COURT OF APPEAL FOR ONTARIO
RE: GARY T.D. ALLEN (Plaintiff/Respondent) –and–
McLEAN BUDDEN LIMITED, GARTMORE INVESTMENT
(CANADA) LTD., PAUL MYNERS and LEWIS McNAUGHT
(Defendants/ Appellants)
BEFORE: OSBORNE A.C.J.O. and CATZMAN J.A.
COUNSEL: Robert J. McComb, for the plaintiff/respondent
Christopher J. Cosgriffe, for the defendants/appellants
E N D O R S E M E N T
[1] On December 10th, 1993, following the trial of this action,
Gotlib J. gave judgment in favour of the respondent Allen for
damages in the amount of $42,500 for constructive dismissal,
ordered Gartmore Investment (Canada) Ltd. to purchase his shares
in McLean Budden Limited for $605,299.82 and dismissed the
counterclaim of McLean Budden and Gartmore for an order that
Allen sell those share to Gartmore for $139,685.
[2] McLean Budden and Gartmore appealed the judgment of Gotlib
J. to this court. On August 24th, 1998, this court allowed the
appeal, set aside the trial judgment and entered judgment in
favour of the appellant on their counterclaim. The reasons of
the court were delivered by McKinlay J.A., with which Catzman
J.A. and Osborne J.A. agreed.
[3] On the settlement of the order of this court, it became
necessary to resolve two issues which were not canvassed in the
reasons of McKinlay J.A. McKinlay J.A. ceased to be a member of
the court on December 31st, 1998. In order to resolve the two
issues, it was agreed in discussion with counsel that they would
present brief written submissions and that the decision of
Osborne A.C.J.O. and Catzman J.A., assuming they were unanimous,
would constitute the decision of the court for the purposes of
disposition of those issues.
[4] The two issues were:
(a) what is the “Effective Date” for the purposes of
Sections 14.5.1 of the Shareholders’ Agreement; and
(b) whether the respondent is entitled to any interest,
either prejudgment or postjudgment.
[5] We are unanimous in our view that, for the brief reasons
that follow, the issues should be answered:
(a) August 24th, 1998; and
(b) no prejudgment interest but postjudgment interest
in respect of the period after August 24th, 1998.
[6] The first issue: Paragraph 20(c) of the counterclaim claimed
a declaration that the “Effective Date” for the purposes of
Sections 14.5.1 and 14.5.2 of the Shareholders’ Agreement be the
date of judgment. The reasons of this court, released on August
24th, 1998, directed that judgment be entered in favour of the
appellants on their counterclaim. That order incorporates, by
reference, the provisions of the prayer for relief in the
counterclaim, including the declaration sought in paragraph
20(c). As the “date of judgment” was not finally and effectively
determined until the date of this court’s reasons, it is the date
of those reasons that constitutes the “Effective Date” to which
reference appears in that paragraph of the prayer for relief.
[7] The second issue: The disposition of this issue follows from
the disposition of the first issue. By Section 14.5.1 of the
Shareholders’ Agreement, the respondent is deemed to have to have
offered to sell all of his shares as of the Effective Date, that
is, August 24th, 1998. Accordingly, no prejudgment interest
should be payable in respect of the period before August 24th,
1998. However, although the Shareholders’ Agreement contains no
provision for interest, we consider it to be fair and just that
interest be payable on the purchase price from and after that
date. In the language of the definition of “postjudgment
interest rate” in sec. 127(1) of the Courts of Justice Act, the
rate of such interest shall be the bank rate at the end of the
first day of the last month of the quarter preceding the quarter
in which August 24th, 1998, falls, rounded to the next higher
whole number where that rate includes a fraction, plus 1 per
cent.
[8] The draft order submitted by the appellants contains a
provision for payment out of court to Hongkong Bank of Canada of
the money paid into court pursuant to the order of McCombs J.
dated July 30th, 1997. Although, on the argument of the appeal,
we were not requested to deal with the money paid into court, it
appears sensible to include such a provision in our formal order,
and we order accordingly.
Signed: “C.A. Osborne A.C.J.O.”
“M.A. Catzman J.A.”