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lexum.umontreal.ca
12-15.415.html
SUPREME COURT OF CANADA - APPEAL HEARD
OTTAWA, 15/12/00. THE SUPREME COURT OF CANADA ANNOUNCED
TODAY THAT THE FOLLOWING APPEAL WAS HEARD ON DECEMBER 15,
2000.
SOURCE: SUPREME COURT OF CANADA (613) 995-4330
COUR SUPRÊME DU CANADA - APPEL ENTENDU
OTTAWA, 15/12/00. LA COUR SUPRÊME DU CANADA A ANNONCÉ
AUJOURD'HUI QUE L'APPEL SUIVANT A ÉTÉ ENTENDU LE 15
DÉCEMBRE 2000.
SOURCE: COUR SUPRÊME DU CANADA (613) 995-4330
COMMITTEE FOR THE EQUAL TREATMENT OF ASBESTOS MINORITY
SHAREHOLDERS v. HER MAJESTY THE QUEEN IN RIGHT OF QUEBEC,
ET AL. (Ont.) (Civil) (By Leave) (27252)
RESERVED / EN DÉLIBÉRÉ
27252 COMMITTEE FOR THE EQUAL TREATMENT OF ASBESTOS
MINORITY SHAREHOLDERS v. HER MAJESTY THE QUEEN IN RIGHT OF
QUEBEC, ONTARIO SECURITIES COMMISSION AND SOCIÉTE NATIONALE
DE L'AMIANTE
Commercial law - Securities - Minority shareholders -
Public Interest Jurisdiction - Whether as a result of this
decision securities regulators may now decline to exercise
their "public interest" jurisdiction in change of control
transactions because of the lack of geographic
transactional connection, even when the transaction
is "abusive of" and "manifestly unfair to" minority
shareholders - Whether the Court of Appeal erred in
allowing the OSC to require a finding of "conscious motive"
to structure the transaction as an extra-provincial one for
the purpose of evading regulatory scrutiny, as a pre-
condition to the exercise of its "public interest"
jurisdiction - Whether the Court of Appeal erred in its
application of the standard of review.
In the fall of 1977, the newly elected Parti Québécois
Government decided to nationalize the Québec asbestos
industry. In the 1980s, the Québec Government acquired
control of Asbestos Corporation Ltd. ("ACL"), a leading
asbestos producer in the province, by purchasing the
interest of its majority shareholder, a Canadian company,
from its American parent. ACL was a federally incorporated
company whose shares traded on the Toronto and Montreal
stock exchanges. ACL was controlled by General Dynamics
Corporation ("GD US"), a Delaware Corporation with its head
office in St. Louis, Missouri. GD US owned all the shares
of General Dynamics Corporation (Canada) Limited ("GD
Canada"), which in turn owned 54.6 per cent of the common
shares of ACL. Approximately 30 per cent of the common
shares of ACL were held by minority shareholders resident
in Ontario. The Québec Government decided to use a Crown
corporation to take control of ACL and in May 1978,
incorporated Société Nationale de l'Amiante (SNA). All of
SNA's shares were allotted to Québec's Minister of Finance.
On November 9, 1981, the Québec Government and GD US
reached an agreement under which SNA would acquire voting
control of GD Canada and, therefore, indirect control of
ACL. However, this 1981 transaction materially differed
from the offer made by SNA in 1979 and rejected by GD US.
Notably, the 1981 transaction was not accompanied by an
undertaking to the minority shareholders of ACL to purchase
their shares. On February 12, 1982, the agreement between
Québec, SNA and GD US was formalized.
Despite earlier public statements by the then Premier and
Minister of Finance of Québec, no follow up offer was made
to the minority shareholders. In 1988, the Appellant, a
group of minority shareholders, represented by the
Committee for the Equal Treatment of Asbestos Minority
Shareholders ("CETAMS"), applied to the OSC for a
determination whether Québec's acquisition of control of
ACL amounted to a take-over bid requiring a follow-up offer
to the minority shareholders or whether the OSC should make
an order under s. 127(1)3 Securities Act removing Québec's
exemptions. In 1994, three-member panel of the Commission
dismissed CETAMS' application.
CETAMS appealed to the Divisional Court, and by an order
dated May 2, 1997, it overturned the decision of the
Commission. The Respondents Sa Majesté du Chef du Québec,
Société Nationale de l'Amiante and the OSC all appealed to
the Ontario Court of Appeal. The Court of Appeal allowed
the appeal and restored the decision of the Ontario
Securities Commission.
Origin of the case: Ontario
File No.: 27252
Judgment of the Court of Appeal: February 18, 1999
Counsel: David W. Scott Q.C./Barry H. Bresner/
Freya J. Kristjanson/Ira Nishisato for the Appellant
Sheila R. Block/James C.
Tory for the Respondent Sa Majesté
Glenn F. Leslie/Matthew J.
Halpin for the Respondent Société
Tim Moseley for the
Respondent Securities Commission
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