Ziegler v Green Acres (Pine Lake) Ltd, 2013 ABQB 349

Court of Queen ’ s Bench of Alberta Citation: Ziegler v Green Acres (Pine Lake) Ltd, 2013 ABQB 349 Date: 20130617 Docket: 1201 13568 Registry: Calgary Between: CRYSTAL ZIEGLER as Personal Representative of Estate of GARTH CHARLES ZIEGLER, CRYSTAL ZIEGLER in her personal capacity and ABIGAIL LEE ZIEGLER BY HER NEXT FRIEND CRYSTAL ZIEGLER Plaintiffs/Respondents - and - GREEN ACRES (PINE LAKE) LTD., DANNY FISHER and LEXY FISHER Defendants/Applicants _______________________________________________________ Memorandum of Decision of the Honourable Mr.

Justice KD Yamauchi _______________________________________________________ I. Introduction [ 1 ] This matter comes before this Court by way of a special chambers application, in which the parties seek to have this Court make a ruling on the

interpretation of paragraph 11.01 which is contained in a unanimous shareholder agreement dated effective August 31, 2003 (the “ USA ” ). Although much of the USA para 11.01 deals with what flows when certain triggering events occur, it is useful for this Court to transpose that entire paragraph into these reasons. USA para 11.01 provides:

In the event that sickness, accident or disability afflict and prevent any shareholder or principal shareholder from continuing active full time employment with the corporation (hereinafter referred to as the "Afflicted Shareholder"), the parties agree that for the first six (6) months of inability to continue active full time employment, the Afflicted Shareholder shall be paid the same remuneration monthly as he would otherwise be paid if he had continued active full time employment with the Corporation.

In the event that the Afflicted Shareholder remains unable to return to active full time employment for a period in excess of twelve (12) months from the date of the affliction, the other shareholders (hereinafter referred to as the "Non-afflicted Shareholders") may serve notice on the Afflicted Shareholder of intention to purchase the Afflicted Shareholders' shares in the same proportion as the respective holdings of shares in the Corporation of the Nonafflicted Shareholders.

In the event that the foregoing notice is not served on the Afflicted Shareholder and he remains unable to return to active full time employment for a period of two (2) years from the date of the affliction, such Afflicted Shareholder may serve notice on the Nonafflicted Shareholders requiring them to purchase the Afflicted Shareholder's shares in the same proportion as the respective holdings of shares in the Corporation of the Non-afflicted Shareholders.

In the event of a notice given as aforesaid by the Afflicted Shareholder or the Non-afflicted Shareholders, as the case may be, the Afflicted Shareholder shall thereafter sell to the Non-afflicted Shareholders all of the Afflicted Shareholder's shares in the same proportion as the respective holdings of shares in the Corporation of the Non-afflicted Shareholders, for a purchase price equal to the value of such shares as determined in accordance with the provisions of

Article 9.05. The Closing Date for such purchase and sale shall be thirty (30) days after the date that the purchase price is so determined and the provisions of

Article 9.04 and

Article 9.05 shall apply mutatis mutandis to the closing of such purchase and sale. II. Background [ 2 ] In an order which he granted on December 5, 2012, Jeffrey J directed that the matter before this Court be determined by way of agreed facts. The parties presented this Court with a statement of agreed facts dated June 29, 2012 ( “ Agreed Statement ” ). The parties filed the Agreed Statement on July 13, 2012. The following are those agreed fact taken verbatim from the Agreed Statement: 1.

The Defendant, Green Acres (Pine Lake) Ltd. ("Green Acres"), is an Alberta business corporation that owns and operates a 124.9 acre campground on Pine Lake in central Alberta. In addition, Green Acres is the operator of the provincially owned campground on Gull Lake known as Aspen Beach Provincial Park under a lease that expires on March 31 st , 2013. 2. The Green Acres campground has been in the Fisher family since 1949. Green Acres was incorporated and became the owner and operator of the Pine Lake campground in 1975.

The Defendant, Danny Fisher, became a Director and Shareholder of Green Acres in 1977, and has been President since 1988. 3. In 1990, Danny Fisher married Lexy Fisher. In 1993 they became the only directors and shareholders of Green Acres. 4. Their two sons, Justin Ziegler and Garth Ziegler, became actively involved with the work and operations of the campground from an early age. 5. In 2000, the Green Acres campground was severely damaged in a tornado. All of these 4 family members worked hard to rebuild the campground. 6.

In 2003, Green Acres embarked on a corporate restructuring and estate freeze for the Fishers. The initial terms of the restructuring were set out in a letter dated July 28, 2003 from Green Acres ’ accountants, Collins Barrow, to Green Acres ’ solicitor, Gerald Neufeld. 7. In this time frame, the shareholders of Green Acres were provided with a form of draft Unanimous Shareholders Agreement that was never executed. 8.

The shareholders of Green Acres (Danny Fisher, Lexy Fisher, Justin Ziegler, and Garth Ziegler) did execute the Unanimous Shareholders Agreement, effective as of August 31, 2003, that is the subject of these proceedings (the "USA").

9. The terms of the restructuring were clarified by a letter dated September 9, 2003 from Collins Barrow to Gerald Neufeld. 10. By letter dated December 16, 2003 from Gerald Neufeld to Green Acres, the completion of the corporate restructuring was explained in detail. 11. As a result of the restructuring, the Articles of Green Acres were amended, and later corrected after the restructuring. Danny Fisher and Lexy Fisher continued at all times as the only two directors of Green Acres. 12. As part of the restructuring, Justin Ziegler and Garth Ziegler were each issued 24 Class "D" shares of Green Acres. 13.

On October 23 rd , 2004, Garth Ziegler and the Plaintiff, Crystal Ziegler (now Crystal Small) had a daughter, the Co-Plaintiff Abigail Lee Zeigler [ sic ]. Garth Ziegler and Crystal had been dating since July of 2003. In March of 2005, Garth Ziegler married the Plaintiff Crystal Ziegler. Garth and Crystal Ziegler resided together at the campground. In a tragic accident, Garth Ziegler was killed on May 29, 2005. 14. Following Garth Ziegler's death, Green Acres continued to pay Crystal Ziegler a bi-weekly payment of $1,600.00 per month, being an amount equivalent to Garth Ziegler's salary.

Green Acres continued the bi-weekly payment for 1 year, up to May of 2006. 15. On August 3rd, 2006, Green Acres issued Crystal Ziegler a Notice of Intention to Purchase Shares for the 24 Class D Shares pursuant to paragraph 11.01 of the USA. By letter dated September 1 st , 2006 counsel for the Plaintiffs disputed the efficacy of the Notice. 16. On May 7, 2008, Justice Hughes granted an Order denying the Plaintiff ’ s application for discovery of Gerald Neufeld. 17.

On June 25, 2009, Justice Kent issued an Order allowing the application of the Plaintiff to admit the unsigned Draft Unanimous Shareholders Agreement as evidence in this action. 18. On October 13, 2011, The Court of Appeal removed an attachment order from the campground lands that had been obtained by the Plaintiff. [ 3 ] Attached to the Agreed Statement were many of the documents to which the Agreed Statement referred. III.

Issue [ 4 ] The only issue that is before this Court is whether the Plaintiffs are required to sell the 24 Class D shares standing in the name of Garth Ziegler ( “ Garth ” ) to the remaining shareholders (or those who choose to purchase their proportionate share of those shares) in accordance with USA para 11.01. The answer to this question depends, in part, on this Court ’ s determination of whether “ death ” is a triggering event, as contemplated by the USA para 11.01. IV. Discussion [ 5 ] This matter comes before this Court not as an intellectual exercise in contract

interpretation. The Respondents might choose to retain the shares. Or, the Respondents might choose to dispose of the shares. If the Respondents choose to dispose of the shares, the value of the shares might be different depending the methodology that the share valuator uses when conducting that valuation.

[6] Under the USA, it is the auditors or accountants of Green Acres (Pine Lake) Ltd. (“Green Acres”) who value the shares,“when preparing the annual financial statements”: USA para 9.05(a). It appears that Green Acres’ auditors or accountants are required tovalue the shares annually.

If an event occurs that requires or allows a shareholder to divest themself of their shareholdings in GreenAcres, Green Acres’ auditors or accountants are required to do the following: ... to revalue the shares in a manner consistent with the original valuation and the new valuation so prepared will govern for the purposesof this agreement during the subsequent year. Strangely, the USA does not tell us anything about how Green Acres’ auditors or accountants are to do the valuation in the first place,but, in any event, they are the ones who do it.

Perhaps they have already established a methodology that the shareholders havehistorically accepted. That evidence is not before this Court. [7] If this Court were to rule that death is not a triggering event under USA para 11.01, then a different type of valuation willhave to take place. As the parties know, there are many different ways in which shares in a closely-held corporation are valued.

Theyhave not asked this Court to rule on this issue, and readily acknowledge that any such valuation might form the subject-matter of aseparate application, depending on how this Court rules on the issue before it. [8] For the sake of clarity, the Applicants are the Defendants in this action, being Green Acres and Danny and Lexy Fisher.The Respondents are the Plaintiffs, being Crystal Ziegler in her personal and representative capacities. [9] Quite simply, the Applicants seek to have this Court find that “death” is included in USA para 11.01.

If this Court so rules,the parties will use the procedure contained in that paragraph for the Respondents’ compulsory sale of Garth’s 24 Class D shares. [10] The Applicants make a number of different arguments in support of their position. Although one or more of those argumentsmight determine the result of this application, this Court will examine each of those arguments. [11] The word “death” is not in USA para 11.01.

In many unanimous shareholder agreements, a shareholder’s death triggers acompulsory disposition in favour of the corporation or the remaining shareholders at a price fixed by the terms of the agreement orthrough a methodology set forth in the agreement. Practically, this would make the unanimous shareholder agreement a testamentaryinstrument.

However, if death does not trigger a compulsory disposition, the shares would fall within the deceased’s estate anddistributed or sold as the personal representative or the holder of letters of administration sees fit, or is able to negotiate. [12] There are general principles that this Court must apply when dealing with the issue that is before it. The words that thecontracting parties have used in their contract form the foundation on which this Court must build its

interpretation house. The words thatthe contracting parties use assist the court in determining the parties’ objective intention: Nexxtep Resources Ltd v Talisman EnergyInc, 2013 ABCA 40 at para 22, 226 ACWS (3d) 275 [Nexxtep]. If the words in the contract are clear and unambiguous, extrinsicevidence is not admissible: Nexxtep at para 20.

This is in keeping with the general principle that where there is no ambiguity, the courtmust give the words their literal or plain, ordinary meaning: North Eastern Ry Co v Hastings, [1900] AC 260 at 263 (HL); AlbertaTreasury Branches v MacLeod Dixon, 2001 ABQB 73 at para 32, 283 AR 4; Matthison v RA Bradburn Enterprises Inc, 2004 ABQB485 at para 31, 360 AR 266, aff'd, 2007 ABCA 173 , [2008] 1 WWR 383 (CA); Suncor Inc v Norcen Int. Ltd, (AB KB), 1988 CarswellAlta 630 at paras 92-94, 89 AR 200 (QB).

In Merrill Petroleums v Seaboard Oil (1957), (AB KB), 22 WWR 529 at 550 (Alta SC), Egbert J said: …The cardinal principle of the construction of contracts is that each word must have assigned to it its plain, ordinary meaning …Therefore, when parties choose certain words to express their meaning and to define their relationships, there is no excuse for distortingthose words out of their ordinary plain meaning. [13] That does not mean, however, that a court is left with parsing each word and using dictionary

definitions to arrive at itsconclusion. It must look at the contract as a whole and give effect to everything in it, if possible: Nexxtep at para 20; Canada Deposit

Insurance Corp v Canadian Commercial Bank, 1991 ABCA 76 , 1991 CarswellAlta 308 at para 12, 113 AR 371 (CA), aff’d(1992), (SCC), 13 CBR (3d) 183 (SCC). In Nexxtep at para 21, the Alberta Court of Appeal provided the followingquotation from Bank of Credit & Commerce Int’l v Ali, [2001] 1 All ER 961 at 965 (HL): To ascertain the intention of the parties the court reads the terms of the contract as a whole, giving the words used their natural andordinary meaning in the context of the agreement, the parties' relationship and all the relevant facts surrounding the transaction so far asknown to the parties.

To ascertain the parties' intentions the court does not of course inquire into the parties' subjective states of mind butmakes and [sic] objective judgment based on the materials already identified.

See also Eli Lilly & Co v Novopharm, (SCC), [1998] SCJ No 59 at para 54, [1998] 2 S.C.R. 129. [14] Even though the court must look to the contract as a whole and relevant facts surrounding the transaction, it must avoidrewriting the contract for the parties or relieving one of the parties against the consequences of an improvident agreement: Keephills Aggregate Company Limited v Riverview Properties Inc, 2011 ABCA 101 at para 12, 44 Alta LR (5th) 264 [Keephills]. [15] The final general principle that is applicable to the case before this Court is embodied in the maxim ejusdem generis, whichstates that where general words follow an enumeration of persons or things, by words of a particular and specific meaning, such generalwords are not to be construed in their widest extent, but are to be held as applying only to persons or things of the same general kind orclass as those specifically mentioned.

But the court must not look just to the enumerated persons or things (or events). It must look to seehow the general words or phrase fit within the context of the contract as a whole. That context may require the court to interpret “generalwords more narrowly in order to accord with the overall intention as shown by nearby narrower words, then the narrower constructionought to be adopted”: Geoff R Hall, Canadian Contractual

Interpretation Law, 2d ed (Markham, Ont: LexisNexis, 2012) at 115 [Hall]. [16] The Applicants have done what the cases say they are not to do, viz, parsing each word and using dictionary

definitions toarrive at a conclusion. As well, they have dissected the clause, which does not take account of the whole paragraph or contract. Forexample, they say: To qualify, the ‘accident’ must both ‘afflict’ and ‘prevent’. The verb ‘prevent is logically tied to the prepositional phrase ‘from continuingactive full time employment’. The verb ‘afflict’ is not logically tied to this prepositional phrase. The

interpretation of an ‘accident’ thatprevents a shareholder ‘from active full time employment’ easily includes a fatal accident. Applicant’s Brief, May 1, 2013, p 6, para 21. [17] The key portion of USA para 11.01 reads: In the event that sickness, accident or disability afflict and prevent any shareholder or principal shareholder from continuing active fulltime employment with the corporation ... Does “death” fall within a sickness, accident or disability that afflicts and prevents any shareholder or principal shareholder fromcontinuing active full time employment with the corporation?

Certainly, it must be conceded that “death” prevents such activity, or anyactivity at all, for that matter. The Applicants concede, quite rightly, that death is not a “sickness” or “disability.” They, however, rely onthe word “accident.” [18] Garth died in an “accident.” The Applicants’ argument is, paraphrased, that Garth was in an accident that afflicted andprevented him from continuing in active full time employment with Green Acres; he died. They argue that: Death is but one form of the physical harm that may be inflicted upon a shareholder by an accident.

Nothing in this drafting structure orthe underlying meaning of the words excludes death.

Applicant ’ s Brief, May 1, 2013, p 6, para 22. [ 19 ] But there is nothing in this drafting structure that would include “ death. ” Although the Applicants have conceded that they base their argument on an “ accident, ” it is important to consider the other events that surround it, viz , “ sickness ” and “ disability. ” When one looks, for example, at various statutes in Alberta that deal with a “ disability, ” it is clear that they contemplate a “ disability ” in a living person. See e.g.

Alberta Human Rights Act , RSA 2000, c A-25.5, s 44(1)(l) "physical disability"; Family Support for Children With Disabilities Act , SA 2003, c F-5.3, s 1(c) "disability"; Employment Standards Code , RSA 2000, c E-9, s 67. As well, a person who is suffering from a “ sickness ” is still alive, until that person dies, at which time that person becomes “ dead, ” and is no longer “ sick. ” [ 20 ] Certainly, an accident can cause death. But applying the maxim ejusdem generis , “ sickness ” and “ disability ” contemplate a person who is still alive.

If this Court were to consider that USA para 11.01 applies to a person who suffers from an “ accident ” that kills him, it would be widening the meaning of that word and applying it to a situation that is not of the same general kind or class as those specifically mentioned. This Court makes this finding of a narrower construction “ to accord with the overall intention as shown by nearby narrower words. ” [ 21 ] Furthermore, when one looks at the balance of USA para 11.01, it supports the notion that the shareholder is still alive at the time they suffer from a disability, sickness or accident.

It provides for a stepped procedure, in the sense that if the shareholder is unable to return to full time employment or has an inability so to do for periods of 6 months, then 12 months, then 2 years, the mechanism for purchasing their shares becomes effective. Why would the drafter have allowed for the stepped time procedure, when the moment the shareholder dies, they are not in a position to work, or do anything for that matter.

To include death as a triggering event would render the balance of USA para 11.01 meaningless. [ 22 ] As well, USA para 11.01 contemplates the “ Non-Afflicted Shareholders ” serving first a notice of intention to purchase the shares of the “ Afflicted Shareholder. ” If the notice of intention to purchase is not served, the “ Afflicted Shareholder ” may serve a notice on the “ Non-Afflicted Shareholders ” requiring them to purchase his shares. How does one serve a dead person? How does a dead person serve a notice?

There is nothing in USA that contemplates the “ Non-Afflicted Shareholders ” serving the personal representative of the “ Afflicted Shareholder ” or the personal representative serving the “ Non-Afflicted Shareholders. ” [ 23 ] The notion of death had not escaped the USA ’ s drafters. The word “ death ” appears in USA para 9.02(g). USA

Article IX provides shareholders with an option to purchase the shares of a shareholder who does (or fails to do) a certain act or who becomes subject to certain proceedings, which the USA describes as a “ Withdrawing Event. ” These include the bankruptcy of a shareholder, seizure of the shareholder ’ s shares for the payment of a judgment, and other such events. USA para 9.02(

g) says that a “ Withdrawing Event ” is where there is a “ change in the principal shareholder, except in the event of the death of a principal shareholder. ” The interesting thing to note about this paragraph is that had Garth been the principal shareholder of a corporate shareholder of Green Acres, this would not be a “ Withdrawing Event. ” There would be nothing that the other shareholders could do and the residual beneficiaries of Garth ’ s estate would continue to hold shares in Green Acres through the corporate shareholder. [ 24 ] The Applicants argue that USA para 11.01 contemplates the employment of all shareholders Green Acres ’ business inasmuch as it speaks of sickness, accident or disability that prevents the shareholder from “ continuing active full time employment with ” Green Acres.

Although that wording suggests that the shareholder has worked and will continue to work in Green Acres ’ business, it only speaks of sickness, accident or disability. There is nothing in the USA that requires a shareholder to be fully employed by Green Acres. In fact, the failure to be in full time employment is not even a “ Withdrawing Event. ” For example, if Justin Ziegler ( “ Justin ” ) chose to leave the employ of Green Acres and work on the rigs, there is nothing in the USA that requires him to have Green Acres redeem his shares, or to sell his shares to the remaining shareholders.

He would only have to do so in the case of a “ Withdrawing Event ” or sickness, accident or disability (after the waiting period). Otherwise, he could be a non-employed shareholder of Green Acres. [ 25 ] The Applicants argue that: Clause 11.01 is drawn from a standard form precedent … The fact that this is a standard clause suggests that too fine a parsing may not be helpful to reveal the intention of the parties. In such a case, the circumstances of the parties at the time of execution, or the factual setting, may be equally revealing.

Applicant ’ s Brief, May 1, 2013, p 7, para 25. [ 26 ] This Court will discuss the circumstances of the parties and factual setting in a moment. For now, it is worth noting that, had the drafter of USA para 11.01 taken the wording from a standard form precedent, this is not helpful. Unless a court has interpreted this particular wording in the way that the Applicants ask this Court to interpret it, this Court must still undertake its own analysis in the context of this unanimous shareholder agreement and these circumstances.

Furthermore, we do not know whether the other “ standard forms ” incorporate other provisions that deal with the death of a shareholder. If so, that would make the exclusion of “ death ” as a triggering event stronger. For example, “ death ” could easily have been made a “ Withdrawing Event. ” This would have required Garth ’ s personal representative to sell his shares in accordance with USA

Article IX. [ 27 ] It is not unusual to include “ death ” as a “ withdrawing event ” and it may even be a “ standard form ” to require the corporation to maintain key-person life insurance so that the corporation would not be required to use corporate funds to redeem shares of a deceased shareholder. In fact, there could be a tax benefit to such a scheme by flowing the insurance proceeds through a capital dividend account. [ 28 ] The Applicants ask this Court to look at many of the other provisions contained in the USA.

Not surprisingly, many of the clauses are those one would find in an estate freeze scenario, where those establishing the “ freeze ” maintain control over the corporation. In this case, Danny and Lexy Fisher established the “ freeze. ” The Applicants argue that in the face of these provisions: The entire structure and content of the USA is oriented towards preserving the Green Acres business as a family owned and controlled enterprise involving shareholders who are active full time employees.

Any potential divestment of shares, not otherwise prohibited or within the control of the parties, triggers a call option in favour of the existing shareholders. The circle of ownership and control is tightly preserved by the USA. Opening the circle to permit an outsider to acquire a block of shares in the event of accidental death without providing a call option to the existing ownership group would represent a significant and unwarranted anomaly in the overall scheme of the USA. Applicant ’ s Brief, May 1, 2013, p 8, para 27. [ 29 ] The USA is not unlike many unanimous shareholder agreements.

In most cases, the primary purpose of a unanimous shareholder agreement is to deal with control of the corporation, in the sense of fettering the directors ’ discretion, in favour of the shareholders. See Alberta Business Corporations Act , RSA 2000, c B-9, s 146.

One of the other purposes of many unanimous shareholder agreements is to deal with the buy-sell arrangements if a shareholder wants to divest itself of its shares in the corporation, or if the shares are transmitted to an “ outsider, ” such as in the case of the bankruptcy of a shareholder, which results in the shares becoming vested in a bankruptcy trustee for the benefit of the bankrupt shareholder ’ s creditors.

In such a case, the shareholders in whom the business and affairs of the corporation are vested, might lose “ control ” which defeats one of the purposes for which they created the unanimous shareholder agreement in the first place. If Green Acres ’ s shareholders sought to maintain this control, they did so through the “ Withdrawing Events ” and, to a certain extent, USA 11.01. [ 30 ] To call the Respondents “ outsiders ” might not be correct, and the Applicants see this characterization as insulting.

In their brief, the Respondents say: In paragraphs 27 and 34 of their Brief, the Defendants/Applicants submit that the Plaintiff/Respondent Crystal Small is an "outsider" and "interloper" vis à vis the remaining shareholders. However, the fact is that at the time of Garth's death, "Crystal Ziegler" was Garth's wife, also the mother of Garth's daughter Abby, and also the Fishers' daughter-in-law. She was family. As for the Plaintiff/Respondent Abby, she was Garth's only child and the Fishers' grand-daughter. She, too, was family.

The Defendants/Applicants submit that the Court should consider the factual matrix at the time the USA was drafted. At that time, the two Ziegler boys were young men in their twenties. One can surmise that either, or both, might marry and ultimately have children, which would have been realistic possibilities for the Fishers to consider in their estate freeze and corporate restructuring.

Accordingly, one possibility of the parties' contractual intention was to provide and preserve share value for the two Ziegler boys and their families, provided they were still married [recall that Clause 9.02 of the USA's "Buy-Sell"

Article IX does provide for a transfer of shares in the event of "matrimonial property or divorce proceedings"]. Respondents ’ Brief, May 17, 2013, paras 69-71. [ 31 ] The USA could have provided for “ death ” being a “ Withdrawing Event. ” That way, the “ outsider, ” being the personal representative of the deceased shareholder ’ s will, would be required to sell the shares to Green Acres or the other shareholders. It does not. The USA makes no provision for the redemption or sale of a deceased shareholder ’ s shares.

As mentioned earlier, USA para 11.01 does not contemplate the sale of the shareholder ’ s shares on the shareholder ’ s death. [ 32 ] The Applicants argue that “ [o]pening the circle to permit an outsider to acquire a block of shares in the event of accidental death without providing a call option to the existing ownership group would represent a significant and unwarranted anomaly in the overall scheme of the USA. ” In fact, this is not anomalous at all.

The structure of the USA could just as easily be interpreted to allow for the holding of Garth ’ s shares by his widow and his child, to facilitate their maintenance following his death. There is no evidence before this Court that would allow it to make this finding. Nor should this Court embark on such an examination.

As the Alberta Court of Appeal said in Nexxtep at para 20 , “ [e]xtrinsic evidence is not admissible when the document is clear and unambiguous. ” In this case, the document insofar as USA 11.01 is concerned, is clear and unambiguous. [ 33 ] As for the primary aspect of a unanimous shareholder agreement, the USA allows those establishing the “ freeze ” to maintain control over Green Acres ’ business and affairs. Neither the Respondents nor, for that matter, the surviving son, Justin, have any involvement in managing Green Acres ’ business and affairs from a management perspective.

Green Acres ’ directors continue to manage the business and affairs of the corporation, except that they may not make fundamental changes such as winding-up Green Acres or substantially depleting its worth, without the unanimity of all shareholders: USA

Article VII. [ 34 ] The Applicants argue that the “ underlying rationale ” for having this Court interpret USA para 11.01 as including “ death ” is explained by Ricky W Ewasiuk, Drafting Shareholder's Agreements: A Guide ( Scarborough, Ont: Carswell, 1998) at para. 3.4 where the author says: Usually, it is advantageous to both the surviving shareholder and to estate of a deceased shareholder that a buyout occur following death: • The "partnership" relationship enjoyed by shareholders in a closely held corporation has a personal aspect to it.

The surviving shareholders may not want to continue in this relationship with the deceased shareholder's spouse or other heirs. • The estate may want to realize upon whatever wealth has accumulated in the deceased persons shares in fairly short order and relocate that wealth to a more secure situation. Hence, it is common to provide for some sort of buy-out mechanism on the death of a shareholder that will compel the estate to sell and the corporation (or surviving shareholders) to purchase.

You could, instead, rely on a simple option (exercisable any time after death) or even on a shotgun arrangement, but there are advantages and disadvantages to consider. [ 35 ] This Court agrees with Ewasiuk ’ s analysis and, as mentioned earlier, acknowledges that these types of provisions are common in unanimous shareholder agreements. However, the shareholders might agree not to include this type of provision and it would be wrong for a court to re-write their contract to include it: Keephills at para 12 .

The USA, in this case, contains no such provision. [ 36 ] Hall at para 29 says: Ambiguity means something more than the mere existence of competing

interpretations, otherwise parol evidence would be admitted in virtually every case, Thus the question of whether there is ambiguity is to be determined by an objective evaluation of whether there are

two or more reasonable

interpretations, Put another way, where a written contract is ambiguous in the sense of being reasonablysusceptible of having more than one meaning, extrinsic evidence is admissible to determine which meaning is preferable. See also Erehwon Exploration v Northstar Energy Corp, (AB KB), [1993] AJ No 916 at paras 100-05 (QB). [37] There was an original draft of the USA, which Kent J in her ruling of August 4, 2009, reported at 2009 ABQB 464, said thatthe court hearing this matter could consider.

She found an ambiguity in USA 11.01, but she had not heard full argument on this; onlycursory argument that would allow her to determine whether the original draft could be considered by the judge hearing the fullargument.

In fact, at para 1 or her decision, she said that the original draft “would go to the judge who would be interpreting the USAand he could use it as he determined was appropriate.” After hearing full argument on this matter, this Court finds that there is noambiguity in USA para 11.01 and finds that it is not appropriate, or necessary, to consider the original draft. [38] The Respondents also argue that if this Court were to find that USA para 11.01 is capable of two meanings equally consistentwith the language that the drafter employed, this Court should apply the principle of contra proferentem.

Inasmuch as this Court has notfound any such ambiguity, it need not apply that principle. [39] Finally, the Applicants argue that this Court may consider the fact that Green Acres continued to pay remuneration to theRespondents in the same amount and manner as before Garth’s death. They argue that this is in keeping with USA para 11.01. There isno evidence before this Court as to why Green Acres continued to pay the Respondents following Garth’s death. It is equally arguablethat they wanted to make sure that Garth’s widow and child were taken care of following his death.

Again, the characterization of thosepayments is not necessary, as this Court is concerned with the

interpretation of USA 11.01. What happened extrinsically in the face of anunambiguous provision is simply not relevant. V. Conclusion [40] On the basis of the foregoing, this Court finds that USA para 11.01 does not include “death” as a triggering factor. Theparties to the USA, in this case, did not address the issue of the death of a shareholder in the USA, except in the case of USA para9.02(

g) which is not applicable in this case. [41] Accordingly, this application is dismissed. Heard on the 30th day of May, 2013. Dated at the City of Calgary, Alberta this 17th day of June, 2013. KD Yamauchi JCQBA Appearances:

Steven L Major Bennett Jones LLP for the Plaintiffs/Respondents Gary Befus Walsh LLP for the Defendants/Applicants