A-572-80
Aldo Piccinin and Ginette Tremblay (Piclo Enrg.-
Piclo Reg'd) (Appellants) (Plaintiffs)
v.
The Queen (Respondent) (Defendant)
Court of Appeal, Pratte and Heald JJ. and
Lalande D.J.—Montreal, March 25; Ottawa,
April 16, 1981.
Crown — Contracts — Appeal from dismissal of action by
wholesale distributors of Loto Canada tickets for alleged
unlawful termination of their contract — Trial Judge held
that shareholder's resolution directing windup of operations
entitled Loto Canada to the benefit of art. 21 of the contract —
Article 21 provided that if any measure whatever was taken
under the Canada Business Corporations Act which would
result in the liquidation of Loto Canada then the contract
would be terminated — Whether "liquider" in art. 21 should
be interpreted to mean "liquidate and dissolve" — Appeal
dismissed — Canada Business Corporations Act, S.C. 1974-
75-76, c. 33, s. 204.
APPEAL.
COUNSEL:
D. W. Seal, Q.C. and L. Seidman for appel
lants (plaintiffs).
B. Bierbrier for respondent (defendant).
SOLICITORS:
Seal & Associés, Montreal, for appellants
(plaintiffs).
Deputy Attorney General of Canada for
respondent (defendant).
The following are the reasons for judgment
rendered in English by
HEALD J.: This is an appeal from a judgment of
the Trial Division [[1981] 1 F.C. 496] dismissing
the appellants' action against the respondent. In
that action, the appellants, wholesale distributors
of Loto Canada lottery tickets in the Montreal
area, claimed for losses and damages in the sum of
$184,000, said to result from the unlawful termi
nation by Loto Canada on December 31, 1979, of
their contract with Loto Canada for a term com
mencing April 1, 1979 and expiring on March 31,
1982. Under the contract, the appellants were to
be exclusive wholesale distributors of lottery tick
ets for Territory 34 as that Territory is more
particularly described in Annex "A" to the con
tract. Article 2 provides that the term of the
contract runs from April 1, 1979 to March 31,
1982, unless it is terminated earlier pursuant to
the provisions of the contract. Article 3 enables
Loto Canada to replace, reduce, enlarge or other
wise modify the appellants' territory without any
recourse by the appellants excepting the require
ment for prior notice and consultation by Loto
Canada. Article 4 gives the appellants exclusive
wholesaler rights in the territory but Loto Canada
reserves unto itself the absolute right to sell tickets
directly to retailers or clients within the territory,
without compensation to the appellants. Article
6(a) provides that Loto Canada will print the
lottery tickets at its expense and will also carry out
the distribution thereof. Article 13 provides that in
case of termination or non-renewal of the present
contract, the appellants do not have any right to
indemnity, reimbursement or damages against
Loto Canada for loss of earnings or expenses etc.
Article 17 provides that neither party to the con
tract is bound by declarations, promises or stipula
tions not expressly stated in the contract. Article
21, which in the view °of the learned Trial Judge,
was a "crucial" clause, provides that if Loto
Canada is liquidated by a law of the Parliament of
Canada, or a regulation passed, or any measure
whatever taken under the Canada Business Cor
porations Act, S.C. 1974-75-76, c. 33 which would
result in the liquidation of Loto Canada, then the
present agreement will be deemed to be terminat
ed, and the appellants will not be able to invoke
said contract in any claim against Loto Canada or
Her Majesty the Queen. At the trial, the respond
ent filed a document entitled "Unanimous Share
holders Resolution" (Exhibit Dl) certified by the
Corporate Secretary of Loto Canada to be a true
copy of a resolution passed on August 21, 1979 by
the sole shareholder of Loto Canada Inc. that sole
shareholder being the Minister responsible for
Loto Canada Inc. who held the sole share in trust
for Her Majesty the Queen. The resolution reads
as follows:
The Shareholder directs the Board of Directors of Loto Canada
Inc. to commence the orderly windup of the operations of the
Corporation effective as of the date hereof.
At the trial, the respondent (defendant) submitted
that said resolution was a measure taken under the
Canada Business Corporations Act which would
result in the liquidation of Loto Canada thus
entitling Loto Canada to the benefit of the provi
sions of article 21 referred to supra. The learned
Trial Judge accepted that submission and relied on
it as the sole basis for dismissing the appellants'
action. He stated that basis as follows [at page
499]:
Counsel for the defendant rightly claims that said resolution
is truly a "mesure quelconque" (any measure whatever) taken
under the above Act resulting in the liquidation of Loto
Canada. Under subsection 204(3) of the Canada Business
Corporations Act as amended [French version] "a corporation
may liquidate and dissolve by special resolution of the share
holders ...". It is clear therefore that a special resolution of the
shareholder of the Board of Directors of Loto Canada is a step
taken under the provisions of the Act which would liquidate
Loto Canada: the resolution directs the Board to commence the
orderly windup of the operations effective as of that date.
On that ground, therefore, plaintiffs are barred from claim
ing damages against Loto Canada or Her Majesty the Queen.
It is not necessary under the circumstances to deal with the
other grounds of defence advanced by the Crown in this matter.
Counsel for the appellants submitted that the
learned Trial Judge erred in so finding. Counsel
argued that because the respondent, in its amend
ed defence, characterized the shareholder's resolu
tion of August 21, 1979 as being passed "pursuant
to Section 204(3) of the Canada Business Corpo
rations Act," and because said subsection 204(3) 1
states that a corporation may liquidate and dis
solve by special resolution of the shareholders, that
therefore the word "liquider" as used in article 21
of the contract must be interpreted to mean
"liquider et dissoudre" or, in English, "to liqui
date and dissolve". Counsel further submitted that
the resolution under subsection 204(3) must clear
ly indicate the intent of the Corporation to
dissolve.
I do not agree with these submissions. In my
view it is necessary to read the provisions of sub
section (3) of section 204 in the context of the
various other provisions of section 204. When
viewed from that perspective, it is my opinion that
' Said subsection 204(3) reads as follows:
204... .
(3) A corporation may liquidate and dissolve by special
resolution of the shareholders or, where the corporation
has issued more than one class of shares, by special
resolutions of the holders of each class whether or not they
are otherwise entitled to vote.
the words "liquidation" and "dissolution" as used
in subsection (3) are not synonymous and should
not be so interpreted. Section 204 sets out the
procedure for voluntary liquidation and dissolution
of a corporation. The section is contained in Part
XVII of the Act which is entitled "Liquidation
and Dissolution". [Emphasis added.] Subsection
(4) of section 204 provides for the filing of a
statement of intent to dissolve with the Director.
This step was not taken, at all relevant times, in
the case at bar. Subsection (5) provides that the
Director shall issue a certificate of intent to dis
solve upon receipt of the statement of intention to
dissolve as contemplated in subsection (4).
Subsection (6) provides that: "Upon issue of a
certificate of intent to dissolve, the corporation
shall cease to carry on business except to the
extent necessary for the liquidation, but its corpo
rate existence continues until the Director issues a
certificate of dissolution." In my opinion, this sub
section shows clearly that the two terms are not
and should not be used synonymously or inter
changeably. Subsection (10) provides that at any
time after issue of a certificate of intent to dissolve
and before issue of a certificate of dissolution, the
corporation may send to the Director a statement
of revocation of intent to dissolve if such revoca
tion is also supported by a special shareholders'
resolution. Subsection (12) provides that upon
completion of the formalities set out in subsection
(11), the corporation may continue to carry on its
business. Subsection (16) provides that the corpo
ration ceases to exist on the date shown in the
certificate of dissolution issued by the Director
pursuant to subsection (15).
I thus conclude that section 204 treats liquida
tion as a preliminary step which may but does not
necessarily lead to the dissolution of the corpora
tion. Accordingly a Court would not be justified in
reading into article 21 of the contract a word such
as "dissolve" which, in the context of the appli
cable statutory provision, has a quite distinct,
separate and different meaning from the word
"liquidate" which is used in the clause under
review.
I therefore agree with counsel for the respondent
that the shareholders' special resolution of August
21 is the first step resulting in or leading to
liquidation of the corporation and as such is:
[TRANSLATION] "... any measure undertaken
pursuant to the Canada Business Corporations
Act, having the effect of liquidating Loto Canada
Inc...." as those words are used in article 21 of
the contract.
Appellants' counsel also referred to articles 1013
to 1021 inclusive of the Quebec Civil Code which
set out the rules relating to the interpretation of
contracts. However, it is my view that those provi
sions do not assist the appellants since I believe the
meaning of article 21 is not doubtful nor is it
susceptible of two meanings.
I have accordingly concluded that the learned
Trial Judge was not in error in deciding that the
operation of article 21 of the contract bars the
appellants' claim against Loto Canada or the
respondent.
At the hearing of the appeal, counsel for the
respondent advanced an additional argument in
support of his position that appellants' action
against the respondent cannot succeed. Shortly
stated, it was the respondent's submission that
Loto Canada Inc., in ceasing its lottery operations
with the draw ending December 31, 1979, was not
in breach of any obligation, express or implied,
contained in its contract with the appellants. I
agree with this submission and find it to be a good
and sufficient basis for affirming the decision of
the Trial Division, quite apart from the basis of
the applicability of article 21 of the contract which
was relied on by the learned Trial Judge. The
central position taken by the appellants was that
pursuant to the contract between the parties, Loto
Canada was legally obligated to sell and deliver
Loto Canada lottery tickets to appellants for the
three year term of the contract and by ceasing its
lottery operations with the sixteenth draw on
December 31, 1979, it had breached that contract.
It was the position of counsel for the appellants
that, whether Loto Canada wished to continue its
lottery operations or not, it was bound to do so for
a period of three years for the benefit of the
appellants or expose itself to an action in damages
for said breach. I cannot accept this submission. In
my opinion, a careful perusal of the terms and
conditions of the contract and the annexes thereto
do not support that view of the matter. The con
tract imposes no obligation on Loto Canada to
continue its lottery operations nor does it specify
the number of draws to be held during the term
thereof. It does not even give to the appellants the
exclusive right to sell tickets in Territory No. 34
since Loto Canada specifically reserved unto itself
the absolute right to sell lottery tickets directly to
retailers or consumers in Territory No. 34. What
the contract did give to the appellants was the
exclusive wholesaler rights to Territory No. 34.
Additionally, Loto Canada could, pursuant to the
contract, replace, reduce, enlarge or otherwise
modify the appellants' territory. I am satisfied that
there is nothing in the terms of the contract or the
annexes thereto, express or implied, which would
have the effect of imposing on Loto Canada a legal
obligation to continue having lottery draws
throughout the term of the contract. The contract
details the terms of the agreement between the
parties which governs their relationship in the
event of and so long as lotteries are held, but, in
my view, such provisions do not justify any infer
ence that Loto Canada has warranted or contract
ed to hold a specified number of draws or to hold
draws for the entire term of the contract, particu
larly so, in the absence of any specific provision to
that effect. It therefore follows that since Loto
Canada did not breach the contract, there can be
no remedy against it or the respondent for any
damages said to be sustained by the appellants.
For all the foregoing reasons, I would dismiss
the appeal with costs.
* * *
PRATTE J.: I agree.
* * *
LALANDE D.J.: I agree.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.