nan QUEEN’S BENCH FOR SASKATCHEWAN Citation: 2005 SKQB 549 Date: 20051223 Docket: Q.B.G. No. 239/2005 Judicial Centre: Saskatoon BETWEEN: MARGARET FEHR, and DONALD BEVERIDGE, CAROLYN BEVERIDGE and PEAK ENTERPRISES INC. Defendants Appearances: Brian J. Scherman, Q.C. for the plaintiff (applicant) Donald Beveridge for the defendants (respondents) JUDGMENT ALLBRIGHT J. December 23, 2005 [1] On February 8, 2005, the plaintiff commenced an action against the defendants seeking various items of specific relief and costs on solicitor‑client basis. Thereafter, the plaintiff brought notice of motion dated February 8, 2005, seeking from the Court an order that the defendants provide an accounting in relation to specified items. On February 22, 2005, Hunter J. made an order directing that the defendants, Donald Beveridge, Carolyn Beveridge and Peak Enterprises Inc., provide to the plaintiff and to the Court within seven days an accounting in respect of all funds or property received from, held on behalf of or invested on behalf of Margaret Fehr. This order was consented to by counsel for the defendants. [2] The defendants filed statement of defence on March 7, 2005, and in paragraph thereof pled the following: 8. The Defendants deny that Peak has any obligation to redeem the Plaintiff’s preferred shares, as asked for by the Plaintiff in paragraph 38 of the Statement of Claim, or that the Beveridges have any obligation to the Plaintiff in relation to the payment of dividends or the redemption of shares. [3] The plaintiff then brought notice of motion returnable in Chambers on July 19, 2005, seeking the following relief: 1. An order pursuant to Rule 129 and 133 of The Queen’s Bench Rules of Court, for an order granting the Plaintiff, Margaret Fehr (“Fehr”), summary judgment against the Defendant, Peak Enterprises Inc. (“Peak”), as follows: (a) Judgment in the amount of $214,600.00 plus interest at rate of 16% per annum from March 6, 2005 to the date of judgment. [4] In response to the plaintiff’s motion, the defendant, Donald Beveridge, filed an affidavit, and on July 19, 2005, the Court directed that Mr. Scherman would be allowed to cross‑examine Mr. Beveridge on his affidavit, and the Court further ordered that the defendant, Donald Beveridge, was to bring with him to the discovery process “all financial information and documentation, including income tax returns and assessments for Peak Enterprises Inc. and Ascent Financial Services Ltd.” [5] This cross‑examination on the affidavit proceeded, and the matter has now been brought back before the Court with an amended notice of motion seeking the original relief plus additional relief. The amended notice of motion also seeks an order pursuant to Rules 217, 173(e) and the inherent jurisdiction of the Court striking the statement of defence of all the defendants. To that end, the plaintiff asserts number of grounds as the basis for making such an order. In addition, the plaintiff seeks an order removing the affidavit of Donald Beveridge, sworn July 15, 2005, in its entirety from the action, and seeks costs of the application and the cross‑examination of the defendant, Donald Beveridge on solicitor‑and‑client basis. The defendants, in turn, request that an amendment be granted to their statement of defence allowing them to plead that Peak Enterprises Inc. was at all relevant times prohibited from redeeming preferred shares (as sought by the plaintiff), under s. 34(2) of The Business Corporations Act, R.S.S. 1978, c. B‑10. The defendants contend that if the amendment is granted to their statement of defence, the judgment requested by the plaintiff simply could not issue by virtue of the wording of the relevant statutory provision. [6] The plaintiff, in support of her application, relies upon copy of the transcript of the cross‑examination conducted by Mr. Scherman of Donald Beveridge on Friday, July 22, 2005, as well as copies of various exhibits identified on that cross‑examination. It is the position of the plaintiff that Donald Beveridge did not produce the documents that he was ordered to by the Court’s fiat and that he has failed to comply with any of the undertakings which he provided on the cross‑examination. The plaintiff further points to the purported failure of the defendants through that cross‑examination to provide any financial information for Ascent Financial Services Ltd. for the fiscal year ending June 30, 2005, and the plaintiff further contends that the only financial statement produced for Peak Enterprises Inc. were unaudited financial statements for the years ending May 31, 2002 and 2003. In addition, the plaintiff suggests that no income tax returns for either corporation were produced as required by the Court’s direction. Finally, the plaintiff points to the fact that in the interim, there has been no response to the undertakings which were given on the occasion of the cross‑examination. At that time, the defendants were represented by counsel, although that is no longer the case. [7] Cumulatively, what the plaintiff now seeks is an order that the affidavit of Donald Beveridge dated July 15, 2005, be struck, that the application for leave to amend the statement of defence be dismissed, that summary judgment be granted against Peak Enterprises Inc., that the defences of each of the defendants be struck out by reason of their failure to comply with their obligations, including failure to make production of documents, and that solicitor‑and‑client costs be awarded against the defendant, Donald Beveridge for the cross‑examination and the application, in any event of the cause. [8] As noted, the defendants opposed each of these requests on the basis that they are inappropriate in light of the overall context of the litigation. Mr. Beveridge also points to the fact that the defendants have been involved in prolonged litigation in another matter, and have been so involved for over seven years. This matter has recently gone to trial, and the parties are awaiting judgment. Mr. Beveridge observes that the legal costs of this other case have hampered the ability of the defendants to pay dividends to the plaintiff. It is also the position of the defendants through Mr. Beveridge that his affidavit of July 15, 2005, remains valid. At the heart of the defendants’ position is the assertion that Peak Enterprises Inc.’s only asset is its holding in the corporation Ascent Financial Services Ltd. Peak Enterprises Inc. is the sole shareholder of Ascent Financial Services Ltd. and accordingly, Peak Enterprises Inc.’s principal asset is its interest in Ascent. The defendants suggest that Ascent Financial Services Ltd. has no cash and has significant debt and outstanding legal bills. It is the position of the defendants that they should be given leave to amend their statement of defence to additionally include the following amendments: 8. If Peak were to make the payment to redeem the preferred shares there would be reasonable grounds for believing that after the payment either: (a) Peak would be unable to pay its liabilities as they fall due; or (b) the realizable value of Peak’s assets would be less than the aggregate of its liabilities and the amount that would be required to be paid to other shareholders who have right to be paid on redemption or in liquidation, rateably with or in priority to the Plaintiff. 9. Peak is therefore prohibited by subsection 34(2) of The Business Corporation [sic] Act (Saskatchewan) from making any payments to redeem the Plaintiff’s preferred shares. Background facts [9] The affidavit of Donald Beveridge, sworn on July 15, 2005, and upon which the defendants continue to rely, provides in part as follows: 1. am one of the defendants in this action and an officer and director of the defendant Peak Enterprises Inc. (“Peak”).... 2. hold 51 Class “A” common voting shares in the capital stock of Peak. My wife, Carolyn Beveridge (“Carolyn”), also defendant in this action, owns 49 Class “A” common voting shares in the capital stock of Peak. 3. The plaintiff, Margaret Fehr (the “Plaintiff”), is the holder of 214,600 Class “E” preferred shares (the “Preferred Shares”) in the capital stock of Peak. 4. There are no other shareholders in the capital stock of Peak and none that would have right to be paid on redemption or in liquidation, rateably with or prior to the Plaintiff as holder of the Preferred Shares. 5. The Plaintiff has asked that Peak redeem the Preferred Shares for the principal amount of $214,600.00. Peak has not redeemed the Preferred Shares. The Plaintiff claims the amount of $214,600.00 in her statement of claim. 6. If Peak redeems the Preferred Shares, there is good reason to believe and believe that after the payment of $214,600.00, Peak will not be able to meet its liabilities as they fall due and the realizable value of Peak’s assets will be less than its liabilities.... 8. Peak is currently the sole shareholder of Ascent Financial Services Ltd. (“Ascent”). Peak’s principal asset is its interest in Ascent. Ascent operates financial services business. believe that if Peak were to dispose of its interest in Ascent today, the proceeds of any such disposition would likely be minimal. 9. reason for this is that both Peak and Ascent are involved in an action with, among others, Arthur Blythman and Anna Blythman (the “Blythmans”) and their company, Artanna Investments Ltd. (“Artanna”) ... (the “Blythman Lawsuit”). 10. The Blythman Lawsuit arises as result of series of transactions commencing with the incorporation of Ascent in 1997. Upon the organization of Ascent, each of the Blythmans were issued 25 Class “A” shares and Peak was issued 50 Class “A” shares in Ascent. 11. By written agreement (the “Goodwill Sale Agreement”) made October 7, 1997, Ascent purchased from the Blythmans the good will, among other assets of financial services business, owned by the Blythmans for total purchase price of $600,000.00.... 12. By written agreement (the “Share Purchase Agreement”) made effective October 15, 1998, Peak purchased the Blythman’s Ascent Shares ... for stated purchase price of $559,000 and the agreement to retire the promissory note issued to Arthur Blythman in the amount of $23,000 as partial consideration paid to him in the Goodwill Sale Agreement.... 15. In 1999, Ascent and Peak commenced the Blythman Lawsuit against the Blythmans and Artanna, amongst others. 16. Subsequently, when payments on the Loan started to become due, Ascent refused to make payments on the Loan. The Blythmans and Artanna recently commenced an action for repayment of the Loan. Peak does not have possession of any share certificates in Ascent and, to the best of my knowledge and belief, the Escrowed Shares in Ascent are still being held in escrow pursuant to the Share Purchase Agreement. 17. In light of the Blythman Lawsuit, the Escrowed Shares in Ascent still being held in escrow, and the claim by the Blythmans and Artanna for the repayment of the Loan, if Peak were to dispose of its shares in Ascent today, believe Ascent would realize very little value for those shares. Thus, while the Draft Financial Statements show that Peak has investments of $619,050, that amount is the cost of those investments, almost the entire amount of which constitutes the shares in Ascent. believe that today’s realizable value of the substantial bulk of those investments is minimal. 18. There is therefore good reason to believe and believe that if Peak were to redeem the Preferred Shares, after the payment of the sum of $214,600, Peak would be unable to pay its liabilities as they became due and the realizable value of Peak’s assets would be less than its liabilities. Finally, it is my belief that if Peak were required to redeem the Purchased Shares, it would be in contravention of the solvency tests set out in sub‑section 34(2) of The Business Corporations Act. [10] There is no dispute between the parties as to the nature of the plaintiff’s investment in the defendant corporation. The real issue between the parties is whether the plaintiff is entitled to the summary relief which she now seeks. [11] It is the position of the plaintiff that the cross‑examination of the defendant, Donald Beveridge, on his affidavit discloses that Peak Enterprises Inc. is profitable company and that s. 34(2) does not provide any defence to the defendants against the requested relief sought. [12] The parties are in disagreement, however, over the issue of the amount of dividend payments which have been made by Peak Enterprises Inc. to the plaintiff pursuant to her investment in the company. The plaintiff takes the position that she has been paid in total the limited sum of $8,500.00 towards such dividends. Counsel for the plaintiff asserted this amount as part of his presentation to the Court on the hearing of the motion. Subsequent to that motion, Mr. Beveridge forwarded to the Court’s attention letter in which he writes: In response to Mr. Sherman’s [sic] assertion that only small portion of the dividends have been paid to date, wish to submit the following schedule of dividend payments in the amount of $88,836.00 made to Mrs. Fehr. As of July 15, 2005 we had sent to Mr. Sherman [sic] photocopies and color scans of each cheque front and back as evidence that Mrs. Fehr had cashed them. We also invited Mr. Sherman [sic] to the office of Robertson Stromberg Pedersen to examine the original cheques if he could not be satisfied with the authenticity of the color photocopies. As of August 4, 2005 we had sent to Mr. Sherman [sic] financial statements and income tax records for Peak and Ascent from 1997 to 2004. Attached to Mr. Beveridge’s letter is separate page headed “Schedule of Dividend Payments,” which chronicles payments from the year 2001 through 2005 totalling $88,836.00. [13] In light of the essence of the dispute between the parties, the issue of what dividends have or have not been paid remains to be resolved between the parties. In this instance, the issue to be determined is whether the plaintiff is entitled to the relief sought and, most particularly, whether she is entitled to summary judgment against the defendant, Peak Enterprises Inc. for the principal amount of her investment in the company. [14] From the conflicting material before me on the matter of the payment of dividends, in any event, would be unable to conclude what had or had not been paid without further submissions and inquiries. Relevant provisions of The Business Corporations Act, supra [15] Section 34(2) of The Business Corporations Act provides: (2) corporation shall not make any payment to purchase or redeem any redeemable shares issued by it if there are reasonable grounds for believing that: (a) the corporation is, or would after the payment be, unable to pay its liabilities as they become due; or (b) the realizable value of the corporation’s assets would after the payment be less than the aggregate of: (i) its liabilities; and (ii) the amount that would be required to pay the holders of shares that have right to be paid, on redemption or in liquidation, rateably with or prior to the holders of the shares to be purchased or redeemed. [16] turn firstly to the question of whether the defendants should be granted leave to amend their statement of defence in the fashion set out earlier herein. am of the view that there is no impediment or justification for not allowing the amendment to proceed, and accordingly do so. The more pertinent question then becomes as to what, if any, application does s. 34(2) of The Business Corporations Act, supra, have in relation to the plaintiff’s application for summary judgment. In considering this matter, am in agreement with the position espoused by the plaintiff. To that end, I observe that the plaintiff’s motion does not require Peak Enterprises Inc. to “make any payment to purchase” or to “redeem any redeemable shares.” Rather, the plaintiff’s application is one seeking summary judgment. The corporate defendant is not making payment to redeem shares, in essence, but rather, following judgment however and whenever obtained, it would be subject to the normal judgment process, including execution. Such execution or enforcement of judgment is not tantamount to redemption of shares. [17] On December 23, 2004, the plaintiff provided notice in writing to Peak Enterprises Inc. that she wished to redeem all of her Class “E” preferred shares effective in March 2005. The principal amount of her Class “E” preferred shares is $214,600. It is this amount which she seeks as the substance of her summary judgment. In considering all of the material before me, there is no dispute as to the plaintiff’s entitlement under appropriate circumstances to redeem the Class “E” preferred shares for the face value. [18] I am of the view that s. 34(2) of the Act does not serve to prevent the plaintiff seeking summary judgment from the Court. The effect of granting a judgment, if it is otherwise appropriate to do so, does not place the corporation in a position of breaching the prohibitions contained in s. 34(2). [19] In the event that this interpretation is wrong, it is also necessary to examine the question of whether there are reasonable grounds for believing that the corporation is or would be insolvent as required by s. 34(2) of the Act if summary judgment were to be granted in favour of the plaintiff. The plaintiff has requested that the affidavit of Donald Beveridge be struck, and accordingly, there would be no evidence before the Court to suggest any grounds for believing that the corporation is or would be insolvent. have considered the matter of Mr. Beveridge’s affidavit, and am of the view that it would not be appropriate to strike the affidavit, and to that end, the Court has broad discretion. The resulting question then is whether the affidavit of Donald Beveridge, which has been referred to earlier herein, provides basis for demonstrating that there are reasonable grounds for believing that the corporation Peak Enterprises Inc. is or would be insolvent as required by s. 34(2) of The Business Corporations Act, supra. In this regard, am also in agreement with the position put forth by the plaintiff. In considering all of the material filed on this application, including the cross‑examination of Mr. Beveridge on his affidavit, I am not satisfied that the defendants have demonstrated on a balance of probabilities that there is real insolvency on the part of Peak Enterprises Inc. To that end, I am also mindful of the failure of the defendants to provide responses to the undertakings following from the cross‑examination process which occurred on July 22, 2005. Further, the defendants have not provided any professional analysis or affidavit evidence in support of their proposition that s. 34(2) is applicable. Where the defendants, and particularly Peak Enterprises Inc., have failed to present reasonable grounds for believing that the corporation is or would be unable to pay its liabilities as they become due or otherwise, s. 34(2) of The Business Corporations Act, supra, is not applicable in considering the plaintiff’s application for summary judgment. [20] That then leaves for resolution the final question of whether the plaintiff is otherwise entitled to summary judgment against Peak Enterprises Inc. [21] The plaintiff’s application for summary judgment was brought under Rules 129 and 133 of The Queen’s Bench Rules. Rule 129(1) provides: 129(1) Where the action is brought to recover debt or liquidated demand and the defendant, or one or more of the defendants if there are several defendants, has or have defended, the plaintiff may on affidavit, made by himself or by any other person who can swear positively to the facts, or if the plaintiff is corporation by any officer or servant or other person who can swear positively to the facts, verifying the cause of action and the amount claimed as due, and stating in the belief of the deponent that there is no defence to the action on the merits, apply to the court for leave to enter final judgment for the amount of the claim or the amount so verified as due to the plaintiff (not exceeding the amount of the claim) together with interest (if any) and costs. Rule 133 provides: 133(1) If it appears that the defence set up by the defendant applies only to part of the plaintiff’s claim, or that any part of the claim is admitted, the plaintiff shall immediately have judgment for that part of the claim that the defence does not apply to, or that is admitted. (2) The court may direct judgment under subrule (1) to be subject to any terms as to suspending execution, payment into court, assessment of costs, or otherwise, that the court considers appropriate. (3) The court may allow the defendant to defend as to the remainder of the plaintiff’s claim. [22] In addition Rule 134 is relevant and provides: 134 If it appears to the court that any defendant has good defence to, or ought to bepermitted to defend the action, and that any other defendant has not such defence and ought not to be permitted to defend, the former may be permitted to defend, and the plaintiff shall be entitled to enter final judgment against the latter, and may issue execution upon such judgment without prejudice to his right to proceed with his action against the former. [23] In considering the plaintiff’s application under Rule 129, the plaintiff refers to the affidavit of Margaret Fehr sworn on June 29, 2005. In that affidavit, in part, the plaintiff deposes to the following: 2. On or about March 6, 2000, signed Subscription Agreement dated March 6, 2000 ... whereby subscribed for 185,000 Class “E” Preferred Shares of the defendant corporation, Peak Enterprises Inc. (“Peak”). Peak issued 185,000 Class “E” Preferred Shares to me at stated purchase price of $185,000.00.... 3. Pursuant to the Subscription Agreement, Peak was to pay me dividend of $0.16 per share, per annum (the “Dividends”). 4. On March 6, 2001, was entitled to Dividends in the amount of $29,600.00. At about that time, the Defendant, Donald Beveridge (“Don Beveridge”) told me that he and the Defendant, Carolyn Beveridge, could not pay me the Dividends at that time but that could have additional shares in Peak in that amount. 5. On or about March 6, 2001, subscribed for an additional 29,600 Class “E” Preferred Shares of Peak. signed another Subscription Agreement dated March 6, 2001 (the “Second Subscription Agreement”) in which Peak agreed to pay me an annual dividend of $0.16 per share.... 6. The Articles of Incorporation of Peak ... provide as follows with respect to Class “E” Shares: (b) the Class “E” Shares shall be redeemable by the Corporation either at its option or at the option of the holder for an amount equal to the amount for which each share was issued, together with an amount equal to all declared and unpaid dividends. 7. On or about December 23, 2004, my lawyer gave notice in writing to Peak and the Beveridges that, as of March 6, 2005, would be redeeming all of my Class “E” Preferred Shares in Peak and that expected to be paid the entire principal amount in the amount of $214,600.00 and the balance of dividends thereon on that date.... 8. have not been paid the principal amount of my Class “E” Preferred Shares in the amount of $214,600.00. 9. With respect to the Dividends, it is not clear how much is owed to me by Peak and the Beveridges. In or about March, 2001, the Beveridges had agreed to pay me the Dividends on monthly basis at rate of $2,500.00 per month, with final payment of $6,836.00 in the twelfth month so that would be paid total dividend of $34,336.00 per year. 10. acknowledge receiving certain payments from the Beveridges between March of 2001 up to the current date. These are set out in my Affidavit of February 7, 2005. In addition, since the date of that Affidavit, have received three monthly payments in the amount of $1,000.00 each. 11. However, the Beveridges maintain that they have made additional payments to me that have not yet been able to verify. Although the Beveridges provided copies of cheques that they allege are additional Dividend payments to me (the “Cancelled Cheques”), the copies of the Cancelled Cheques are, in many cases, not legible. On many of the Cancelled Cheques, the front is visible and shows that the cheque was made out to me but the back of the cheque, which would contain the information as to whether and where the cheque was deposited is not legible.... 12. My lawyer requested production of the original cancelled cheques so that we can determine whether the cheques were in fact negotiated by me.... [B]ut the original cheques or other supporting documentation for the alleged payments have not yet been provided.... 13. Because it is not clear how much am owed by Peak by way of Dividends, am not asking this Honourable Court to grant summary judgment in relation to my claim for the payment of the Dividends. am only asking this Honourable Court to grant summary judgment against Peak for the redemption amount of my Class “E” Preferred Shares in Peak, being $214,600.00. intend to pursue my claim for the unpaid Dividends against Peak in conjunction with my claim against the Beveridges. 14. make this Affidavit in support of an application for summary judgment against Peak in the amount of $214,600.00. [24] The amount sought to be recovered by the plaintiff in my view does represent debt or liquidated demand as that phrase is contemplated in Rule 129. Further, the affidavit of the plaintiff deposes positively to the facts in question, verifies the cause of action and the amount claimed as due. While the plaintiff does not specifically depose that there is no defence to the action on the merits, that is the fair interpretation to be placed on the overall tenor of her affidavit. Accordingly, conclude that it is her belief that there is no defence to her action available to the defendant Peak Enterprises Inc. [25] Aside from the plaintiff’s assertions, it is necessary to examine all of the facts and materials. am in agreement with the plaintiff’s contention that the defendant Peak Enterprises Inc. really does not dispute the assertion of the plaintiff relating to the structure of the preferred shares purchased by her and sought to be redeemed by her. In effect, the defendant Peak Enterprises Inc. has contended that it would be inappropriate for the company to redeem the shares in light of s. 34(2) of The Business Corporations Act, supra. For the reasons which have earlier stated, have concluded that this legislative provision has no impact on the application and, accordingly, is not an impediment or bar to the plaintiff’s application for summary judgment. [26] In considering the plaintiff’s application under Rule 129, am also mindful of the provisions of Rule 133. [27] For the reasons have set forth, am satisfied that there is no merit to the defendants’ denial in paragraph of the original statement of defence that the corporation has any obligation to redeem the plaintiff’s preferred shares as asserted by the plaintiff in the statement of claim. [28] In conclusion on this issue, I am satisfied that the plaintiff has demonstrated an entitlement to summary judgment pursuant to Rule 129 against the defendant Peak Enterprises Inc. for the sum of $214,600.00. Further, the plaintiff is entitled to interest in accordance with the Share Agreement at the rate of 16 percent from March 6, 2005, and the plaintiff shall have judgment for this principal amount and interest against the defendant Peak Enterprises Inc. [29] I am not, however, satisfied that the plaintiff has demonstrated an appropriate basis for summary judgment to be granted against the defendants Donald Beveridge and Carolyn Beveridge personally, and accordingly I decline to order such. The causes of action brought against the defendants, Donald Beveridge and Carolyn Beveridge, have been responded to in the statement of defence, and their statements of defence on the face raise litigible issue. [30] The plaintiff also contends that the statement of defence as it relates to Donald Beveridge and Carolyn Beveridge personally should be dismissed in light of the failure to respond to the undertakings given by Donald Beveridge on July 22, 2005. note that the undertakings were provided only by Donald Beveridge and not Carolyn Beveridge. It is appropriate for these undertakings to be responded to, and accordingly, direct that Donald Beveridge is to reply to all of the undertakings made by him on July 22, 2005, on or before the 31st day of March, 2006. In considering this time line, am mindful of the fact that Mr. Beveridge indicated in his oral comments to the Court at the time of the hearing of the application that his focus had been strongly upon the other lawsuit, and this had prevented him from addressing his mind to these undertakings. Bearing that in mind, am satisfied that this window of time is more than ample to enable these undertakings to be responded to. If there is failure to respond to these undertakings in an appropriate way by March 31, 2006, the plaintiff has leave to return the matter to me for consideration of the application to strike out the statement of defence of Donald Beveridge. In the event the undertakings are complied with, the matter will proceed in the normal course. [31] have considered the matter of costs as requested by the plaintiff, and am satisfied that the plaintiff is entitled to her costs of the application and of the cross‑examination on July 22, 2005. The plaintiff seeks solicitor‑and‑client costs in this regard; however, the plaintiff has not provided an indication of the approximate amount of such solicitor‑and‑client costs such as would enable the Court to assess whether an award of solicitor‑and‑client costs would be appropriate. In the absence of this information, am of the view that the appropriate award of costs to the plaintiff is that the plaintiff receive costs in an amount of double Column in Schedule “B”, being the tariff of costs in the Court of Queen’s Bench. This order as to costs is made pursuant Rule 545(3)(e). This order for costs is made against the defendant Peak Enterprises Inc., and such costs are to be payable by the defendant Peak Enterprises Inc. forthwith upon the assessment thereof by the Local Registrar. J. G.N. Allbright
There is no dispute between the parties as to the nature of the plaintiff's investment in the defendant corporation. The real issue between the parties is whether the plaintiff is entitled to the summary relief, which she now seeks pursuant to Rules 129 and 133 of The Queen's Bench Rules. It is the position of the plaintiff that the cross- examination of the defendant on his affidavit discloses that the corporation is profitable company and that s. 34(2) of The Business Corporation Act does not provide any defence to the defendants against the requested relief sought. The parties are in disagreement over the issue of the amount of dividend payments that have been made by the corporation to the plaintiff pursuant to her investment in the corporation. HELD: 1) The plaintiff's application for summary judgment does not require the corporation to redeem any redeemable shares. Rather, the plaintiff's application is one seeking summary judgment. The corporate defendant is not making payment to redeem shares, but rather following judgment however and whenever obtained, it would be subject to the normal judgment process, including execution. Such execution or enforcement of judgment is not tantamount to redemption of shares. The plaintiff provided notice in writing to the corporation that she wished to redeem all her Class E preferred shares effective March 2005. The principal amount of her shares is $214,600. It is this amount that she seeks as the substance of her summary judgment. Section 34(2) of the Act does not serve to prevent the plaintiff seeking summary judgment from the court. The effect of granting judgment, if it is otherwise appropriate to do so, does not place the corporation in a position of breaching the prohibitions contained in s. 34(2) of the Act. 2) The defendants have not demonstrated that there is real insolvency on the part of the corporation. The defendants have failed to provide responses to the undertakings. Further, the defendants have not provided any professional analysis or evidence in support of their position that s. 34(2) is applicable. 3) The amount sought to be recovered by the plaintiff does represent debt or liquidated demand as contemplated by Rule 129. The plaintiff is entitled to summary judgment against the defendant corporation for the sum of $214,600 pursuant to Rule 129. Further the plaintiff is entitled to interest at the rate of 16% from March 2005 in accordance with the Share Agreement. 4) The plaintiff has not demonstrated an appropriate basis for summary judgment against the individual defendants. 5) The plaintiff is entitled to costs.