Rathie v. Montreal Trust Co.

Rathie v. Montreal Trust Co.

The Supreme Court held that s.124(1) contemplates that the offer be open for acceptance for the four month period specified; an offer that limits acceptance to a shorter period (here two weeks) does not comply with the subsection and therefore the transferee company is not entitled to invoke the court's power to compel dissenting shareholders to transfer their shares.

Citation
[1953] 2 SCR 204
Parties
Appellant (plaintiff): W. G. Rathie; Respondent (defendant): Montreal Trust Company; Respondent (defendant): British Columbia Pulp and Paper Company Limited; Intervenant: Attorney General of Canada; Intervenant: Chartered Trust Company; Intervenant (shareholder): W. H. Powell
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
6 October 1953
Procedural Posture
Company/commercial Law Appeal to Supreme Court of Canada / On Appeal From the British Columbia Court of Appeal; Judgment on Appeal
Outcome
Appeal allowed; judgments of the trial judge and the Court of Appeal set aside; declaration granted that transferee was not entitled to acquire appellant's shares under s.124(1).
Legal Topics
Share Acquisition, Statutory Interpretation, Compulsory Transfer of Shares, Corporate Procedure, Ultra Vires Challenge
Source Language
English
Commercial Law Company Law Constitutional Law Share Acquisition Statutory Interpretation Compulsory Transfer of Shares Corporate Procedure Ultra Vires Challenge

Case Brief

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Parties

W. G. Rathie

Appellant (plaintiff)

Montreal Trust Company

Respondent (defendant)

British Columbia Pulp and Paper Company Limited

Respondent (defendant)

Attorney General of Canada

Intervenant

Chartered Trust Company

Intervenant

W. H. Powell

Intervenant (shareholder)

Procedural Posture

Company/commercial Law Appeal to Supreme Court of Canada / On Appeal From the British Columbia Court of Appeal; Judgment on Appeal

Legal Issues

  1. 1 Whether s.124(1) of The Companies Act requires the offer to remain open for acceptance for four months
  2. 2 Whether an offer limited to a shorter period (two weeks) satisfies s.124(1) so as to permit compulsory acquisition of dissenting shareholders' shares
  3. 3 Whether s.124 is ultra vires the Parliament of Canada (constitutional validity)

Ratio Decidendi

The Supreme Court held that s.124(1) contemplates that the offer be open for acceptance for the four month period specified; an offer that limits acceptance to a shorter period (here two weeks) does not comply with the subsection and therefore the transferee company is not entitled to invoke the court's power to compel dissenting shareholders to transfer their shares.

Court Disposition

Appeal allowed; judgments of the trial judge and the Court of Appeal set aside; declaration granted that transferee was not entitled to acquire appellant's shares under s.124(1).

Orders

  • Judgments of the Court of Appeal and of Coady J. set aside
  • Judgment entered for appellant granting the relief claimed in the writ (declaration that Montreal Trust Company is not entitled or bound to purchase the appellant's shares and that appellant is not bound to sell or transfer them)