ONTARIO
SUPERIOR COURT OF JUSTICE ( Commercial List)
Court File No. 09-8431-00CL
Date: 20120316
B E T W E E N:
MARY YOUNG (Applicant)
Patrick T. Summers , for the Applicant
- and -
CKLN RADIO INC. (Respondent)
Thomas Slahta , for the Respondent Jonathan Davis-Sydor for Ryerson Students' Union Lorne Sabsay for Individual Directors
HEARD: December 12, 2011
REASONS FOR DECISION
[ 1 ] On December 12, 2011 this Court granted the Order sought by the Respondent CKLN for a winding up of the Corporation pursuant to the Winding Up and Restructuring Act .
[ 2 ] These are the reasons for that decision.
[ 3 ] This matter has had a long and protracted history. Mary Young on her own and on behalf of others complained in proceedings in this Court by way of an Application alleging oppression concerning the election and operation of the radio station CKLN.
[ 4 ] In addition an action was commenced by Mary Young on the civil list against the present Respondent's former directors and financial backers of the radio station.
[ 5 ] CKLN was incorporated as a non-share capital corporation pursuant to the Canada Corporations Act and starting in 1983, it operated a licensed campus community radio station in association with Ryerson University.
[ 6 ] As a result of internal dissension some of which involves the subject of this Application and the companion action which was not resolved even with mediation, the Canadian Radio Television Commission (CRTC) revoked the station’s broadcast license and it went off the air in April 2011.
[ 7 ] The Palin Foundation, the effective landlord of CKLN, required CKLN to vacate the premises occupied by the Corporation as the result of the loss of the broadcasting license, which termination took place by the end of September 2011.
[ 8 ] As of October 11, 2011 following a referendum of the students of Ryerson, the funding from the student levy, formerly allocated to CKLN, has been reallocated.
[ 9 ] As of the end of October 2011, CKLN no longer had a broadcast license, a place from which to carry out operations or any funding for continuation and as a result with two abstentions, the membership voted unanimously to take steps to dissolve the Corporation.
[ 10 ] The position of the Applicant is that given allegation in the present Application and companion action and the indemnity obligations to former directors arising from the action, the mechanism of s. 32 of the Canada Corporations Act , R.S.C. 1970, c. C-32 that would otherwise be applicable to CKLN as a non-share capital corporation, is unavailable:
Surrender of charter
- (1) The charter of a company may be surrendered if the company proves to the satisfaction of the Minister
( a ) that the company has no assets and that, if it had any assets immediately prior to the application for leave to surrender its charter, such assets have been divided rateably among its shareholders or members, and either,
(i) that it has no debts, liabilities or other obligations, or
(ii) that the debts, liabilities or other obligations of the company have been duly provided for or protected or that the creditors of the company or other persons having interests in such debts, liabilities or other obligations consent; and
[ 11 ] Accordingly, given the outstanding claims, CKLN seeks relief under the Winding Up and Restructuring Act , R.S.C., 1985, c. W-11 and relies on the resolution of members and the factual circumstances set out above.
[ 12 ] Mary Young opposed the relief sought on the following grounds:
(a) That this Court has no jurisdiction to make an Order under s. 6 of the Winding Up and Restructuring Act ;
(b) the resolution of the members of CKLN is of no force and effect since there was no formal vote;
(c) the procedures under the Winding Up and Restructuring Act were not followed;
(d) CKLN is not dissolved; and.
(e) Mary Young submits that there are just and valid claims of CKLN's which if prosecuted would enable it to have sufficient funds to pay all of its debts, including any contingent debts, such as the claims against the Ryerson Students' Union and former and present members of its Board of Directors.
[ 13 ] The difficulty with the last ground of complaint by Mary Young is that it would require an Order of this Court to permit a proposed derivative claim to be brought either against or in the name of CKLN.
[ 14 ] The argument of counsel for Mary Young hinges on the distinction that Mr. Summers makes between the words “dissolve” and “windup.” Section 10 of the Winding Up and Restructuring Act provides that the Court may make an order "where the company at a special meeting of shareholders called for the purpose has passed a resolution requiring the company be wound up."
[ 15 ] The submission is that the resolution merely said “dissolve” and not “ wind up” and therefore is not in compliance with the requirement of s. 10(b).
[ 16 ] I conclude that in the circumstances presented on this motion, the distinction between dissolve and wind up is a distinction without a difference. CKLN is a nonprofit corporation with no assets to speak of beyond minor claims of creditors and no rationale for continuance but for the wished claim of Mary Young.
[ 17 ] The companion action by which Mary Young seeks damages for oppression against the former directors will be effectively stayed as against CKLN by a Winding Up Order being granted and in essence what Mary Young seeks to do by opposing the Order is to keep alive the ability to continue the action as against the individual directors.
[ 18 ] Counsel for Mary Young submitted that there are appropriate grounds for this Court to grant leave for a derivative claim, which would keep alive the claims of Mary Young not only as against the directors, but as against Ryerson University and the Palin Foundation.
[ 19 ] To the extent that there could be any validity to the suggestion of a claim by Mary Young, it is simply untenable on the facts of this case on which to consider granting leave.
[ 20 ] CKLN was a not-for-profit corporation which had as its sole purpose the operation of a community-based radio station associated with Ryerson University. The station no longer has a license. If there was a valid complaint of what could or should have been done to preserve the license, that was a matter for the CRTC, which has determined that the license be at an end.
[ 21 ] The suggestion of what those who were associated with the station would do in the future is not a matter before this Court. To give effect to the arguments on behalf of Mary Young would in my view be elevating form beyond substance to an unheard-of level.
[ 22 ] By seeking the relief of a derivative claim, counsel acknowledged that the action by Mary Young against the remaining directors would have little chance of success.
[ 23 ] I would go further. I was not persuaded from the pleading and submissions that without CKLN as a conduit, claims would have any chance of success.
[ 24 ] For the foregoing reasons I granted the relief sought by CKLN. I do recognize there will need to be a further process to deal with the remaining minor assets of the corporation.
[ 25 ] Following submissions I ordered costs as follows: costs of CKLN: $10,000, costs of Ryerson Students' Union $1000 and for the Individual Directors collectively $1000, all on a partial indemnity basis.
C. CAMPBELL J.
RELEASED:
Court File No. 09-8431-00CL
Date: 20120316
ONTARIO SUPERIOR COURT OF JUSTICE
B E T W E E N: MARY YOUNG (Applicant) - and – CKLN RADIO INC. (Respondent)
REASONS FOR DECISION
C. CAMPBELL J.
Released: March 16, 2012