Case Reporter – Cimmer v Niessner – 2022 SKCA 60
Written by Connor Jonsson, supervised by Professor MacPherson.
Can a party who does not have present legal ownership of shares, but may be able to prove beneficial legal ownership in the future, make an application under s.63 of the PPSA to obtain an injunction against the disposal of those shares by a 3rd party? In a recent decision, Cimmer v Niessner, 2022 SKCA 60, (1) Saskatchewan’s Court of Appeal said no, and overturned an earlier trial decision which had allowed the Respondent, Mr. Niessner, to make such an application.
The Appellant, Mr. Cimmer, had purchased the shares of a Saskatchewan corporation, Keely lake Lodge, from an employee of Mr. Niessner. The employee was in possession of the shares as the result of a sham arrangement between himself and Mr. Niessner while the employee was undergoing immigration difficulties. (2) Although the parties agreed that the shares had been falsely received, and that the entrie
in the Saskatchewan public records did not accurately reflect the true ownership of the shares of the Corporation (3), Mr. Cimmer asserted ownership of the shares after purchasing them from the employee, and attempted to dispose of them by public sale. Mr. Niessner brought an application to the Court of Queen’s Bench pursuant to s.63 of the PPSA (4) and successfully obtained an injunction prohibiting the Respondent from taking steps to dispose of the shares of the Corporation that he purported to own. (5)
On appeal, Mr. Cimmer claimed, among other things, that the Respondent did not have standing under the PPSA to obtain such an injunction. The relevant portions of s.63 of Saskatchewan’s PPSA states that on application by a debtor, a creditor of a debtor, a secured party, a sheriff or a person with an interest in the collateral, the court may make any order that is necessary to ensure protection of the interest of any person in the collateral. (6) The Court of Appeal, in applying fundamental principles of statutory interpretation to their analysis, found that Mr. Niessner had no recognizable current legal interest in the disputed shares, despite the fact that he may be able to prove beneficial legal ownership in the future. (7)
The Court of Appeal warned the lower court to exercise caution so as not to permit parties external to the issues, or with mere claims, to make applications under s.63, even when there may be genuine controversy as to the true ownership of shares. (8)
(1) Cimmer v Niessner, 2022 SKCA 60.
(2) Ibid at para 6.
(3) Ibid at para 8.
(4) The Personal Property Security Act, SS 1993, c P-6.2 [PPSA].
(5) Cimmer v Niessner, supra note 1 at paras 24-26.
(6) PPSA, supra note 4 at s.63.
(7) Cimmer v Niessner, supra note 1 at para 84.
(8) Cimmer v Niessner, supra note 1 at para 85.
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