Court File and Parties

Court of Appeal for Ontario Date: 2022-03-10 Docket: M53127 (C70005)

Before: Pepall J.A. (Motions Judge)

Between: Moses Sabatino Applicant (Appellant/Moving Party)

And: Posta Ital Bar Inc., Rocco Mastrangelo and Marco Mastrangelo Respondents (Respondents/Responding Parties)

Counsel: David Morawetz and John Lo Faso, for the appellant Daniel Rosenbluth, for the respondents

Heard: February 25, 2022 by video conference

Reasons for Decision

[1] The applicant, Moses Sabatino, moves for an extension of time to perfect his appeal. A factor that may be considered on a motion to extend time is whether this court has jurisdiction: Jadhav v. Jadhav, 2020 ONCA 19.

[2] The order under appeal dismissed an oppression application under the Ontario Business Corporations Act, R.S.O. 1990, c. B.16. Section 255 of that Act states that “[a]n appeal lies to the Divisional Court from any order made by the court under this Act.”

[3] On February 22, 2022, the Executive Legal Officer (Acting) of this court wrote to counsel alerting them to this concern and asking them to be prepared to address the issue in their submissions on the motion.

[4] In attending before me, both counsel agreed that this appeal should be in Divisional Court but urged me to address the other issues. The parties advised that they would be bound by the result and if the respondents were unsuccessful on the issues other than jurisdiction, they would consent to a late filing in the Divisional Court. Under the circumstances, I will first very briefly address the relevant background facts followed by a discussion of the test for an extension and its application.

Background Facts

[5] The applicant is a one-third shareholder in the corporate respondent, Posta Ital Bar Inc., a restaurant in Port Credit, Ontario. The individual respondent, Rocco Mastrangelo, holds the remaining two-thirds of the shares in the company, one half of which is held in trust for his brother, the respondent Marco Mastrangelo. In late 2018, the applicant was asked to participate in a cash call which Rocco felt was critical for the survival of the business. The applicant refused and Rocco then caused him to be removed as a director. He was not removed from his position as an officer of the company.

[6] The applicant then commenced an application under s. 248 of the OBCA. On October 6, 2021, Cavanagh J. dismissed the application and subsequently ordered him to pay costs fixed in the amount of $106,758.88.

[7] On November 16, 2021, the applicant filed his notice of appeal dated November 3, 2021.

[8] The applicant did not perfect his appeal and on December 20, 2021, the Registrar of this court gave notice of his intention to dismiss the appeal for delay if it was not perfected by January 11, 2022.

[9] The applicant states in his affidavit that beginning in November 2021, his former lawyers and lawyers for the individual respondents had ongoing settlement discussions with an aim to resolving the appeal. He maintains that around Christmas, he had lost confidence in his former lawyers and began looking for a new one. He retained his current lawyers on January 6, 2022 but states that they have not had an opportunity to review the file. He maintains the delay has been brief and the respondents will suffer no prejudice to his knowledge. He has been locked out of the restaurant and the individual respondents are running it.

[10] The respondents take issue with this characterization of the facts and submit that the appeal has no merit.

Applicable Test

[11] In considering whether to grant an extension of time, the court has generally considered the following factors: (i) whether the appellant formed an intention to appeal within the relevant period; (ii) the length of, and explanation for, the delay; (iii) prejudice to the respondent; and (iv) the merits of the appeal. The overarching principle is that an extension should be granted if the justice of the case so requires.

[12] Dealing first with the intention to appeal, as this motion involves an extension of time to perfect an appeal, the factor to consider is whether the applicant has demonstrated a continuing intention to appeal.

[13] The applicant made an offer to settle to the respondents on November 12, 2021, which was rejected by the respondents on November 14. He made a further overture on November 15 to which counsel for the respondents provided thoughts but no counteroffer. On December 8, counsel for the respondents asked counsel for the applicant for the applicant’s appeal materials. That same day, counsel for the applicant responded, stating that the notice of appeal and certificate were submitted to the court within the requisite 30 days but due to internal delays at the court, the court staff only reached them by November 16. Counsel was advised by the court staff that the 30 days would run from November 16.

[14] On December 14, the applicant’s counsel proposed a call and on December 15, he sent a further offer to the respondents’ counsel. On December 16, the respondents provided a counteroffer and on December 20, again asked the applicant for his materials. On December 21, counsel for the applicant advised the respondents’ counsel to respond directly to the applicant as they were no longer acting for him.

[15] The motion record for an extension of time was served before the date set for a dismissal by the Registrar.

[16] Although the applicant should have acted with greater dispatch, the delay was short, he has explained the delay, and I am satisfied that he does have a continuing intention to appeal.

[17] Turning to the issue of prejudice, I am to focus on the prejudice caused by the delay to perfect, not the overall delay. The respondents candidly acknowledge that they have not suffered significant prejudice in this regard.

[18] As for the merits, the applicant advances numerous arguments. He submits that he injected shareholder loans into the company but the application judge rejected this position, contrary to all the company’s records including financial statements and the minute book. He also asserts that the application judge improperly limited his analysis to oppression and failed to address the remaining elements in s. 248 of the OBCA: namely unfair prejudice and unfair disregard. He further submits that the application judge erred by suggesting that acting improperly or in bad faith was necessary for a finding of oppression. Lastly, he submits that while the application judge considered it significant that the applicant was not removed as an officer, the respondents’ intention was to do so.

[19] The respondents submit that the case was entirely fact-driven and the appeal has no reasonable prospect of success. Counsel responds to each of the applicant’s arguments and submits that it is unfair to allow the applicant’s allegations of fraud to hang over the respondents’ heads.

[20] When assessing the merits of an appeal, it is to determine whether the appeal has so little merit that the court could reasonably deny the important right of appeal: Issasi v. Rosenzweig, 2011 ONCA 112, 277 O.A.C. 391, at para. 10; Duca Community Credit Union Ltd. v. Giovannoli (2001), 142 O.A.C. 146 (C.A.), at para. 14. Even where it is difficult to see the merits of a proposed appeal, a party should not be deprived of the right to appeal where there is no real prejudice to the other side: Denomme v. McArthur, 2013 ONCA 694, 36 R.F.L. (7th) 273, at para. 10; Derakhshan v. Narula, 2018 ONCA 658, 142 O.R. (3d) 535, at para. 22.

[21] That said, there are occasions when the lack of merit in an appeal is so clear-cut that, on its own or in combination with a consideration of the other factors, a motion judge determines that leave should not be granted: see for example Reid v. College of Chiropractors of Ontario, 2016 ONCA 779, at para. 15; Wardlaw v. Wardlaw, 2020 ONCA 286, at para. 4; Sutherland Lofts Inc. v. Peck, 2017 ONCA 803, at para. 12. Courts must be mindful of the cost of litigation and unnecessary expenditures of time but all the while preserving the need to ensure that the dictates of the justice of the case are met.

[22] But for the jurisdiction issue, I do not view the merits of this appeal to be so weak that the requested extension of time is unjustified. While the respondents assert strong arguments in response to those of the applicant, I would not be prepared to conclude that the justice of the case precludes an extension of time to permit the applicant to have his appeal adjudicated.

[23] However, here I must conclude that the appeal is meritless because, as the parties concede, this court has no jurisdiction to hear it: see Henderson v. Henderson, 2014 ONCA 571, 325 O.A.C. 138, at para. 8; Aljawhiri v. Pharmacy Examining Board of Canada, 2019 ONCA 798, at para. 7; and Jadhav v. Jadhav. But for that difficulty, the other factors would favour the grant of an extension of time.

[24] For these reasons, the motion for an extension of time to perfect the appeal in this court is dismissed. There shall be no order of costs of the motion.

“S.E. Pepall J.A.”