COURT OF APPEAL FOR ONTARIO
CITATION: Paulpillai Estate v. Yusuf, 2020 ONCA 655
DATE: 20201019
DOCKET: M51439 & M51521 (C68024)
Doherty, Hoy and Jamal JJ.A.
BETWEEN
Theresa Yogaranie Paulpillai in her capacity as the Estate Trustee for the Estate
of Richmond Gabriel Paulpillai, Theresa Yogaranie Paulpillai
and Maneharran Paulpillai
Applicants/Moving Parties
(Respondents/Moving Parties on M51439/
Responding Parties on M51521)
and
Joshua Akanni Yusuf, Meerc Inc., All Saints University Limited,
All Saints University School of Medicine Limited, Avonelle Pinard, David Bruney,
Frankie Bellot and Medical Education Examination Resource Center
Respondents/Responding Parties
(Appellants/Responding Parties on M51439/
Responding Parties on M51521)
Counsel: Edwin G. Upenieks and Angela H. Kwok, for the respondents
Osborne G. Barnwell, for the appellants
Heard: September 17, 2020 by video conference
Jamal J.A.:
[1] There are two motions before the court: the respondents’ motion to quash an appeal from an order of Fowler Byrne J. (the “motion judge”), dated February 6, 2020, on the basis that the order under appeal is interlocutory, not final, and thus any appeal lies to the Divisional Court with leave; and the appellants’ motion to stay the order under appeal.
[2] For the reasons that follow, I conclude the order under appeal is interlocutory, and thus any appeal lies to the Divisional Court with leave. Because this court lacks jurisdiction over the appeal, I would quash the appeal and dismiss the motion to stay the order under appeal.
Background
[3] The late Richmond Gabriel Paulpillai (“Richmond”) and Joshua Akanni Yusuf (“Joshua”) were partners in a successful business venture operating two medical schools in the Caribbean: All Saints University of Medicine Limited, incorporated and based in Dominica (“ASU Dominica”), and All Saints University Limited, incorporated and based in St. Vincent and the Grenadines (“ASU SVG”). Richmond and Joshua, who both lived in Ontario, each owned 40% of the shares in each of ASU Dominica and ASU AVG.
[4] ASU Dominica and ASU SVG are managed by MEERC Inc., a corporation in which Richmond and Yusuf each owned 50% of the shares.
[5] The tuition payments, dividends, and profits of ASU Dominica and ASU SVG are held by a partnership known as the Medical Education Examination Resource Center (“the Center”), in which Richmond and Joshua were equal partners. The Center holds current earnings and substantial undistributed earnings that accumulated before Richmond’s death. The Center operates under a partnership agreement (the “Partnership Agreement”) governed by Ontario law that provides for arbitration of disputes between the partners.
[6] Before Richmond died, ASU Dominica and ASU SVG shared recruiting efforts and expenses and allocated students to their respective campuses according to capacity, essentially operating as related businesses. When Richmond died, Joshua proposed to Theresa Paulpillai (“Theresa”) — Richmond’s spouse and sole executor, trustee, and beneficiary — that they divide up the businesses, with Joshua and Richmond’s family each assuming ownership and management of one university.
[7] Theresa elected to take ASU SVG, but claims Joshua refused to provide her with financial information about the businesses. She alleges Joshua continued to manage both universities and their funds without regard to the interests of the Paulpillai family, recruited ASU SVG’s staff and students, and competed with ASU SVG through another medical school, the American University of St. Vincent. She also claims Joshua failed to account for partnership funds after Richmond’s death.
[8] Because of these concerns, Theresa, acting on her own behalf and on behalf of Richmond’s estate, and her son, Maneharran Paulpillai (“Mane”), commenced an application before the Ontario Superior Court of Justice against Joshua and the other entities and individuals involved in the businesses. They claimed, among other relief, a declaration and damages for corporate oppression, a declaration and damages for breach of the Partnership Agreement, an accounting and tracing of money received since Richmond’s death, and other injunctive relief.
[9] At the first attendance on the application on February 1, 2019, the parties agreed to a consent order separating the businesses and granting the injunctive relief sought on the application. The application was adjourned sine die, to be brought back if necessary.
[10] Because Theresa felt that Joshua was breaching the consent order, the parties brought back the application and moved for a range of interim relief.
The Order Under Appeal
[11] On February 6, 2020, the motion judge issued the order under appeal, with reasons reported as Paulpillai v. Yusuf, 2020 ONSC 851.
[12] The order: (1) appointed BDO Canada Limited (“BDO”) as an investigative monitor of ASU Dominica and ASU SVG; (2) released funds on an interim basis to Theresa and Mane to operate ASU SVG, as an advance of any sum that might be found to be payable to them; (3) enjoined Joshua on an interim basis from competing unfairly with ASU SVG or recruiting its students or personnel; (4) converted the application to an action; (5) added parties to the action; and (6) declined to seal the entire court file.
[13] The respondents filed a notice of appeal from this order with this court, and later also filed a notice of motion for leave to appeal to the Divisional Court.
[14] In response, Theresa and Mane (the “moving parties”) moved to quash this appeal on the basis that the order is interlocutory, not final, and thus any appeal lies to the Divisional Court with leave. For their part, Joshua and the other respondents (the “responding parties”) moved to stay the order under appeal.
Discussion
[15] Section 6(1)(b) of the Courts of Justice Act, R.S.O. 1990, c. C.43, provides that an appeal lies to the Court of Appeal from “a final order of a judge of the Superior Court of Justice”, while s. 19(1)(b) provides that an appeal lies to the Divisional Court from “an interlocutory order of a judge of the Superior Court of Justice, with leave as provided in the rules of court”.
[16] The main principles that determine whether an order is interlocutory or final are well known:
An appeal lies from the court’s order, not from the reasons given for making the order: see Grand River Enterprises v. Burnham (2005), 2005 6368 (ON CA), 197 O.A.C. 168 (C.A.), at para. 10; Amphenol Canada Corp. v. Sundaram, 2019 ONCA 932, at para. 21; and Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, 2016 ONCA 404, 131 O.R. (3d) 455, at para. 33.
An interlocutory order “does not determine the real matter in dispute between the parties — the very subject matter of the litigation — or any substantive right[.] Even though the order determines the question raised by the motion, it is interlocutory if these substantive matters remain undecided”: Drywall Acoustic Lathing Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2020 ONCA 375, at para. 16, citing Hendrickson v. Kallio, 1932 123 (ON CA), [1932] O.R. 675 (C.A.), at p. 678; Ball v. Donais (1993), 1993 8613 (ON CA), 13 O.R. (3d) 322 (C.A.). See also Amphenol, at para. 18.
In determining whether an order is final or interlocutory, “one must examine the terms of the order, the motion judge’s reasons for the order, the nature of the proceedings giving rise to the order, and other contextual factors that may inform the nature of the order”: Prescott & Russell (United Counties) v. David S. Laflamme Construction Inc., 2018 ONCA 495, 142 O.R. (3d) 317, at para. 7.
The question of access to appellate review “must be decided on the basis of the legal nature of the order and not on a case by case basis depending on the application of the order to the facts of a particular case”: Laurentian Plaza Corp. v. Martin (1992), 1992 7561 (ON CA), 7 O.R. (3d) 111 (C.A.), at p. 116; see also Amphenol, at para. 19. In other words, the characterization of the order depends upon its legal nature, not its practical effect: see Ontario Medical Assn. v. Miller (1976), 1976 679 (ON CA), 14 O.R. (2d) 468 (C.A.), at p. 470; Deltro Group Ltd. v. Potentia Renewables Inc., 2017 ONCA 784, 139 O.R. (3d) 239, at para. 3.
[17] As elaborated below, in my view, applying these principles to the order under appeal confirms that it is interlocutory.
(1) Appointment of BDO as investigative monitor
[18] Paragraphs 2-15 of the order appoint BDO Canada Limited as investigative monitor to monitor the business operations and financial affairs of MEERC Inc., the Centre, ASU Dominica, ASU SVG, and the American University of St. Vincent; requires these entities to cooperate with BDO; orders BDO to determine and make equalization payments between the parties; and requires the parties to authorize the release of $500,000 to the monitor as a retainer for its services.
[19] Although the order does not refer to the specific statutory basis to appoint the monitor, the motion judge’s reasons noted the court had “authority to appoint a receiver and manager by an interlocutory order where it appears to be just or convenient to do so: Courts of Justice Act, s. 101”: at para. 59. Section 101(1) of the Courts of Justice Act provides:
101 (1) In the Superior Court of Justice, an interlocutory injunction or mandatory order may be granted or a receiver or receiver and manager may be appointed by an interlocutory order, where it appears to a judge of the court to be just and convenient to do so.
[20] Section 101(1) authorizes the court to appoint a receiver with investigative powers to protect the parties’ interests pending the resolution of the claims and to mitigate risk posed to the plaintiff’s right to recovery. A receiver with investigative powers is often appointed to gather information and determine the true state of affairs about the parties: see Akagi v. Synergy Group (2000) Inc., 2015 ONCA 368, 125 O.R. (3d) 401, at paras. 65-66, 90.
[21] The motion judge invoked similar considerations in appointing BDO as monitor in this case. She noted that a monitor may be appointed where “the plaintiffs’ ability to recover could be seriously jeopardized”: at para. 61. The appointment was made “not to adjudicate on an issue, but rather to provide the accounting that is required by both parties in order to resolve or try this issue”: at para. 63. BDO would “perform an audit function and determine the proper equalization payment to be made to one party”: at para. 63.
[22] This court has accepted that the appointment of a receiver on an interlocutory motion under s. 101(1) of the Courts of Justice Act (rather than on application) is interlocutory: see e.g., Illidge (Trustee of) v. St. James Securities Inc. (2002), 2002 44971 (ON CA), 60 O.R. (3d) 155 (C.A.), at para. 4; Ontario v. Shehrazad Non Profit Housing Inc., 2007 ONCA 267, 85 O.R. (3d) 81, at paras. 15-17.
[23] In my view, the same is true of the order appointing BDO as investigative monitor here. The order does not adjudicate the parties’ rights and obligations. Rather, it authorizes BDO to undertake an audit, to protect the parties’ interests pending the resolution of the dispute, and to furnish the court with information to help resolve the dispute. The order appointing the monitor is interlocutory.
(2) Interim release of funds to operate ASU SVG
[24] Paragraphs 16-17 of the order require the parties to authorize the release of USD$1 million from the partnership funds to Theresa and Mane to operate ASU SVG, as “an advance on any sum found to payable to [them]”, with any further release of interim funds at BDO’s sole discretion.
[25] In her reasons, the motion judge noted Joshua “has admitted that $1 million could be released for each of the universities to allow them operating funds for a period of two months”: at para. 44. She also highlighted that Joshua “conceded that USD$4.6 million is currently in a Pay[P]al account that is related to both medical schools”: at para. 44. She ordered an interim release of funds for ASU SVG alone because she was “not convinced on the evidence that ASU Dominica requires funds on an urgent basis in order to continue its operations. There does appear to be an urgent need for ASU SVG”: at para. 88.
[26] An interim release of funds to one party, on motion, that settles no elements of the lis between the parties is an interlocutory order: see Grand River Enterprises, at paras. 4, 6, 9, and 13; Watkin v. Open Window Bakery Ltd. (1996), 1996 11788 (ON SC), 28 O.R. (3d) 441 (Div. Ct.), at p. 444.
[27] The responding parties assert in their factum that this aspect of the order “is final in nature as it was granted against [their] wishes” and “the failure to make an equal payment to [them] leaves them without the working capital they need and thus, this is highly prejudicial and finally brings their request for money to an end”.
[28] This submission is without merit. The order refers to an “advance” of monies that may be found to be owing to Theresa and Mane. It is not a final determination of anyone’s entitlement. If the court ultimately decides that no money was owing to Theresa, Mane, or ASU SVG, it may have to be repaid.
[29] Thus, I conclude that the order for an interim payment to Theresa and Mane to operate ASU SVG is interlocutory.
(3) Interim injunction
[30] Paragraphs 18-19 of the order restrain Joshua on an interim basis from directly or indirectly providing medical education in St. Vincent and the Grenadines, except through the American University of St. Vincent, and regarding the American University of St. Vincent, restrains Joshua from enrolling or educating students enrolled with ASU SVG, or employing individuals employed by ASU SVG, in the previous 12 months.
[31] An interim or interlocutory injunction is interlocutory for purposes of the appeal route, because its legal nature does not finally determine the essence of the litigation before the court, even if its practical effect may be to do so: see Amphenol, at para. 23; Ontario Medical Assn., at p. 470; and Deltro Group, at para. 3.
[32] As a result, I conclude that this aspect of the order is interlocutory.
(4) Conversion of the application to an action
[33] Paragraphs 20-22 of the order convert the application to an action and provide a deadline for delivery of the statement of claim.
[34] An order converting an application into an action is interlocutory. Such an order simply converts the application into a trial. The matter was started in the Superior Court of Justice and remains there: see Susan J. Model & Talent Management Inc. v. IMG Models Inc., 2006 2882 (Ont. C.A.), at para. 3.
(5) Addition of parties
[35] Paragraph 23 of the order grants leave to add the American University of St. Vincent and related individuals as defendants.
[36] An order adding parties as defendants is interlocutory. The litigation continues, and the order does not affect the added parties’ substantive rights: see Fram Elgin Mills 90 Inc., at para. 28; Hunter v. Richardson, 2013 ONCA 731, at para. 2; Shoukralla v. Shoukralla, 2016 ONCA 128, 41 C.B.R. (6th) 6, at para. 17; and Robinson v. Thornlea Farms Ltd., [1991] O.J. No. 2219 (C.A.).
(6) Refusal to seal the court file
[37] Paragraphs 24-25 of the order deny the request to seal the entire court file, except for certain affidavits that are to remain sealed. However, at para. 92 of her reasons, the motion judge stated “[t]his issue can be revisited in the action if either party can present evidence in support of it”.
[38] This aspect of the order does not finally determine the real matter in dispute between the parties — the claim of corporate oppression, whether the responding parties have appropriately accounted to the moving parties for monies that may be owing to them, and the appropriate way to separate the two medical school businesses. Instead, it relates to the collateral matter of whether the court file is to be sealed, and in any event, is open to being revisited on appropriate evidence. In my view, this aspect of the order is therefore interlocutory.
(7) Refusal to refer the dispute to arbitration
[39] Finally, the responding parties assert that the motion judge refused to refer the dispute to arbitration under the arbitration clause in the Partnership Agreement, and that this was a final order because it finally determined the forum for adjudicating the parties’ dispute and deprived the responding parties of their substantive contractual right to resolve the dispute by arbitration.
[40] I do not agree with this submission in this case.
[41] It is telling that the motion judge’s order is silent on the issue of arbitration. As the motion judge’s reasons explain, this is because there was no motion before the court to refer the dispute to arbitration.
[42] At para. 51 of her reasons, the motion judge accepted that the Partnership Agreement “clearly states that any disputes should be resolved through an arbitration”, adding that under the arbitration clause “injunctive relief may be sought outside the arbitration process”. Accordingly, nothing prohibited the moving parties from seeking injunctive relief before the court: at para. 52.
[43] At para. 55, the motion judge observed that, despite the responding parties maintaining in their affidavit material on the motion that the matter should have proceeded to arbitration, “at no time did they bring a motion seeking to stay these proceedings or to compel the [moving parties] to proceed by way of arbitration”. She highlighted s. 7(1) of the Arbitration Act, 1991, S.O. 1991, c. 17 (“Arbitration Act”), which “makes it clear that the action can only be stayed by way of motion, and even then, the court has the discretion to refuse to grant the stay if the motion is not made in a timely manner”: at para. 55. That discretion arises under s. 7(2)4 of the Arbitration Act:
7 (2) However, the court may refuse to stay the proceeding in any of the following cases:
- The motion was brought with undue delay.
[44] At para. 57, the motion judge suggested that even if the responding parties had a right to have the issues determined by an arbitrator, they waived this right when they took steps within the proceeding.
[45] At para. 58, the motion judge said that the lack of a motion to stay the proceeding and the responding parties taking steps within the proceeding meant that they had waived any right to arbitration:
[G]iven that there is no motion before the Court to stay the action, and given that the [responding parties] have taken significant steps to respond to this application, including filing numerous affidavits, producing viva voce evidence in the application, conducting cross-examinations and even bringing an oral motion without formal notice seeking to remove the [moving parties’] counsel as solicitors of record for the [moving parties], I find that the [responding parties] have waived their right to seek to have these issues determined by way of arbitration.
[46] In my view, the motion judge did not make a final determination on whether the dispute should be referred to arbitration. She explained that the responding parties had failed to bring a motion as required by s. 7, and thus it was not open to her to grant a stay. For good measure, in obiter, she raised the issues of delay and waiver.
[47] Even if the motion judge is viewed as having exercised discretion because of undue delay under s. 7(2)4 of the Arbitration Act to refuse to stay the court proceeding and refer the dispute to arbitration — despite the silence of the order on this point — this court would still lack appellate jurisdiction over this aspect of the order. Section 7(6) of the Arbitration Act provides: “There is no appeal from the court’s decision.” The appeal bar in s. 7(6) applies to any decision under s. 7, including a decision to refuse a stay under s. 7(2): see TELUS Communications Inc. v. Wellman, 2019 SCC 19, [2019] 2 S.C.R. 144, at para. 91; Toronto Standard Condominium Corporation No. 1628 v. Toronto Standard Condominium Corporation No. 1636, 2020 ONCA 612, at paras. 62, 66-68, and 95.
[48] Thus, on either reading of the motion judge’s reasons, I conclude this court lacks jurisdiction over this aspect of the order under appeal.
Disposition
[49] I would grant the motion to quash the appeal and dismiss the motion to stay the order under appeal, without prejudice to the right to seek leave to appeal to the Divisional Court and to renew the stay motion before that court.
[50] I would order costs payable to the moving parties in the agreed amount of $15,000 all inclusive.
Released: October 19, 2020 (“D.D”)
“M. Jamal J.A.”
“I agree. Doherty J.A.”
“I agree. Alexandra Hoy J.A.”