The Alberta Business Corporations Act, RSA 2000, c B-9 ("ABCA") was recently amended with the new provisions coming into force on May 31, 2022. One of these amendments relates to the time period in which a corporation that has been dissolved or struck from the record can be revived. The revival of a corporation can be important in litigation to properly include a corporation that should be a party to a matter. A corporation must be active in order for it to be served with a claim and to become part of an action. While a corporation that has been struck from the corporate record likely will not have much in the way of financial contribution, it could uncover additional insurance coverage that could contribute to a settlement or resolution. As such, it is important to include all relevant corporations to an action and to revive these corporations if necessary.
The primary area where this would come into play is in construction deficiency matters. Generally, there are a vast number of contractors and subcontractors that contribute to a final construction project. Upon the discovery of a deficiency in the project, all parties that were involved in the construction are usually included in the litigation process. The companies that were involved in the construction are sometimes dissolved following the completion of the project and prior to any deficiencies being discovered. In that case, the company would need to be revived in order to include them in the legal proceedings and access any insurance coverage they may have had at the time of construction or the deficiency. The ability to access insurance coverage from a dissolved corporation is important for the insurer of the dissolved corporation to understand, but also for insurers of co-defendants, third party defendants, and subrogated insurers.
Sections 208 and 210 of the ABCA govern revival of corporations. Previously, an interested party could apply to revive a corporation within 5 years of its dissolution. These sections state that a corporation may not be revived following this period. The amendments to the ABCA changed the revival period of a corporation from 5 years to 10 years. This gives interested parties more time to revive a corporation to include them in litigation. On the other hand, corporations that are dissolved or struck from the corporate record will need to be aware that they could still be revived for up to 10 years.
While this extension of the revival period appears to be straightforward, it creates a temporary issue. The issue comes down to whether the amendments apply retroactively to corporations that were dissolved prior to the amendments coming into force, but that 10 years has not yet elapsed. Will corporations that are dissolved or struck prior to May 31, 2022 be subject to the 5-year revival period, or the new 10 year revival period? These corporations could be further broken down into two groups.
Group One would include those corporations that were dissolved less than 5 years before May 31, 2022. These corporations would have still been within the 5-year revival period at the time the amendments came into effect. Group Two would include corporations that were dissolved more than 5 years but less than 10 years before the amendments. These corporations would have been past their 5-year revival period at the time the amendments came into effect but would still be within the new 10-year revival period if it applied retroactively.
As a general rule, legislation will not apply retroactively when it is affecting a substantive right. To the contrary, legislation will apply retroactively when it is affecting a procedural right. It is likely in the case of reviving a corporation that the right would be found to be a procedural right as it is a vehicle of litigation to attain the administration of justice. Therefore, the amendments to the ABCA would likely apply retroactively.
There is a second presumption in statutory interpretation against interference with vested rights. If the right of an individual has vested at the time of the new legislation, it is presumed that those vested rights will not be interfered with, regardless of whether or not the legislation applies retroactively. There is an argument to be made that the right of revival was a vested right that crystallized on the 5-year anniversary of the date of dissolution and should not be interfered with by the new amendments.
The Alberta Court of King's Bench recently released a decision, Jackson v. Cooper, 2022 ABKB 609, in which they were required to interpret whether amendments to the Judgment Interest Act, RSA 2000, c J-1 applied prior to the enactment of the amendments. In Jackson, the court had to determine whether interest was calculated at the prior rate, or the new amended rate for the period of time prior to the amendments being enacted. The analysis in Jackson provided a framework for how the application of legislation will be interpreted.
Substantive vs. Procedural
To determine how legislation will apply without coming into force or any sense of the legislative intent, a court will first determine whether the rights provided by the legislation are substantive or procedural. The Supreme Court of Canada recently summarized the rules of interpretation governing the temporal application of new legislation in R v. Chouhan, 2021 SCC 26 at para. 91:
New legislation that affects substantive rights will be presumed to have only prospective effect unless it is possible to discern a clear legislative intent that it is to apply retrospectively However, new procedural legislation designed to govern only the manner in which rights are asserted or enforced does not affect the substance of those rights. Such legislation is presumed to apply immediately to both pending and future cases.
Not all provisions dealing with procedure will have retrospective effect. Procedural provisions may, in their application, affect substantive rights. If they do, they are not purely procedural and do not apply immediately. Thus, the key task in determining the temporal application of the Amendments at issue in the instant case lies not in labelling the provisions "procedural" or "substantive", but in discerning whether they affect substantive rights.
The Supreme Court in Chouhan went on to establish two guiding factors (para. 92):
- procedural amendments depend on litigation to become operable: they alter the method by which a litigant conducts an action or establishes a defence or asserts a right.
- substantive amendments operate independently of litigation: they may have direct implications on an individual's legal jeopardy by attaching new consequences to past acts or by changing the substantive content of a defence; they may change the content or existence of a right, defence, or cause of action.
Finally, the Supreme Court in Chouhan stated that "the mere fact that a procedure was important or advantageous to one party does not, without more, render the procedure substantive" (para. 96). The court in Jackson summarized that "a substantive provision attracts the presumption against retroactivity, whereas a procedural provision is presumed to apply retroactively (para. 179).
In the case of reviving a corporation, it appears that the right involved would be a procedural right. While the right to revive a struck corporation after only 5 years was advantageous to a corporation, it is likely not concerned with the ends which the administration of justice seeks to attain. The revival of a corporation would likely be seen as part of the vehicle to attain the administration of justice and a method by which a litigant conducts an action. Therefore, it would likely be found to be a procedural right and would apply to pending and future cases. This means that a corporation in Group One or Two as described above, would likely be subject to the 10-year revival period for any ongoing matters or future matters.
The Supreme Court of Canada made a further distinction in Dikranian c. Quebec (Procureur general), 2005 SCC 73 between vested rights and retroactivity. The Supreme Court stated that there remains a clear distinction between the presumption against retroactive legislation (for substantive rights), and the presumption against interference with vested rights (para. 31). The Supreme Court in Dikranian confirmed that a statute could "have a retroactive effect and yet not interfere with vested rights" (para. 30).
The Supreme Court of Canada further determined in Gustavson Drilling (1964) Ltd. v. Minister of National Revenue, 1975 CarswellNat 330 that "[t]he presumption that vested rights are not affected unless the intention of the legislature is clear applies whether the legislation is retrospective or prospective in operation" (para. 15).
In Jackson, the Alberta court followed Dikranian in finding that the right to pre-judgment interest did not vest until there was a determination made by the trial judge (para. 191) as "a right is not vested until it has crystallized, meaning that the right-holder has the ability to enforce it" (para. 188).
For a right to be vested, Dikranian states that it must meet two criteria (para. 37):
- the individual's legal (juridical) situation must be tangible and concrete rather than general and abstract; and
- this legal situation must have been sufficiently constituted at the time of the new statute's commencement.
The issue of pre-judgment interest in Jackson was based on the statutory right to pre-judgment interest upon judgment. This provided that the right did not crystallize until a judgment was rendered. It could be argued that the right to revive a corporation crystallized on the 5-year anniversary of the corporation being struck. Once this date occurred, legislation at the time crystallized the corporation's status and its inability to be revived.
This presumption against interference with vested rights is what differentiates the corporations in Group One and Group Two. The Group One corporations likely would not have had their right crystallized as 5 years had not elapsed at the time the amendments came into effect. Therefore, the right for the corporation not to be revived had not yet vested. The 10-year revival period would likely apply to the Group One corporations.
On the other hand, it could be argued that the Group Two corporations had their right vested and crystallized on the 5-year anniversary of their dissolution. Under the legislation at the time, the corporation would no longer be able to be revived. This could be argued to satisfy the test of a vested right as it could be a tangible and concrete situation as the corporation was struck and 5 years had elapsed without it being revived, and the situation sufficiently constituted at the time of the new statute's commencement.
It is unclear how a court will interpret these new amendments for corporations that were dissolved prior to May 31, 2022. It is likely that the new 10-year revival period will apply to Group One corporations that were dissolved less than 5 years before May 31, 2022. It is arguable that Group Two corporations that were dissolved more than 5 years, but less than 10 years before May 31, 2022, would not be subject to the new 10-year revival period as the right vested before the amendments and should not be interfered with.
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This article is intended to be an overview and is for informational purposes only.