ONSC 3793

COURT FILE NO.: CV-14-10594-00CL

DATE: 20140625

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: Orange Capital, LLC, Applicant

AND:

Partners Real Estate Investment Trust and Kevin Vanamburg, Joseph Feldman, Marc Charlebois, Stephen Dulmage and Dexter D.S. John in their capacities as trustees of Partners Real Estate Investment Trust, Respondents

BEFORE: Justice H.J. Wilton-Siegel

COUNSEL: Orestes Pasparakis, Jennifer Teskey and John Picone, for the Applicant

R. Paul Steep and Shane C. D'Souza, for the Respondents

HEARD: June 23, 2014

ENDORSEMENT

[1] The Applicant, Orange Capital, LLC (“Orange”), seeks to replace the board of trustees (the “Board”) of Partners Real Estate Investment Trust (the “REIT”) at its annual and special meeting of unitholders scheduled for July 15, 2014 (the “Meeting”). The REIT contends that Orange is precluded from pursuing the election of its nominees because it has not complied with the REIT’s advance notice policy described below (the “Advance Notice Policy”). Absent intervention by this Court, the REIT has said that it will disallow Orange from nominating trustees for election to the Board.

[2] On this application, the Applicant seeks:

(a) a declaration that the Advance Notice Policy respecting the nomination of trustees for election to the board of trustees of the REIT is of no force or effect;

(b) in the alternative, a declaration that Orange has fully complied with the Advance Notice Policy and is entitled to nominate trustees for election to the board of trustees of the REIT at the Meeting; or

(c) in the further alternative, an order requiring the board of trustees of the REIT to waive or enjoin the board of trustees of the REIT from enforcing the Advance Notice Policy in respect of Orange's nominees.

[3] At the conclusion of the hearing, I advised the parties that the application was granted on the basis that Orange had complied with the Advance Notice Policy and that written reasons would follow, which are set out herein.

Factual Background

[4] The background to this proxy contest is the following.

The Parties

[5] The REIT is a real estate investment trust which currently owns (directly or indirectly) 42 retail properties located in British Columbia, Alberta, Manitoba, Ontario and Quebec, aggregating approximately 3.2 million square feet of leasable space.

[6] The REIT is governed by the Board pursuant to a declaration of trust dated March 27, 2007, as amended and restated, which governs the affairs of the REIT (the “Declaration of Trust”).

[7] The REIT is publicly traded on the Toronto Stock Exchange (the “TSX”). As of June 17, 2014, the REIT has 27,256,502 issued and outstanding units and 4,813,517 issued and outstanding special voting units. All REIT units are entitled to one vote. As of the close of trading on June 17, 2014, the REIT's units were trading at a price of $4.88.

[8] Orange is a New York-based investment firm. It currently owns 1,000 units of the REIT, representing approximately 0.0003% of the REIT's issued and outstanding units.

The Advance Notice Policy

[9] On April 8, 2013, the Board unanimously resolved to amend the Declaration of Trust to include the Advance Notice Policy, which forms Appendix A to the Declaration of Trust.

[10] The Board did not submit the Advance Notice Policy for approval of the Unitholders by Special Resolution at the next annual and general meeting of the Unithholders, which was held on June 6, 2013, and do not propose to do so at the Meeting. Accordingly, the Board relies on the provisions of sections 11.1(b)(ii) and 11.1(c) as its authority for enacting the Advance Notice Policy. No member of the current Board was a member of the Board on April 8, 2013.

[11] The relevant provisions of the Advance Notice Policy are as follows:

1. Only persons who are nominated in accordance with the provisions set out below (the "Nomination Provisions") and otherwise in accordance with the other provisions of the Declaration of Trust shall be eligible for election as trustees of the Trust. Nominations of persons for election as trustees of the Trust may be made at any annual meeting of unit holders (or at any special meeting of unit holders if one of the purposes for which the special meeting was called was the election of trustees) only as follows:

(a) by or at the direction of the Trustees, including pursuant to a notice of meeting;

(b) by or at the direction or request of one or more unit holders pursuant to subsection 12.1(3) of the Declaration of Trust [which pertains to a Unitholder requisition and is not applicable]; or

(c) by any person (a "Nominating Unitholder"): (A) who, at the close of business on the date of the giving of the notice provided for in section 2 of these Nomination Provisions and on the record date for notice of such meeting, is entered in the securities register of the Trust as a holder of one or more units of the Trust carrying the right to vote at such meeting or who beneficially owns units that are entitled to be voted at such meeting; and (B) who complies with the notice procedures set forth below in these Nomination Provisions.

2. In addition to any other applicable requirements, including the notice provisions under subsection 17.1(2) of the Declaration of Trust, for a nomination to be made by a Nominating Unitholder, the Nominating Unitholder must have given timely notice thereof in proper written form addressed to "The Chairman of the Trustees of Partners REIT – Private and Confidential" at the principal office of the Trust in accordance with these Nomination Provisions.

3. To be timely, a Nominating Unitholder's notice to the Chairman of the Trust must be made:

(a) in the case of an annual meeting of unit holders, not less than 30 nor more than 65 days prior to the date of the annual meeting of unit holders; provided, however, that in the event that the annual meeting of unit holders is called for a date that is less than 50 days after the date (the "Notice Date") on which the first Public Announcement (as defined below) of the date of the annual meeting was made, notice by the Nominating Unitholder may be made not later than the close of business on the tenth (10th) day following the later of (i) the Notice Date and (ii) the first Public Announcement of the amendment to the Declaration of Trust pursuant to which these Nomination Provisions became part of the Declaration of Trust; …

In no event shall any adjournment or postponement of a meeting of unit holders or the announcement thereof commence a new time period for the giving of a Nominating Unitholder's notice as described above.

The Calling of the Meeting

[12] On April 21, 2014, the REIT filed notice of its 2014 annual and special meeting on June 26, 2014 with a record date of May 16, 2014. The REIT takes the position that, pursuant to the terms of the Advance Notice Policy, any nominations for trustees were due between April 22, 2014 and May 27, 2014 (i.e. between 65 and 30 days prior to June 26, 2014). The position of Orange on this issue is discussed below. The REIT did not receive any such nominations by May 27, 2014.

[13] On May 29, 2014, the REIT postponed the date of the Meeting from June 26 to July 15, 2014 and maintained the record date of May 16, 2014. The circumstances that led to this postponement are described below.

[14] The REIT says that the postponement occurred for reasons entirely unrelated to the announcement of Orange on May 28, 2014 that Orange intended to nominate trustees for election at the Meeting. It also says that, on May 29, 2014 when the Board postponed the Meeting, the Board believed that the election of trustees at the Meeting could not be contested at the Meeting because the REIT had not received any nominations in accordance with the Advance Notice Policy.

[15] In reaching this conclusion, the Board relied on the provisions of the proviso at the end of section 3 of the Advance Notice Policy (the “Proviso”), which provides that any adjournment or postponement of a meeting of unitholders, or the announcement thereof, does not commence a new time period for the purposes of the giving of notice of an intention to nominate trustees.

The Holyrood Transaction

[16] The following description of the Holyrood Transaction and of Orange's activities directed towards acquiring control of the REIT are background to the current proxy fight.

[17] On April 2, 2014, the REIT announced that it had entered into an agreement with Holyrood Holdings Ltd. (“Holyrood”) to implement a transaction under which the REIT would purchase three retail centers from Holyrood in exchange for 18.7% of the REIT’s units (the “Holyrood Transaction”).

[18] Following this announcement, Orange raised concerns with the REIT regarding the Holyrood Transaction, given the connection between the interim chief executive officer of the REIT and Holyrood. On April 23, 2014, the REIT announced that it had closed the Holyrood Transaction.

[19] On May 1, 2014, Orange issued a press release regarding the Holyrood Transaction in which it questioned whether the REIT’s interim chief executive officer and the vendor’s owner were related parties.

[20] At or about this time, the REIT retained independent counsel to re-examine the issue, which had been considered earlier at the time of execution of the agreement respecting the Holyrood Transaction. The REIT says that material new information subsequently came to the attention of the REIT and its advisers which caused the REIT to conclude that unwinding the Holyrood Transaction was in the best interests of the unitholders. On May 4, 2014, the REIT announced that it would pursue an unwinding of the Holyrood Transaction. It also announced that the chief executive officer of the REIT would resign. The REIT also offered Orange one seat on the Board at that time, which Orange rejected.

[21] On May 6, 2014, the TSX advised the REIT that it would not have allowed the Holyrood Transaction to close without unitholder approval if it had known of the chief executive’s officer’s interest in the Holyrood Transaction. The TSX further advised that it:

… would not be approving any further transactions of the REIT until the Compliance and Disclosure department of the TSX has completed a review of the REIT and is satisfied that the business of the REIT can be conducted in compliance with the rules and regulations of the TSX, as well as the best interests of the REIT's security holders and the investing public.

[22] The REIT disclosed this matter on page 15 of its Management Discussion and Analysis dated May 15, 2014, in which it also stated that it had been advised by the TSX that the TSX had logged this matter as an incident of significant non-compliance that would also be reported to the Ontario Securities Commission.

[23] On May 6, 2014, the REIT also announced that it would be undertaking a strategic review process.

[24] The Board determined to postpone the Meeting after its discussions with the TSX regarding the Holyrood Transaction. On May 13, 2014, the REIT announced that it had requested that the TSX consider a request for an extension of the date of the Meeting from June 26, 2014 to July 31, 2014.

[25] On May 29, 2014, as mentioned, the REIT announced that the date of the Meeting would be July 15, rather than July 31. The press release of the REIT on May 29, 2014 announcing the postponement stated the following:

[The REIT] today announced that following discussions with the Toronto Stock Exchange the REIT will postpone its annual unitholder meeting from June 26 to July 15, 2014. The postponement will allow more time for details surrounding the unwinding of the April 2014 transaction with Holyrood Properties to be provided. As previously announced, the record date for unitholders to be eligible to vote their units at the meeting remains May 16, 2014.

[26] On June 6, 2014, the REIT announced that it had executed a definitive agreement to rescind the Holyrood Transaction.

The Activities of Orange to Acquire Control of the REIT

[27] In November, 2013, Orange unsuccessfully sought to acquire control of the REIT by the acquisition of a holding of 3,872,863 units of the REIT that represented approximately 14.95% of the REIT’s issued and outstanding units (and the single largest block of REIT units).

[28] In April, 2014, Orange offered to purchase $15,000,000 of convertible securities, subject to the immediate appointment of three new trustees, of which one was to be nominated by Orange, and voting rights equivalent to 15% of the outstanding units. The REIT rejected this offer in favour of a more conventional financing proposal with a third party, announced on May 13, 2014, which did not involve the issue of convertible securities, voting rights, or the appointment of new Trustees.

[29] On May 28, 2014, Orange issued a press release announcing that it intended to propose trustees to be elected to the Board at the Meeting. At the same time, Orange announced a tender offer to purchase up to 10% of the issued and outstanding units of the REIT described below (the “Orange Offer”).

[30] Pursuant to the Orange Offer, Orange offered to purchase up to 10% of the units of the REIT for $5 per unit from unitholders that held units of the REIT on the record date for the Meeting. At the close of trading on May 27, the trading price of the REIT’s units was $4.67. The Orange Offer requires that tendering unitholders appoint Orange as their nominee and proxy for all deposited units, even though Orange may not ultimately purchase all of the units tendered to the extent that the Orange Offer is oversubscribed. The Orange Offer further provides mechanics that permit unitholders whose units are not taken up under the Orange Offer to withdraw their proxies in favour of Orange if they so choose.

[31] The press release of Orange on May 28, 2014 stated the following:

Orange Capital intends to mail a proxy circular (the “Circular”) to all unitholders, including those whose proxies will be requested in accordance with the Premium Tender. The Circular will provide required disclosures to permit unitholders to make an informed decision, including details on Orange Capital’s trustee nominees for election to the board of Partners REIT.

[32] On June 3, 2014, Orange issued a further press release regarding the Orange Offer and its plans to nominate trustees for election at the Meeting which included the following:

In addition to the Premium Tender, Orange Capital will be mailing a proxy circular (the “Circular”) to all unitholders in respect of Partners REIT’s upcoming July 15, 2014 annual and special meeting (the “Meeting”) and will be nominating trustees for election at the Meeting in accordance with the REIT’s procedures. Orange Capital will be providing further details on its proposed trustee nominees shortly.

[33] On June 4, 2014, the REIT filed a complaint with the Ontario Securities Commission (the “OSC”) regarding the Orange Offer, setting out a number of terms that it believed were abusive to the capital markets and the REIT’s investors.

[34] On June 6, 2014, Orange provided the chairman of the Board with formal notice that it was nominating five named individuals to be eligible for election to the Board at the Meeting to be held on July 15, 2014, or any postponement or adjournment thereof.

[35] On June 9, 2014, following discussions with Staff of the OSC, Orange issued a press release indicating that it had revised certain terms of the Orange Offer and extending the Offer until June 24, 2014 to ensure sufficient time for Orange’s proxy circular, prepared in connection with the Meeting, to be disseminated and received by unitholders in advance of this new deadline.

[36] On June 10, 2014, Orange announced that it had provided notice to the Board of its nomination of the five individuals it intended to nominate for election at the Meeting and mailed its proxy circular to unitholders.

[37] On June 10, 2014, the REIT issued a press release stating its position that Orange had not complied with the Advance Notice Policy:

The Board of Trustees notes that Orange Capital announced the names of five individuals that it would like to nominate for election to the Board of Trustees and stated that it will file a proxy circular. ...

The REIT, like very many public companies, in both Canada and the U.S., has advance notice requirements if a unitholder wants to nominate trustees at a meeting. There are good reasons for these notice requirements, primarily, so the company and its owners have notice of a contest for control of the business. For whatever reason, Orange Capital has not complied with your REIT’s advance notice requirements.

Accordingly, it is the REIT’s position that Orange Capital is not entitled to nominate trustees at the July 15, 2014 annual unitholder meeting. We expect Orange Capital may challenge that position, but the REIT will defend it. These provisions of the REIT’s Declaration of Trust, which governs all aspects of the REIT, have been in force for well over a year. Orange Capital and its advisors are aware of this and the fact that they have missed the deadline, yet they insist on continuing down a futile path and forcing unnecessary costs on the REIT and its unitholders.

Issues On This Application

[38] As mentioned, Orange raises three issues on this application:

1. whether the Advance Notice Policy is invalid because it has not received the approval of the unitholders of the REIT as required by the Declaration of Trust;

2. in the alternative, if the Advance Notice Policy is valid, whether Orange has complied with its terms; and

3. in the further alternative, even if the Advance Notice Policy is valid and Orange has not complied with its terms, should unitholders nevertheless be permitted to consider Orange’s nominees at the Meeting.

A critical issue on this application is the interpretation of the Proviso and its operation in the present circumstances. I will therefore address this issue first before addressing the disposition of the three issues raised by Orange.

The Interpretation of the Proviso

[39] For purposes of the interpretation of the Proviso, the relevant provisions of section 3(a) of the Advance Notice Policy are the following:

3. To be timely, a Nominating Unitholder’s notice to the Chairman of the Trust must be made:

(a) in the case of an annual meeting of unit holders, not less than 30 nor more than 65 days prior to the date of the annual meeting of unit holders; provided, however, that in the event that the annual meeting of unit holders is called for a date that is less than 50 days after the date (the “Notice Date”) on which the first Public Announcement (as defined below) of the date of the annual meeting was made, notice by the Nominating Unitholder may be made not later than the close of business on the tenth (10th) day following the later of (i) the Notice Date and (ii) the first Public Announcement of the amendment to the Declaration of Trust pursuant to which these Nomination Provisions became part of the Declaration of Trust …

In no event shall any adjournment or postponement of a meeting of unit holders or the announcement thereof commence a new time period for the giving of a Nominating Unitholder’s notice as described above.

Applicable Legal Principles

[40] The REIT, including the rights and obligations of the unitholders, is governed by the Declaration of Trust, rather than a corporate statute. The Declaration of Trust is a contractual document which therefore must be construed in accordance with traditional principles of contractual interpretation.

[41] The applicable principles of contractual interpretation were set out by Blair J.A. in Ventas, Inc. v. Sunrise Senior Living Real Estate Investment Trust, 2007 ONCA 205, 85 O.R. (3d) 254, at para. 24 which held that a commercial contract was to be interpreted:

(a) as a whole, in a manner that gives meaning to all of its terms and avoids an interpretation that would render one or more of its terms ineffective;

(b) by determining the intention of the parties in accordance with the language they have used in the written document and based upon the "cardinal presumption" that they have intended what they have said;

(c) with regard to objective evidence of the factual matrix underlying the negotiation of the contract, but without reference to the subjective intention of the parties; and (to the extent there is any ambiguity in the contract),

(d) in a fashion that accords with sound commercial principles and good business sense, and that avoid a commercial absurdity.

[42] In respect of the last principle, dealing with the interpretation of ambiguous contracts, Lamb V.C. of the Delaware Court of Chancery expressed the view in Openwave Systems Inc. v. Harbinger Capital Partners Master Fund I, Ltd., C.A. No. 2690-VCL at p. 20 that, if the language of a corporate by-law is found to be ambiguous, “doubt is resolved in favor of the stockholders’ electoral rights.” I think that the same approach is appropriate in the present context of the interpretation of the Declaration of Trust.

The Positions of the Parties

[43] The parties advance competing interpretations of the operation of section 3 in the event of an adjournment or postponement that triggers the Proviso.

The REIT

[44] The REIT interprets section 3 such that, once a meeting is announced, a unitholder must nominate trustees within a window of not less than 30 and not more than 65 days prior to the scheduled meeting date. It reads the Proviso to provide that, once such nomination window is established based on the originally scheduled meeting date, it is unaffected by any adjournment or postponement of the originally scheduled meeting date.

[45] On this interpretation, the nomination window was established when the Meeting was scheduled for June 26, 2014, the nomination window therefore being between April 22, 2014 and May 27, 2014, and the subsequent decision to move the date of the Meeting did not affect the period for nominations.

Orange

[46] Orange says that it is the actual date of the meeting that triggers the nomination window – not the originally scheduled date of the meeting. In support of its position, it relies on the wording in the Advance Notice Policy that requires that nominations must be made “not less than 30 nor more than 65 days prior to the date of the annual meeting of unitholders”. It says that the purpose of the Proviso is to ensure that a timely nomination does not become “stale” as a result of an adjournment or postponement, thereby relieving a nominating unitholder from having to repeat the nomination process.

[47] On this interpretation, if the Meeting proceeds as planned on July 15, 2014, the nomination window is May 11, 2014 to June 15, 2014. Orange says that its notice of May 28, 2014 was therefore timely because it fell within this window.

[48] In short, Orange says that the purpose of the Proviso is to protect nominations that are already the subject of a notice under the Advance Notice Policy at the time of any postponement or adjournment of a scheduled meeting whereas the REIT submits that the purpose of the proviso is to provide certainty to the REIT and its unitholders regarding any nominations for trustees that are to come before a unitholder meeting in the event of any postponement or adjournment, as well as to allow the REIT to concentrate on its own affairs during the interim, by excluding any further nominations.

Analysis and Conclusions

[49] I am of the opinion that both the plain meaning and the policy behind advance notice by-laws favour the interpretation of the Proviso proposed by Orange. In addition, I conclude that, insofar as the Proviso may be said to be ambiguous, it should be interpreted in such manner to reflect the commercially sensible result, in this case, the result that weighs in favour of unitholder voting rights. I will address each issue in turn.

[50] First, on the plain wording of the provision, section 3(a) clearly sets the “date of the annual meeting” as the trigger for giving notice, not the original scheduled date of the meeting. The REIT’s interpretation requires that we ignore the words “date of the annual meeting” and replace them with the words “scheduled date of the annual meeting”. However, section 3(a) refers to the "date of the annual meeting" as the trigger for the giving of notice, rather than the “scheduled date” for the meeting, or, more importantly, the date on which the meeting is "called". This latter concept is embodied in the language of section 3(a) in respect of an annual meeting called for a date that is less than 50 days after the notice date. If it had been intended that the same concept was to apply in respect of meetings called 50 days or more from the notice date, the Declaration of Trust would have used that language.

[51] This interpretation addresses a substantive issue that would otherwise be unclear from the language of section 3(a) of the Advance Notice Policy. If a scheduled meeting were postponed or adjourned beyond the timelines established in the Advance Notice Policy pertaining to any notice previously given to the REIT under the Policy, there would be a legitimate question regarding the effect of the postponement or adjournment on a notice already delivered. The Proviso removes the need for the unitholder to give a further notice in order to preserve its right to nominate its nominees at the meeting in the event the date of the unitholder's notice falls outside the timelines of the Advance Notice Policy based on the re-scheduled date. I am not persuaded that the Proviso is redundant in the context of section 3(a) when read in its entirety.

[52] Second, Orange’s interpretation also accords with the purpose of the Advance Notice Policy. Advance notice by-laws seek to ensure that management and unitholders have sufficient notice of a challenge for control of the business before the vote takes place. As the REIT observes, courts have upheld the validity of advance notice bylaws on the basis that they further such purpose as well as facilitating orderly and efficient meetings. For example, in Openwave at p. 19, Lamb V.C. stated:

Advance notice bylaws, provisions that require stockholders to provide the corporation with prior notice of their intent to nominate directors along with information about their nominees, are “commonplace.” Such bylaws are designed and function to permit orderly meetings and election contests and to provide fair warning to the corporation so that it may have sufficient time to respond to shareholder nominations. Advance notice bylaws are often construed and frequently upheld as valid by Delaware courts. [Citations omitted.]

[53] The British Columbia Supreme Court endorsed the same view in Northern Minerals Investment Corp. v. Mundoro Capital Inc., [2012] B.C.J. No. 1544 at paras. 47 and 53:

… the Policy in fact ensures an orderly nomination process and that the shareholders are informed in advance of an AGM what is in issue. In doing so the Policy prevents a group of shareholders from taking advantage of a poorly attended shareholders meeting to impose their slate of directors on what could be a majority of shareholders unaware of such a possibility arising …

[54] Advance notice policies are intended to be a shield to protect shareholders or unitholders, as well as management, from ambush; they are not intended to be a sword in the hands of management to exclude nominations given on ample notice or to buy time to develop a strategy for defeating a dissident shareholder group.

[55] In this context, it is significant that the Orange interpretation furthers these objectives whereas the REIT's interpretation does not. The REIT's interpretation would exclude a nomination that occurred after the initial nomination window closed notwithstanding that the timelines within section 3(a) of the Advance Notice Policy were complied with. Moreover, under the REIT's interpretation, no further nominations could occur even if a shareholder meeting were postponed or adjourned by reason of a material development in the affairs of an issuer that might well call into question the appropriateness of the existing directors and management. Further, in the circumstances of a meeting that was originally given on short notice and then postponed or adjourned, under the REIT's interpretation, unitholders will have a nomination window of only ten days notwithstanding that a longer period might become available upon the postponement or adjournment.

[56] The REIT argues that its interpretation allows unitholders to know definitively at the end of the notice period what nominations will be before a unitholder meeting, even if it is postponed. While true, it is not clear that this entails any real benefit to the unitholders. There is no demonstrable need for unitholders to have advance knowledge of nominations contemplated for a future meeting for any period beyond the 30-65 day period contemplated by section 3(a). Conversely, to the extent such timelines are satisfied in respect of an adjourned or postponed meeting, I see no benefit in the "definitive knowledge" at the end of the nomination period that the REIT says is the protection that its interpretation gives a unitholder.

[57] The REIT also argues that fixing the nomination window in the manner contemplated by its interpretation of the Proviso also has the benefit to the REIT of allowing it to concentrate on its own more immediate business and to avoid the distractions of an unnecessary proxy contest. Most issuers regard a proxy contest as an unnecessary distraction. It is for the unitholders or shareholders to make that determination in any particular situation, not management.

[58] Third, to the extent there is any ambiguity regarding the operation of the Proviso in the present circumstances, it is well established in the case law that the Court should have regard to the more commercially reasonable interpretation. As mentioned above, in my view, in the context of the interpretation of a declaration of trust of a business trust that has public unitholders, the commercially reasonable interpretation is that which is resolved in favour of unitholder voting rights. In my view, for the policy reasons expressed above, the more commercially reasonable interpretation is that the Proviso operates to prevent a timely nomination from becoming stale as a result of an adjournment or a postponement of a scheduled meeting date.

Compliance with the Advance Notice Policy

[59] On the assumption that the Advance Notice Policy is valid and enforceable, Orange argues that it has complied with the terms of the Advance Notice Policy for the election of its nominees at the Meeting by giving timely notice under the Policy.

[60] Given the Court's determination regarding the proper interpretation of the Proviso, I agree with Orange. The postponed date of the Meeting is July 15, 2014. Orange gave notice under the Advance Notice Policy or before June 10, 2014, which is 37 days prior to the scheduled date for the Meeting.

[61] The REIT raises one further issue that must be addressed in regard to the operation of section 3(a). It argues that Orange missed the nomination deadline even under its own interpretation because, as of May 27, 2014, the only meeting scheduled was the meeting scheduled for June 26, 2014. I do not think this is correct.

[62] The REIT would be correct if it had not postponed the Meeting until July 15, 2014. In such event, the relevant date for the purposes of section 3(a) would have been June 26. However, the Board chose to postpone the Meeting to July 15, 2014 (I disregard the initial announcement of a date of July 31, 2014 as it is not relevant for present purposes.) Notice of this change of date was given on May 29, 2014. As mentioned, Orange gave notice 37 days before the Meeting and therefore satisfied the timelines in section 3(a) of the Advanced Notice Policy.

[63] Based on the foregoing, I conclude that Orange is entitled to a declaration that, even if the Advance Notice Policy is valid and enforceable, Orange has complied with the Policy.

Validity of the Advance Notice Policy

[64] In view of the foregoing conclusion, it is not necessary to address the alternative argument of Orange that the Advance Notice Policy is invalid and unenforceable given the decision of the Board not to seek unitholder approval of the Policy by means of a Special Resolution. After discussion with counsel at the conclusion of the hearing, I have not addressed this issue.

Waiver of the Advance Notice Policy

[65] The Board considered whether to waive the Advance Notice Policy for Orange, and has resolved not to do so. The REIT submits that this decision was reasonable and that the Court should defer to the Board in the operation of the business judgment rule. Orange submits that the operation of the Advance Notice Policy in the present circumstances is not fair and equitable and that the Court should order the Board to waive the Advance Notice Policy, or enjoin the Board from enforcing it, in respect of Orange’s nominees.

[66] In view of the decision above regarding Orange's compliance with the Advance Notice Policy, it is not necessary to address this issue and I therefore decline to do so in view of the time constraints of the parties regarding a decision on this application.

Costs

[67] The issue was a novel one. In addition, Orange offers no explanation for its failure to comply with the timelines in the Advance Notice Policy prior to the postponement of the Meeting notwithstanding that it had ample notice of the terms of the Policy. In these circumstances, I think each party should bear their own costs of this application.

Wilton-Siegel J.

Date: June 25, 2014