Executive Summary: Key Legal and Evidentiary Issues

• Validity of share issuance and rectification of the securities register under the Canada Business Corporations Act.

• Alleged non-payment by the respondent of the share subscription price and additional $100,000 buy-in.

• Dispute over whether the respondent was properly served with court documents and notified of the hearing.

• Application of Rule 22-1(3) of the Supreme Court Civil Rules to set aside an order made in the respondent’s absence.

• Assessment of whether the respondent presented a defence worthy of investigation regarding share ownership.

• Determination of whether maintaining the default order would result in a miscarriage of justice.

Facts and outcome of the case

Background and parties

Green Mile Original Ltd., a company incorporated under Canadian law and licensed to produce marihuana, brought a petition against David William MacDonald, a former employee and one of three original shareholders. On July 28, 2022, MacDonald, Shaun Ashworth, and Grant Curtis were each issued 1,000,000 common shares in Green Mile for a subscription price of $100. Green Mile asserted that, in addition to the subscription price, each shareholder was to pay an additional $100,000 for their shares, and that only Ashworth and Curtis complied with this agreement. The company alleged that MacDonald failed to pay, did not sign corporate documents, and ceased involvement with Green Mile from August 2024 onward. Green Mile sought to rectify its corporate records to remove MacDonald as a shareholder, claiming his shares were wrongly issued due to non-payment.

Procedural history and legal framework

The petition was filed on March 10, 2025. The hearing took place on May 16, 2025, in MacDonald’s absence. Green Mile’s process server deposed that MacDonald was personally served at an address in Pitt Meadows, British Columbia, on March 31, 2025. MacDonald denied being personally served, stating he never lived at that address and that it was his girlfriend’s residence. He acknowledged that his girlfriend told him a package of documents had been left for him but claimed he did not understand he was required to respond. The court had previously granted all orders sought by Green Mile, including declarations that MacDonald’s shares were void and authorizing the company to remove references to him from its records.

MacDonald applied to set aside the May 16, 2025 order under Rule 22-1(3) of the Supreme Court Civil Rules. The court considered whether MacDonald was in wilful default, whether the application was made as soon as reasonably possible, and whether there was a defence worthy of investigation. The court also considered whether upholding the order would constitute a miscarriage of justice.

Key legal and evidentiary issues

The main issue was whether MacDonald had paid for his shares, with conflicting evidence regarding payment and the existence of a $100,000 buy-in agreement. The court reviewed affidavits, corporate records, and communications, including a share subscription receipt and text messages. The court noted that the rationale for revoking MacDonald’s shares was not raised until years after the shares were issued and that there was written confirmation of payment at the time of issuance.

Outcome and costs

The court found that MacDonald had at least constructive notice of the proceedings but was not in wilful default. The application to set aside the order was made promptly, and the court determined that MacDonald had raised a defence worthy of investigation regarding payment for the shares. The court set aside the May 16, 2025 order, allowing MacDonald to file a response to the petition. The court ordered MacDonald to pay $1,500 in costs to Green Mile for the petitioner’s appearance at the May 16, 2025 hearing. No damages were awarded. Upon payment of costs, MacDonald was permitted to respond to the petition, and the matter could proceed further if not resolved.