Ringuet v. Bergeron

Ringuet v. Bergeron

Majority: The shareholders' agreement did not bind the parties in their capacities as directors nor contravene the Quebec Companies Act or public order; clause 11 was interpreted to relate to shareholders' meetings only; the pact was a lawful means for majority shareholders to secure control and the penalty clause was enforceable; appeal dismissed.

Citation
[1960] SCR 672
Parties
Defendant Appellant: Lucien Ringuet; Defendant Appellant: Maurice Pagé; Plaintiff Respondent: Léo Paul Bergeron; Mis En Cause: St. Maurice Knitting Mills Limited; Mis En Cause: Gérard Jean
Court
Supreme Court of Canada
Jurisdiction
Canada
Judgment Date
24 June 1960
Procedural Posture
Appeal / On Appeal to the Supreme Court of Canada From the Court of Queen's Bench, Province of Quebec
Outcome
Appeal dismissed
Legal Topics
Shareholder Voting Agreements, Directors' Duties, Fiduciary Duty, Penalty Clause, Public Policy, Severability
Source Language
English
Commercial Law Company Law Shareholder Voting Agreements Directors' Duties Fiduciary Duty Penalty Clause Public Policy Severability

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Parties

Lucien Ringuet

Defendant Appellant

Maurice Pagé

Defendant Appellant

Léo Paul Bergeron

Plaintiff Respondent

St. Maurice Knitting Mills Limited

Mis En Cause

Gérard Jean

Mis En Cause

Procedural Posture

Appeal / On Appeal to the Supreme Court of Canada From the Court of Queen's Bench, Province of Quebec

Legal Issues

  1. 1 Whether a shareholders' agreement requiring unanimous voting is valid
  2. 2 Whether such an agreement can bind parties in their capacity as directors and thereby contravene fiduciary duties and statutory requirements
  3. 3 Whether the penalty clause transferring shares on breach is enforceable

Ratio Decidendi

Majority: The shareholders' agreement did not bind the parties in their capacities as directors nor contravene the Quebec Companies Act or public order; clause 11 was interpreted to relate to shareholders' meetings only; the pact was a lawful means for majority shareholders to secure control and the penalty clause was enforceable; appeal dismissed.

Court Disposition

Appeal dismissed

Orders

  • Appeal dismissed with costs
  • Judgment of the Court of Queen's Bench (Appeal Side) restoring the action of the respondent upheld