SUPERIOR COURT OF JUSTICE – ONTARIO

COMMERCIAL LIST

RE: Concept Capital Management Ltd. and Sprott Asset Management GP Ltd. General Partner of Sprott Asset Management LP, Applicants

AND:

Oremex Silver Inc., Respondent

BEFORE: D. M. Brown J.

COUNSEL: S. Robinson and M. Benson, for the Applicants

J. Porter and S. Reid, for the Respondent

HEARD: December 18 and 19, 2013

REASONS FOR DECISION

I. Application under the CBCA regarding a past and a future meeting of shareholders

[1] Oremex Silver Inc. (“Oremex”) is a publicly-held mineral exploration company, incorporated under the Canada Business Corporations Act, the shares of which trade on the TSX Venture Exchange and the Frankfurt Stock Exchange, although trading presently is suspended. Oremex’s principal securities regulator is the British Columbia Securities Commission.

[2] The Applicants, Concept Capital Management Ltd. (“CCM”) and Sprott Asset Management LP (“Sprott”), are both registered and/or beneficial shareholders of at least 5% of the shares of Oremex.

[3] On September 27, 2013, Oremex called an annual general meeting and special meeting of shareholders for November 26, 2013 (the “November Meeting”), with a record date of October 25. About six weeks later, on November 7, 2013, Oremex cancelled that meeting and called an annual general meeting for December 31, 2013, with a record date of November 29, 2013 (the “December Meeting”). The applicants took the position that Oremex could not cancel the November Meeting and on November 26 some shareholders convened and conducted a meeting, passing resolutions removing the three incumbent directors and electing a new Board of three directors.

[4] The applicants have brought this proceeding seeking alternative relief. First, the applicants seek an order confirming the results of the voting at the November Meeting. Alternatively they seek an order that the annual meeting of the shareholders of Oremex called by the directors for December 31, 2013, be conducted as follows:

(i) the record date for the meeting shall be a date that is prior to the date on which shares were issued pursuant to a November 29 private placement;

(ii) the chair of the meeting shall be independent of both the management of Oremex and the applicants; and,

(iii) the December Meeting shall not be cancelled, rescheduled or adjourned.

[5] Two key issues are raised by this application. First, was the November Meeting a valid meeting of Oremex shareholders? The applicants contended that it was called in response to their requisition and that the directors’ subsequent cancellation of the meeting and the re-scheduling of a shareholders’ meeting for December were improper. From that the applicants argued that the meeting held on November 26 was a proper shareholders’ meeting and this Court should confirm the results of the voting under CBCA s. 145(2).

[6] Second, if the results of the November Meeting are not confirmed, the applicants took the position that the issuance of 34.5 million shares by Oremex on November 29 constituted an improper dilution of shareholdings on the record date set for the December Meeting and therefore this Court should fix a new record date for that meeting under CBCA s. 144(1).

[7] For the reasons set out below, I grant the application by fixing a new record date for the December Meeting, requiring the appointment of an independent chair for that meeting and directing that the meeting not be cancelled, rescheduled or adjourned.

II. Background Facts

[8] Oremex is in the business of exploring for and developing mineral deposits. At present Oremex owns resources in Mexico, but has no proven ore reserves. At present Oremex has three directors: John Carlesso, Keith Minty and Roderic Prat (the “Directors”). The latter two individuals were appointed directors, not elected.

[9] Until November 29, 2013, the applicants held approximately 18.9% of the then issued and outstanding common shares of Oremex. On that date a private placement transaction – the GRIT Transaction - closed in escrow. Oremex issued 34.5 million common shares from its treasury that day. It presently holds those shares in escrow for GRIT pending the satisfaction of some conditions in the GRIT Transaction. If those shares are treated as fully paid issued shares, they would significantly increase the number of Oremex’s issued and outstanding shares, resulting in a material dilution of the applicants’ shareholdings and, no doubt, would impact materially on the voting to take place at the December Meeting. I will return to that transaction later in these Reasons.

[10] For over a year Oremex has sought financing for its operations and the development of its resources. On October 9, 2012, the applicant, CCM, on behalf of other co-investors, made financing available to Oremex pursuant to a convertible debenture. As security for Oremex’s obligations under that loan it provided CCM with a security interest over certain mineral concessions, which included its Chalchihuites Project located in the state of Zacatecas, Mexico. During the first part of this year Oremex sought to secure CCM’s consent to lifting or releasing part of its security in order to obtain financing from a third party, but no agreement could be reached.

[11] Over the course of this year the applicants have voiced strong disapproval of the conduct of Oremex’s management. During the late Spring and Summer discussions took place between Oremex and the applicants which would have seen the departure of the incumbent management and the appointment of new directors. Those discussions did not result in an agreement.

[12] As one often sees in disputes of this sort, the dissident shareholders filed evidence upon which they argued that the affairs of the company were in disarray, while management filed evidence contending that the corporate ship remains on course. Although I have considered all of the evidence filed by the parties, I need not make any determination on those conflicting positions.

[13] That then takes us to the events of this past September.

III. First Issue: Was the November Meeting a valid meeting of the shareholders of Oremex?

A. Was the November Meeting called in response to the Requisition?

[14] By September the holding of a shareholders’ meeting was long overdue - Oremex had last held an annual meeting of shareholders on June 29, 2012.

[15] CCM held not less than 5% of the issued and outstanding shares of Oremex. On September 26, 2013, CCM requisitioned a meeting of shareholders of Oremex (the “Requisition”). This Requisition was sent by registered mail to Mr. John Carlesso, the CEO and a director of Oremex, the other two directors and the company. Oremex acknowledged receiving the Requisition on September 30, 2013. The validity of the Requisition was not in dispute.

[16] The next day, September 27, CCM issued a press release announcing the Requisition. This press release was filed on SEDAR at 10:31 a.m.

[17] Later on September 27, 2013, Oremex’s Directors called an annual and special meeting of shareholders to be held on November 26, 2013, with a record date of October 25, 2013. Oremex’s directors were required to mail out their management information circular for the November Meeting by Monday, November 4, 2013. They did not do so. As matters transpired, on November 7 Oremex announced the cancellation of the November Meeting and set a new date for the shareholders meeting – December 31, 2013.

[18] The applicants submitted that Oremex had called the November Meeting in response to their September 26 Requisition. The evidence does not support that submission.

[19] As disclosed by Oremex’s evidence, back on August 9, Oremex had received a letter from the TSXV informing the company that trading in its shares would be halted pending satisfaction by Oremex of certain reinstatement requirements, which included the requirement to hold an annual general meeting. (That suspension of trading remains in place today.)

[20] On September 18, Oremex’s counsel sent a letter to the TSXV addressing its reinstatement requirements, and counsel’s letter included an undertaking by Oremex to “issue a notice of meeting in respect of its 2013 AGM no later than September 30, 2013 and to hold such meeting no later than November 30, 2013” (the “Undertaking”).

[21] The TSXV responded to the September 18 letter via email acknowledging the Undertaking and advising the Company that, as revealed by the Company’s disclosure documents, Oremex had a rolling stock option plan that required yearly shareholder approval and would thus have to be approved by its shareholders at the annual general meeting.

[22] Counsel to Oremex responded by way of letter sent on September 25 advising the TSXV that the rolling stock plan was not in force, but that the company intended to seek shareholder approval for it at its upcoming general meeting. Under the heading “Annual General Meeting”, Oremex’s counsel wrote:

We note your comment and the Company will issue the notice on, or prior to, September 27, 2013.

[23] Now, although Carlesso deposed that sometime on the afternoon of September 27 he was informed orally that CCM had requisitioned a special meeting of shareholders, that was some two days after the company’s counsel had told the TSXV that it would issue a notice for an annual general meeting of shareholders by September 27.

[24] Then, on September 27, 2013, Computershare, as agent for Oremex, filed a notice on SEDAR of an annual general and special meeting of shareholders to be held on November 26, 2013 with a record date of October 25, 2013. Notice was given simultaneously to the relevant stock exchanges.

[25] According to Oremex’s evidence, its directors only received the Requisition on September 30, 2013, after they had called the November Meeting.

[26] From this evidence I find that Oremex had decided to call the November Meeting and had so advised the TSXV two days before its CEO learned about the Requisition. Consequently, Oremex did not call the November Meeting in response to the Requisition.

B. Did CBCA s. 143(3) apply?

[27] Nevertheless, CCM had sent a Requisition to Oremex and its directors pursuant to CBCA s. 143(1) and section 143(3) of the CBCA states:

143. (3) On receiving the requisition referred to in subsection (1), the directors shall call a meeting of shareholders to transact the business stated in the requisition, unless

(a) a record date has been fixed under paragraph 134(1)(c) and notice of it has been given under subsection 134(3);

(b) the directors have called a meeting of shareholders and have given notice thereof under section 135; or

(c) the business of the meeting as stated in the requisition includes matters described in paragraphs 137(5)(b) to (e).

[28] Upon receipt of the Requisition were the Directors of Oremex obliged to call a meeting of shareholders to transact the business stated in the Requisition? Oremex submitted that its Directors were not required to call another meeting because by calling the November Meeting they fell within the exception set out in CBCA s. 143(3)(a). Oremex had taken this position in its November 12 press release:

The Company originally convened an annual and special meeting of shareholders by issuing the requisite notice on September 27, 2013, for a meeting to be held November 26, 2013 and, as such, was under no obligation to convene another meeting in response to a shareholder requisition which was subsequently received by the directors of the Company and which action had also been publically announced by the shareholder making the requisition.

The applicants disagreed, taking the position that although Oremex had fixed a record date for a shareholders meeting before receipt of the Requisition, it had not fulfilled the second requirement of that subsection – giving notice of the fixing of the record date under CBCA s. 134(3).

[29] The dispute on this point turns on the requirement found in CBCA s. 134(3) that notice of the record date must be given within the prescribed period by, inter alia, advertisement in a newspaper. There is no dispute on the evidence that Oremex’s newspaper advertisement was not published in the Globe and Mail until October 7, 2013, after the receipt of the Requisition.

[30] My reasons for decision in Wells v. Bioniche Life Sciences Inc. attempted to extract from the jurisprudence the principles underlying the exemptions found in CBCA s. 143(3):

[80] Each of those three exceptions reflects an underlying policy that where no need exists for the requisitioned meeting, the directors are not required to call it. The first two exceptions, CBCA ss. 143(3)(a) and (b), signal that no need for a requisitioned meeting will arise where the directors have already taken steps to call a meeting of shareholders at which an opportunity will be given for shareholders to discuss and vote on the subject-matter of the requisition. As Blair J. (as he then was) stated in Airline Industry Revitalization Co. v. Air Canada, in dealing with the exceptions in ss. 143(3)(a) and (b):

Although there appears to be no jurisprudence on the point, it seems to me that a "record date" as contemplated in paragraph 143(3)(a) must be a "record date" for a meeting at which there is some reasonable chance that the business stated in the requisition will be considered. It is one thing to say that if a meeting is requisitioned, and there is already a meeting pending at which the matters in question can be considered, then the directors are not obliged to call another meeting. There is no point in duplicating meetings, and the directors generally are vested with the power to call meetings of shareholders and to determine the timing and place of such meetings. It is quite another thing, however, to say that even though the required percentage of shareholders have requisitioned a meeting, their statutory right to have their business considered at a meeting may be thwarted by the simple expedience of the directors having already fixed a record date for a meeting on other matters. I interpret "record date" in paragraph 143(3)(a) of the CBCA to refer to a record date for a meeting having been fixed prior to receipt of the requisition but at which the requisitioners' business may nonetheless be considered. Likewise, I interpret "meeting of shareholders" in paragraph 143(3)(b) in the same way: the directors are obligated to call a validly requisitioned meeting, unless the directors have called a meeting of shareholders, and given notice thereof, and the requisitioners' business may be considered at that meeting.

[82] Given that this Court in the Paulson case stated that a qualifying shareholder’s right to requisition a meeting “is only meaningful if it can be exercised in a timely and expeditious manner”, it strikes me that in order to give effect to that purpose of the statutory right, directors should only be allowed to rely on the exceptions set out in CBCA ss. 143(3)(a) and (b) if the meetings they have called, or for which they have fixed a record date, will occur in a “timely and expeditious manner” when measured against when the shareholder delivered its requisition and the date proposed by the shareholder for the requisitioned meeting.

[84] That leads me to conclude that in order for directors to be able to rely on the exception set out in CBCA s. 143(3)(a), the meeting in respect of which they have fixed a record date before receiving a requisition must be scheduled for a time reasonably soon after the receipt of the requisition, with the range of reasonableness taking into account the need for shareholders to possess sufficient information to form a reasoned judgment before they vote on the subject-matter of the requisition, a subject-matter which they will have the opportunity to discuss and vote upon at the meeting fixed by the directors. In my view, if CBCA s. 143(3)(a) is not interpreted as containing such a requirement of reasonable timeliness, it could result in the triumph of form over substance to the great detriment of the practical availability of a statutory right for minority shareholders.[^1]

[31] In the present case, the Directors of Oremex called the November Meeting on September 27 and within 5 days of the receipt of the Requisition they had run the required advertisement in the Globe and Mail. The meeting called by the Directors would take place within 60 days of their receipt of the Requisition, a timely and expeditious date in the circumstances. Taken together, that course of conduct by the Directors, in my view, was sufficient to justify not calling another meeting in response to the Requisition and, instead, to proceed with the November Meeting. Indeed, the applicants treated the calling of the November Meeting as a sufficient response by the Directors to their Requisition because in their October 16 press release the applicants gave notice of their intention to propose three persons for election as directors “at the upcoming annual general and special meeting of shareholders on November 26, 2013”.

[32] I therefore conclude that the Directors of Oremex were excused, under CBCA s. 143(3), from calling another shareholders’ meeting following their receipt of the Requisition. But, by relying on the excuse provided by CBCA s. 143(3), the Directors had to ensure that the meeting they had called on September 27 would satisfy the policy objectives of CBCA s. 143. Specifically, the consequences of benefitting from the statutory exemption were two-fold:

(i) the meeting called by the Directors would have to meet the requirement of reasonable timeliness, which the November 30 meeting did in the circumstances; and,

(ii) some reasonable chance must have existed that the business stated in the applicants’ Requisition would be considered at that November Meeting. In the result, the Directors cancelled the November Meeting before the formal notice of meeting was sent out.

C. Were the directors entitled to cancel the November Meeting?

[33] On Thursday, November 7, 2013, the Directors of Oremex posted on SEDAR information about an amended notice of meeting date and record date showing that an annual (but not special) shareholders’ meeting would be held on December 31, 2013, with a record date of November 29, 2013. This would result in the holding of a shareholders’ meeting some 90 days following the receipt of the Requisition.

[34] The applicants contended that the Directors had no power or authority in the circumstances to cancel the November Meeting and therefore the meeting’s cancellation was ineffective. In their Amended Notice of Application they explained the basis for their position:

It is now apparent that the reason the directors of Oremex purported to cancel the Shareholders’ Meeting and to set a new record date was to permit them to issue a massive number of shares (at extremely low prices) through a private placement that will dilute the position and votes of the Applicants and all other shareholders of Oremex.

This is a transparent case of management entrenchment.

The press release and the notice of meeting date and record date issued on November 7, 2013, made it clear for the first time that Oremex’s directors refused to call a meeting in response to the requisition by Concept Capital Management Ltd.

Oremex submitted that its Directors were acting well within their powers when they cancelled the November Meeting and established the date for the new December Meeting.

C.1 Governing principles of law

[35] Although Oremex’s By-laws address the issue of the adjournment of a shareholders’ meeting which already has convened (s. 7.18), they do not deal with the question of the postponement or cancellation of a meeting not yet convened. Turning to the jurisprudence, a board of directors has the authority to postpone an already called shareholders’ meeting in appropriate circumstances, but the fundamental question a court must consider is whether in postponing the meeting the directors have exercised corporate power unfairly or inequitably.[^2] In Canadian Jorex Ltd. v. 477749 Alberta Ltd. the Alberta Court of Appeal stated:

The directors' residual powers under s. 102 must be interpreted in conjunction with any other statutory provisions limiting those powers. The shareholders' right to call a special meeting may well be adversely affected if the directors were entitled under s. 102 to cancel a special meeting called on requisition of the shareholders. This cannot have been intended by Parliament. Reading s. 102 of the C.B.C.A. in conjunction with s. 143 arguably means that the directors' residual powers under s. 102 would not extend to the unilateral cancellation of any meeting properly convened on the shareholders' request. At the very least, any exercise of the powers of the directors in these circumstances would be subject to close scrutiny by the courts.[^3]

[36] Building on that analysis in the Canadian Jorex case, the Manitoba Court of Queen’s Bench, in Oppenheimer & Co. v. United Grain Growers Ltd., stated:

The above quote poses two possibilities available to a court in the circumstances of this case. I believe that the later possibility is the preferable one. It conforms most closely with the general philosophy underlying the CBCA and does not unduly restrict the directors' ability to conduct the corporation's business in its best interests. It allows the directors to postpone a shareholders' meeting as part of their power to manage the business of the corporation and to act in the best interests of all their shareholders. However, it also protects the shareholders' right to call a special meeting since it subjects the directors' action to the close scrutiny of a court and will provide relief where the action was taken for an improper purpose or in bad faith.[^4]

C.2 Analysis

[37] In the present case, the Directors of Oremex have relied on their calling of the November Meeting to justify not calling an additional meeting in response to the Requisition. Applying close scrutiny to the actions of Oremex’s Directors in postponing the November Meeting, does the evidence disclose that they did so for an improper purpose or in bad faith?

[38] The analysis must start by looking at any public statements made by Oremex explaining the decision to postpone the November Meeting. The postponement was posted on SEDAR on Thursday, November 7, 2013, some three business days after the date the Directors had been required to mail out their management information circular for the November Meeting. The Directors had not sent out a Management Information Circular.

[39] On November 12, Oremex issued a press release confirming its plan to proceed with the December Meeting. It offered the following explanation for the postponement of the shareholders’ meeting:

The Company subsequently convened the Meeting for December 31, 2013, primarily as a result of having focussed its recent efforts to, among other things, continue to seek a reinstatement for trading with the TSX Venture Exchange, which has granted approval to the Company to formally adopt a fixed stock option incentive plan in lieu of a rolling stock option plan, reserving for issuance of a maximum of 8,875,000 stock options under the plan (such that there was no longer a need for special business to be contemplated at the meeting).

[40] The applicants submitted that these explanations did not pass scrutiny as reasonable ones sufficient to justify the postponement of the November Meeting. There is some merit in their submission. It is difficult to ascertain what link existed between management’s efforts to reinstate Oremex’s stock for trading and the timing of a shareholders’ meeting. Trading of the stock was under suspension on September 27 when the Directors called the November Meeting; it was under suspension when they postponed the meeting on November 7; and today trading in the stock still remains under suspension.

[41] As to the stock incentive plan, the applicants submitted that the explanation given by Oremex in its press release was inconsistent with its public disclosure in the December 4 Management Information Circular which confirmed that the fixed option plan had been adopted on October 10, 2013, which was 15 days prior to the October 25 record date and 47 days prior to the shareholders’ meeting. Certainly that suggested ample time had existed to prepare the requisite information to place before shareholders for the November Meeting.

[42] In paragraph 50 of his affidavit Carlesso deposed that Oremex had to postpone the Shareholders’ Meeting in order to establish a fixed option plan at the request of the TSXV:

Subsequent to filing the September 27 Notice, the TSXV advised Oremex that, since the Rolling Stock Plan was not currently in place, the Company was required to put in place a 10 per cent fixed option plan (the “Fixed Option Plan”) prior to the AGSM being held. In order to establish the Fixed Option Plan, the Company had to postpone the AGSM. Also, since approval of the Rolling Stock Plan would no longer be required, no special business would be conducted at the AGSM.

Although Carlesso had appended other communications from the TSXV to his affidavit, he did not attach the TSXV communication referred to in his paragraph 50.

[43] On this point I am faced with a limited record. Carlesso’s failure to attach to his affidavit the communication from the TSXV makes it very difficult for the Court to evaluate the accuracy of his summary of that communication found in paragraph 50 of his affidavit. That failure must be assessed in light of management’s subsequent statement in its December 4 MIC that the board had approved a stock incentive plan on October 10. The case for the need to postpone the shareholders’ meeting appears weak. That said, neither party exercised their right to cross-examine the other’s affiant. Although the failure to cross-examine a witness does not mean that a Court must accept the witness’s evidence – quite the contrary – in the present case the burden does lie on the applicants to demonstrate that the postponement resulted from improper motives by the Directors, and the applicants’ failure to cross-examine Carlesso on this important point works against their assertion of an improper motive.

[44] But, as noted, the applicants’ main submission was that the Directors improperly postponed the November Meeting in order to facilitate a massive stock dilution. To understand this submission, one must circle back to August, 2013 when the GRIT Transaction first emerged.

[45] According to Oremex’s evidence, back on August 2, 2013, it began discussions with Global Resources Investment Ltd. (“GRIL”), a company focused on investing in junior mining and natural resource sectors worldwide, to raise financing by entering into a potential share exchange transaction with Global Resources Investment Trust Plc (“GRIT”), an investment trust to be constituted by GRIL.

[46] Negotiations ensued. Although by September 23, 2013 Oremex and GRIL generally had agreed upon the definitive documents to implement the GRIT Transaction, the GRIT Transaction remained subject to approval by the TSXV and conditional on the listing of the GRIT shares on the London Stock Exchange (the “LSE”).

[47] Under the GRIT Transaction Oremex sought to raise up to $1,725,000 in financing through the sale of 34,500,000 units at a price of $0.05 per Unit. Each Unit consists of one Oremex common share and one common share purchase warrant. Warrants are exercisable to acquire an Oremex share at a price of $0.05 per share at any time up until the date that is five years from the date of the GRIT Transaction.

[48] As consideration for its purchase of the Units, on November 29 GRIT issued to Oremex 1,053,756 “subscription receipts” exercisable to acquire 1,053,756 ordinary shares of GRIT at a price of £1.00 per share. (Whether the issuance of those subscription receipts was required by the actual terms of the GRIT Transaction is an issue I will address later in these Reasons.) The Units are being held in escrow by Oremex pending completion of the listing of the GRIT shares on the LSE. When the listing occurs the subscription receipts automatically will be exercised and Oremex will receive one GRIT share for each subscription receipt it holds, without payment of any additional consideration. Oremex will then sell the GRIT Shares through the facilities of the LSE to realize the contemplated proceeds of the transaction.

[49] On September 26, 2013, GRIT submitted an application to the TSXV seeking approval of the GRIT Transaction. The TSXV advised GRIT that the GRIT Transaction was precedent setting and, as such, the executive listings committee of the TSXV would need to better understand the GRIT Transaction before it could provide conditional approval. The TSXV further advised GRIT that it would require exemptive relief orders from both the British Columbia Securities Commission and the Ontario Securities Commission for the GRIT Transaction. According to Oremex, those requirements resulted in the parties extending the closing of the GRIT Transaction to November 8, 2013.

[50] From this evidence, which was not tested by cross-examination, it appears that when the Directors of Oremex called the November Meeting on September 27, they anticipated that the GRIT Transaction would close around November 8, some 14 days after the record date of October 25 set for the November 26 shareholders’ meeting. That is to say, one can infer from the evidence that the expectation of the Directors when they called the November Meeting was that any new shares issued under the GRIT Transaction would not be voted at the November 26 shareholders’ meeting.

[51] According to Oremex, by November 6, 2013, GRIT had advised that it had received notice that it would soon receive the requisite approvals from the securities regulators.

[52] On November 7, the Directors of Oremex posted the postponement of the shareholders’ meeting to December 31, 2013. The Directors set the record date at November 29, 2013.

[53] According to Oremex, about a week later, on November 13, in anticipation of receiving regulatory approvals, UK counsel for GRIT provided to Oremex the countersigned definitive documents and asked for a further extension of the transaction closing date to no later than November 30, 2013, to allow it time to receive the approvals. The parties agreed to that extension.

[54] Consequently, the record before me indicates that the Directors of Oremex postponed the November Meeting at a time (November 7) when they thought that the GRIT Transaction was scheduled to close, by its terms, on November 8, although obviously some uncertainty about the ability to achieve that closing date must have existed because on November 6 GRIT had not yet received the required regulatory approvals. The extent of that uncertainty is not something that I can measure with any degree of precision because, again, no cross-examination was conducted of Oremex’s affiant.

[55] The evident uncertainty about the November 8 closing date at the time the Directors postponed the November Meeting, when coupled with the agreement less than a week later to extend the closing date for the GRIT Transaction until November 30 – right around the time of the new record date – does raise concerns about the Directors’ conduct. But the thinness of the record on this point prevents me from concluding that the applicants have demonstrated, on the balance of probabilities, that the postponement of the November Meeting by the Directors of Oremex was motivated by an improper purpose or bad faith.

[56] As a result, I am not prepared to find, on the record before me, that the Directors improperly postponed or cancelled the November Meeting.

D. The holding of the November Meeting

[57] Just to complete the chronology, notwithstanding the Directors’ postponement of the November Meeting, a meeting of some shareholders did go ahead on November 26. Following Oremex’s November 7 notice of the December Meeting date, the applicants issued a November 8 press release announcing to all Oremex shareholders that the November Meeting would proceed as scheduled. The applicants mailed out an information circular to all shareholders on Monday, November 11, and retained Kingsdale Shareholder Services to contact Oremex shareholders to tell them of the upcoming shareholders’ meeting and to solicit their proxies. On November 19, the applicants issued a further press release to remind shareholders of the upcoming shareholders’ meeting.

[58] A meeting was held on November 26, 2013. A total of 98 proxies, representing 32.7% of all Oremex shares, were represented at the November Meeting. Of the 98 proxies, 21 were disallowed by the scrutineer, resulting in 77 proxies representing 41,447,775 shares to vote at the meeting. That represented 28.3% of all issued and outstanding shares. By contrast, at the last Oremex shareholders meeting 22.5% of the issued and outstanding shares were represented.

[59] The Directors did not attend the meeting. After a fifteen minute delay, a chair was elected by the shareholders present at the meeting. A quorum of shareholders was present. The shareholders represented at the November Meeting, in person or by proxy, voted overwhelmingly to approve resolutions (i) removing the three Directors from office, (ii) fixing the number of directors of Oremex at three, and (iii) electing Frank Högel, Keith Stein and Allan Folk as directors. In a press release following that meeting, the incumbent Directors of Oremex announced that the December Meeting would proceed.

[60] Notwithstanding that some shareholders met on November 26, it follows from my finding that the November 7 postponement of the annual general and special shareholders’ meeting to December 31, 2013 was valid that the November 26 meeting which took place was not a valid meeting of the shareholders of Oremex. I therefore do not grant the relief sought by the applicants in paragraph 1(a) of their Amended Notice of Application to confirm the results of the voting at the November 26 meeting.

IV. Second Issue: The alternative relief requested in respect of the December Meeting: changing the record date and appointing an independent meeting chair

A. Calling the December Meeting

[61] As mentioned, on November 7, 2013, Oremex filed a notice on SEDAR announcing the new December 31 date for the annual general meeting of shareholders and setting a new record date of November 29, 2013. Notice of the December Meeting was given simultaneously to the relevant stock exchanges and an advertisement was placed in the Globe on November 18, 2013.

[62] Oremex filed its proxy materials and management information circular for the December Meeting on SEDAR on December 5, 2013. The materials were also sent out to the company’s shareholders in accordance with its securities obligations. A dissident proxy circular was mailed out and filed on December 9, 2013.

[63] The primary alternative relief sought by the applicants involves a request to change the record date for the December Meeting to a date prior to November 29, 2013 - the announced record date - because on that date Oremex issued 34,500,000 common shares to GRIT under a private placement announced by the company on December 2. As put by the applicants in their Amended Notice of Application:

The shares issued pursuant to the private placement were not properly issued because the consideration for the shares was not paid.

Moreover, the sole purpose for which Oremex issued shares pursuant to the private placement, in exchange for subscription receipts, was to dilute the shares of the existing shareholders of Oremex prior to the November 29, 2013, record date that has been set by Oremex management for the meeting they had purported to call for December 31, 2013.

It is unclear who claims (or intends to claim) entitlement to vote the shares issued pursuant to the private placement.

Oremex strongly disputed these allegations, submitting that the GRIT Transaction and its closing in escrow on November 29, 2013 were done in the best interests of the corporation.

B. The further steps in the GRIT Transaction

[64] To assess the applicants’ allegations one must pick up the narrative on the GRIT Transaction. According to Oremex, on November 13 the parties agreed to extend the deal’s closing date to November 30, 2013.

[65] GRIT received exemptive relief orders from the security commissions on November 18, as well as the TSXV approval on November 20, 2013. However, the TSXV’s conditional approval letter required the parties to make additional amendments to the definitive documents which, in turn, prompted further negotiations and approvals by both GRIT and Oremex.

[66] Both GRIT and Oremex ultimately signed off on the amended deal documents by November 28, 2013. That day, however, GRIT told Oremex that the listing on the LSE would not be completed until about December 31, 2013.

[67] The major deal document for the GRIT Transaction was a Subscription Agreement dated November 13, 2013 between Oremex, as the “Subscriber” and GRIL. The Agreement relates “to a subscription for shares in Globe Resources Investment Trust PLC in exchange for the issue of securities in The Subscriber”. As recited in Paragraph A of the Subscription Agreement:

[GRIL] is seeking admission of its ordinary Shares to listing on the premium listing segment of the Official List to trading on the London Stock Exchange’s main market for listed securities, and will be re-registered as a public company and constitutes a UK Investment Trust with the name Global Resources Investment Trust Plc.

The Agreement then defines the term “Admission” to mean:

Admission of the Ordinary Shares to listing on the premium listing segment of the Official List and to trading on the London Stock Exchange’s main market for listed securities becoming effective.

[68] GRIL and Oremex proceeded to close the GRIT Transaction in escrow on November 29, 2013, and there it remains today - the event of “Admission”, as defined in the Subscription Agreement, has not yet occurred.

[69] Oremex takes the position that on November 29 it lawfully issued a further 34,500,000 common shares to GRIT, raising the number of issued and outstanding shares from approximately 146.455 million to 183.2 million. GRIT’s shareholding would constitute 18.82% of the latter number, making it the single largest shareholder in Oremex.

C. Analysis

[70] GRIL is not a party to this application. (Its change of name and re-configuration to GRIT has not yet taken place.) The applicants therefore could not, and in fact do not, request any formal relief regarding the validity of the issuance of the 34.5 million Oremex shares on November 29. However, they submitted that the issuance of those shares was improper in the context of identifying which shares will be eligible to vote at the December Meeting, and the applicants asked this Court to change the record date for that meeting to a date before November 29, 2013 pursuant to CBCA s. 144(1)(c). Oremex did not contest the power of this Court to change the record date; it submitted, however, that on the facts of this case no reason existed for the Court to exercise its power to change the date.

[71] The analysis shall focus on two issues: (i) what actually occurred at the November 29 escrow closing of the GRIT Transaction; and, (ii) whether the escrow closing demonstrated any improper or bad faith conduct by the Directors of Oremex in the context of the steps leading up to the December Meeting.

[72] The key obligations of the parties to the Subscription Agreement are found in Articles 3 and 4. Article 3 deals with “subscription for the new shares”, i.e. the GRIT shares, and Article 4 deals with the “issue of the consideration securities”, that is the Oremex shares. Section 3.1 states:

Subject to the Conditions being fulfilled or in the case of the Placing Conditions waived in accordance with the terms of the Placing and Sponsor Agreement, [Oremex] shall upon Admission subscribe at the Subscription price for the Subscription Amount for the New Shares subject to the memorandum and articles of association of [GRIL] and free from all Encumbrances and together with all rights that attach (or may in further attach) to them after the date of their issue and allotment, which New Shares shall rank pari passu in all respects with the Ordinary Shares in issue at the date of Admission. (emphasis added)

Section 4.1 provides, in part:

[Oremex] shall upon Admission simultaneously allot and issue to [GRIL] or Custodian (as directed by [GRIL]) the Consideration Securities credited as fully paid at the aggregate Consideration Price…(emphasis added)

The Agreement defines “Consideration Securities” as follows:

34,500,000 common shares of no par value in the capital of [Oremex], together with 34,500,000 Warrants.

[73] As of November 29, the escrow closing date, the event of “Admission” had not yet occurred. (It still has not.) Accordingly, under the terms of the contract entered into between Oremex and GRIL, Oremex was not under an obligation, as of that date, to subscribe for GRIT shares or to issue Oremex shares. Yet it did, using a document styled as a “subscription receipt”. In that document Oremex was described as the “Holder” and GRIT as the “Company”. The material portions of the Subscription Receipt stated:

This Subscription Receipt is issued pursuant to that Subscription Agreement between the Company and the Holder dated November 13, 2013 where the Holder subscribed for 1,053,756 ordinary shares in the capital of the Company (each a “GRIT Share”) in consideration for the issuance of 34,500,000 common shares in the capital of the Holder (the “OAG Shares”). The OAG Shares issued by the Holder to the Company for the purchase of the GRIT Shares are and will be held by the Holder in escrow pending satisfaction of the Release Conditions (as herein defined), or returned by the Holder to its treasury if the Conditions are not satisfied.

Each Subscription Receipt entitles the Holder to automatically receive, without payment of additional consideration and without further action on the part of the Holder…one GRIT Share within five days following satisfaction of the Release Conditions.

An attachment setting out the terms and conditions of the subscription receipt contained a section 2 headed “Exercise of Subscription Receipt”:

Each Subscription Receipt will entitle the Holder to automatically receive without payment of additional consideration and upon delivery of the OAG Shares issued by the Holder and held in escrow, and subject to adjustment, one GRIT Share within five days following satisfaction of the release Conditions. Should the Release Conditions not be satisfied within 60 days following the date of this Subscription Receipt certificate, the Holder will be entitled to withdraw its consideration and return the OAG Shares to the treasury of the Holder.

[74] The Subscription Receipt purported to be “issued pursuant to [the] Subscription Agreement”, but what did the Subscription Agreement have to say about the use of subscription receipts? Nothing, actually. The Subscription Agreement did not make any reference to the use of subscription receipts, let alone their use to facilitate an escrow closing. The Subscription Agreement established a “Long Stop Date” of October 14, 2013, the significance of which was that GRIT enjoyed the right to terminate the agreement if certain conditions were not fulfilled by that date (s. 2.2), without liability to Oremex (s. 6.2.8). Of course, that date had long passed by the time the parties closed in escrow. Since no written amending agreement was placed in evidence, one must infer that any extensions of that date resulted from the parties deciding not to enforce their strict rights (s. 10.3). The need for an escrow closing or the use of subscription receipts therefore does not leap off the pages of the Subscription Agreement. To the contrary, the obligation of Oremex to subscribe for the GRIT shares would not arise until “Admission”, or the LSE listing of those shares (s. 3.1).

[75] The obvious question then arises: why did Oremex issue 34.5 million shares to GRIT on November 29, the record date for the December Meeting, when the Subscription Agreement did not contain an obligation for it to do so? What explanation has Oremex offered?

[76] Oremex announced the GRIT Transaction in a December 2 press release. In the release Oremex stated that “it has agreed to terms in regards to a private placement” with GRIL under which it was seeking to raise up to $1.75 million. The release went on to announce:

Pursuant to the Offering, the Company is seeking to raise up to $1,725,000 (the “Private Placement Proceeds”) through the sale of 34,500,000 units (“Units”) at a price of $0.05 per Unit.

Each Unit shall consist of one common share of the Company…and one common share purchase warrant…

In consideration for the Units, GRIT has issued to the Company 1,053,756 subscription receipts exercisable to acquire 1,053,756 ordinary shares of GRIT at a price of £1.00 per share (the “GRIT Shares”). The Units are to be held in escrow pending satisfaction of the completion of the listing of the GRIT Shares on the London Stock Exchange (LSE), upon which the subscription receipts shall automatically be exercised and the Company shall receive one GRIT Share for each subscription receipt held by the Company, without payment of any additional consideration. The Company will then sell the GRIT Shares through the facilities of the LSE to realize the Private Placement Proceeds.

Closing of the Offering is subject to a number of conditions precedent, including approval of the TSX Venture Exchange and GRIT successfully listing the GRIT Shares on the LSE. GRIT expects to be listed on the LSEF on or prior to December 31, 2013. Upon exercise of the subscription receipts, GRIT will hold approximately 19% of the issued and outstanding Common Shares of the Corporation. (emphasis added)

[77] The language of this press release certainly suggests that Oremex was reporting on the issuance by GRIT to it of “subscription receipts” which would be exercisable at some future date to acquire GRIT shares, and when the GRIT shares became listed on the LSE “the subscription receipts shall automatically be exercised” and “upon exercise of the subscription receipts, GRIT will hold” 19% of Oremex’s shares. Put another way, a reader of the press release could well come away with the view that until the GRIT shares were listed on the LSE, GRIT would not be holding Oremex shares – the LSE listing would trigger the chain of events that would see GRIT ending up with 19% of Oremex’s shares.

[78] The press release did not explain what circumstances had led to the Units being held in escrow pending the LSE listing of the GRIT shares.

[79] A December 9, 2013 Material Change Report filed by Oremex stated that “the Units are to be held in escrow pending satisfaction of the listing of the GRIT Shares on the LSE”, but it did not explain what had led up to the escrow event. The Material Change Report also stated:

Upon exercise of the subscription receipts, GRIT will hold approximately 19% of the issued and outstanding Common Shares of the Company.

[80] Oremex’s December 4 Management Information Circular reported that the only person or corporation which beneficially owned 10% or more of the voting rights attaching to its shares was GRIT, and it listed GRIT as owning 34.5 million common shares. The MIC did not explain what had led up to the escrow event.

[81] In his affidavit Carlesso described the events surrounding the escrow closing in the following language:

Both GRIT and Oremex were ultimately signed off on the amended Definitive Documents by November 28, 2013. However, on the same date, GRIT advised the Company that the Listing would not be completed until on or prior to December 31, 2013. GRIT and Oremex proceeded to close the GIRT Transaction in escrow on November 29, 2103 via sub-receipts, the last business day prior to the outside closing date of November 30, 2013, pending completion of the Listing.

Carlesso did not explain why the parties simply did not further extend the closing date when the inability to complete the transaction was caused by GRIT not having secured LSE listing approval.

[82] The latter point emerged as an important one because the applicants filed evidence that 30 other junior mining or exploration companies had issued recent press releases announcing private placements of shares to GRIT in exchange for GRIT shares, yet no other such transaction had involved the exchange of shares for subscription receipts, the issuance of shares to GRIT prior to the listing of GRIT shares on the LSE, or the holding of shares in escrow pending the listing of the GRIT shares on the LSE. The evidence disclosed that those three attributes were unique to Oremex’s November 29 escrow closing. Further, the November 13, 2013 decision of the British Columbia Securities Commission granting GRIL an exemption from the prospectus requirement for these transactions made no reference in its statement of facts to the use of an escrow closing or subscription receipt as part of a GRIL/GRIT transaction to acquire securities of a Canadian company.[^5]

[83] Oremex offered no explanation on this application about why its transaction with GRIT used mechanisms – a subscription receipt and an escrow closing – which no other Canadian transaction with GRIT was employing.

[84] Taken as a whole, this evidence leads me to conclude that the Directors of Oremex purported to issue 34.5 million shares to GRIL/GRIT through an escrow closing on November 29 for the purpose of significantly diluting the shares owned by other shareholders before the expiration of the record date for the December Meeting in order to enhance the prospects that the Directors proposed by Oremex would secure election to its Board of Directors. I reach this conclusion for several reasons.

[85] First, this conclusion does not depend upon whether or not the GRIT Transaction was in the best interests of the company as a means of raising financing. The critical issue for this application is not the merits of that financing technique, but the timing of the issuance of the Oremex shares. The coincidence of the escrow closing date with the shareholder meeting record date requires a court to take a hard look at the reason for such coincidental timing. The company did not file any cogent evidence to suggest that if an escrow closing did not take place on November 29, it would lose GRIT as a source of financing. Carlesso did not make that suggestion in his affidavit; he simply deposed that November 29 was the “last business day prior to the outside closing date of November 30”. Carlesso did not depose that the company would lose the deal; nor did he indicate that an extension to the closing date could not be obtained, especially when the reason for the inability to close lay with GRIT’s failure to obtain listing approvals. Also, given that the Long Stop Date set out in the Subscription Agreement had long since passed and Oremex did not file any written agreement amending that date, I do not accept that the November 29 date possessed any “do or die” significance for the availability of the GRIT financing transaction.

[86] Second, by its terms the Subscription Agreement did not contemplate the use of “subscription receipts”. On the contrary, it provided that Oremex would not be required to subscribe for GRIT shares until “Admission” had occurred and that it would not have to issue any Oremex shares to GRIT until “Admission”. Indeed, section 4.2 of the Subscription Agreement provided:

4.2 [Oremex] shall instruct its registrars as soon as reasonably practicable following Admission to:

4.2.1 enter [GRIT] or the Custodian (as directed by the Company) in the register of members of the Subscriber in respect of such Consideration Securities; and

4.2.2 deliver to [GRIT] or the Custodian…a share certificate for or, if so directed, credit [GRIT’s] or Custodian’s CREST account(s)…in respect of the Consideration Securities issued and allotted to [GRIT] or Custodian…(emphasis added)

[87] Third, the use of subscription receipts in the GRIT Transaction with Oremex stands out as a singular, and unexplained, exception to the manner in which the other 30 GRIT transactions were structured.

[88] Fourth, although counsel agreed that when shares have been issued and fully paid up they may be voted notwithstanding that they are held in escrow,[^6] the evidence on this application raised very serious doubts as to whether, at the time of the escrow closing or today, the 34.5 million shares purportedly issued by Oremex to GRIT were or are fully paid up.

[89] Section 25(3) of the CBCA provides:

25.(3) A share shall not be issued until the consideration for the share is fully paid in money or in property or past services that are not less in value than the fair equivalent of the money that the corporation would have received if the share had been issued for money.

The share register of Oremex was not placed in evidence. In the Subscription Receipt Oremex stated that it had issued 34.5 million shares to GRIT, but was holding them in escrow “pending satisfaction of the Release Condition”, which was defined as the listing of GRIT’s ordinary shares on the LSE, an event which had not occurred by November 29 and still has not occurred. As Oremex stated in its December 2 press release and Material Change Form, the consideration for the issuance for the Oremex common shares was the issuance by GRIT of the subscription receipts. But, the Subscription Receipt merely entitled Oremex to automatically receive GRIT shares once they become listed on the LSE. That listing may or may not occur; as of today one simply does not know. That is to say, the issuance of shares made by Oremex on November 29 may or may not end up being supported by the consideration of the delivery of GRIT shares if those shares are ever listed on the LSE.

[90] Although shares may be fully paid for by “property”, CBCA s. 25(5) provides that “property does not include a promissory note, or a promise to pay, that is made by a person to whom a share is issued”. While the Subscription Receipt technically is not a promissory note or promise to pay by a person to whom a share is issued, it shares a key characteristic with them. For through the Subscription Receipt GRIT essentially has agreed to an automatic mechanism by which to pay for Oremex shares at some future date, but GRIT offers no guarantee that future payment will be made because Oremex’s “rights to payment” under the Subscription Receipt are only triggered if and when the GRIT shares receive LSE listing. If that does not happen, then the Subscription Receipt provides that Oremex may return the issued shares to its treasury. Not only does this mechanism resemble a promise to make a future payment, that promise is made conditional on an event which may or may not occur. In other words, the consideration is both deferred and conditional.

[91] Not only do the terms of the Subscription Receipt raise strong doubts about whether the November 29 issuance of Oremex shares to GRIT met the consideration requirements of CBCA s. 25(3), the escrow mechanism used by the Directors on November 29 represented a material departure from the way in which the Subscription Agreement contemplated that consideration would pass – i.e. on Admission Oremex would subscribe for GRIT shares in exchange for issuing Oremex shares. That the Directors of Oremex were prepared to depart so markedly from the terms of the Subscription Agreement and risk running afoul of the requirements of CBCA s. 25(3) reflected, in my view, a decision to ensure that a large number of Oremex shares were issued before the expiration of the record date to a friendly party thereby mitigating the risk of an unfavourable vote for directors at the December 31, 2013 shareholders’ meeting.

[92] The importance of a record date to the fair conduct of a shareholders’ meeting was explained in Fox-Davies Capital Ltd. v. CEP International Petroleum Ltd.:

Either way the Act ensures that a record date will be set. There is a policy reason for this: the record date provides certainty to shareholders regarding how many individuals will be voting and allows them to make strategic decisions on how they themselves will vote. I am in agreement with the B.C. Supreme Court in Langset that a record date can prevent late manipulation of the voting process by diluting the shares.[^7]

[93] Earlier in these Reasons I was not prepared to find that on November 7 the Directors of Oremex had postponed the November Meeting for improper purposes. However, I conclude that by the end of November the Directors were looking for a way to influence the voting at the December Meeting. Since the trading in Oremex shares had been suspended for several months, there would be no change in the shareholders of record since the time the Directors initially had called a meeting back on September 27. So, the directors adopted another course of action: they departed from the express provisions of the Subscription Agreement and arranged for an escrow closing on the record date, November 29, and issued shares to GRIT using the Subscription Receipt. By then disclosing in their December 4 Management Information Circular that GRIT held 18.9% of Oremex’s issued and outstanding shares, the directors signaled that they were prepared to accept for voting at the December Meeting shares for which consideration had not been fully paid.

[94] While the jurisprudence has recognized that by fixing a record date directors are not necessarily prevented from issuing further stock before the date of the shareholders’ meeting,[^8] each case must be assessed on its specific facts. While in the present case the Directors of Oremex may have reasonably viewed the GRIT Transaction as offering a source of financing which would be in the best interests of the company, they tried to “jump the gun” by issuing Oremex shares to GRIT under an “escrow closing” before the company was obligated to do so under the terms of the Subscription Agreement. That conduct was improper, and I conclude that it amounted to an attempt at the late manipulation by the Directors of the voting process for the December Meeting by diluting the shares of the company.[^9]

[95] As noted earlier, GRIL/GRIT is not a party to this application, so no order can be made in respect of the escrow closing of the Subscription Agreement. But, CBCA s. 144(1)(c) does enable the Court to protect the other shareholders from the efforts of the Oremex Directors to manipulate the voting process by making an order that a meeting “be called, held and conducted in the manner that the court directs”, which would include changing the record date for the December Meeting. Accordingly, I grant the relief sought in paragraph 1(b)(i) of the Amended Notice of Application and direct that the record date for the December 31, 2013 Oremex shareholders’ meeting be fixed at November 27, 2013, two days before the escrow closing and a day before Oremex and GRIL signed the definitive documents.

[96] Since the shares of Oremex have not traded for many months, the only possible shareholder affected by that order would be GRIL/GRIT. I see no prejudice to it by making such a change. The Subscription Agreement contemplated that GRIT would not receive Oremex shares until “Admission” had occurred, and when the closing for the GRIT Transaction initially had been set for November 8, GRIT would not have been entitled to vote at the November Meeting. So, by changing the record date, GRIT still receives that which it bargained for in the Subscription Agreement.

[97] As a result of my finding that the Directors of Oremex have attempted to manipulate the voting process for the December Meeting, I also grant the relief sought in paragraph 1(b)(iii) that the December Meeting shall not be cancelled, rescheduled or adjourned. As well, in light of that finding, it would be appropriate in this case to order that the Chair of the December Meeting be independent of both the management of Oremex and the applicants. While the fact of a proxy fight may not lead in the ordinary course to the appointment of an independent chair, a finding that the directors have attempted to manipulate the voting process should.

VIII. Summary and Costs

[98] For these reasons, I grant the relief sought in paragraph 1(b) of the Amended Notice of Application. Specifically, I fix the record date for the December Meeting at November 27, 2013, order that the Chair of the meeting shall be independent of both the management of Oremex and the applicants, and direct that the December Meeting shall not be cancelled, rescheduled or adjourned.

[99] I would encourage the parties to try to settle the costs of this application. If they cannot, the applicants may serve and file with my office written cost submissions, together with a Bill of Costs, by January 10, 2014. Oremex may serve and file with my office responding written cost submissions by January 17, 2014. The costs submissions shall not exceed three pages in length, excluding the Bill of Costs.

(original signed by)__

D. M. Brown J.

Date: December 19, 2013

[^1]: 2013 ONSC paras. 80, 82 and 84.

[^2]: Ewart v. Higson-Smith, 2009 CanLII 38517 (ON SC), paras. 12 and 18.

[^3]: (1991), 1991 ABCA 330, 4 B.L.R. (2d) 174 (Alta. C.A.), pp. 178-9.

[^4]: (1997), 1997 CanLII 22815 (MB KB), 36 B.L.R. (2d) 54 (Man. Q.B.), para. 22.

[^5]: Global Resources Investment Ltd. (Re), 2013 LNBCSC 360, para. 3§11

[^6]: Sasko-Wainwright Oil & Gas Ltd. v. Old Settlers Oils Ltd. (1957), 1957 CanLII 288 (AB CA), 7 D.L.R. (2d) 393 (Alta. S. Ct., App. Div.); St. John v. HPY Industries Ltd., [1990] B.C.J. No. 2206 (B.C.S.C.)

[^7]: 2007 YKSC 21, para. 24.

[^8]: Shield Development Co. v. Snyder, 1975 CanLII 1589 (BC SC), [1976] 3 W.W.R. 44 (B.C.S.C.).

[^9]: Teck Corp. Ltd. v. Millar (1972), 1972 CanLII 950 (BC SC), 33 D.L.R. (3d) 288 (B.C.S.C.), paras. 86 and 91; Carter Oil & Gas Ltd. v. Inland Natural Gas Co., [1982] B.C.J. No. 1423 (B.C.S.C.), para. 30; Bernard v. Valentini (1978), 1978 CanLII 1316 (ON SC), 18 O.R. (2d) 656 (H.C.J.), para. 9.