A-609-80
Dow Jones & Company Inc. (Appellant) (Plain-
tiff)
v.
Attorney General of Canada (Respondent)
(Defendant)
Court of Appeal, Urie and Ryan JJ., MacKay
D.J.—Toronto, March 20, 1981.
Crown — Foreign Investment Review Act — American
company, which owned all of the issued and voting shares of a
Canadian business enterprise, merged into another American
company — Appeal from Trial Division decision that an
acquisition of control by a foreign corporation from another
foreign corporation which controls the Canadian business
enterprise is an acquisition of control within s. 3(3) of the Act
— Whether Trial Judge erred — Appeal dismissed — Foreign
Investment Review Act, S.C. 1973-74, c. 46, s. 3(3).
APPEAL.
COUNSEL:
G. J. Smith, Q.C. and J. D. Winberg for
appellant (plaintiff).
J. A. Scollin, Q.C. and J. P. Malette for
respondent (defendant).
SOLICITORS:
Weir & Foulds, Toronto, for appellant
(plaintiff).
Deputy Attorney General of Canada for
respondent (defendant).
The following are the reasons for judgment of
the Court delivered orally in English by
RYAN J.: We have not been persuaded that the
learned Trial Judge erred in answering in the
affirmative the question submitted to him for
determination. The question was based on an
agreed statement of facts which is set out in the
reasons for judgment of the Trial Judge [[1981] 1
F.C. 428] .
Clause 3(3)(a)(i)(A) of the Foreign Investment
Review Act, S.C. 1973-74, c. 46, reads:
3....
(3) For the purposes of this Act,
(a) control of a Canadian business enterprise may only be
acquired,
(i) in the case of a Canadian business enterprise that is a
Canadian business carried on by a corporation either alone
or jointly or in concert with one or more other persons,
(A) by the acquisition of shares of the corporation to
which are attached voting rights ordinarily exercisable
at meetings of shareholders of the corporation, ...
In his reasons for judgment, after considering
various submissions made to him on behalf of Dow
Jones & Company Inc., the Trial Judge stated [at
pages 435-436]:
Mr. Smith contends that the merger in question did not
amount to an acquisition of control and relies on subsection
3(3) of the Act in support thereof. However, it is acknowledged
in paragraph 4 of the special case that immediately prior to the
merger all issued and outstanding voting shares of Irwin-Dor-
sey were owned and controlled by Irwin-U.S. In paragraph 6 of
the stated case it is acknowledged by the parties that the result
of the merger of Irwin-U.S. into RDI, Inc., was that all of the
property of Irwin-U.S., including the voting shares of Irwin-
Dorsey became the property of RDI, Inc., and as well Irwin-
U.S. thereafter surrendered its charter and ceased to exist as a
corporate entity. Irwin-Dorsey then became a subsidiary of
RDI, Inc. By virtue thereof an acquisition of control had been
acquired by a non-eligible corporation within the United States
in accordance with paragraph 3(3)(d) of the Act.
I therefore answer the question submitted in the stated case
in the affirmative and find that the transaction referred to
herein did constitute an acquisition of control of a Canadian
business enterprise by a non-eligible person to which the For
eign Investment Review Act applies.
We find no error in the Trial Judge's conclusion.
Counsel, as we understood him, submitted that
the Trial Judge did not specifically advert to a
submission to the effect that "the acquisition of
control of a foreign corporation which controls a
Canadian business enterprise is not a reviewable
transaction under the Act when there is no specific
sale or dealing with the shares or assets of the
Canadian business enterprise". Counsel submitted
that the transaction in question (the merger of
"Irwin-U.S." into RDI, Inc.) involved only inci
dentally the transfer of shares of Irwin-Dorsey
Limited to RDI, Inc.
We are not persuaded that the Trial Judge
overlooked this submission. And, at any rate, we
are of opinion that a consequence of the transac
tion was that RDI, Inc., a non-eligible person,
acquired the voting shares of Irwin-Dorsey Lim
ited, and thus obtained control of Irwin-Dorsey
Limited, a Canadian business enterprise.
We are all of opinion that the appeal should be
dismissed with costs.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.