Widrig v. Strazer et al.

Widrig v. Strazer et al.
Collection
Supreme Court Judgments
Date
1964-03-23
Report
[1964] SCR 376
Judges
Cartwright, John Robert; Fauteux, Joseph Honoré Gérald; Martland, Ronald; Ritchie, Roland Almon; Hall, Emmett Matthew
On appeal from
Alberta
Subjects
Action
Estates
Torts
Decision Content
Cour Suprême du Canada
Widrig v. Strazer et al., [1964] S.C.R. 376
Date: 1964-03-23
Ralph Swift Widrig (Plaintiff) Appellant;
and
Shirley Mae Strazer and Lloyd W. Gardiner, The Public Trustee of the Province of Alberta, Executors of the Estate of Richard R. Strazer, Deceased, and John W. D. Buchanan (Defendants) Respondents;
and
Shirley Mae Strazer, Lloyd W. Gardiner, Harold Komish and B.C. Yukon Air Service Limited (Defendants).
1963: May 15, 17; 1964: March 23.
Present: Cartwright, Fauteux, Martland, Ritchie and Hall JJ.
ON APPEAL FROM THE SUPREME COURT OF ALBERTA, APPELLATE DIVISION.
Executors and administrators—Direction in will to sell testator's shares in company for cash and to first offer them to person or persons holding other shares in company—Whether right of first refusal given to only other shareholder—Whether contract to sell to another party binding.
Judgments and orders—Alternative remedies—Judgment not entered—Jurisdiction of trial judge to recall original judgment and substitute another.
Damages—No interference by Supreme Court with amount allowed by Court of appeal unless error of principle on part of latter.
A clause in a testator's will directed his trustees to sell his shares (which constituted 49 per cent of the issued shares) in an air service company "for cash at any price which they in their uncontrolled discretion deem reasonable" and further directed them "to first offer my shares … to the person or persons holding other shares in the company at my death, with such person or persons to have a reasonable and just opportunity in which to accept or reject the offer to purchase my said shares." The respondents S and G were the executors named in the will and the respondent B, who held 2 per cent of the issued shares as trustee for the testator, was the solicitor of the estate. One K held the remaining 49 per cent of the issued share capital. K made offers for the testator's shares which were refused by the executors. After rejecting what was specified by K as his final offer, the executors and B entered into an agreement with the appellant W to sell the shares to him. K's solicitors, acting on K's behalf, then sent a letter to the executors which read in part "… exercising our right of first refusal … we hereby agree to match the best offer that you are proposing to accept …" As the result of an action instituted by K, an interim injunction was granted restraining the estate from offering for sale, disposing of or otherwise dealing with the shares. B and the executors thereupon proceeded to sell the shares to K.
On hearing that B and the executors were not going to complete the sale of the shares to him, W commenced an action claiming specific performance, damages for breach of contract and costs. The trial judge gave judgment for specific performance, damages in the sum of $6,000 and costs. However, the formal judgment was not entered. W applied to the trial judge to reopen the case to substitute a judgment for damages and not for specific performance on the grounds that a decree for specific performance was no longer an adequate remedy. The trial judge directed that his original judgment be reconsidered and, following argument by counsel, gave judgment against the respondents as executors of the estate and also against the said respondents personally for damages in the sum of $40,000. On appeal, the Court of Appeal sustained the judgment against the respondents as executors but reduced the damages to $12,000. The appeal was allowed insofar as judgment had been given against the respondents personally.
W appealed to this Court to have restored the award of $40,000 damages given him by the trial judge. The respondents cross-appealed to have the action dismissed or alternatively to have the damages awarded to the appellant by the Court of Appeal further reduced.
Held: The appeal should be allowed and the trial judgment restored except insofar as it directed that the appellant recover damages and costs from S and G in their personal capacities. The cross-appeal should be dismissed.
The Court agreed with the Court of Appeal in rejecting the respondents' contention that the trial judge had no jurisdiction to reopen the trial and to give the judgment for damages on the grounds that the appellant had elected to claim specific performance, and, having been given judgment for specific performance, he was bound thereby. United Australia, Ld. v. Barclays Bank, Ld., [1941] A.C. 1; Dobson v. Winton and Robbins Ltd., [1959] S.C.R. 775, followed.
The clause in the will directing the executors to first offer the shares to the person or persons holding other shares in the company did not give K a right of first refusal. He was the only person who, in fact, qualified as a person holding other shares, but there might well have been two or more such other persons for the clause specifically said "to the person or persons". A right of first refusal could not be given to two or more such persons, and was not, in fact, given to K. There was no doubt as to the power of the executors to sell to the appellant after they had duly considered and rejected K's offer expressly stated by him to be his final offer. An additional ground upon which the executors were precluded from asserting that they were bound to accept K's offer was the fact that the said offer was not a cash offer. The will had specifically directed the executors to sell for cash. Accordingly, as held by the trial judge and the Court of Appeal, there was a binding contract to sell the shares to the appellant.
As to the quantum of damages, this Court would not interfere with an amount allowed for damages by the Court of last resort in a province unless there was error in principle on the part of the Court of Appeal in reducing the amount of damages. In this case there were errors of principle on the part of the Court of Appeal in reducing the amount of damages. Having regard to all the circumstances and the matters which the trial judge took into account in arriving at the amount of $40,000, it could not be said that in assessing the damages the trial judge applied a wrong principle of law or that the amount was so high as to be a wholly erroneous estimate of the damage. Nance v. British Columbia Electric Railway Company Ld., [1951] A.C. 601; Lang and Joseph v. Pollard and Murphy, [1957] S.C.R. 858, applied.
APPEAL by plaintiff and cross-appeal by defendants from a judgment of the Supreme Court of Alberta, Appellate Division1, sustaining a judgment against the defendants as executors but reducing the amount of damages and allowing an appeal from judgment against the defendants personally. Appeal allowed and cross-appeal dismissed.
W. A. McGillivray, Q.C., for the plaintiff, appellant.
A. F. Moir, Q.C., and J. P. Brumlik, for the defendants, respondents.
The judgment of the Court was delivered by
Hall J.:—On July 3, 1962, the appellant Widrig recovered judgment in an action tried by Milvain J. against the respondents John W. D. Buchanan, Shirley Mae Strazer and Lloyd W. Gardiner, the Public Trustee of the Province of Alberta, as executors of the estate of Richard R. Strazer and also against the said Shirley Mae Strazer, Lloyd W. Gardiner and John W. D. Buchanan personally for damages in the sum of $40,000. The action against two other defendants Harold Komish and B.C. Yukon Air Service Limited was dismissed without costs. The defendants Buchanan, Strazer and Gardiner appealed to the Court of Appeal for Alberta2 which Court sustained the judgment against the defendants as executors but reduced the damages to $12,000. The appeal was allowed insofar as judgment had been given against the said Buchanan, Strazer and Gardiner personally.
The appellant Widrig has appealed to this Court to have restored the award of $40,000 damages given him by Milvain J. The respondents Buchanan, Strazer and Gardiner have cross-appealed to have the action dismissed or alternatively to have the damages awarded to the appellant by the Court of Appeal further reduced.
The facts and circumstances giving rise to this litigation are unusual and complicated.
One Richard R. Strazer died on November 15, 1960. A grant of probate of his will issued on June 29, 1961, to the executors named therein, the respondent Shirley Mae Strazer and the Public Trustee of the Province of Alberta. The respondent Lloyd W. Gardiner is and was at all material times the Public Trustee for the Province of Alberta.
Prior to his death the said Richard R. Strazer was the owner of 49 per cent of the issued shares in the company B.C. Yukon Air Service Limited. The respondent Buchanan held 2 per cent of the issued shares as trustee for Richard R. Strazer. The said Komish held the remaining 49 per cent of the issued share capital. Buchanan was at all times solicitor for the Strazer estate.
Clause (c) of the will of the deceased Richard R. Strazer provided:
I direct my trustees to sell my shares in B.C. Yukon Air Service Limited for cash at any price which they in their uncontrolled discretion, deem reasonable. I further direct my trustees to first offer my shares in B.C. Yukon Air Service Limited to the person or persons holding other shares in the company at my death, with such person or persons to have a reasonable and just opportunity in which to accept or reject the offer to purchase my said shares.
Following the death of Richard R. Strazer, the operations of the company, B.C. Yukon Air Service Limited (an Alberta company) based at Watson Lake in the Yukon Territory continued under the management of Komish. That was the state of affairs when in July of 1961 Widrig, who was an experienced and licensed pilot, became interested in purchasing the 51 per cent of the issued share capital in the company from the executors and Buchanan. He had been employed as a pilot by the company during the years 1953, 1954 and until the fall of 1955. His father-in-law, one G. C. F. Dalziel, had been the founder of the company but in 1961 had no interest in the company, having sold out his interest a year or two before. It was through Dalziel that Widrig learned that the majority share holdings in the company might be for sale.
Having heard this, he went to Watson Lake about July 10th and there he saw Mrs. Strazer who told him she was very anxious to sell the controlling shares in the company held by the estate of her late husband. Mrs. Strazer told Widrig that Buchanan was her solicitor and that she would have Buchanan communicate with him. Widrig returned to Seattle. He had a 'phone call from Buchanan about July 18th. He received a letter from Buchanan inviting him to come to Edmonton to meet with Mrs. Strazer who would come from Watson Lake.
Widrig went to Edmonton the following week. He met with Buchanan and Mrs. Strazer on July 27th. He then was told that there was a provision in Strazer's will that before the shares could be sold they would first have to be offered to Komish and Komish given a reasonable opportunity to come forward with an offer. Widrig was not shown a copy of the will. He was told, however, that Komish had been informed of his interest in the shares and had been asked to come forward with an offer before July 31st. On the following day, July 28th, Widrig met Gardiner with Buchanan and Mrs. Strazer and was advised by them that Komish had requested more time and that he had been given until August 15th to come forward with an offer.
Widrig thereupon returned to Seattle. He kept in touch with Buchanan by 'phone. With Buchanan's encouragement he returned to Edmonton on August 14th. He saw Buchanan on the 15th and was told by him that Komish had made several offers but that these offers were inadequate and the executors were now perfectly free to deal with him.
Widrig then made certain offers which were not accepted, the principal difficulty being whether he could find the cash to purchase the shares. He had $10,000 of his own available. The executors had to sell for cash as directed by Strazer's will. Widrig went to Watson Lake where he arranged to borrow $50,000 from his father-in-law Dalziel, the former owner of the company. He returned to Edmonton on August 24th. He was then in a position to offer $60,000 cash for the shares. Widrig in his testimony tells how the deal progressed from that point:
A. Well, after I made that offer he said, he advised me that there was liability from the company to the estate in the amount of slightly over $20,000 and that if I would go another fifteen or twenty thousand dollars they would assign that over to me, make it part of the same deal and I told him I couldn't get any more cash but I would certainly be willing to give them promissory notes for the balance and, so, with a little negotiation we finally arrived at a purchase price for the shares and that liability of $75,000, ten thousand cash and promissory notes for $15,000.
Q. Yes.
A. And when we reached that point he, Mr. Buchanan telephoned, while I was there, Mr. Gardiner and just made the proposal briefly to him and from what I gathered from the conversation that was fine. Then Mr. Buchanan advised me that his office would draft up some agreements for signature and that, as we had outlined our deal there and advised me to come back in a couple of hours and look them over.
* * *
Q. Mr. McGillivrat: Yes, sir, go ahead.
A. So I returned back to Mr. Buchanan's office a short time later, several hours later and the agreements were prepared and he said, well, let us take them over to Mr. Gardiner's office, we will show them to him and if he approves of them you can take them over then to your solicitor's office, Mr. Becker, and if he approves of them you can sign them with him as a witness and bring them back. So, we did that and I walked over with him to Mr. Gardiner's office, he took them in to Mr. Gardiner, showed them to him and from what I gathered Mr. Gardiner was in accord with the proposal as set forth in the agreement. And Mr. Buchanan then gave me the agreements and asked me to take them over to my solicitor and have him read them and if they were satisfactory to sign them.
* * *
A. The agreements called for $10,000 down which I then gave to Mr. Buchanan who gave me a receipt for the $10,000 and he said, well, that is it, it is a deal, you might as well go to Watson Lake for good and you can take the agreements with you and have Mrs. Strazer sign them when you get there and return them to me on Monday's plane, which would be the next plane, and Mr. Gardiner and I both will sign them and we'll schedule a directors' meeting for Thursday, that would be August the 31st, at which time we will officially appoint you as manager and transfer the shares on the books of the company.
* * *
Q. By the way, you had, how many copies of the agreement that you signed were there?
A. It was prepared in four copies, I had signed the copies he prepared, in a large envelope with a return address that I was to mail them back to him in and, I believe, he also wrote an accompanying letter to Mrs. Strazer which he sealed and gave to me to give to her. That letter reads:
We are enclosing herewith the original and three copies of an agreement between the Estate and Mr. Widrig covering the sale of shares, etc. to him.
Lengthy discussions took place today between our Mr. Buchanan and Mr. Widrig and later between our Mr. Buchanan and Mr. Gardiner. The upshot of the discussions was that Mr. Widrig put forward an offer to purchase the estate's shares in B.C. Yukon and the estate's debt due from B.C. Yukon for a total price of $75,000, this amount to be paid in the manner set out in the enclosed agreement.
Mr. Widrig's offer will result in the estate receiving $60,000 cash immediately. The remaining $15,000 is secured by two Promissory Notes on which Mr. Dalziel is a co-signer. From the writer's and your own knowledge of Mr. Dalziel we would feel that the $15,000 is well secured.
By dealing with Mr. Widrig the estate will be free to collect from Mr. Komish the personal liability of approximately $10,000 which he owes the estate. As soon as the sale to Mr. Widrig is finalized it is our intention to make a formal demand on Mr. Komish for the payment of the amount due from him.
After you have perused the agreement enclosed and given this matter your consideration we would appreciate your signing the agreement in the presence of a witness (Burns McEathron would be a good witness) and return all copies of the agreement to us in the envelope provided.
We might add that it is Mr. Widrig's hope that Mr. Dalziel will arrange further financing so that the two Promissory Notes totalling $15,000 can be eliminated and the total of $75,000 paid in cash. If this is done, you might amend Clause 2(b) to read $65,000 and strike out Clauses 2(c) and 2(d). If these changes in the agreement are made they should be initialled by yourself and Mr. Widrig.
We are handing this letter to Mr. Widrig who is going up by plane tomorrow. If everything works out according to plan all documents necessary should come down on Monday's plane and we would be in a position to finalize the transaction on Tuesday or Wednesday of next week.
We will keep you posted as to developments.
Although we would be pleased to see you again it does not seem necessary for you to come into Edmonton at this time. Should there be anything arise, though, you might contact our Mr. Buchanan by telephone.
Widrig took the letter containing the documents to Watson Lake. Mrs. Strazer signed the documents and they were returned by 'plane on August 28th.
On August 30th, Widrig 'phoned Buchanan who acknowledged receipt of the documents. He was advised by Buchanan that the $50,000 had been received and a court order approving of the sale had been obtained, the agreements had been signed and that "the matter was finished". The following day, August 31st, Widrig received a 'phone call from Buchanan telling him that the directors of the company were holding a meeting at which Komish's solicitor had appeared but that the sale to him (Widrig) was completely finished and he was being appointed as manager of the company. Widrig did receive the following telegram later that same day:
You are employed as manager of B.C. Yukon Air Service effective immediately copy of minutes being forwarded by mail Mr. Komish has been advised.
J. W. D. Buchanan Secretary.
The agreements had in fact been signed and approval obtained from the Court to the sale on August 30th. Buchanan denied having told Widrig that the agreements had been signed. The learned trial judge accepted Widrig's evidence in preference to that of Buchanan and, in my opinion, was justified on the evidence in doing so. Having received that wire, Widrig attempted to take control of the company's operations at Watson Lake but this was resisted by Komish. Eventually the R.C.M.P. were called in but Widrig found it impossible to take over due to Komish's interference.
Things continued in this state until September 5th when Widrig wired Buchanan as follows:
Due circumstances beyond my control I hereby resign as manager B.C. Yukon Air Service effective immediately stop Komish assuming control
Ralph Widrig
Meanwhile, on September 1st, Widrig had received the following telegram:
Take notice that by an injunction order of the Honourable Mr. Justice M. E. Manning the Estate of Richard Strazer is restrained from offering for sale disposing of or otherwise dealing with its shares in B.C. Yukon Air Service Limited You are also so restrained by such order
Morrow Hurlburt Reynolds Stevenson and Kane.
The injunction referred to in this letter was obtained from Mr. Justice Manning on September 1st in an action instituted by Komish naming Widrig as one of the defendants. Messrs. Morrow, Hurlburt, Reynolds, Stevenson and Kane were Komish's solicitors. The injunction provided, amongst other things, that:
IT IS ORDERED that the Defendants and each of them, their agents and employees, be enjoined until the determination of this action from offering for sale, disposing of, transferring or otherwise dealing with the shares of B.C. Yukon Air Service Limited held by the late Richard Robert Strazer. We must now go back in time to the events after August 15th which preceded the granting of this injunction at the suit of Komish.
Komish had made offers for the shares which had been refused by the executors. The situation as of August 14th is shown by exhibit no. 37 sent August 14th and which reads:
"19"
August 14th, 1961.
(Date Stamp: RECEIVED
AUG 14 1961)
Messrs. Haddad, Cavanagh & Buchanan,
Barristers and Solicitors,
618 McLeod Building,
EDMONTON, Alberta.
Attention: Mr. Buchanan
Dear Sirs: Re: B.C. Yukon Air Service Limited
Estate of Richard R. Strazer
and Harold T. Komish
On behalf of our client H. Komish, and referring to his offer to the Public Trustee and yourself on behalf of the Strazer Estate of August 8th, 1961, we are authorized to state that our client is prepared to increase his offer to purchase the same items and on the same terms except where changed herein, as contained in his offer of August 8th, 1961, to a new firm bid of $85,000 to be payable in one or the other of the following two ways:
"30"
"WM" (a) $25,000 cash, $55,000 within Sixty (60) days subject to the hypothecation arrangement referred to in the offer of August 8th, 1961. The remaining $5,000 payable Septem ber 30th, 1962, secured by a note by Komish to carry interest to be charged if payment made on or before the due date.
(b) In the alternative, $25,000 cash, $60,000 within Six (6) months, subject to the normal hypothecation arrangement as contained in the offer of August 8th, 1961.
"withdrawn."
These offers are open for acceptance until 5:00 o 'clock today, August 14th, 1961. This is our client's final offer.
Yours very truly,
WGM/es MORROW, HURLBURT, REYNOLDS, STEVENSON
& KANE
Per: "W. G. Morrow"
cc. H. Komish, Esq. The alterations and deletions as they appear in the foregoing were made by Komish's solicitor on August 19th when, having been advised by Buchanan that the offer was not acceptable, amended the letter as it now appears. Although other parts were changed or deleted, it is important to note that the final sentence "This is our client's final offer" remained.
It was after rejecting this final offer by Komish that the executors and Buchanan proceeded to sell the shares to Widrig.
While the company's directors were concluding the sale to Widrig on August 31st, Komish's solicitor appeared at the meeting, and, on being told that the shares were being sold to Widrig, he produced and left with Buchanan the following letter:
August 31st, 1961
(Date Stamp: "RECEIVED
AUG 31 1961")
The Public Trustee,
The Executor of the Estate of
Richard R. Strazer and
J. W. Buchanan.
Dear Sirs: Re: B.C. YUKON AIR SERVICE LIMITED
On behalf of our client, Harold Komish, and exercising our right of first refusal under the Will of the above deceased, we hereby agree to match the best offer that you are proposing to accept, and hereby agree to purchase on the same basis, same price and same terms in all respects.
Yours truly,
MORROW, HURLBURT, REYNOLDS, STEVENSON & KANE,
WGM/ns
Per: "W. G. Morrow"
Komish on September 1st instituted the action previously mentioned and obtained the injunction from Mr. Justice Manning referred to above. Buchanan and the executors thereupon proceeded to sell the shares to Komish, the deal being concluded on or about September 29th.
On hearing that Buchanan and the executors were not going to complete the sale of the shares to him, Widrig commenced this action on September 22nd claiming specific performance, damages for breach of contract and costs.
Milvain J., at the conclusion of the trial, gave judgment on June 11, 1962, for specific performance, damages in the sum of $6,000 and costs. There was also to be an accounting to determine the company's indebtedness to the Strazer estate. However, the formal judgment was not entered.
In this situation, counsel for Widrig applied to Milvain J. on June 27, 1962, to reopen the case to substitute a judgment for damages and not for specific performance on the grounds that a decree for specific performance was no longer an adequate remedy having regard to the time that had elapsed with Komish in control of the company and which would elapse while an appeal was being disposed of.
Milvain J. directed that the judgment delivered by him on June 11th be reconsidered. Following argument by counsel, the learned trial judge delivered the judgment referred to in the opening paragraph hereof.
The respondents argued in the Court of Appeal and in this Court that Milvain J. had no jurisdiction to reopen the trial and to give the judgment for damages on the grounds that Widrig had elected to claim specific performance and, having been given judgment for specific performance, he was bound thereby. The Court of Appeal rejected this contention. With respect, I agree with Johnson J.A. when he said that the argument is answered by a passage from the judgment of Lord Atkin in United Australia, Ld. v. Barclays Bank, Ld.3:
"I therefore think that on a question of alternative remedies no question of election arises until one or other claim has been brought to judgment. Up to that stage the plaintiff may pursue both remedies together, or pursuing one may amend and pursue the other: but he can take judgment only for the one, and his cause of action on both will then be merged in the one."
A claim for damages was in the prayer for relief in the statement of claim. The trial judge's right to recall his original judgment and substitute another was settled, if in fact there was any doubt about his right to do so, by the case of Re Harrison's Settlement, [1955] 1 All E.R. 185. See also Stevenson v. Dandy, (1918), 14 A.L.R. 99 (a judgment of this Division). No election therefore took place until the later judgment was signed and entered.
The statement by Judson J. in Dobson v. Winton and Robbins Ltd.4, which reads:
On the purchaser's repudiation of the contract, the vendor could have forfeited the deposit and claimed for loss of bargain and out-of-pocket expenses. The Judicature Act gives him the right to join this claim with one of specific performance. At some stage of the proceedings he must, of course, elect which remedy he will take. He cannot have both specific performance and a common law claim for loss of bargain. But he is under no compulsion to elect until judgment, and the defendant is not entitled to assume that by issuing the writ for specific performance with a common law claim for damages in the alternative, the vendor has elected at the institution of the action to claim specific performance and nothing else.
put this question of election beyond doubt.
The learned trial judge found that a binding agreement was completed between Widrig and the executors and Buchanan as of August 30th. This was upheld by the Court of Appeal.
However, the power of the executors to enter into the agreement was questioned in this Court. The issue arises out of the clause in Strazer's will previously quoted and which reads:
I direct my trustees to sell my shares in B.C. Yukon Air Service Limited for cash at any price which they in their uncontrolled discretion, deem reasonable. I further direct my trustees to first offer my shares in B.C. Yukon Air Service Limited to the person or persons holding other shares in the company at my death, with such person or persons to have a reasonable and just opportunity in which to accept or reject the offer to purchase my said shares.
It was contended on behalf of Komish that this clause gave Komish a right of first refusal and the right to match the best offer that the executors had received from Widrig.
I do not read the clause in question as giving Komish a right of first refusal. As the situation stood in August 1961, the will directed the executors to first offer the shares to the person or persons holding other shares in the company. Komish was the only person who, in fact, qualified as a person holding other shares, but there might well have been two or more such other persons for the clause specifically says "to the person or persons". A right of first refusal could not be given to two or more such persons, and was not, in fact, given to Komish. Komish was offered the shares. He asked for and was given further time to make his offer and it was not until his final offer contained in exhibit 37 as amended by his solicitor on August 19th had been rejected that the executors proceeded to sell to Widrig. I entertain no doubt as to the power of the executors to sell to Widrig after they had duly considered and rejected Komish's offer expressly stated by him to be his final offer.
There is another ground upon which the executors are in my view precluded from asserting that they were bound to accept Komish's offer which was in fact so near in amount to Widrig's as to be substantially the same. The will of the deceased Strazer specifically directed the executors to sell the shares for cash. Komish's offer of August 14th, as amended on August 19th, was not a cash offer. In his first alternative, he was offering to put up $30,000 cash and the balance subject to an hypothecation arrangement within 60 days, and in his second alternative, he was offering $25,000 cash and $60,000 within six months. Widrig's offer, on the other hand, was a cash offer for the shares. The $60,000 put up by him was more than the value of the shares which had been fixed at $55,000. The balance of his offer was to cover the indebtedness of the company to the Strazer estate in an amount of $20,671.24 which was being assigned to him.
The judgment of Milvain J. and of the Court of Appeal that there was a binding contract to sell the shares to Widrig must, therefore, be sustained.
There remain for consideration the appeal and the cross-appeal as to the quantum of the damages.
The Court of Appeal reduced the trial judge's award of $40,000 to $12,000. The right of the Court of Appeal to review a trial judge's award is governed by well-settled principles as stated by Viscount Simon in Nance v. British Columbia Electric Railway Company Ld.5, as follows:
Whether the assessment of damages be by a judge or a jury, the appellate court is not justified in substituting a figure of its own for that awarded below simply because it would have awarded a different figure if it had tried the case at first instance. Even if the tribunal of first instance was a judge sitting alone, then, before the appellate court can properly intervene, it must be satisfied either that the judge, in assessing the damages, applied a wrong principle of law (as by taking into account some irrelevant factor or leaving out of account some relevant one); or, short of this, that the amount awarded is either so inordinately low or so inordinately high that it must be a wholly erroneous estimate of the damage.
Unless there was error of principle on the part of the Court of Appeal, this Court will not interfere with an amount allowed for damages by the court of last resort in a province. I adopt what Cartwright J., speaking for himself and Taschereau J. (as he then was) said in Lang and Joseph v. Pollard and Murphy6:
Under these circumstances where no error of principle and no misapprehension of any feature of the evidence is indicated I think that the rule which we should follow is that stated by Anglin J., as he then was, giving the unanimous judgment of the Court, in Pratt v. Beaman [1930] S.C.R. 284 at 287:
The second ground of appeal is that the damages allowed for pain and suffering by the trial judge, $1,500, should not have been reduced, as they were on appeal, to $500. While, if we were the first appellate court, we might have been disposed not to interfere with the assessment of these damages by the Superior Court, it is the well established practice of this court not to interfere with an amount allowed for damages, such as these, by the court of last resort in a province. That court is, as a general rule, in a much better position than we can be to determine a proper allowance having regard to local environment. It is, of course, impossible to say that the Court of King's Bench erred in principle in reducing these damages.
This decision was followed in the unanimous judgment of this Court, delivered by Kerwin J., as he then was, in Hanes et al. v. Kennedy et al., [1941] S.C.R. 384 at 387.
The principle appears to me to be equally applicable whether the first appellate Court has increased or decreased the general damages awarded at the trial.
In my view there were errors of principle on the part of the Court of Appeal in reducing the amount of the damages. The Court of Appeal appears to have equated share control of the company with a partnership in which the parties share control of a business. The two situations are not comparable. Widrig was desirous of acquiring control of the company because he was an experienced pilot and would have continuous employment in a going concern which had certain flying rights and which showed every indication of being a profitable undertaking. Widrig knew the company's potentialities. He had been employed as one of its pilots and was experienced in the specialized nature of the company's operations. Johnson J.A. appears to have overlooked these considerations in referring to Widrig's lack of experience in relation to this type of business. Widrig had been looking for an opportunity to get into this kind of business. He had looked as far as Australia for a suitable situation or opportunity to get into the commercial flying business. He was justified in not going away from Alberta while there was a reasonable chance that he would get control of the company. Also, in giving the weight which the Court did to the price actually paid by Komish for the shares, it overlooked that Komish was interested only in meeting Widrig's offer and not in making an objective offer based on his own ideas of the actual value of the shares which he was so anxious to obtain and which he got under the threat of litigation. It is of interest that when Komish took the action before referred to in which the injunction was obtained that resulted in Widrig being pushed aside and the shares sold to Komish, he, Komish, claimed $100,000 damages in lieu of the shares in question. That claim was, no doubt, somewhat exaggerated but it shows that Komish placed a high value on these shares when he was contending for them.
Johnson J.A. placed some importance on the fact that the net average profit of the company for the years 1959, 1960 and 1961 was $10,250. I am unable to reconcile this figure with the total of $36,900.29 which he gives for the three-year period which works out at an average of $12,300 a year. In any event, he appears to have overlooked that the figures for these three years were arrived at after depreciation allowances had been deducted which were not in fact reflected in the actual value of the aircraft. The income figures, after paying $10,372.94 income tax for these three years, before deducting depreciation were $42,063.10 for 1959, $37,329.47 for 1960 and $41,912.22 for 1961. These figures are indicative of the earning capacity of the company as a going concern and this is what Widrig was acquiring in buying share control of the company.
Having regard to all of these circumstances and the matters which the learned trial judge said he took into account in arriving at the amount of $40,000, I cannot say that in assessing the damages Milvain J. either applied a wrong principle of law or that the amount was so high as to be a wholly erroneous estimate of the damage.
In the result, Widrig's appeal to restore the amount awarded to him by the learned trial judge will be allowed and the judgment of the trial Court restored except insofar as it directed that the appellant recover damages and costs from Shirley Mae Strazer and Lloyd W. Gardiner in their personal capacities. The cross-appeal to have the action dismissed or, alternatively, to have the damages awarded to the appellant by the Court of Appeal further reduced will be dismissed. The appellant will be entitled to his costs here and in the Courts below.
Appeal allowed and cross-appeal dismissed with costs.
Solicitors for the plaintiff, appellant: Fenerty, Fenerty, McGillivray, Robertson, Prowse, Brennan & Fraser, Calgary.
Solicitors' for the defendants, respondents: Wood, Moir, Hyde & Ross, Edmonton.
1 (1963), 41 W.W.R. 257, 37 D.L.R. (2d) 629.
2 (1963), 41 W.W.R. 257, 37 D.L.R. (2d) 629.
3 [1941] A.C. 1 at 30.
4 [1959] S.C.R. 775 at 779, 20 D.L.R. (2d) 164.
5 [1951] A.C. 601 at 613.
6 [1957] S.C.R. 858 at 862, 11 D.L.R. (2d) 161.