Court of Appeal for Ontario

Date: 2017-07-06

Docket: M47951 (C62186)

Lauwers J.A. (In Chambers)

Between

Gina Gustafson and Juanita Curle Applicants (Respondents/Moving Parties)

and

Bruce Johnson, Allan Curle, Norall Group Inc., and Norall Group Contracting Inc. Respondents (Appellants/Responding Parties)

Counsel

Morris J. Holervich, for the moving parties

Bruce Johnson and Allan Curle, in person

Heard by teleconference: June 30, 2017

Reasons for Decision

[1] The appeal is from the decision of Justice Helen M. Pierce dated April 26, 2016, with reasons reported at 2016 ONSC 2804.

[2] The moving parties seek an order transferring this appeal from this court to the Divisional Court at Thunder Bay. They argue that the Divisional Court has exclusive jurisdiction over the appeal under s. 255 of the Ontario Business Corporations Act, R.S.O. 1990, c. B.16 ("OBCA"), which provides: "An appeal lies to the Divisional Court from any order made by the court under this Act."

[3] The first two paragraphs of the judgment provide:

THIS COURT ORDERS AND DECLARES with respect to each of Norall Group Inc. and Norall Group Contracting Inc. (the "Corporations") that:

(a) Juanita Curle is a 49% shareholder;

(b) Gina Gustafson is a 35% shareholder; and

(c) Jeanette Johnson is a 16% shareholder.

THIS COURT ORDERS AND DECLARES that it is just and equitable that the corporations be wound up.

[4] The reasons for judgment provide, at paras. 1-3:

This is a contested winding up application, pursuant to the provisions of the Ontario Business Corporations Act, R.S.O. 1990, c. B.16.

The applicants, Gina Gustafson and Juanita Curle, seek an order winding up the corporations, Norall Group Inc. and Norall Group Contracting Inc.

The respondents, Bruce Johnson and Allan Curle, consent to an order liquidating the assets of the corporations, but object to the corporations being wound up. They dispute that the applicants are the majority shareholders and directors of the corporations. At the heart of the dispute is this question: who are the shareholders of the corporations? The answer will determine who is entitled to the assets if the corporations are wound up.

[5] At para. 71 of the reasons, the application judge made findings respecting the shareholding of the companies: "For the reasons above, with respect to NGI and NGCI, I find that Juanita Curle is a 49% shareholder; Gina Gustafson is a 35% shareholder; and Jeanette Johnson is a 16% shareholder."

[6] The application judge turned to the application of the OBCA at para. 77 et seq. of her decision, citing s. 207(1)(b)(iv), which provides that a court may order a corporation to be wound up if: "it is just and equitable for some reason, other than the bankruptcy or insolvency of the corporation, that it should be wound up". Further, s. 207(2) provides: "Upon an application under this section, the court may make such order under this section or section 248 as it thinks fit."

[7] The application judge framed the issue before her at para. 79:

The applicants proceed on two grounds: firstly, that pursuant to s. 207(1)(b)(iv), it is just and equitable to wind up the corporations, and secondly, that pursuant to s. 207(1)(c), the shareholders have authorized an application to the court to wind up. In this case, Ms. Curle and Ms. Gustafson who together hold a majority of the shares in each corporation, ask for a winding up order.

[8] After a lengthy review of the evidence in relation to the grounds on which a corporation may be wound up, the application judge concluded, at para. 91:

Consequently, I have concluded that it is just and equitable that the corporations, Norall Group Inc. and Norall Group Contracting Inc. be wound up. An order will issue accordingly.

[9] The application judge also issued what may be called ancillary orders. The first referred an outstanding account from the corporation's solicitor to assessment. The second related to invoices rendered to the corporations by Aegus Contracting, which had completed contracts left unfinished by the corporations. She directed, at para. 99, the trial of an issue. She also ordered a sale of the companies' remaining assets.

[10] The responding parties assert that "the fundamental order made under the judgment appealed from is that of share ownership; and that all other orders and declarations subsequently made turned upon this initial determination." They add that jurisdiction to make that finding "did not rely upon any judicial powers conferred upon the Application Judge under the [OBCA]." The responding parties rely in particular on the decision of this court in Buccilli v. Pillitteri, 2016 ONCA 775, at para. 19, per Rouleau J.A.:

In my view, the critical issue to be determined is the basis of the power pursuant to which the partial summary judgment was granted. If, as alleged by the moving parties, the underlying source of authority for the relief ordered is the OBCA, then the order, whether it was made pursuant to s. 248(3) or r. 20, is for appeal purposes considered to be an order made under the OBCA. In other words, if the motion judge was exercising a power "sufficiently 'close' to a legislative source under the OBCA", then it will be treated as an OBCA order and it matters not whether the relief was granted pursuant to s. 248(3) or r. 20: Ontario (Securities Commission) v. McLaughlin, 2009 ONCA 280, 248 O.A.C. 54, at para. 16. If, however, the source of the authority for the order is the common law or equity, as opposed to the OBCA, then the appeal lies properly to this court.

[11] The court in Buccilli found, at para. 20, that the plaintiffs were successful based on the doctrines of undue influence, unconscionability, misrepresentation and breach of fiduciary duty, which carried with it an accounting. Justice Rouleau stated at para. 21: "I do not, therefore, view the appeal as constituting, at its core, an appeal under the OBCA to which s. 255 of that Act applies." The responding parties rely especially on his words, at para. 22:

Even if I were to assume that part of the relief was grounded in an OBCA claim and was granted pursuant to s. 248(3), this court would nonetheless have jurisdiction to hear the appeal from all aspects of the order pursuant to s. 6(2) of the Courts of Justice Act. This is because those parts of the order under appeal that are rooted in the OBCA are final orders that, although appealable to the Divisional Court, may be joined to the appeal of the parts of the order that are not rooted in the OBCA.

[12] The moving parties assert the application judge was exercising authority under the OBCA, so that the appeal is to the Divisional Court under s. 255 of the OBCA. They distinguish Buccilli on the basis that the case was really about the payment of money by the trial judge under doctrines of undue influence, unconscionability, misrepresentation and breach of fiduciary duties.

[13] The same cannot be said of this case, in my view. At its core, this case is a winding up application under the OBCA. It was necessary for the application judge to determine who the shareholders were, in order to decide whether the corporations should be wound up. I agree with the moving parties that the balance of the order gives directions to determine the liabilities of the corporations and to liquidate assets, which are all ancillary to the winding up order. See generally Amaranth L.L.C. v. Counsel Corp., 71 O.R. (3d) 258; Pruner v. Ottawa Hunt and Golf Club, Limited, 2015 ONCA 609, 127 O.R. (3d) 337; and 1186708 Ontario Inc. v. Gerstein, 2016 ONCA 905.

[14] The responding parties complain that the moving parties did not move in a timely way to challenge this court's jurisdiction and the hearing of this appeal is scheduled for October 26, 2017. This does not affect this court's jurisdiction.

Disposition

[15] Accordingly, the proper route of appeal is to the Divisional Court and I order that this appeal be transferred to the Divisional Court, subject to the following paragraph.

[16] Moving the matter to the Divisional Court in Thunder Bay could introduce a delay to December of 2017 and a further six months beyond if the matter is not reached then. The moving parties advise that they will be filing the factum within the week, and the case will then be ready to argue. They express support for an order transferring the appeal to the Divisional Court, without limiting it to Thunder Bay, in the event that the appeal can be reached earlier in Toronto. Order accordingly.

[17] By agreement, the costs of this motion are reserved to the panel hearing the appeal.