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< http://www.courts.gov.bc.ca/jdb-txt/sc/96/08/s96-0871.txt

Date of Release: June 10, 1996 No. C936312
Vancouver Registry

IN THE SUPREME COURT OF BRITISH COLUMBIA

BETWEEN: )
)
) REASONS FOR JUDGMENT
SMR INVESTMENTS LTD. )
)
)
PLAINTIFF )
)
)
AND: ) OF THE HONOURABLE
)
)
RAND CAM ENGINE CORPORATION )
)
)
DEFENDANT )
) MR. JUSTICE COLLVER
)

Counsel for the Plaintiff: R.N. Pelletier

Counsel for the Defendant: B.G. Livingston

Place and Date of Summary Trial: Vancouver, B.C.
June 3, 1996

1 In a Rule 18A summary trial, the plaintiff, SMR
Investments Ltd. ("SMR"), seeks specific performance of a verbal
agreement by which it was to acquire from the defendant, Rand Cam
Engine Corporation ("Rand Cam"), 100,000 shares of Reg Technologies
Inc. ("Reg Tech. Inc.") for $40,000. Although $40,000 was paid by
SMR, Rand Cam has refused to deliver the shares. The trial of the
action is set for later this week, for two days.

2 James L. McCann is an inventor. On March 28, 1990,
on behalf of Rand Cam, he negotiated transfer of the right, title
and interest in the "Rand Cam-Engine" to Rand Energy Group Inc.
("Rand Energy") in consideration for the issuance to Rand Cam of
1,800,000 common shares of Rand Energy.

3 At the same time, Rand Energy issued 1,200,000 of its
common shares to Reg Tech. Inc., which resulted in Rand Cam and Reg
Tech. Inc. holding 60% and 40%, respectively, of the issued shares
of Rand Energy.

4 However, Rand Cam then agreed to sell 330,000 of its
shares in Rand Energy to Reg Tech. Inc. for $11,050,000, bringing
Reg Tech. Inc.'s interest in Rand Energy to 1,530.000 common shares
(51% of Rand Energy's shares), and leaving Rand Cam with 1,470,000
common shares (49% of Rand Energy's shares).

5 With respect to payment of the $11,050,000 for the
330,000 Rand Cam shares, the agreement (dated July 30, 1992)
between Reg Tech. Inc., Rand Cam, Rand Energy, and James McCann
required payment of $10,000 on execution, issuance of 100,000 Reg
Inc. shares to Rand Cam within 30 days, payments of $500,000 on
July 24, 1993 and July 24, 1994, and payment of the remaining
$10,000,000 in accordance with a schedule which I need not recite
in these reasons.
6 Concurrently with the above, John Robertson, President
of SMR (and also President of Reg Tech. Inc.), and James McCann, of
Rand Cam, negotiated for SMR's purchase of 100,000 shares of Reg
Tech. Inc. from Rand Cam. Their oral agreement was (at least
partially) confirmed in a July 29, 1992 letter, as follows:

Pursuant to our verbal agreement, this letter
is to confirm that SMR Investments Ltd. agrees
to purchase 100,000 treasury shares of Reg
Resources Corp. from the Rand Cam-Engine Corp.
for $40,000 within ten days after receipt of
the said shares from Reg Resources Corp.

On July 29, 1992, Reg Tech. Inc. shares were trading on the
Vancouver Stock Exchange ("VSE") at $0.47 to $0.50 per share.

7 Reg Tech. Inc. is the only public company to be
involved in the above dealings, and when it was discovered that VSE
approval of the release of the 100,000 Reg Tech. Inc. shares was
required, the July 30th, 1992 agreement was amended on April 27,
1993, providing for new payment terms, including issuance of the
mentioned 100,000 shares within 30 days after VSE approval.

8 Meanwhile, the $40,000 which SMR had agreed to pay to
Rand Cam for the Reg Tech. Inc. shares had been paid by SMR.
However, rather than delivering 100,000 Reg Tech. Inc. shares to
SMR, Rand Cam returned the $40,000 to SMR on September 27, 1993.
On that date, Reg Tech. Inc. shares were trading at $2.76 to $2.98.
9 SMR's action against Rand Cam is for: a declaration
that Rand Cam holds 100,000 Reg Tech. Inc. shares in trust for SMR;
an order transferring the shares to SMR; an injunction restraining
Rand Cam from dealing with the shares; specific performance; and,
in the alternative, damages either in lieu of specific performance
or for breach of contract.

10 Rand Cam's pleadings, prepared and filed by James
McCann, are difficult to fathom, but Mr. McCann's affidavits, filed
in response to this application, fairly explain his position.

11 Essentially, Mr. McCann contends that SMR agreed to
purchase 100,000 Reg Tech. Inc. shares from Rand Cam for $40,000
only if the Reg Tech. Inc. shares were then trading on the VSE at
less than $0.40 per share. Emphasizing that Rand Cam would not
have agreed to sell unless the sale was completed by August 30,
1992, Mr. McCann deposed as follows:

13. It makes no sense for Rand to enter into
such an agreement with Reg, if upon receipt of
the shares from Reg, the trading price of Reg
shares on the Vancouver Stock Exchange was in
excess of $0.40 cents per share. My clear
understanding of my verbal agreements with
John Robertson, on behalf of Reg and SMR, in
July, 1992, was that in the event the share
price of Reg was greater than $0.40 cents,
upon the issuance of the subject 100,000
shares, that Rand would then be at liberty to
sell the Reg shares on the Vancouver Stock
Exchange for a price in excess of $0.40 cents
per share.
He continued:

14. In effect, the letter of July 29, 1992,
set out as Exhibit "B" to this Affidavit is
the "Guarantee" of SMR that it will purchase
the 100,000 shares of Reg from Rand for a
price of $0.40 cents per share, if the trading
price of Reg shares was below that price at
the time of issuance of the shares to Rand on
or before August 30, 1992.

12 However, counsel for SMR submits that the "letter
agreement" of July 29, 1992 is a valid and enforceable contract,
drafted in clear and unambiguous terms, and he argues that Rand Cam
cannot now proffer evidence purporting to establish "a contractual
agreement which fundamentally contradicts the written agreement".

13 Aside from the admissibility issue, counsel for SMR
further contends that if the parties had intended that SMR would
have to pay market price for the shares, but not less than $0.40,
that could easily have been addressed in the written agreement.
Furthermore, evidence which Rand Cam intends to adduce at trial
seems to be contradicted by Mr. McCann's acknowledgement of SMR's
November 10, 1992, payment of $10,000 "as part payment on 100,000
treasury shares of Reg. Resources Corp." In this regard, I note
that on that date, Reg Tech. Inc. was trading at between $0.57 and
$0.59, although John Robertson deposes "the share price of Reg
fluctuated dramatically between $1.00 and $1.75". I do not know
where Mr. Robertson's figures come from.
14 When faced with conflicting affidavits, simply
preferring one version of events to another would lead to an
improper resolution of a summary trial application: Inspiration
Management Ltd. v. McDermid St. Lawrence Ltd. (1989), 36 B.C.L.R.
(2d) 202 at 212 (C.A.).

15 Although Mr. Roberston marshalls the more persuasive
argument, I do not accept his counsel's submission that, by itself,
the mentioned letter of July 29, 1992 is "a valid and enforceable
agreement". At most, it purports to confirm what Mr. Robertson
and Mr. McCann earlier agreed to, and that is anything but clear.

16 Until both Mr. Robertson and Mr. McCann have been
challenged in cross-examination, neither version of events can
convincingly prevail, and this is not a matter which can be
summarily determined.

"Collver J."

If man was supposedly created in gods image, then.....holy krap...we're all doomed.-sKallyWagger

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