Mark Ferguson v. Cheryl Kermeen, 2024 BCSC 123

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Ferguson v.

Mapleguard Apartments Ltd., 2024 BCSC 123 Date: 20240129 Docket: S185004 Registry: Victoria Between: Mark Ferguson and Cheryl Kermeen Petitioners And Mapleguard Apartments Ltd., Neal Davidge, Isobel Davidge, Lawrence Engelsman in his capacity as the Executor of the Estate of Jan Engelsman, Barbara Dunsmore, Robert Christie, Belva Christie, Patrick Wadden, Aiko Wadden, Leonard Hindle and Juanita Brillion Respondents - and - Docket: S170310 Registry: Victoria Between: Mark Ferguson and Cheryl Kermeen Plaintiffs And Mapleguard Apartments Ltd., Neal Davidge, Neal Davidge, as Executor and Trustee of the last will and testament of Isobel Davidge, Lawrence Engelsman in his capacity as the Executor of the Estate of Jan Engelsman, Barbara Dunsmore, Robert Christie, Belva Christie, Patrick Wadden, Aiko Wadden, Leonard Hindle and Juanita Brillion Defendants Before: The Honourable Justice Donegan Reasons for Judgment Counsel for the Petitioners: J.M.

Aiyadurai Counsel for the Respondents, Mapleguard Apartments Ltd. C.N. Christie Counsel for the Respondent, Neal Davidge: D.A. Hunter Place and Date of Hearing: Victoria, B.C. April 11, 12 & 14 and May 23, 2023 Place and Date of Judgment: Victoria, B.C. January 29, 2024 Overview ... 3 Preliminary Matters .. 5 (

a) Status of the Named Defendants/Respondents . 5 (

b) Orders Granted at the Outset of the Hearing . 6 Notice of Application Exceeds Ten Pages . 6

Application and Petition Heard at the Same Time . 8 (

c) Mid-Hearing Application to Amend Pleadings in the Action .. 11 Findings of Fact .. 17

Interpretation of the Articles .. 41 General Principles of Contractual

Interpretation .. 41 Questions . 43 Analysis . 44 1. Can the Consent Transfer Provision be used once the ROFR Provision has been engaged? 44 2. Can the Consent Transfer Provision be invoked and/or consents obtained after the 14-day period of the ROFR Provision has ended? . 51 3. What is the effect of the Directors’ Absolute Discretion Provision? . 54 4. Were the consents obtained valid? . 57 Conclusion . 63 Have the Plaintiffs established any breach of any contract? . 64 Have the Plaintiffs established that Mr. Davidge induced any breach of contract? .. 65 Have the Plaintiffs established that Mr.

Davidge is liable under the tort of unlawful interference with economic relations? .. 66 Have the Davidges been unjustly enriched? .. 68 Have the Plaintiffs established oppression under the BCA ? . 70 Reasonable Expectations . 72 Oppression, Unfair Prejudice or Disregard . 74 Conclusion .. 78 Overview [ 1 ] This is a

summary trial application and petition hearing arising from the same dispute. [ 2 ] The plaintiffs/petitioners, Mark Ferguson and Cheryl Kermeen (the “Plaintiffs”), are shareholders in Mapleguard Apartments Ltd. (“Mapleguard”). Mapleguard, one of the defendants/respondents, owns two apartment buildings on a parcel of land in central Vancouver Island. Beneficial ownership of living units in the buildings is based on shareholdings by shareholders of Mapleguard.

The process for sale and transfer of shares in Mapleguard is governed by certain provisions in Mapleguard’s 1992 articles of incorporation (the “Articles”), specifically Articles 25.1 and 25.2. [ 3 ] Both this action (the “Action”) and this petition proceeding (the “Petition”) relate to the sale of certain shares (the “Disputed Shares”) in Mapleguard by one shareholder and another of the defendants/respondents, Lawrence Engelsman in his capacity as the executor of the estate of Jan Engelsman (the “Engelsman Estate”), to other shareholders and another of the defendants/respondents, Neal and Isobel Davidge (the “Davidges”). [ 4 ] In late 2016, the Davidges purchased the Disputed Shares from the Engelsman Estate for $52,500.

In doing so, the Engelsman Estate, the Davidges and Mapleguard utilized a provision in the Articles which allows an existing shareholder to directly transfer shares to another person if two-thirds of Mapleguard’s shareholders consent to the transfer. The Davidges say they acted in reliance on this provision and obtained the required consents. [ 5 ] Around the same timeframe, the Plaintiffs, through another provision in the Articles, exercised their right of first refusal to purchase the Disputed Shares.

They contend that their doing so created a binding contract between them and the Engelsman Estate for the purchase and sale of the Disputed Shares. By selling the Disputed Shares to the Davidges instead of them, the Plaintiffs say that the Engelsman Estate (and perhaps Mapleguard as its agent) breached this contract. They also advance a claim against Mr. Davidge for inducement of breach of contract. [ 6 ] The Plaintiffs also contend that by proceeding as they did, the Engelsman Estate, the Davidges and Mapleguard breached another contract—the Articles.

In this regard, they point to Mapleguard’s shareholders agreement which requires all shareholders to comply with the Articles. They say that the failure of these defendants to comply with the Articles constitutes a breach of contract. [ 7 ] In terms of relief in the Action, the Plaintiffs primarily seek a declaration that there is a binding agreement for them to purchase

the Disputed Shares, specific performance effecting a transfer of the Disputed Shares to them, and related relief. [ 8 ] The Plaintiffs seek effectively the same relief in the Petition. There, the Plaintiffs contend that Mapleguard engaged in oppressive and unfairly prejudicial behaviour pursuant to s. 227 of the Business Corporations Act , S.B.C. 2002, c. 57 [ BCA ] by not correctly following the process for the sale and transfer of the Disputed Shares set out in the Articles. The Plaintiffs say that as shareholders in Mapleguard, they held a reasonable expectation that the Articles would be followed.

The sale of the Disputed Shares to the Davidges, which they contend was contrary to the process set out in the Articles, defied this reasonable expectation. Had Mapleguard followed the process required by the Articles, the Disputed Shares would have been sold to them. [ 9 ] Mapleguard and the Davidges agree the Action is suitable for

summary trial. They also agree that the two proceedings should be heard at the same time. Overall, these defendants/respondents contend that their

interpretation of the Articles in relation to the purchase and transfer of the Disputed Shares was the correct one. As such, they say there was no contract between the Engelsman Estate and the Plaintiffs and no breach of any contract, inducement of breach of contract and/or shareholder oppression. They ask that the Action and Petition both be dismissed. Preliminary Matters [ 10 ] Before turning to my factual findings and analysis of the issues, I will address some preliminary matters: (

a) the status of the named defendants/respondents; (

b) orders I granted at the outset of the hearing; and (

c) the Plaintiffs’ mid-hearing application to amend their pleadings. (

a) Status of the Named Defendants/Respondents [ 11 ] The Plaintiffs claim against the same defendants/respondents in both the Action and the Petition. Specifically, they claim against Mapleguard, the Davidges, the Engelsman Estate, and the other shareholders in Mapleguard at the relevant time (the “Other Shareholders”). The Other Shareholders are Barbara Dunsmore, Robert and Belva Christie (the “Christies”), Patrick and Aiko Wadden (the “Waddens”), Leonard Hindle, and Juanita Brillion. [ 12 ] Although the Other Shareholders are named, the Plaintiffs only seek relief against Mapleguard and the Davidges.

The Plaintiffs named the Other Shareholders as defendants/respondents to provide notice to them in their capacity as shareholders in Mapleguard. Other than Ms. Dunsmore and Ms. Christie, who both provided affidavit evidence in this hearing, the Other Shareholders did not participate in the litigation. [ 13 ] The Engelsman Estate did not participate in the hearing.

Although the Plaintiffs’ claim in the Action is primarily grounded in their assertion that the Engelsman Estate breached a contract it had with the Plaintiffs by selling the Disputed Shares to the Davidges rather than to them, the Plaintiffs do not seek any relief from the Engelsman Estate.

At the outset of the hearing, counsel for the Engelsman Estate advised (through counsel for the Plaintiffs) that it would not be taking a position or appearing at the hearing on the understanding that if the Plaintiffs were successful, they would seek to have any relief granted structured to avoid affecting the interests of the Engelsman Estate. (

b) Orders Granted at the Outset of the Hearing [ 14 ] The Plaintiffs sought, and I granted, three orders at the outset of the hearing: 1. An order granting leave for the Plaintiffs to rely upon their Notice of Application, even though it exceeds ten pages; 2. An order to have the Plaintiffs’

summary trial application in the Action heard at the same time as the hearing of the Petition; and 3. An order that examination for discovery transcripts and affidavits filed in the Action may be used in the Petition hearing. [ 15 ] Mapleguard and the Davidges did not oppose any of the orders sought, provided that, in relation to order #3, they be permitted the same use of these materials. Given our time constraints, I did not provide reasons at the time, but will provide them now. Notice of Application Exceeds Ten Pages [ 16 ] Rule 8-1(4) of the Supreme Court Civil Rules , B.C.

Reg. 168/2009 [ Rules ] provides that “the notice of application, other than any draft order attached to it … must not exceed 10 pages in length.” Rule 8-1(10) imposes a similar ten-page limit on application responses. [ 17 ] Madam Justice Gray discussed the purpose behind this rule in McMahon v. Harper , 2017 BCSC 2328 [ McMahon ], where she held: [99] There is a good reason for a page length limit for a notice of application.

It encourages brevity, and enables the court and the opposition to understand the application and the basis for it without undue investment of time. [ 18 ] There is no dispute that the Plaintiffs’ Notice of Application does not comply with Rule 8-1(4).

Leaving aside the excerpts from the Articles attached to it, the Notice of Application is 22 pages in length. [ 19 ] Rule 22-7 deals with the effect of non-compliance with the Rules . [ 20 ] Rule 22-7(1) provides that, unless the court orders otherwise, a failure to comply with the Rules is to be treated as an irregularity and does not nullify, among other things, any step taken or any document made in a proceeding. Rule 22-7(2) sets out what a court may

do if there has been a failure to comply with the Rules. This includes making any “order it considers will further the object” of the Rules:Rules, R. 22-7(2)(e). [21] The object of the Rules, set out in Rule 1-3, is to secure the just, speedy and inexpensive determination of every proceeding on itsmerits. Securing this object includes considerations of proportionality, as set out in Rule 1-3(2): Proportionality

(2) Securing the just, speedy and inexpensive determination of a proceeding on its merits includes, so far as is practicable, conducting theproceeding in ways that are proportionate to (

a) the amount involved in the proceeding, (

b) the importance of the issues in dispute, and (

c) the complexity of the proceeding. [22] I am satisfied, under Rule 22-7(2), that granting an order permitting the Plaintiffs to rely upon their Notice of Application eventhough it exceeds ten pages would further the object of the Rules. If I had considered it necessary, I would have granted the same orderin respect of the defendants’ application responses, which I note also exceed the ten-page limit. As stated by Gray J., “[i]t is difficult toconceive of a case in which the court would consider a notice of application to be a nullity only because of its length”: McMahon at para.104. [23] This is a

summary trial application in a case that is factually and legally complex. The hearing occupied four court days. Counseltendered more than two dozen affidavits, relied upon dozens of case authorities and, in addition to their oral arguments, providedextensive written briefs.

This is not a case where the lengthy Notice of Application causes any prejudice to the defendants, nor is this acase where the court should insist on strict compliance with page limits. [24] To the contrary, I am satisfied that the complexity of this proceeding and the importance of the issues in dispute requires such acomprehensive Notice of Application and such comprehensive responses. I am also satisfied that granting the order, as I have, promotesthe just, speedy and inexpensive determination of the Action on its merits.

Application and Petition Heard at the Same Time [25] The Plaintiffs’ application to have their

summary trial application in the Action and the Petition heard at the same timenecessarily involves, as a first step, a determination that the Action is suitable for determination in a

summary manner. Suitability for

Summary Trial [26] The Plaintiffs’

summary trial application is brought pursuant to Rule 9-7(15) of the Rules. This rule permits the court to grantjudgment in favour of any party, either on an issue or generally, unless the court determines that it is not appropriate to do so. Therelevant factors, when considering suitability for

summary trial, are set out in Girchuru v. Pallai, 2013 BCCA 60 at paras. 28–31. [27] There are two aspects to the test under Rule 9-7(15). First, I must be able to find the facts necessary to decide the issues of fact orlaw. Second, I must be of the opinion that it would not be unjust to decide the issues in this manner: Brissette v. Cactus Club CabaretLtd., 2017 BCCA 200 at para. 26; Inspiration Management Ltd. v. McDermid St. Lawrence Ltd. (1989), 36 B.C.L.R. (2d) 202, (C.A.) [Inspiration Management]. [28] The decision to proceed by way of

summary trial is a discretionary one. It involves consideration of many factors, such as: theamount involved; the complexity of the matter; urgency and prejudice likely to arise by reason of delay; the cost of taking the caseforward to a conventional trial in relation to the amount involved; the course of the proceedings; whether credibility is a critical factor indetermination of the dispute; and whether the application will result in “litigating in slices”: Inspiration Management at para. 49; Dahl etal v. Royal Bank of Canada et al, 2005 BCSC 1263 at para. 12, aff’d 2006 BCCA 369. [29] The parties agree, and I find, that the Action is suitable for determination by

summary trial. [30] Although the factual and legal issues are complex, most of the facts are undisputed. While I do have to consider credibility, I findit is not a critical factor in determining the dispute. In the discrete and limited areas of factual dispute, I am satisfied I can resolve thedispute and find the facts necessary to decide the issues of fact or law. [31] I am also of the opinion that it would be just to decide the issues in the Action in this

summary manner. The amount involved isnot substantial. None of the parties will be prejudiced by this

summary proceeding. A determination will conclude the litigation and savethe parties the expense of a conventional trial. I am satisfied the object of the Rules will be promoted by proceeding in this manner. [32] With this determination, I turn to outline my reasons for granting the orders to have the evidence from one proceeding used in theother and to have the Action and Petition heard at the same time Tried at the Same Time [33] Rule 22-5(8) of the Rules gives the court discretion to order the consolidation of proceedings or to order proceedings be tried atthe same time.

A “proceeding” includes, among other things, an action and a petition proceeding: Rules, R. 1-1(1). [34] As set out by Master Kirkpatrick (as she then was) in Merritt v. Imasco Enterprises Inc., [1992] B.C.J. No. 160, 2 C.P.C. (3d)

275 (S.C.) [ Merritt ] , there are two questions to be considered when determining whether two proceedings should be tried together. The first is whether the two proceedings involve common claims, disputes and relationships.

The second is whether the two proceedings are so interwoven as to make separate trials or hearings at different times before different judges undesirable and fraught with problems and expense. [ 35 ] This second question involves consideration of a number of factors, including: whether it will create a savings in pre-trial procedures; whether there will be a real savings in experts’ time and witness fees; the potential for a party to be seriously inconvenienced by being required to attend a trial in which they may only have a marginal interest; whether the number of trial days will be reduced if the matters are heard together; whether one of the actions is at a more advanced stage than the other; whether an order will result in a delay of the trial of one of the proceedings and, if so, where the prejudice to a party from delay will outweigh the potential benefits of a combined trial; and whether there is a risk of inconsistent findings: Cao v.

Chen, 2020 BCSC 2050 at para. 24 ; Merritt at para. 19. [ 36 ] I am aware that proceedings commenced by way of Notice of Civil Claim and proceedings commenced by petition are generally not consolidated or heard at the same time, as they follow different processes and involve different rules and procedures. However, this is a unique situation where those differences are immaterial and it makes very good sense to have this Action and this Petition heard at the same time. [ 37 ] Pre-trial procedures in the Action have completed. The Action is not proceeding to a conventional trial. It is to be determined in a

summary manner on the basis of affidavits and portions of examination for discovery evidence. The Petition is to be determined in the same

summary manner, with a consent order that the affidavits tendered by the parties in the Petition and the affidavits and examination for discovery evidence tendered by the parties in the Action are to be used in both proceedings, in this one hearing. [ 38 ] These two proceedings involve the same facts. They involve the same disputes, the same relationships, the same central issues of contractual

interpretation and, effectively, seek the same relief. To have separate hearings at different times before different judges would create the real potential for inconsistent findings, increase costs and inconvenience to the parties, and require the expenditure of more valuable court time. To have the evidence tendered in each proceeding used in the other, and then having the two proceedings heard together not only benefits the parties, but also promotes judicial economy. [ 39 ] In all of these circumstances, I agree with the parties and conclude the two proceedings should be heard together pursuant to Rule 22-5(8) and the evidence tendered in each proceeding should be used in the other. (

c) Mid-Hearing Application to Amend Pleadings in the Action [ 40 ] The Plaintiffs applied to amend their Fourth Amended Notice of Civil Claim on day three of the hearing pursuant to Rule 6-1 of the Rules . Specifically, they sought two amendments. [ 41 ] First, under

Part 1: Statement of Facts, they seek to add the following: 27J. The Davidges committed the unlawful act of breaching the shareholders agreement and the Company’s Articles by purchasing the Shares in contravention of the process set out in

Article 25.1 of the Company’s Articles. That process, if not contravened, would have resulted in the sale of the Shares to the plaintiffs in these circumstances. [ 42 ] Second, under

Part 3: Legal Basis, they seek to add the following underlined sentences: 1. Breach of contract. […] (

c) The Company’s Articles also constitute a contract between the Company and its shareholders and a breach of the Company’s Articles by either the Company or the shareholders is a breach of contract. The Davidges breached the shareholders agreement and the Company’s Articles by purchasing the Shares in contravention of the process set out in

Article 25.1 of the Company’s Articles. That process, if not contravened, would have resulted in the sale of the Shares to the plaintiffs in these circumstances . [ 43 ] The Davidges opposed the application and Mapleguard took no position. By agreement, and so as not to interfere with the time allotted for the hearing, I reserved judgment on this application and we proceeded with the hearing as if the amendments had been allowed. I advised counsel I would include my decision, and the reasons for it, in my final decision.

I have determined to grant the Plaintiffs’ application. [ 44 ] In order to understand the amendments sought, a review of the history of the pleadings in the Action is required. [ 45 ] On January 25, 2017, the Plaintiffs filed the original Notice of Civil Claim. The claim sought the following relief:

i) a declaration setting aside the transfer of the Disputed Shares to the Davidges; ii) a declaration that there was a binding contract of purchase and sale of the Disputed Shares with the Plaintiffs; iii) an order restraining the transfer of the Disputed Shares until the final disposition of the Action; iv) general damages;

v) interest pursuant to the Court Order Interest Act, R.S.B.C. 1996, c. 79 [ COIA ]; and vi) costs. Grounded in their

interpretation of the Articles, the basis of the claim was in breach of contract and the torts of unlawful interference with economic interests and inducement of breach of contract. [ 46 ] On May 7, 2018, the Davidges filed their original Response to Civil Claim. They denied the substance of the claims against them and claimed instead that there was valid agreement for them to receive the Disputed Shares. They offered a differing

interpretation of the Articles. On this same day, the Davidges also applied to strike the Plaintiffs’ claim on the basis that it did not disclose a reasonable claim and, in particular, disclosed no material facts to support the claimed causes of action. [ 47 ] On October 18, 2018, the Plaintiffs filed their Amended Notice of Civil Claim. They clarified and corrected certain terms and

facts and, more significantly, they particularized their claim to assert that the Davidges had misrepresented that the approval theDavidges received was for the Disputed Shares to be transferred to the Davidges, rather than pro rata to the Davidges and the Plaintiffs.The claim refers specifically to Ms. Dunsmore, who approved the transfer but was alleged to have misunderstood the nature of what shewas approving. The Amended Notice of Civil Claim also sought the following additional relief:

i) shareholder oppression under theBCA, s. 227; ii) an order that the Disputed Shares be transferred to the Plaintiffs upon their payment of the purchase price; iii) anaccounting of the income earned by the Davidges on the property since the transfer; and iv) punitive damages. [48] On February 28, 2019, Mapleguard filed its original Response to Civil Claim. Mapleguard denied the claim in its entirety. [49] On July 14, 2022, Justice Taylor heard the Davidges’ application to strike the claim as against them.

Justice Taylor ordered thefollowing relief sought to be struck from the Amended Notice of Civil Claim: the relief seeking a declaration setting aside the transfer ofDisputed Shares to the Davidges, the oppression claim, and the relief seeking an order that the Disputed Shares be transferred to thePlaintiffs upon payment of the purchase price. Justice Taylor ordered the Plaintiffs to further particularize various elements of theirclaim, but did not dismiss the claim outright as against the Davidges. [50] On August 5, 2022, the Plaintiffs filed their Second Amended Notice of Civil Claim.

The amendment acknowledged the death ofMrs. Davidge and Mr. Davidge’s new, additional role as her estate’s administrator. It added further details about the allegedmisrepresentation by the Davidges and removed some of the relief sought so that only the following remedies remained: a declaration ofa binding purchase and sale agreement, an order for an accounting, general damages, punitive damages, COIA interest, and costs. Theoppression remedy claim was removed.

This amendment was made according to Taylor J.’s order of July 14. [51] On August 23, 2022, the Davidges filed their Response to Amended Notice of Civil Claim. They responded to the Plaintiffs’allegations regarding Ms. Dunsmore, pleading facts relating to their having clarified to her that the consent they sought was for a transferof the Disputed Shares only to them, rather than a pro rata apportionment between them and the Plaintiffs as alleged.

The Davidges alsoamended their legal basis to include that they had no contractual relationship with the Plaintiffs. [52] On August 25, 2022, Mapleguard filed its Response to Second Amended Notice of Civil Claim.

It added pleadings related to: i)that the Articles gave the directors of Mapleguard total discretion to refuse to register share transfers, ii) that there was never a contractfor the Plaintiffs to buy the Disputed Shares because Mapleguard never approved the transfer to them, and iii) that it acted in good faith,or alternatively, acted only in an agency relationship. [53] On March 10, 2023, the Plaintiffs filed their Third Amended Notice of Civil Claim.

This amendment added a claim based onunjust enrichment, and pleadings related to the Davidges having received and continuing to receive income as a result of the transfer ofthe Disputed Shares. This amendment was filed by consent of the parties. [54] On April 11, 2023, the first day of this hearing but before the hearing began, the Plaintiffs applied to amend their pleadingsagain. The central change sought was to restore the requested order that the Disputed Shares be transferred to the relief sought, whichhad been removed due to inadvertence of counsel. There were also some additional changes to facts pled.

The defendants consented to allof the amendments sought and I granted the order. The Plaintiffs later filed their Fourth Amended Notice of Civil Claim. [55] It is against this backdrop that I now turn to consider the issues raised by the Plaintiffs’ mid-trial application to amend theirpleadings. [56] The Court of Appeal recently discussed the law around mid-trial amendment of pleadings in Sperring v. Shutiak, 2023 BCCA 54[Sperring]. The Court in Sperring again affirmed the criteria identified by Justice Harvey in Macdonald v.

Macdonald Estate (1996), 21B.C.L.R. (3d) 379, (S.C.) [Macdonald] to be applied when considering whether to permit such amendments. TheCourt identified the criteria, articulated as questions, at para. 95 as follows: (

a) is it inconsistent with the pleadings already filed on behalf of the party seeking the amendment; (

b) is it inconsistent with evidence already tendered by that party and his witnesses at trial and on discovery; (

c) if it had been asked for at the outset of the trial, would it have changed the whole course of the trial; (

d) would it be unfair to the opposite party; (

e) is it necessary for the purpose of determining the real issues raised or depending upon the pleadings? [57] Referring to two of the Court’s previous decisions, also affirming the five-part test from Macdonald, the Court in Sperring wenton: [97] In Khera, Justice Newbury, writing for the Court, observed the following when discussing the appropriate consideration of lateamendments: [16] The test normally applied is the five-part one which the trial judge here took from Macdonald v. Macdonald Estate (1996), (BC SC) 21 B.C.L.R. (3d) 379 (B.C.S.C.), quoted at para. 8 of her reasons.

She dealt with each of these factors with somecare, concluding that the defendants had not established “any real prejudice”, that there was no obvious inconsistency between theevidence tendered by the plaintiffs at trial and the amendment, and that the amendment would not likely have changed the course of thetrial had it been sought from the outset. [98] In Olson, Justice Frankel wrote: [71] In Gatien v. Avini, 2015 BCCA 383 at paras. 30 −31, 389 D.L.R. (4th) 463, and Century 21 Coastal Realty Ltd. v.

Khera, 2018BCCA 298 at para. 16, 14 B.C.L.R. (6th) 311, this Court endorsed the test for determining whether to grant an amendment set out in

MacDonald v. MacDonald Estate (1996), (BC SC), 21 B.C.L.R. (3d) 379 at para. 40, (S.C.). … As Justice Rowles stated in Langret Investments S.A. v. McDonnell (1996), (BC CA), 21 B.C.L.R. (3d) 145 at para.34 (C.A.): Amendments are allowed unless prejudice can be demonstrated by the opposing party or the amendment will be useless. The rationalefor allowing amendments is to enable the real issues to be determined.

The practice followed in civil matters when amendments aresought fulfils the fundamental objective of the civil rules which is to ensure the just, speedy and inexpensive determination of everyproceeding on the merits. [Emphasis original.] [58] Applying these principles and criteria, I am satisfied the amendments sought should be permitted. [59] The amendments are not inconsistent with the pleadings already filed by the Plaintiffs, nor are they inconsistent with evidencealready tendered by the parties at this trial.

I am also satisfied that had these amendments been asked for at the outset of the trial, theywould not have changed the course of the Action, or the Petition for that matter. The Davidges concede as much. [60] I included a

summary of the previous amendments to the Plaintiffs’ claims in order to provide important context. The Plaintiffs’claims have evolved over time and their articulations of their breach of contract(

s) claim seemed to have solidified at the hearing. ThePlaintiffs intend to establish the existence of two distinct contracts, both of which they say were breached when the defendants failed tofollow the process (as they interpret it) for share transfers set out in the Articles. The two contracts they allege existed and they allegewere breached are: (

a) a contract between them and the Engelsman Estate for the purchase of the Disputed Shares that arose when thePlaintiffs exercised their right of first refusal; and (

b) a contract between all shareholders pursuant to the shareholders’ agreement and theArticles to follow the Articles. The Plaintiffs’ pleadings had a tendency, in my respectful view, to blur these alleged contracts and theiralleged breaches. Through the amendments they now seek, they hope to bring clarity. [61] To the extent the amendments seek to further support a potentially novel contention that a shareholder has an independent causeof action against another shareholder for breach of the Articles, I do not find this to be determinative of the application.

The Davidgesconcede that they are not caught by surprise. They do not point to any prejudice they will suffer as a result of the amendments. Theiropposition is really about the merits of the claim and their position that the Plaintiffs’ pleadings, even with the amendments, are stilldeficient. [62] I think these amendments are necessary to fairly adjudicate the issues between the parties. The defendants’ arguments on themerits will, of course, be addressed. There is no prejudice or injustice done to any of the non-amending parties.

I exercise my discretionto permit the amendments. [63] I turn now to my general findings of fact. I will make additional findings of fact in the course of my analysis of the issues. Findings of Fact [64] Mapleguard was incorporated as a British Columbia company on September 17, 1992, with a board of three directors. [65] Scott Rodway was Mapleguard’s corporate solicitor at incorporation. He remained Mapleguard’s corporate solicitor over theyears, including during the times relevant to this dispute. Mr.

Rodway wrote the Articles, which included provisions for the sale andtransfer of shares in Mapleguard. [66] Shortly after incorporation, on October 26, 1992, Mapleguard and its shareholders entered into an agreement outlining theirrespective rights and obligations (the “Shareholders’ Agreement”). Among other things, the Shareholders’ Agreement requires theparties to conduct the business of Mapleguard in accordance with its Articles at s. 2.02.

The Shareholders’ Agreement is binding uponany successors. [67] Many of the litigants in this dispute have been shareholders of Mapleguard since incorporation, including the Davidges and Ms.Dunsmore. Mr. Davidge was also a director during the times relevant to this dispute, as was Ms. Kermeen. Ms. Dunsmore was a directorat the relevant times as well, as she has been since incorporation. Some of the original shareholders have died since the Action andPetition were commenced, including Mrs. Davidge and Mr.

Christie. [68] Mapleguard owns a property on Vancouver Island in Bowser, British Columbia legally known and described as: PID: 000-831-387; LOT 97, DISTRICT LOT 1, NEWCASTLE DISTRICT, PLAN 20442. (the “Property”) [69] The Property contains two residential apartment buildings that house a total of ten apartments (the “Buildings”). The apartmentsin the Buildings are occupied full time, used as vacation homes, or rented out on a short or long-term basis.

Mapleguard’s sole business isowning the Property and the Buildings. [70] The ownership of shares in Mapleguard corresponds to the control of specific apartment units through long-term leases. WhenMapleguard was incorporated, each of the shareholders had a long-term lease for their unit(s). Since then, when a shareholder has soldshares, the corresponding lease has been assigned to the new owner of the shares in order to transfer control of the unit(s).

The value ofshares in Mapleguard arises from the right to control the corresponding unit(s), in exchange for payment of monthly fees that are puttowards the expenses of owning and maintaining the Property and Buildings.

[ 71 ] As I described earlier, all individually named parties in the Action and Petition were shareholders of Mapleguard at the relevant times. Each shareholder held Class A voting shares (“Class A Shares”) and also held Class B shares (“Class B Shares”) relative to the size and amount of the units owned.

While Class A Shares and Class B Shares hold different entitlements under the Articles, the nature of those entitlements are not at issue and I am satisfied this has no bearing on the outcome of the Action and Petition. [ 72 ] Prior to November 2016, the following individuals owned shares in Mapleguard as follows: Shareholders Class A Shares Class A Share % Ownership Class B Shares Class B Share % Ownership Units Owned The Plaintiffs 10 10% 34,900 5.49% 1 Ms. Brillion 10 10% 33,900 5.33% 1 Mr. Hindle 10 10% 77,900 12.25% 1 The Waddens 10 10% 85,900 13.51% 1 The Christies 10 10% 34,900 5.49% 1 Ms.

Dunsmore 10 10% 82,900 13.03% 1 The Engelsman Estate 30 30% 205,700 32.34% 3 The Davidges 10 10% 79,900 12.56% 1 [ 73 ] The Articles, in

Part 25, contemplate how potential share transfers may occur. As my

interpretation of these Articles is central to the resolution of this dispute and my findings of fact will involve reference to them, I will reproduce the relevant portions of Articles 25.1 and 25.2 here. [ 74 ] In this reproduction, I have added bolded headings that do not appear in the Articles.

I use these headings for ease of reference, as the parties have in their submissions, and for no interpretative or other purpose. [ 75 ] Headed “Restriction on Share Transfers”, Articles 25.1 and 25.2 provide: 25.1 As long as the Company is a company which is not a reporting Company, no shares in the capital of the Company shall be transferred by any member, or the personal representative of any deceased member or the trustee in bankruptcy of any bankrupt member, or the liquidator of a member which is a corporation, except under the following conditions: Right of First Refusal (ROFR) (

a) A person (herein called the "proposing transferor") desiring to transfer any share or shares in the Company shall give notice in writing (herein called the "transfer notice") to the Company that he desires to transfer the same. The transfer notice shall specify the price, which shall be expressed in lawful money of Canada, and the terms of payment upon which the proposing transferor is prepared to transfer the share or shares and shall constitute the Company his agent for the sale thereof to any member or members of the Company at the price and upon the terms of payment so specified.

The transfer notice shall also state whether or not the proposing transferor has had an offer to purchase the shares or any of them from, or proposes to sell the shares or any of them to, any particular person or persons who are not members and if so the names and addresses of such persons shall be specified in the transfer notice. The transfer notice shall constitute an offer by the proposing transferor to the other members of the Company holding shares of the class or classes included in the transfer notice and shall not be revocable except with the sanction of the directors.

If the transfer notice pertains to shares of more than one class then the consideration and terms of payment for each class of shares shall be stated separately in the transfer notice. (

b) The directors shall forthwith upon receipt thereof transmit the transfer notice to each of the members, other than the proposing transferor, holding shares of the class or classes set forth in the transfer notice and request the member to whom the transfer notice is sent to state in writing within 14 days from the date of the transfer notice whether he is willing to accept any, and if so, the maximum number of shares he is willing to accept at the price and upon the terms specified in the transfer notice. A member shall only be entitled to purchase shares of the class or classes held by him. (

c) Upon expiration of the 14 day notice period referred to in

Article 25.1(b), if the directors shall have received from the members entitled to receive the transfer notice sufficient acceptances to take up the full number of shares offered by the transfer notice and, if the transfer notice includes shares of more than one class, sufficient acceptances from the members of each class to take up the full number of shares of each class offered by the transfer notice, the directors shall thereupon apportion shares so offered among the members so accepting and so far as may be, pro rata according to the number of shares held by each of them respectively, and in the case of more than one class of share, then pro rata in respect of each class.

If the directors shall not have received sufficient acceptances as aforesaid, they may, but only with the consent of the proposing transferor who shall not be obliged to sell to members in the aggregate less than the total number of shares of one or more classes of shares offered by the transfer notice, apportion the shares so offered among the members so accepting so far as may be according to the number of shares held by each respectively but only up to the amount accepted by such members respectively.

Upon any such apportionment being made the proposing transferor shall be bound upon payment of the price to transfer the share to the respective members to whom the directors have apportioned same.

If, in any case the proposing transferor, having become so bound fails in transferring any share, the Company may receive the purchase money for that share and shall upon receipt cause the name of the purchasing member to be entered in the register as the holder of the share and cancel the certificate of the share held by the proposing transferor, whether the same shall be produced to the Company or not, and shall hold such purchase money in trust for the proposing transferor.

The receipt of the Company for the purchase money shall be a good discharge to the purchasing member and after his name has been entered in the register the validity of the proceedings shall not be questioned by any person. (

d) In the event that some or all of the shares offered shall not be sold under the preceding Articles within the 14 day period referred to in Articles 25.1 (b), the proposing transferor shall be at liberty for a period of 90 days after the expiration of that period to transfer such of

the shares so offered as are not sold to any person provided that he shall not sell them at a price less than that specified in the transfer notice or on terms more favourable to a purchaser than those specified in the transfer notice. (the “ROFR Provision”) Consent Transfer (

e) the provisions as to transfer contained in this

Article shall not apply: (

i) if before the proposed transfer of share is made, the transferor shall obtain consents to the proposed transfer from members of the Company, who at the time of the transfer are the registered holders of two-thirds or more of the issued shares of the class to be transferred of the Company or if the shares comprise more than one class, then from the registered holders of two-thirds or more of the shares of each class to be transferred and such consent shall be taken to be a waiver of the application of the preceding Articles as regards such transfer; or … (the “Consent Transfer Provision”) Directors’ Absolute Discretion 25.2 Notwithstanding anything contained in these Articles the Directors may in their absolute discretion decline to register any transfer or shares and shall not be required to disclose their reasons therefor. (the “Directors’ Absolute Discretion Provision”) [ 76 ] The ROFR Provision includes reference to giving “notice”.

The Articles expressly contemplate when a “notice” is effective in

Article 21.1 as follows: Notices 21.1 A notice… may be given or delivered by the Company to any member either by delivery to him personally or by sending it by mail to him to his address as recorded in the register of members.

Where a notice… is sent by mail, service or delivery of the notice… shall be deemed to be effected by properly addressing, prepaying and mailing the notice […] and to have been given on the day, Saturdays, Sundays, and holidays excepted, following the date of mailing… (the “Notice Provision”) [ 77 ] Between 1992 and 2016, there were a few informal, uncontentious transfers of shares in Mapleguard. When these transfers occurred, Mr. Rodway, as Mapleguard’s solicitor, would send a letter informing shareholders of a transfer and the option of exercising a ROFR.

No one ever exercised the right. [ 78 ] In about 2012, the shareholders began to discuss selling Mapleguard. In 2014, the Property was appraised at $725,000. The appraisal was circulated among the shareholders, but the Property was not listed for sale. [ 79 ] On June 26, 2015, shareholder Mr. J. Engelsman passed away. Mr. J. Engelsman owned the Disputed Shares, constituting 30 out of the 100 Class A Shares, and 205,700 out of the 636,000 Class B Shares. This corresponded to Mr. J. Engelsman having leases for three apartments in the Buildings; specifically, units 7, 8, and 10. [ 80 ] After Mr. J.

Engelsman’s death, his son and executor of his estate, Mr. L. Engelsman, tried to sell the Disputed Shares. He placed a “for-sale” sign for the Disputed Shares on the Property, but by the fall of 2016 he had the sign removed. [ 81 ] In the middle of September 2016, Mr. Engelsman reached out to the Davidges and asked them if they were interested in purchasing the Disputed Shares. They began discussions. [ 82 ] On September 24, 2016, the annual general meeting of Mapleguard’s shareholders took place (the “AGM”). There was a vacancy on the board of directors and one of the Plaintiffs, Ms.

Kermeen, was elected as Vice President. After the AGM, Mapleguard’s board of directors consisted of: Mr. Davidge as President; Ms. Kermeen as Vice President ; and Ms. Dunsmore as Secretary/Treasurer (the “Board of Directors”). [ 83 ] There is a factual dispute about whether the Plaintiffs inquired about the Disputed Shares at the AGM and whether the Davidges replied to their inquiry in a misleading way, or at all. [ 84 ] The Plaintiffs ask me to find that they inquired at the AGM whether the Disputed Shares would be offered for sale and that the Davidges answered their inquiry “in the negative”.

The Plaintiffs believe the Davidges responded in this way in a deliberate effort to keep the offer for sale to themselves. Mr. Davidge has no recollection of them being asked any such question or them giving any such response. He denies doing this. [ 85 ] To the extent it is necessary to resolve this factual dispute, I do so in favour of the Davidges. I find that Ms. Kermeen’s evidence on this point is unreliable. The minutes of the AGM do not reflect any discussion of the Disputed Shares and Ms.

Kermeen’s evidence on this point has been inconsistent. [ 86 ] In her first affidavit filed in the Action (sworn January 25, 2017), Ms. Kermeen deposed that she and her husband first learned that the Engelsman Estate was going to offer the Disputed Shares for sale in September 2016. This evidence changed when, in her first affidavit in the Petition (sworn November 19, 2018), Ms. Kermeen deposed that her previous evidence was in error and that she and her

husband did not learn the Engelsman Estate was going to offer the Disputed Shares for sale until October 2016. She also deposed that sheand her husband had asked about the sale of the Disputed Shares at the AGM, but received no response at that time. [87] Ms. Kermeen’s evidence on this point changed again in her third affidavit in the Action (sworn March 20, 2023). Here, shedeposed that she and her husband actually received a response from the Davidges to their inquiry about the Disputed Shares at the AGM.According to Ms. Kermeen, the Davidges answered their inquiry “in the negative.” [88] I accept Mr.

Davidge’s evidence on this point. His evidence has not changed and is consistent with the minutes of the AGM. Ifind the Plaintiffs did not inquire about the Disputed Shares at the AGM, nor did the Davidges do or say anything in an attempt toconceal information about the Disputed Shares as alleged, or at all. [89] In making this finding, I am not impugning Ms. Kermeen’s credibility. The unreliability of her memory is a reflection of the timethat has passed.

These events happened several years ago now and memories will understandably be imperfect. [90] Discussions regarding the purchase of the Disputed Shares continued between the Engelsman Estate and the Davidges. On orabout October 12, the Davidges agreed to purchase the Disputed Shares for the sum of $52,500. On October 20, 2016, the Davidgesdelivered a $5,000 deposit to Mr. Rodway, who in turn delivered the deposit to the solicitors acting for the Engelsman Estate in thetransaction, Waterstone Law Group. [91] Also in October 2016, the Plaintiffs learned the Disputed Shares were to be offered for sale.

They were interested, but unsure ofthe process for shares in Mapleguard to be transferred, so they contacted Mr. Rodway. In response to their inquiry, Mr. Rodway wrote tothe Plaintiffs on October 21, 2016, outlining the general process for a transfer, as he understood it. [92] Mr. Rodway told the Plaintiffs that under

Part 25 of the Articles there was a ROFR on the transfer of shares in Mapleguard. Heexplained that any offer to purchase shares must be sent to the existing Mapleguard shareholders (through him), who would then begiven 14 days to respond as to whether or not they wished to purchase the shares. Assuming no one exercised their ROFR, he explainedthat his law firm would then prepare all necessary documents to effect the transfer of the shares and the assignment of the associated unitlease. Once these documents were signed by the purchaser and vendor, Mr.

Rodway wrote that they would then be “presented to thedirectors and shareholders of Mapleguard for signature”. He added that, as a condition of any transfer of shares, the new shareholder,remaining shareholders and Mapleguard must all enter into a shareholders’ agreement, before the directors approved the transfer. [93] This seems a convenient point to discuss the use of legal opinions in this case. [94] As seen above, and as will been seen as this chronology unfolds, various lawyers provided opinions to the parties about how thetransfer provisions in the Articles were to be construed at the time of these events.

The drafter of the Articles, Mr. Rodway, also offeredan opinion on this topic years later, at his examination for discovery. As there was some disagreement between counsel at the hearingabout the use to be made of these opinions, it is important for me to clearly outline their permissible uses from the outset. [95] None of the lawyers who offered opinions to the shareholders or to their respective clients about the

interpretation of the Articlesat the time of the events (or years later in the case of Mr. Rodway) were called as witnesses in this case, nor were any of their opinionstendered as expert evidence. None of their opinions are admissible for the purpose of assisting the court with its

interpretation of theArticles. [96] Where matters call for special knowledge, an expert may draw inferences and offer an opinion. The expert’s function is toprovide the trier of fact with ready-made inferences that the trier of fact was unable to formulate due to the technical nature of the factsinvolved: R. v. Abbey, [1982] 2 S.C.R. 24 at 42, . The

interpretation of contractual documents, in this case the Articles, iswithin the specialized expertise of the court itself. The court can form its own opinion on the correct

interpretation of the Articleswithout the assistance of a legal expert. [97] The various legal opinions offered to the parties at the time the events occurred are admissible for two limited purposes:

i) ascontext, to explain why the parties took the steps they did at the time; and, ii) in the case of the Plaintiffs, to inform the reasonableexpectations they may have held at the time of these events. [98] Mr. Rodway’s later opinion, the one he offered at his examination for discovery, is not admissible for any purpose. I will discussthis in greater detail later in these reasons. I return now to my findings of fact. [99] On October 25 and 26, 2016, Mr.

Rodway wrote to all of the shareholders of Mapleguard (except the Engelsman Estate and theDavidges), notifying them of the proposed transfer of the Disputed Shares to the Davidges (the “Transfer Notice”). [100] The Transfer Notice, a letter dated October 25, 2016, states: Dear Sir/Madame: Re: Mapleguard Apartments Ltd. (the “Company”); Transfer of Shares – Estate of Jan Engelsman to Davidge We enclose the following documentation with respect to the above noted transfers: 1. Notice of Sale; and 2. Waiver form consenting to the transfer from the Estate of Engelsman to the Davidges pursuant to the Notice of Sale.

If you do notwish to invoke your right of first refusal, could you please return the executed waiver to the writer; Should you have any questions, please do not hesitate to contact us. Your early return of the documents would be greatly appreciated.

[ 101 ] Mr. Rodway’s office emailed the Transfer Notice, along with the attachments, to the Plaintiffs on October 26, 2016. The Plaintiffs also received it by mail, with an envelope post-marked October 28, 2016. [ 102 ] The first attachment, the Notice of Sale, is dated October 25, 2016.

It states: LAWRENCE JOHN ENGELSMAN, executor of the Estate of Jan Englesman hereby gives notice that he intends to sell: (1) 30 Class “A” shares; (2) 205,700 Class “B” shares; (3) all of the Estate’s interests in the lease of Units 7,8 and 10, 151 Burne Road, Bowser, B.C.; for the sum of $52,500.00 to NEIL [sic] DAVIDGE AND ISOBEL DAVIDGE of 3915 – 156th Street, Surrey, British Columbia to be completed on or before December 1, 2016 [ 103 ] The second attachment, the waiver form, was for each shareholder to date, sign and return.

Among other things, it stated that the shareholder: …HEREBY WAIVES their rights to under the Articles of the Company and otherwise to acquire any of the [Disputed Shares] proposed to be transferred by the Estate of Jan Englesman [sic] to Neil [sic] Davidge and Isobel Davidge pursuant to a Notice of Sale dated the 25th day of October, 2016. [ 104 ] Ms. Dunsmore emailed Mr. Rodway a signed waiver. She also sent him signed waivers on behalf of Mr. Hindle and Ms. Brillion. [ 105 ] The Plaintiffs retained counsel, Michael Genge, to act on their behalf. On November 4, 2016, Mr. Genge wrote to Mr.

Rodway and advised that his clients had received the Notice of Sale and wished to invoke their ROFR. Although Mr. Genge wrote that his clients were doing so pursuant to “section 25 of the Shareholders Agreement”, I am satisfied he intended to convey that they were doing so pursuant to the ROFR Provisions in the Articles. Mr. Genge further wrote that his clients “accordingly accept the offer to buy the shares of Jan Engelsman pursuant to the terms and conditions set out in the attached Notice of Sale.” [ 106 ] Mr. Rodway informed Ms. Dunsmore, as a director of Mapleguard, of the contents of Mr.

Genge’s correspondence. Ms. Dunsmore left it to Mr. Rodway to determine its implications. [ 107 ] On November 9, 2016, Mr. Rodway asked the Engelsman Estate for its position on the Plaintiffs’ exercise of their ROFR. Mr. Engelsman replied the next day and advised Mr. Rodway that the Engelsman Estate wished to pursue the sale to the Davidges alone, with the intention of closing on November 30. He wrote: Scott, Do you have an

interpretation to

article 25 as per our conversation yesterday? What I would like to do is push ahead with the deal with Neil [sic] with the intention of closing on November 30th. Let them deal with fall out, if any. [ 108 ] It was around this time that the Davidges retained counsel, Carl Holm, to act on their behalf. [ 109 ] On November 12, 2016, Mr. Rodway emailed Mr. Holm, to inform him that the Plaintiffs were seeking to invoke their ROFR. Mr. Rodway also advised Mr.

Holm that he could see no way to avoid the ROFR Provisions unless the Engelsman Estate acted under the Consent Transfer Provision and obtained the consent of two-thirds of the shareholders to a transfer directly to the Davidges prior to completion of the transfer. Mr. Rodway expressed his view that acting under the Consent Transfer Provision required “a consent to the transfer from the members and not a waiver or a a failure to respond to the right of first refusal”. [ 110 ] Mr. Rodway also advised Mr.

Holm in this correspondence that Mapleguard had not provided the Transfer Notice to the Davidges, who he concluded were also entitled to exercise the ROFR. He attached the Transfer Notice. The Transfer Notice and its attachments were mailed to the Davidges on November 14, 2016. Pursuant to the Notice Provision, it was deemed delivered to them on November 15, 2016. [ 111 ] On November 21, 2016, Mr. Holm sent an email to Mr. Rodway asking for particulars of the number of Disputed Shares available for purchase by the Davidges . [ 112 ] On November 23, 2016 at 8:55 a.m., Mr. Rodway sent an email to Mr.

Holm outlining where he thought things stood. He included Mr. Engelsman and Ms. Dunsmore in this email. Among other things, Mr. Rodway told Mr. Holm that the Plaintiffs were the only shareholders who had, by that time, exercised their ROFR and that the Plaintiffs would therefore be considered the only purchasers under the Articles. He further advised that if the Davidges were also exercising their ROFR, there would be a pro rata split of the Disputed Shares between the Plaintiffs and the Davidges . He also provided his opinion as to the precise apportionment that would occur in that event. [ 113 ] Mr.

Holm wrote back to Mr. Rodway, by letter, that same day. Mr. Holm said he was puzzled by Mr. Rodway’s position that the Plaintiffs were the only purchasers of the Disputed Shares to date. Mr. Holm detailed the Davidges’ conduct in relation to the Disputed Shares to that point, including that they had signed a contract with the Engelsman Estate on October 12 for their purchase, and had forwarded the purchase funds to Mr. Rodway. Based on this conduct, Mr. Holm expressed his belief that Mr. Rodway had “[n]otice of Mr. and Mrs.

Davidge’s intention to purchase the shares pro-rata” and that the Davidges “have not waived their right to purchase”. He expressed certainty that Mr. Rodway, as Mapleguard’s corporate solicitor, was “well aware” of the Davidges’ intentions in this regard. [ 114 ] In this same letter, Mr. Holm also wrote about next steps, including the movement of the trust funds. He indicated that he would rely on Mr. Rodway’s apportionment calculations, and that it would ultimately be necessary for Mr. Engelsman’s counsel to secure Mr.

Engelsman’s signature “on the Transfer and Assignments (pro rata) of the leases”. Mr. Holm noted that time was of the essence and that Mr. Engelsman, who was soon to be out of town for a period of time, had to execute these documents on or before November 25, 2016. [ 115 ] The Davidges and Mapleguard take the position that Mr. Holm’s November 23 correspondence to Mr. Rodway as I have just described constitutes an exercise of the Davidges’ ROFR under the ROFR Provisions. The Plaintiffs submit that it does not. [ 116 ] When I consider the language used by Mr.

Holm throughout his letter in context of all that was occurring at the time, I find there can be no doubt that the Davidges exercised their ROFR through their counsel’s correspondence to Mapleguard’s counsel on November 23, 2016, within 14 days of their receiving notice of the proposed sale. Mr. Holm expressly stated the Davidges were not waiving any of their rights and said more than once that his clients would purchase the Disputed Shares pro rata . That this letter came to light through Mr.

Rodway’s discovery responses later in this litigation and that the Davidges ultimately pursued an undivided purchase of the Disputed Shares under the Consent Transfer Provision, is immaterial to this finding. [ 117 ] By November 24, 2016, the following shareholders had returned signed waiver forms, waiving their ROFR: Ms. Brillion, Ms. Dunsmore, the Waddens, the Christies, and Mr. Hindle. [ 118 ] It was around this time that the Engelsman Estate retained counsel, Edward Kaye, to act on its behalf. [ 119 ] At 2:36 p.m. on November 24, 2016, Mr. Kaye responded to Mr. Rodway’s November 23 email.

The Engelsman Estate wished to pursue sale of the Disputed Shares to the Davidges only, using the Consent Transfer Provision. Mr. Kaye took the position that the ROFR Provision would not apply if two-thirds of the shareholders consented to a direct transfer to the Davidges under the Consent Transfer Provision, pointing out that nine out of ten units had already consented and waived their ROFR. [ 120 ] Mr. Rodway replied to Mr. Kaye about two hours later. He included Mr. Holm and Ms. Dunsmore in the email chain.

He expressed his position that the waivers already returned by the shareholders were not sufficient to trigger the Consent Transfer Provision. He expressed the view that the shareholder consent required under the Consent Transfer Provision was different than a shareholder’s waiver of the ROFR. He wrote: I am of the opinion that the consent process under

Article 25.1(e)(

i) requires a consent to the transfer from the shareholder not a waiver of the shareholders [sic] right to participate in the Right of First Refusal. This is substantiated by the last part of

Article 25.1(e)(

i) which indicates that the consent to the transfer is a waiver of the

Article 25.1(

a) procedure not a part of it. I believe a consent is different than the waiver. [ 121 ] Like the Engelsman Estate, the Davidges also wanted to pursue the purchase and transfer of the Disputed Shares to themselves under the Consent Transfer Provision. [ 122 ] As a result of Mr. Rodway’s position that the waiver that had been previously sent out to the shareholders was different than the consent that was required under the Consent Transfer Provision, Mr. Davidge sent an email (copied to his counsel Mr. Holm) to the Other Shareholders (other than Ms.

Brillion who did not have email) at 5:37 p.m. on November 24, 2016 to ask for their consent to the transfer. [ 123 ] The subject line of the email reads: “Transfer/Sale of shares Unit 10, 8, & 7”. The parties referred to this email as the “At This Late Hour Email” throughout their submissions, a reference to the introductory words used by Mr. Davidge in the body of the email. I will refer to this email in the same manner. [ 124 ] In the At This Late Hour Email, Mr. Davidge asked the Other Shareholders for a return email indicating each shareholder’s consent to the transfer of the Disputed Shares. He asked Ms.

Dunsmore to ask Ms. Brillion for consent as Ms. Brillion did not have email. Mr. Davidge expressed some urgency with his request. As a result of his understanding that Mr. Engelsman was leaving town and needed to execute the documents no later than November 25, 2016, Mr. Davidge wrote that he needed the information from them by the next day and referred to “contractual arrangements being processed tomorrow”. [ 125 ] Ms. Dunsmore replied to the At This Late Hour Email promptly, at 6:05 p.m..

She wrote: This is to advise that I consent to the transfer of shares for Units 7, 8 and 10 of Mapleguard Apartments Ltd. [ 126 ] Mr. Hindle also replied promptly to the At This Late Hour Email. At 6:45 p.m., he emailed to indicate that while he had waived his ROFR, he would not provide his consent to the transfer. [ 127 ] The next day, November 25, 2016, was a very busy day. The shareholders were corresponding, as were the various lawyers. [ 128 ] On the morning of November 25, 2016, Ms. Dunsmore sent Mr. Davidge two emails—the first at 6:38 a.m. and the second at 11:15 a.m.

Collectively, I will refer to these two emails as the “Dunsmore Clarification Emails”. [ 129 ] By the time of her first email that morning, Ms. Dunsmore had read Mr. Hindle’s email reply from the previous evening (which she described as a “rant”). As a result, she first wrote to Mr. Davidge to ask him to clarify the consent he had asked for in the At This Late Hour Email. At the time Ms. Dunsmore sent this email, she mistakenly thought Mr. Davidge had asked for the Other Shareholders to consent to a pro rata division of the Disputed Shares. Ms.

Dunsmore’s 6:38 a.m. email reads: Neal – I think you need to clarify to everyone who the shares are being transferred to and how many. Your e-mail makes it look like they’re all going to you and may be one of the reasons for Len’s “rant”. [ 130 ] When Mr. Davidge had not responded to her first email by 11:15 a.m., Ms. Dunsmore emailed him again. In this second email, Ms.

Dunsmore clarified that the consent she provided the previous evening had been to the transfer of the Disputed Shares “as per Scott Rodway’s e-mail of November 23, 2016”, with the Disputed Shares to be apportioned between the Davidges and the Plaintiffs. Ms.

Dunsmore wrote: Neal To clarify my consent to the transfer of shares for Mapleguard Apartments Ltd.: I am consenting to the transfer as per Scott Rodway’s e- mail of November 23, 2016 with the Class B shares being split between you and Isabel (69.60%) and Cheryl Kermeen and Mark Ferguson (39.40%). Barb [ 131 ] At the time she wrote the Dunsmore Clarification Emails, Ms. Dunsmore believed that an apportionment of the Disputed Shares could work for Mapleguard. As will be seen, her position in this regard changed. [ 132 ] The Waddens and the Christies did not misunderstand the At This Late Hour Email as Ms.

Dunsmore had. [ 133 ] The Waddens replied, by email, to the At This Late Hour Email, on November 25, 2016 at 8:08 a.m., consenting to the transfer of the Disputed Shares to the Davidges. Mr. Wadden wrote: I consent to transfer of shares of Mapleguard Apartments Ltd 7 8 and 10 to Neal Davidge. [ 134 ] The Christies also replied, by email, to the At This Late Hour Email on November 25, 2016. They consented to the transfer of the Disputed Shares to the Davidges. They wrote: Hello Neal: We, Robert and Belva Christie “we consent to transfer” shares in units 10, 7, & 8 at Mapleguard Apt Ltd.

Hope this is enough information for you. Thanks Robert and Belva Christie [ 135 ] Mrs. Christie has sworn an affidavit confirming that she understood at the time of this email that the Christies were consenting to have the Disputed Shares all transferred to the Davidges, and not to the Plaintiffs. [ 136 ] Mr. Davidge forwarded all of the email consents he received to Mr. Holm. [ 137 ] The Plaintiffs ask me to find that Mr. Davidge intentionally withheld disclosure of the Dunsmore Clarification Emails. I decline to make this finding. [ 138 ] Mr. Davidge denies this accusation.

He does not recall when he first saw the Dunsmore Clarification Emails, but, as will be seen, his counsel, Mr. Holm, knew the same day the Dunsmore Clarification Emails were sent that Ms. Dunsmore’s consent may have been for a pro rata division and not a direct transfer to the Davidges. Things were happening quickly that day, with many emails flying. Whether Mr. Davidge forwarded the Dunsmore Clarification Emails or not, the information they contained was not withheld. Mr. Holm had the key information from the Dunsmore Clarification Emails—that Ms.

Dunsmore’s email consent had been for a pro rata division of the Disputed Shares—the very day the information came to light. As will also be seen, Mr. Holm passed on this key information to others. Nothing was withheld. [ 139 ] While the shareholders were communicating that day, so were the lawyers. On November 25, 2016, Mr. Kaye responded to Mr. Rodway’s November 24 position on the necessary “consent” required. He disagreed with his position, writing: I’m not sure what you are saying. Regardless of whether you call it a consent or a waiver, 9 of the 10 say that are OK with the transfer.

You seem to be saying that there is a RFR, and it applies. On a plain reading of the provision, this is not the case.

Section 25.1(

e) says that the other provisions don’t apply at all if before the transfer is made the transferor obtains consents from members who hold 2/3 or more of the shares. […] I also note that the provision does not say that you need a written consent, just a consent. [ 140 ] Later in the day on November 25, 2016, Mr. Kaye sent an email to Mr. Holm asking that the Davidges sign a consent form enclosed with the email. He advised Mr.

Holm that the Engelsman Estate would be signing the same consent form (consenting to a direct transfer of the Disputed Shares to the Davidges only) and that he would be endeavouring to get the other owners to “either verbally consent, email Scott Rodway with their consent, or sign a Consent.” [ 141 ] On November 25, 2016, Mr. Engelsman, on behalf of the Engelsman Estate, signed the consent form, consenting to transfer the Disputed Shares directly to the Davidges. [ 142 ] Next, Mr. Holm’s assistant, Nicole Gregerson, sent an email to Mr. Kaye, enclosing the email consents from Ms.

Dunsmore, the Christies and the Waddens. Ms. Gregerson expressly noted in her correspondence that Ms. Dunsmore’s email consent did not specify that her consent was to have the Disputed Shares transferred directly to the Davidges . [ 143 ] Ms. Gregerson emailed Mr. Kaye again about 15 minutes later. She advised Mr. Kaye that Ms. Dunsmore may only be consenting to a “divided transfer,” not 100% to the Davidges. She wrote: Just trying to reach our client [Mr. Davidge] – Carl [Mr.

Holm] thinks that Barbara Dunsmore consents to the divided transfer, not 100% to the Davidges, which would explain why her email did not specify. [ 144 ] This correspondence makes clear, as I found earlier, that Mr. Holm was in possession of the information contained in the Dunsmore Clarification Emails on the same day Ms. Dunsmore shared the information with Mr. Davidge.

[ 145 ] On November 27, 2016, Mr. Kaye forwarded all of the consents obtained to that point, including the email consents and his client’s executed consent form, to Mr. Rodway. Indicating that these consents, along with the Davidges’ anticipated consent, reflected more than the two-thirds required by the Consent Transfer Provision, Mr. Kaye asked for Mr.

Rodway’s confirmation that the Engelsman Estate’s proposed transfer of the Disputed Shares to the Davidges would be accepted. [ 146 ] On November 27, 2016, the Davidges executed a consent form consenting to the transfer of the Disputed Shares to them. [ 147 ] On November 28, 2016, Mr. Rodway sent an email to all other counsel (Mr. Kaye, Mr. Holm, and Mr. Genge) and Ms. Dunsmore. Mr. Rodway stated that he could not advise Mr. Kaye as to whether or not the consents received were sufficient to effect a sale of the Disputed Shares to the Davidges, indicating that this would be a decision for the Board of Directors.

He wrote that he could express an opinion to the Board of Directors, but that it would be for them to determine what they “can and will do.” Mr. Rodway also advised that Ms. Dunsmore had sent him an email clarifying the terms of her consent . [ 148 ] On November 29, 2016, Mr. Kaye sent consent forms, specifically requesting consent for a transfer of the Disputed Shares to the Davidges alone, to Ms. Dunsmore for herself, Mr. Hindle, and Ms. Brillion to sign. [ 149 ] At 7:35 p.m. on November 29, 2016, one of the Plaintiffs, Mr. Ferguson, wrote an email addressed to Ms. Dunsmore, Mr. Hindle and Ms.

Brillion, forcefully advocating for them to refuse to consent to the transfer to the Davidges alone. Mr. Ferguson’s animus toward Mr. Davidge was clear in this correspondence. He alleged that Mr. Davidge would use a controlling shareholding in Mapleguard for his own personal benefit. He wrote, in part: …The big picture is Neil having complete voting power. He will invite us all up to his new Penthouse Suite and we can all listen as he makes all the decisions on the fate and future of Mapleguard Apartments. We all know that the end is near, but at what price and how near?

Its all up to Neal if he gets 100% of Englesmans shares. He will be looking down on everybody from the penthouse as we all move out ,,,, one by one …when they condemn the apartments below or when there is an assessment for repairs that is just too high to pay. No matter how many spins you put on it, we as shareholders, are going to lose when [Neal] votes not to repair something or wants another ‘QUALIFIED ENGINEER’ to come for another inspection. He will still be standing tall as HE sells the company for nothing !! .

At least as shareholders, with a vote that counts, if we sell the place we can vote for the best market value. Not some ridiculous low price or hope for a ridiculous high price. Don’t forget Englesman sold his shares for next to nothing. Stay tuned to see what happens with my offer of $10,000 to buy the Christies place. More than likely, he’ll be in there getting 100% of that too? We need you as shareholders to vote AGAINST THE TRANSFER OF 100% OF ALL SHARES from Englesman to Davidge. The division, if you vote our way, of Englesman shares will be approx. 70% Davidge 30% Ferguson / Kermeen.

But most importantly, NEIL WILL NOT HAVE COMPLETE VOTING CONTROL! [ 150 ] Mr. Hindle replied a short time later, agreeing with Mr. Ferguson. He expressed his view that Ms. Dunsmore will net less for her unit unless she “stands up to Neal and declines to sign the consent” to the transfer to the Davidges alone. [ 151 ] Mr. Ferguson’s email changed Ms. Dunsmore’s mind. She previously believed that an apportionment of the Disputed Shares between the Plaintiffs and the Davidges could work for Mapleguard, but after reading Mr. Ferguson’s email, it became clear to Ms.

Dunsmore that it would not be workable for the Disputed Shares to be apportioned between the Plaintiffs and the Davidges. Ms. Dunsmore disagreed with Mr. Ferguson’s accusation that Mr. Davidge was planning on gaining control over Mapleguard to personally benefit himself at the disadvantage of the Other Shareholders. [ 152 ] Ms. Dunsmore was concerned that if the Disputed Shares were apportioned it would create difficulties for Mapleguard, as the Davidges and the Plaintiffs would inevitably disagree over management of the corresponding units. After reading Mr. Ferguson’s email, Ms.

Dunsmore decided firmly, on November 29, 2016, that she consented to the transfer of the Disputed Shares directly to the Davidges. She concluded that the apportionment of Disputed Shares between the Plaintiffs and the Davidges would not be in the best interests of Mapleguard. [ 153 ] I agree with the positions of Mapleguard and the Davidges that Mapleguard was faced with two potential outcomes from all of this. Neither potential outcome would see the Plaintiffs receive all of the Disputed Shares.

Either the Davidges would receive the Disputed Shares under the Consent Transfer Provision if the necessary consent threshold was achieved, or the Disputed Shares would be apportioned pro rata between the Davidges and the Plaintiffs under the ROFR Provision. [ 154 ] Ms. Dunsmore was clearly aware of these two alternatives and the Davidges’ exercise of their ROFR.

She initially consented to the pro rata apportionment, but changed her mind on November 29, 2016 and decided to consent to the Engelsman Estate transferring the Disputed Shares only the Davidges, without apportionment to the Plaintiffs. [ 155 ] Although she made this decision firmly on the evening of November 29, Ms. Dunsmore did not sign her written consent to the transfer of the Disputed Shares to the Davidges under the Consent Transfer Provision until the following day, November 30, 2016. Her executed written consent provides as follows: WHEREAS: A.

Jan Adrian Den Engelsman is the registered holder of 30 Class “A” Common and 205,700 Class “B” Common shares (the “Shares”) in the capital of Mapleguard Apartments Ltd, which represent Jan Adrian Den Engelsman’s rights to three of the 10 residential units (the “Units”) in Mapleguard Apartments; B. Jan Adrian Den Engelsman died on June 26, 2015; C. On October 7, 2016 Lawrence John Elgelsman obtained a Grant of Probate of the Will of Jan Adrian Den Engelsman; D. Lawrence John Engelsman wishes to transfer to Neal Davidge and Isobel Davidge all of the Shares and all interest of Jan Adrian Den Engelsman in the Units;

E. The Articles of Mapleguard Apartments Ltd. provide in Sections 25.1(

a) to (

d) that the other owners of Shares in Mapleguard Apartments Ltd. have a right of first refusal, and

Section 25.1(e)(

i) provides that “the provisions as to transfer contained in this

Article shall not apply if before the proposed transfer of share is made, the transferor shall obtain consents to the proposed transfer from members of the Company, who at the time of the transfer are the registered holders of two-thirds or more of the issued shares of the class to be transferred of the Company or if the shares comprise more than one class, then from the registered holders of two-thirds or more of the shares of each class to be transferred and such consent shall be taken to be a waiver of the application of the preceding Articles as regards such transfer.” F.

The undersigned is the registered and beneficial owner of 10 Class “A” Shares and 82,900 Class “B” Shares in the capital of Mapleguard Apartments Ltd. and consents to the transfer referred to in recital D above; NOW THEREFORE, I, Barbara Dunsmore do hereby consent to the transfer of all the Shares from Jan Adrian Den Engelsman and/or Lawrence John Engelsman, Executor of the Estate of Jan Adrian Engelsman, to Neal Davidge and Isobel Davidge for the purposes of

Section 25.1(e)(

i) of the Articles of Mapleguard Apartments Ltd. [ 156 ] Ms. Dunsmore was not aware of any alleged deadline for securing the necessary number of consents to the transfer of the Disputed Shares to the Davidges.

Her understanding at the time was that if the required two-thirds consent threshold was achieved, the Engelsman Estate and the Davidges would be permitted to continue the process of the Davidges’ purchase of the Disputed Shares from the Engelsman Estate. [ 157 ] In the end result, the position taken by the shareholders of Mapleguard in regard to the transfer of Disputed Shares from the Engelsman Estate to the Davidges under the Consent Transfer Provision was as follows : Shareholder Number of Shares Percentage of Shares Position for or against Mark Ferguson and Cheryl Kermeen 10 Class A 34,900 Class B 10% Class A 5.487% Class B Against Juanita Brillion 10 Class A 33,900 Class B 10% Class A 5.330% Against Leonard Hindle 10 Class A 77,900 Class B 10% Class A 12.248% Against Patrick and Aiko Wadden 10 Class A 85,900 Class B 10% Class A 13.506% For Robert and Belva Christie 10 Class A 34,900 Class B 10% Class A 5.487% Class B For Barbara Dunsmore 10 Class A 82,900 Class B 10% Class A 13.034% Class B For Jan Engelsman (the Engelsman Estate) 30 Class A 205,700 Class B 30% Class A 32.342% Class B For Neal and Isobel Davidge 10 Class A 79,900 Class B 10% Class A 12.562% Class B For Total Against 30 Class A 146,700 Class B 30% Class A 23.07% Class B Total For 70 Class A 489,300 Class B 70% Class A 76.93% Class B [ 158 ] This result clearly meets the two-thirds threshold required by the Consent Transfer Provision.

On November 30, 2016, the Davidges entered into a written contract with the Engelsman Estate for the purchase of the Disputed Shares (the “Share Purchase Contract”). [ 159 ] The Share Purchase Contract closed on the same date. On that date, the Davidges delivered the remaining balance of the purchase price in the amount of $47,500 to Waterstone Law Group. [ 160 ] On November 30, 2016, the Engelsman Estate signed an application for transfer, requesting that Mapleguard complete the transfer of the Disputed Shares to the Davidges. [ 161 ] On December 13, 2016, Mr.

Rodway provided the Board of Directors with an opinion (the “Rodway Opinion”) on the request that had been made to have Mapleguard effect the transfer of Disputed Shares as per the Share Purchase Contract. He enclosed correspondence from Mr. Holm and copies of the consents. He explained the Consent Transfer Provision and noted that, in his opinion, it does not indicate that the consent has to be in any particular form or that it has to be in writing.

He wrote that “it would appear from the correspondence received that [the required] consents have been obtained.” He explained that if the Board of Directors found the consents

were acceptable, it was his opinion that the procedure in the Consent Transfer Provision “has been met and the right of first refusal procedure does not apply”. He further wrote: As such, even though the Company undertook the right of first refusal procedure and there was an exercise of that right of first refusal procedure by Mr. Ferguson and Ms. Kermeen, it would appear that

Article 25.1(e)(

i) renders that procedure inoperable. [ 162 ] Mr. Rodway recommended the Board of Directors proceed with the resolution transferring the Disputed Shares to the Davidges. [ 163 ] Ms. Dunsmore signed the directors’ resolution effecting the transfer from the Engelsman Estate to the Davidges, but Ms. Kermeen refused to sign. Th

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