Supreme Court of Canada
Witco v. The Corporation of Oakville, [1975] 1 S.C.R. 273
Date: 1974-02-12
Witco Chemical Company, Canada, Limited (Plaintiff) Appellant;
and
The Corporation of the Town of Oakville and the Public Utilities Commission of the Town of Oakville, also Known as the Oakville Public Utilities Commission (Defendants) Respondents.
1973: November 29; 1974: February 12.
Present: Fauteux C.J. and Abbott, Martland, Judson, Ritchie, Spence, Pigeon, Laskin and Dickson JJ.
ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.
Company law—Amalgamation—Continuance of amalgamating corporation as a corporate entity—Effect of amalgamation—The Business Corporations Act, R.S.O. 1970 c. 53, s. 197(4).
Practice—Amalgamation of corporations—Amendment of style of cause—Status of amalgamating corporation to sue after amalgamation—Whether action a nullity—Right to amend style of cause.
The appellant Witco Chemical Company, Canada, Limited, incorporated in Ontario, had a plant at 1485 Speers Road in the Town of Oakville. The plant was serviced with water by the respondents. On December 31, 1971, the appellant as plaintiff issued through its solicitor, a writ in respect of damages allegedly caused on or about July 5 or 6, 1971, to the plumbing fixtures in the plant by contaminated water. During the same period however the appellant was involved in corporate reorganization and amalgamation with another company. To this end an amalgamation agreement had been executed on November 24, 1971, approved by shareholders on November 30, 1971 and submitted to the appropriate authorities. The resulting certificate issued in terms of s. 197 of The Business Corporations Act, R.S.O. 1970, c. 53 stated that “These Articles of Agreement are effective on December 30, 1971.” It was only in the course of preparations to answer a demand for particulars that the solicitor having charge of the litigation thought from indefinite information that a corporate reorganization was taking place. On receiving a copy of the certificate of agreement he sought at once to amend the writ and statement of claim. The significance being that this was weeks after January 6, 1972, the
[Page 274]
date on which the very short limitation period would bar the cause of action against one defendant. The application to amend was allowed but this order reversed on appeal by Lacourcière J. whose judgment was affirmed by the Court of Appeal for Ontario.
Held: The appeal should be allowed.
The error in the “style” of cause was in this case altogether bona fide, there was no exercise of choice as to alternative plaintiffs. Indeed the name used was the name of the occupier being supplied with water according to the respondents’ records and the name of the corporation with which the respondent had dealt in the matter of the claim. The error was quite minor and technical and the general principle is that the Court should amend where the opposite party has not been misled or substantially injured by the error. Moreover the amalgamation did not extinguish the corporate identity of the appellant Witco Chemical Company, Canada Limited but continued both the amalgamating corporations as one person.
Ladouceur v. Howarth, [1974] S.C.R. 1111; Dill v. Alves, [1968] 1 O.R. 58; Chretien v. Herrman, [1969] 2 O.R. 339; Davies v. Elsby Brothers, Ltd., [1960] 3 All E.R. 672; Williamson et al. v. Headley, [1950] O.W.N. 185; Bank of Hamilton v. Baldwin (1913), 28 O.L.R. 175; The Queen v. Black and Decker Manufacturing Company Limited (1974), 43 D.L.R. (3d) 393; Union Gas Co. of Canada Ltd. v. Brown, [1968] 1 O.R. 524; Stanward Corporation v. Denison Mines Ltd., [1966] 2 O.R. 585; Regina v. J.J. Beamish Construction Co. Ltd. et al., [1966] 2 O.R. 867 referred to.
APPEAL from a judgment of the Court of Appeal for Ontario affirming the judgment of Lacourcière J. which allowed an appeal from a decision of O’Connell Co. Ct. J. Appeal allowed.
Donald J. Wright, Q.C., and B.C. McDonald, for the plaintiff, appellant.
B.B. Papazian, for the defendants, respondents.
[Page 275]
The judgment of the Court was delivered by
SPENCE J.—This is an appeal from the judgment of the Court of Appeal for Ontario pronounced on March 8, 1973, wherein that Court dismissed an appeal from the judgment of Lacourcière J. pronounced on August 17, 1972. Lacourcière J. had allowed an appeal from the decision of O’Connell Co. Ct. J. pronounced on May 26, 1972.
His Honour Judge O’Connell had allowed the application of the appellants to amend the style of cause and show Argus Chemical Canada Limited, formerly known as Witco Chemical Company, Canada, Limited, as the plaintiff instead of Witco Chemical Company, Canada, Limited, without any further description.
Witco Chemical Company, Canada, Limited, incorporated under the laws of the Province of Ontario, had its head office in the City of Toronto and a plant at 1485 Speers Road, in the Town of Oakville, Ontario. That plant was serviced with water by the defendants. It is alleged that on or about the 5th or 6th day of July 1971, water flowed from the mains into that plant so contaminated that damage was caused to the plumbing fixtures in the plant and work had to be suspended. A firm of solicitors in the City of Toronto represented Witco Chemical Company, Canada, Limited.
One of the associates in the firm took up the matter of the damage to the plant in Oakville and the claiming of compensation therefor. During the same period, another associate in the same firm was engaged in arrangements for a corporate reorganization of the Witco Chemical Company, Canada, Limited, and an amalgamation of it with another company.
An agreement was executed on November 24, 1971 between Witco Chemical Company, Canada, Limited, and Argus Chemical Canada Limited whereby the two companies agreed to amalgamate under the latter name. This agreement was approved by shareholders on November 30, 1971 and was submitted under the
[Page 276]
provisions of The Business Corporations Act, R.S.O. 1970, c. 53, to the appropriate authorities. As a result, a certificate under the provisions of s. 197 of that statute was delivered which certificate read, in part:
These Articles of Agreement are effective on December 30, 1971.
Blissfully unaware of this progress in the corporate alteration in the company, the associate dealing with the claim against the utility company for damage caused by the contaminated water issued a writ in the County Court of the County of York on December 31, 1971. In that writ, the plaintiff is shown as Witco Chemical Company, Canada, Limited. The writ and statement of claim of even date was served by the Deputy Sheriff of the County of Halton on January 7, 1972. Some weeks thereafter, the solicitor for one of the defendants named in the writ and statement of claim by letter notified the solicitors for the plaintiff that he desired particulars of the negligence referred to in the statement of claim. In the course of preparation to answer that demand for particulars the solicitor having charge of the litigation thought of the indefinite information which had come to him that a corporate reorganization was taking place and sought more exact information from his associate engaged in the legal work in reference to that reorganization. That associate gave to him a copy of the certificate of agreement to which I have referred and he noticed immediately that the amalgamation had been effective on December 30, 1971, one day prior to the date on which he had issued the writ. This was, of course, weeks after January 6, 1972, the date when it is said the very short period of limitations provided by the applicable statute would bar the cause of action against one defendant. The solicitor at once applied to the County Court Judge to permit amendment of the writ and statement of claim.
O’Connell Co. Ct. J., in a carefully reasoned judgment, cites and analyzes many of the relevant decisions but in the end relied on the provisions of Rules 136, 185 and 186 of the Rules of Practice of the Supreme Court of
[Page 277]
Ontario to allow the amendment. I cite the said Rules in full:
136. (1) The court may, at any stage of the proceedings, order that the name of a plaintiff or defendant improperly joined be struck out, and that any person who ought to have been joined, or whose presence is necessary in order to enable the court effectually and completely to adjudicate upon the questions involved in the action, be added or, where an action has through a bona fide mistake been commenced in the name of the wrong person as plaintiff or where it is doubtful whether it has been commenced in the name of the right plaintiff, the court may order any person to be substituted or added as plaintiff.
(2) No person shall be added or substituted as a plaintiff or as the next friend of a plaintiff without his own consent in writing thereto being filed.
(3) Parties added or substituted as defendants shall, unless otherwise ordered, be served with the amended writ of summons, and the proceedings as against them shall be deemed to have begun only at the time when they are added.
…
185. A proceeding shall not be defeated by any formal objection, but all necessary amendments shall be made, upon proper terms as to costs and otherwise, to secure the advancement of justice, the determining of the real matter in dispute, and the giving of judgment according to the very right and justice of the case.
186. Non-compliance with the rules does not render the writ or any act or proceeding void, but the same may be set aside, either wholly or in part, as irregular, or may be amended, or otherwise dealt with, as seems just.
The respondent appealed from the judgment of O’Connell Co. Ct. J. to the Supreme Court of Ontario, and Lacourciere J., again in carefully detailed reasons, allowed the appeal, refused leave to amend the writ and statement of claim, and made an order striking out the writ of summons and statement of claim.
[Page 278]
The appellant in turn appealed from that order to the Court of Appeal for Ontario. Arnup J.A., giving the reasons for the Court, very carefully analyzed the problem but came to the conclusion that Lacourcière J. had adopted the proper view of the effect of The Business Corporations Act and dismissed the appeal.
The reasons in the courts below have been much concerned with the effect of an amalgamation under the provisions of The Business Corporations Act and with the problem of whether upon that amalgamation becoming effective by virtue of the certificate granted by the appropriate official of the Province of Ontario, the amalgamated corporations’ corporate identities have perished. I shall refer to this issue hereafter but, firstly, shall have reference to the terms of Rule 136 which I have cited above and particularly these words,
…or, where an action has through a bona fide mistake been commenced in the name of the wrong person as plaintiff or where it is doubtful whether it has been commenced in the name of the right plaintiff, the court may order any person to be substituted or added as plaintiff.
Section 197(4)(b) of The Business Corporations Act provides:
197. (4) Upon the date set forth in the certificate of amalgamation,
…
(b) the amalgamated corporation possesses all the property, rights, privileges and franchises and is subject to all liabilities, contracts, disabilities and debts of each of the amalgamating corporations;
Therefore, whether or not the action had been commenced in the name of the wrong person as plaintiff, it was certainly doubtful whether it had been commenced in the name of the right plaintiff. I am of the opinion, therefore, that if there was a bona fide mistake within the words of Rule 136, an order should have been made, as O’Connell Co. Ct. J. made, substituting the extended description of the plaintiff as its solici-
[Page 279]
tors had requested. This is the view which this Court took in Ladouceur v. Howarth. It is also the view taken by the Court of Appeal for Ontario in Dill v. Alves, and in Chretien v. Herrman. In the latter case, it was the name of the defendant which had been mis-stated.
I emphasize that the error in this case was altogether bona fide. It was not such a case as the Board of Commissioners of Police of Corporation of Township of London v. Western Freight Lines Ltd. et al., where the solicitor issuing the writ knew, of course, of the existence of the Township of London and of the Police Commissioners of London Township and chose to name the latter as the plaintiff.
The solicitor in the present case exercised no choice as between two possible plaintiffs. He issued the writ in the name of the only plaintiff whom he knew and it was the plaintiff who had suffered the damage. It is true that by the amalgamation effective on the day prior to the issuance of the writ, the name and, perhaps, to some extent, the amalgamated identity of that plaintiff had been changed to Argus Chemical Canada Limited. The solicitor was not aware of that fact when he issued the writ and it is of some interest to note that the defendants could not have been aware of it. The defendants would have had in their records the name of the occupier being supplied with municipal water and that name would have been Witco Chemical Company, Canada, Limited.
If the writ had been issued in the name of the company as amalgmated when served upon the defendants it would have been quite meaning-
[Page 280]
less as the defendants would not have found that name in their records and, to use the language of Devlin L.J., in Davies v. Elsby Brothers, Ltd., would have said:
This plaintiff in the writ is so named by mistake. I had no dealings with him.
It is also of interest to note that the defendants could not have been in any way misled or prejudiced by the use of the name Witco Chemical Company, Canada, Limited, as that was the exact company to which the defendants had supplied water and that was the exact company which was complaining of the damage. The error in this particular case is quite minor and technical. The two companies, Witco Chemical Company, Canada, Limited, and Argus Chemical Canada Limited, might just as well have amalgamated under the name Witco Chemical Company, Canada, Limited, and had the two companies amalgamated under that name the defendant would never have known the difference. Also, the Witco Chemical Company provided far the lion’s share in the amalgamation. The amalgamated company, according to the amalgamation agreement, was to have 431,022 shares and of those 431,000 were to be issued to former Witco shareholders and only twenty-two were to be issued to former Argus shareholders, so the latter company’s part in the amalgamation was minuscule.
Kelly J., in Williamson et al. v. Headley, in determining a like case of misnaming of the plaintiff which, however, had no corporate involvement, cited Middleton J. in Bank of Hamilton v. Baldwin, at p. 178:
The general principle underlying all the cases is, that the Court should amend where the opposite party has not been misled or substantially injured by the error.
[Page 281]
That basic principle is reflected in Rule 185, supra.
For these reasons, I am of the opinion that the appeal should be allowed and that the application to amend the writ and statement of claim to show the plaintiff therein as “Argus Chemical Company Limited, formerly known as Witco Chemical Company, Canada, Limited,” should be granted and the application striking out the writ and statement of claim should be quashed.
Although in my view, this is sufficient to dispose of the appeal, I feel it preferable to express my opinion upon the issue of the effect of the amalgamation agreement and the certificate issued by the provincial authorities.
Arnup J.A., in his reasons in the Court of Appeal, summarized the position of the defendants in these words:
The position of the defendants before Lacourcière J. and on this appeal, put in its simplest form, is that the writ was issued in the name of a non-existent company and that what is now sought to be done is to substitute for a non-existent plaintiff the name of the company which really has the cause of action in question.
For the reasons which I have outlined, I am of the opinion that even if the non-existence of the named plaintiff were established that would not have been a sufficient answer. Moreover, I am of the opinion that the non-existence of Witco Chemical Company, Canada, Limited, the named plaintiff, has not been established. It must be remembered that this issue is dealt with in reference to two companies both originally incorporated in Ontario which were amalgamated under the provisions of The Business Corporations Act. That Act, as Arnup J.A. pointed out, differs in some particulars from the provisions of the Canada Corporations Act, R.S.C. 1970, c. C-32 . Under the Ontario statute, the amalgamation is wrought not by the issuance of new Letters Patent but by the issue of a certificate of amalgamation. The result when Letters Patent are issued under the Canada Corporations Act , now R.S.C. 1970, c. C‑32 , has been enunciated in the judgment of this Court in The
[Page 282]
Queen v. Black and Decker Manufacturing Company Limited. In my view, that result is even clearer when the amalgamation takes place under the provisions of The Business Corporations Act. The issuance of a certificate has the exact effect provided in s. 197(4) (a) of that Act, that is, the amalgamating companies are amalgamated and continue as one corporation. There is, in addition, in The Business Corporations Act, the provision of s. 197(4) (d) which provision reads:
197. (4) Upon the date set forth in the certificate of amalgamation,
…
(d) the articles of incorporation of each of the amalgamated corporations are amended to the extent necessary to give effect to the terms and conditions of the amalgamation agreement.
Arnup J.A. found this provision rather puzzling and adopted Lacourciere J.’s analysis as follows:
In my opinion, the amalgamation provisions merely indicate that an amalgamating corporation does not cease to exist for all purposes. But this is not the same thing as stating that an amalgamating corporation retains a separate legal status on amalgamation that would give the requisite status to commence an action. The amalgamated corporation must be the only entity with legal status or else the provisions of s. 200 and s. 197(4)(b) would be superfluous; this latter section merely affirms that the amalgamating corporations are not dissolved by an amalgamation.
I find it difficult to contemplate a situation where the amalgamating corporation does not cease to exist for all purposes but is not a juristic person with a status to commence an action. I am of the opinion, on the other hand, that s. 197(4)(d) of The Business Corporations Act has a strong indication that the corporate entity Witco Chemical Company, Canada, Limited, did continue to exist as a corporate entity
[Page 283]
despite the fact that by s. 197(4)(a) and (b) all its powers had passed to the amalgamated corporation. I do not think the provisions of s. 197(4)(d) and of s. 200 may be considered to be superfluous.
The clause first appeared in the Statutes of Ontario, 1970, c. 25, when The Business Corporations Act was first enacted, and did not appear in the predecessor section of The Corporations Act, s. 97(4) of R.S.O. 1960, c. 71. It may well have been intended to prevent the results exhibited in such cases as Union Gas Co. of Canada Ltd. v. Brown, dealing with the assignment from one corporation to another of its rights, and to attempt to cure all questions in reference to the proper plaintiff to assert a right assigned from one company to another in amalgamation proceedings.
I adopt the view expressed by Kelly J.A. in Stanward Corporation v. Denison Mines Ltd. at p. 592:
While it may be difficult to comprehend the exact metamorphosis which takes place, it is within the Legislature’s competence to provide that what were hitherto two shall continue as one.
I make no comment on the position in reference to companies incorporated under the provisions of the Canada Corporations Act or on the decision in Regina v. J.J. Beamish Construction Co. Ltd. et al.
I am, however, of the opinion that in the present case there was not an extinguishment of the corporate identity of the Witco Chemical Company, Canada, Limited, sufficient to justify
[Page 284]
the Court in holding that the writ had been issued in the name of a non-existent plaintiff.
For these reasons, I would allow the appeal with costs throughout. The amendment to the writ and statement of claim proposed by the appellant should be granted and the writ and statement of claim should not be stricken out.
Appeal allowed with costs.
Solicitors for the appellant: Lang, Michener, Cranston, Farquarson & Wright, Toronto.
Solicitors for the respondents: Thomson, Rogers, Toronto.
Email this Content