1936 (5) TMI 18 - HC - Companies Law

Summary

Issues Involved:

1. Validity of the Grand Trunk Railway Acquisition Act, 1919, and subsequent agreements and orders.
2. Legality of the stock transfer to the Minister of Finance.
3. Jurisdiction of the Exchequer Court of Canada.
4. Right to maintain action vs. petition of right.
5. Claim for damages against the Grand Trunk and Canadian National Railway.

Detailed Analysis:

1. Validity of the Grand Trunk Railway Acquisition Act, 1919, and Subsequent Agreements and Orders:

The appellant challenged the legality of the Grand Trunk Railway Acquisition Act, 1919, and subsequent agreements and orders, arguing that they were ultra vires, illegal, and void. The appellant sought declarations that various legislative and executive actions, including the Grand Trunk Railway Acquisition Act, 1919, the agreement dated March 8, 1920, and the Order-in-Council of January 19, 1923, were invalid. The court found that these claims could only be pursued via a petition of right, as they involved questioning the title of the Crown.

2. Legality of the Stock Transfer to the Minister of Finance:

The appellant sought a declaration that the transfers of the Grand Trunk stock to the Minister of Finance were invalid and demanded rectification of the stock register. The court held that the main objective of the appellant's relief was the recovery of stocks held by the Crown's trustee, which could only be obtained through a petition of right. The court emphasized that the subject could not proceed by action if the claim involved establishing the invalidity of a title once held by the Crown.

3. Jurisdiction of the Exchequer Court of Canada:

The court addressed the issue of jurisdiction, declaring that the Exchequer Court of Canada had exclusive original jurisdiction to determine the matters in question. This decision was based on the principle that claims impugning the Crown's title to property must be pursued through a petition of right, which falls under the jurisdiction of the Exchequer Court.

4. Right to Maintain Action vs. Petition of Right:

The appellant argued that the McLean case did not apply to his action, as it sought to enforce stockholders' rights against the Grand Trunk for breach of duty in removing names from the stock register without consent. The court, however, maintained that the appellant's claim, which involved challenging the Crown's title, could only be pursued by petition of right. The court cited historical legal authorities supporting the principle that claims involving the Crown's title must be addressed through a petition of right.

5. Claim for Damages Against the Grand Trunk and Canadian National Railway:

The court differentiated between the appellant's claims for rectification of the stock register and claims for damages. While the former required a petition of right, the latter could proceed as an action for damages against the defendant companies. The court allowed the appellant's claim for damages to proceed, noting that it did not necessitate the Crown or its trustee as a party. The court referenced precedents where claims for damages were allowed to proceed independently of rectification claims.

Separate Judgments:

The court noted the divergence in judicial opinion regarding the application of the McLean case. The Chief Justice of Ontario and other judges relied on the McLean case to hold that the appellant's claim required a petition of right. However, the court acknowledged that certain historical authorities were not considered in the McLean case, suggesting that the decision might not have intended to depart from established legal principles regarding claims against the Crown's patentees.

Conclusion:

The court concluded that the appellant's action could not proceed in so far as it sought to rectify the stock register or reclaim stocks held by the Crown's trustee. However, the claim for damages against the Grand Trunk and Canadian National Railway was allowed to proceed. The court also determined that the appellant was entitled to appeal as of right, as the matter in controversy exceeded the sum of 4,000 dollars. The orders of the lower courts were varied accordingly, and the appellant was ordered to pay a portion of the costs.

Costs:

The appellant was ordered to pay the costs of the Attorney-General and a portion of the costs of the other defendants. The court considered the partial success of the appellant in the first appeal and the complete success in the second appeal while determining the costs. The appellant was allowed to deduct certain amounts from the costs payable to the defendants.

Solicitors:

- For the Appellant: Messrs. Lawrence Jones & Co.
- For the Respondents: Messrs. Chas. Russell Co.