Canada: Ontario Court Rules in Favour of Dissident in Interpreting Provision In Advance Notice Policy—Would Consideration Of US Jurisprudence Have Changed The Result?

Last Updated: July 17 2014
Article by Paul D. Davis

Co-authored by: Allison Vale, Student-at-Law


In its recent decision in Orange Capital, LLC v Partners Real Estate Investment Trust,1 the Ontario Superior Court addressed an interesting issue with respect to the interpretation of the operation of an advance notice policy (the "Policy"). Ultimately, the Court held that the Policy should be interpreted in accordance with its plain meaning and purpose, and with a view to construing any ambiguity in favour of unitholders. It would appear, however, that the Court did not have the benefit of relevant United States jurisprudence or practice which, in light of the longstanding and widespread adoption of advance notice provisions by Delaware companies, may have been helpful in the contractual interpretation of a purported ambiguity in the Policy.


Orange Capital, LLC ("Orange"), a unitholder in the Partners Real Estate Investment Trust (the "REIT"), sought to replace the REIT's board of trustees (the "Board") at the annual and special meeting of unitholders scheduled for July 15, 2014 (the "Meeting").

In April 2013, the Board amended its Declaration of Trust to add the Policy, pursuant to which any nominations of trustees to the Board must be given "not less than 30 nor more than 65 days prior to the date of the annual meeting".2 Included in the Policy was a proviso (the "Proviso") which provided that "[i]n no event shall any adjournment or postponement of a meeting of unit holders or the announcement thereof commence a new time period" for the purposes of giving notice of an intention to nominate trustees.3

In April 2014, the REIT announced that its annual meeting would be held on June 26, 2014, which it later postponed by 19 days to July 15, 2014. On June 6, 2014, Orange provided notice of its intention to nominate trustees to the Board at the Meeting. The Board resolved not to waive the notice timing provisions under the Policy, and contended that Orange ought to be precluded from pursuing the elections of its nominees because it had not complied with the Policy: Nominations for trustees were due between April 22, 2014 and May 27, 2014 (i.e. between 65 and 30 days prior to June 26, 2014), as per the originally scheduled meeting time and independent of any adjournment or postponement thereof; no such nominations had been received by the REIT within that specified time period.

Conversely, Orange maintained that the window for nominations was triggered by the actual meeting date (i.e. July 15, 2014) as opposed to the originally scheduled date (i.e. June 6, 2014). According to Orange, the Proviso should be read to ensure that a timely nomination does not become "stale" as a result of an adjournment or postponement.4 In other words, upon adjournment or postponement, a unitholder that has already made a timely nomination will not be required to repeat the nomination process.


The Court found that both the plain meaning and the policy rationale behind advance notice provisions support the interpretation proposed by Orange, and that insofar that there is ambiguity in the language, "doubt is resolved in favor of the stockholders' electoral rights."5 With respect to the plain wording of the provision, the Court held that the Policy clearly sets the "date of the annual meeting" as the trigger for giving notice—not the originally scheduled date of the meeting—and any interpretation to the contrary would, in effect, render the words "date of the annual meeting" ineffective. In support of the interpretation advanced by Orange, the Court held that the Proviso is intended to remove the need for a unitholder to provide further notice in order to preserve its nomination rights in the event of a postponement or adjournment.

The Court also found that Orange's interpretation is in accordance with the purpose of the Policy: "Such bylaws are designed and function to permit orderly meetings and election contests and to provide fair warning to the corporation so that it may have sufficient time to respond to shareholder nominations."6

Finally, the Court held that any ambiguity regarding the operation of the Proviso should be resolved to reflect the commercially reasonable result, which for the Court meant that the Proviso operated "to prevent a timely nomination from becoming stale as a result of an adjournment or a postponement of a scheduled meeting date."7 Thus, the Court found Orange had complied with the Policy and so was entitled to nominate trustees for election.

The Court deemed it unnecessary, however, to address the alternative arguments put forth by Orange, including that the Policy was invalid due to the fact that the REIT unitholders had not voted to approve the Policy, as was arguably required by the Declaration of Trust. However, in light of the novelty of the issue before it and the lack of explanation offered by Orange for its failure to comply with the notice timelines of the Policy prior to the postponement of the Meeting (notwithstanding that it had "ample notice" of the terms of the Policy), the Court decided that each party should bear its own costs.


The Landscape in the United States

As discussed in our seminal study published in August 2013, advance notice provisions have been used by Delaware companies for over 20 years and are widely adopted in the United States.8 The provisions of the Policy that were before the Court, including the Proviso, are standard provisions in both Delaware and Canadian advance notice provisions. It is therefore not surprising that the interpretation of these provisions in the context of postponed meetings have been the subject of litigation. For example, in Sherwood, et al v Chan Tze Ngon, et al,9 Vice Chancellor Parsons of the Delaware Court of Chancery sided with a dissident stockholder of ChinaCast Education Corporation ("ChinaCast"), finding that the postponement of the annual meeting of stockholders likely re-opened the advance notice nomination window under ChinaCast's bylaws.

The Delaware Chancery Court held that ChinaCast's bylaw provision requiring advance notice for director nominations was ambiguous as to the effect of the various postponements of the annual meeting for the purposes of determining the deadline for stockholders to give notice of an opposing slate.10 Whereas other companies' advance notice bylaws expressly address this issue by explicitly stating that an adjournment or postponement does not commence a new time period, ChinaCast's bylaw contained no such proviso in such an event. Specifically:

Defendants' position is that the various postponements of the Annual Meeting are immaterial for purposes of determining whether a stockholder's notice is timely under Section 3.3. In their reading of the bylaw, "the meeting" was announced on October 18, the postponements have not negated the fact that the Company has only one annual shareholder meeting, and Plaintiffs did not provide their notice within ten days of October 18. For their part, Plaintiffs dismiss the argument about the existence of only one annual shareholder meeting as a straw man. Rather, their position is that the plain language of the bylaw requires that notice be given within ten days of the announcement "of the date of the meeting." Because the date of the Annual Meeting, now scheduled to occur on December 21, 2011, was first announced in the Proxy Supplement on December 8, Plaintiffs contend that notice of their slate is timely so long as the Company's Secretary received it by December 18. In addition, Plaintiffs reported at the argument that notice of the slate they support was given on or about December 15.

Furthermore, Plaintiffs note by way of comparison that other companies' advance notice bylaws clearly address this issue. For example, Hewlett-Packard Co.'s advance notice bylaw states expressly that "[i]n no event will the public announcement of an adjournment or postponement of a stockholders meeting commence a new time period (or extend any time period) for the giving of a stockholder's notice as described above." The conspicuous absence of similar language from ChinaCast's bylaw suggests that Section 3.3 is at least ambiguous in this regard, and ambiguities in advance notice bylaws are construed "in favor of the stockholders' electoral rights."11

Accordingly, the "conspicuous absence of similar language" to the Proviso led to an ambiguity. It should then logically follow that the inclusion of the Proviso in advance notice provisions should resolve any ambiguity in favour of the public company.


The meaning given to the Proviso as advanced by Orange and accepted by the Court appears to be counter-intuitive and inconsistent with the interpretation generally accepted in the United States. While it may or may not be the case that the Court would have reached a different conclusion had it been given the benefit of a discussion of the history of advance notice provisions in the United States and the Sherwood decision, an exploration of the United States jurisprudence and practice would likely have been helpful.

Although the Policy may be unclear as to the date that triggers the nomination window, what is clear from the provision is that the addition of the Proviso abrogates any ambiguity with respect to the effect of an adjournment or postponement of the date of the annual meeting. Without due consideration for the plain language of the Proviso, which expressly prohibits commencing a new time period for giving notice, the Court appears to have read in an ambiguity to the Policy that did not exist.

Perhaps, in reaching its decision, the Court was coloured by the facts that transpired against the backdrop of the REIT and Orange's proxy fight.12 Whatever the case may be, as expected, we have entered a phase of increased litigation in Canada relating not only to the validity of advance notice provisions (particularly those adopted by policy), but also with respect to the interpretation of advance notice provisions. Given the well-established jurisprudence in the United States relating to advance notice provisions, we would expect that future litigants in Canada will seek guidance from jurisprudence in the United States in interpreting advance notice provisions.

by Paul Davis, James Munro and Allison Vale, Student-at-Law

1 2014 ONSC 3793 [Orange Capital].

2 Amended and Restated Declaration of the REIT, Appendix A, s 3(a).

3 Ibid.

4 Orange Capital, LLC v Partners Real Estate Investment Trust, 2014 ONSC 3793 (Factum of the Appellant at para 57).

5 Orange Capital, supra note 1 at para 42 citing Openwave Systems Inc v Harbinger Capital Partners Master Fund I, Ltd, CA No 2690-VCL at 20 [Openwave].

6 Orange Capital, supra note 1 at para 52 citing Openwave, supra note 5 at 19.

7 Supra note 1 at 58.

8 Paul Davis et al, " Canadian Advance Notice Provisions Study" (2013).

9 CA No 7106-VCP (Del Ct Ch 2011) [Sherwood].

10 Section 3.3 of ChinaCast's bylaws state that if less than 70 days notice of the date of the annual meeting is given, "notice by the stockholder, to be timely, must be received no later than the close of business on the tenth (10th) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs."

11 Sherwood, supra note 9 at 26-28 [emphasis in original and footnotes omitted].

12  The REIT had pursued a transaction for the purchase of certain properties in exchange for units in the REIT. Subsequently, however, the REIT decided to unwind the transaction after the TSX advised that the REIT would be reported to the Ontario Securities Commission given the REIT's chief executive officer's interest in the transaction.

The foregoing provides only an overview and does not constitute legal advice. Readers are cautioned against making any decisions based on this material alone. Rather, specific legal advice should be obtained.

© McMillan LLP 2014

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Paul D. Davis
Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Canada LLP
Norton Rose Fulbright Canada LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Norton Rose Fulbright Canada LLP
Norton Rose Fulbright Canada LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions