Court File and Parties

COURT FILE NO.: 259/05 DATE: 20051025

SUPERIOR COURT OF JUSTICE - ONTARIO DIVISIONAL COURT

RE: DEBRA FLOM Applicant (Respondent in Appeal)

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527049 ONTARIO LIMITED AND PEGGY HUGHES Respondents (Appellants)

BEFORE: Mr. Justice Carnwath

COUNSEL: P. David McCutcheon, for the Appellants Morris Cooper, for the Respondent

HEARD: October 21, 2005

ENDORSEMENT

CARNWATH J.:

[1] Some background to this matter is necessary.

[2] Debra Flom sought an order requiring the appellants to furnish her with the financial information to which she was entitled as a shareholder of 527049 Ontario Limited, pursuant to the Ontario Business Corporations Act ("OBCA"). The company and its principal shareholder, Peggy Hughes, resisted, alleging Ms. Flom's 10% shareholding was subject to conditions contained in an oral agreement that disentitled her to the information.

[3] The issue was tried by C. Campbell J. on the Commercial List on the consent of the parties and oral evidence was called. C. Campbell J. found in favour of Ms. Flom and ultimately ordered an audit of the years 2002, 2003 and 2004. The respondents seek an extension of time to perfect an appeal of C. Campbell J.'s order and a stay of his order pending appeal.

[4] As noted above, C. Campbell J. ordered an audit for the most recent three years, at a cost not to exceed $15,000 per year. He did so on the basis of his finding that Debra Flom was a registered shareholder of the corporation holding a certificate for 10% of the shares. He rejected the evidence of Trevor Hughes, Peggy Hughes' husband, who was acknowledged to be the directing mind of the corporation. That evidence sought to establish that Mr. Flom had to perform certain services for the corporation before Ms. Flom could exercise her rights as a shareholder.

[5] The parties were unable to agree on the form of C. Campbell J.'s order which issued on April 5, 2005.

[6] The appellants appealed C. Campbell J.'s order to the Court of Appeal on April 15, 2005.

[7] The appellants received a notice of intention to dismiss the appeal for delay from the Registrar of the Court of Appeal dated May 18, 2005. The notice said that the appeal would be dismissed if not perfected by June 8, 2005.

[8] The appellants and the respondents made repeated attempts to finalize C. Campbell J.'s judgment. The attempts were unsuccessful and counsel for both parties appeared before him on May 30, 2005, to settle the order. The order was not settled because of outstanding issues concerning the proposed audit.

[9] By June 8, 2005, the appellants had prepared all materials required to perfect the appeal to the Court of Appeal except for the final judgment which had not been settled, issued and entered.

[10] The appellants got in touch with the Registrar of the Court of Appeal to explain that the order appealed from was not settled.

[11] On June 8, 2005, the appellants attempted to file the materials to perfect the appeal. The materials were rejected by the Court of Appeal because the issued and entered judgment of Justice C. Campbell was not included.

[12] On June 9, 2005, the appellants filed their notice of motion requesting an extension of time to perfect the appeal which was returnable on June 21, 2005.

[13] On June 21, 2005, Simmons J.A. advised the parties that, in her view, the appeal was more properly heard by the Divisional Court which had jurisdiction to hear appeals under the OBCA. A one-week adjournment to the motion was granted to allow the parties to review that position and obtain instructions from their clients.

[14] Counsel for the parties agreed the application and issues before C. Campbell J. fell solely within the scope of the OBCA and on June 29, 2005, the appeal was transferred by a consent order of the Court of Appeal to the Divisional Court.

[15] The parties, once again, appeared before C. Campbell J. on June 23, 2005, at which time he added to the original order by giving directions concerning the audit ordered by the court. The appellants then moved before me on August 17, 2005, for an order extending the time to appeal the order of C. Campbell J. to the Divisional Court and for a stay of his order.

[16] Both counsel agreed that I should hear the matter despite their being no settled order. They agreed I was to assume the order was settled, issued and entered on the terms of C. Campbell J.'s endorsements of April 5, 2005, and following endorsements.

[17] For reasons more extensively set out in my order of August 19, 2005, I found the appeal devoid of merit and denied both the extension of time to appeal and the stay.

[18] On October 6, 2005, the order of C. Campbell J. was issued and entered.

[19] Shortly thereafter, I received a telephone call from the Registrar of the Divisional Court reporting that counsel for the appellants had sought to perfect an appeal to the Divisional Court of C. Campbell J.'s order of April 5, 2005 as finally settled, issued and entered on October 6, 2005.

[20] I directed the Registrar that the appellants not be permitted to file any documents to attempt perfecting the appeal until such time as the order of Mr. Justice C. Campbell had been settled and issued. I was unaware that his order had been settled, issued and entered on October 6, 2005. Upon receiving this direction, counsel for the appellants purported to perfect an appeal to the Divisional Court of C. Campbell J.'s order in the face of my decision that no extension of time be granted for the appeal on August 17, 2005. Counsel has explained his action by submitting that he did so in order to pre-empt the Registrar from invoking the provisions of rule 61.13.

[21] Not surprisingly, counsel for the respondents requested an appearance before me to seek directions.

[22] I invited counsel for the appellants to make submissions on the question of whether anything had changed between August 17 and today's date which would require me to reconsider my finding that the appeal was devoid of merit. Nothing he submitted persuades me that the appeal has any more merit today than on August 17, 2005.

[23] Counsel agreed that I should make my decision on August 17, 2005, on their agreement that I should consider C. Campbell J.'s order to have been settled, issued and entered. That disposes of any ability of the appellants to appeal C. Campbell J.'s order, subject, of course, to a successful appeal of my order. I will extend the time to appeal my order.

[24] I, therefore, order as follows:

(a) The purported perfection of the appeal from C. Campbell J.'s order of April 5, 2005, is quashed and is of no force and effect.

(b) The appellant shall have 30 days from October 26, 2005, to appeal my order of August 17, 2005;

(c) Both parties agreed that the costs of the hearing before me on October 21, 2005, should follow the event. Unless I receive written submissions to the contrary within five days, there shall be costs to the respondent fixed at $500, inclusive of fees, disbursements and GST.

CARNWATH J.

DATE: 20051025