Tacora Resources Inc. v. 1128349 B.C. Ltd et al., 2026 ONSC 1569

CITATION: TACORA RESOURCES INC. v. 1128349 B.C. LTD et al., 2026 ONSC 1569

ONTARIO SUPERIOR COURT OF JUSTICE (TORONTO REGION)

CIVIL ENDORSEMENT FORM (Rule 59.02(2)(c)(i))

BEFORE

Justice AKAZAKI

Court File Number: CV-26-00002852-0000

Title of Proceeding:

TACORA RESOURCES INC.

Applicant (s)

-v-

1128349 B.C. LTD et al.

Respondent (s)

Case Management:

Yes

If so, by whom:

No

Participants and Non-Participants:(Rule 59.02(2)((vii))

Party

Counsel

E-mail Address

Phone #

Participant (Y/N)

Applicant (s): TACORA RESOURCES INC.

Tamara Kljakic Kevin O’Brien Ainsley Leguard

tkljakic@osler.com kobrien@osler.com aleguard@osler.com

416-862-6412 416-862-4861 416-862-4879

Y Y y

Respondent (s): 1128349 B.C. LTD

Colm St R. Seviour G. John Samms

cseviour@stewartmckelvey.com gisamms@stewartmckelvey.com

709-570-8847 709-570-8891

Y Y

Respondent (s): Jerrod Freund, Mark Holliday, Alan Rowe, Nimesh Patel, and Skylar Wichers

Meg Bennett Robert W. Staley Nathan Shaheen

bennettm@bennettjones.com StaleyR@bennettjones.com shaheenn@bennettjones.com

416-777-4857 416-777-7306

Date Heard: (Rule 59.02(2)(c)(iii))

March 13, 2026

Nature of Hearing (mark with an “X”): (Rule 59.02(2)(c)(iv))

Motion

Appeal

Case Conference

Pre-Trial Conference

Application

Format of Hearing (mark with an “X”): (Rule 59.02(2)(c)(iv))

In Writing

Telephone

Videoconference

In Person

If in person, indicate courthouse address:

Relief Requested: (Rule. 59.02(2)(c)(v))

Interpleader order under rule 43

Disposition made at hearing or conference (operative terms ordered): (Rule 59.02(2)(c)(vi))

1. The Application is dismissed.
2. On an interim basis, to allow it to obtain an interpleader order from the appropriate forum, Tacora Resources Inc. is directed to pay royalties for the Scully Mine to Stewart McKelvey in trust for 1128349 B.C. Ltd. That firm may further direct the payment to an independent law firm, for the purpose of holding the funds pending the start of interpleader proceedings in another forum. This interim relief shall expire in 90 days.
3. The applicant is entitled to be indemnified in full for its costs of the application, as a set off from the royalties, in the amount of $173,917.95.
4. No formal order is required to give effect to this order.

Costs: On a

indemnity basis, fixed at $

are payable

by

to

[when]

Brief Reasons, if any: (Rule 59.02(2)(b))

OVERVIEW

1. Because of the applicant Tacora’s potential loss of rights under the Newfoundland mining lease if the issue is not decided one way or the other to permit payment of the overdue royalty by next month, these reasons will be prepared over the weekend, for release on Monday, March 16, 2026, subject to editorial revision for publication.

2. Tacora is an Ontario company operating the Scully Mine in Wabush, Newfoundland. It is an open-pit iron ore mine and processing facility. The holder of the mining rights is 1128349 B.C. Ltd., a British Columbia Company. 112 is a wholly owned subsidiary of Scully Royalty Inc., a Cayman Island company. Tacora is obligated under the mining lease to remit quarterly instalments to 112.

3. Tacora has missed the royalty payment for the final quarter of 2025, amounting to approximately $5.5 million, due in January 2026. Its grounds for holding it back was communication from a group purporting to be the newly elected board of Scully, followed up by a letter dated February 6, 2026, from the group’s Toronto counsel. The funds are in its lawyers’ trust account. But for these requests to suspend payment, Tacora has been ready, willing, and able to make the payment.

4. The letter represented that Scully’s shareholders elected a new board on December 27, 2025, ousting the directors who are also currently registered on the B.C. companies register as the officers and directors of 112. This event has sparked corporate governance proceedings in the Cayman Islands Law Courts. The letter alleged that one Samuel Morrow had no authority on behalf of 112 to issue a demand and notice of default of the royalty. The new group consists of principals of an entity called Milfam LLC.

5. There were initial discussions about escrowing the funds, but the group aligned around Mr. Morrow refused. This impasse precipitated the interpleader application by Tacora. It seeks an order for payment of the quarterly royalties into court and a declaration absolving it of liability for any amounts paid into court. It also seeks costs on a full indemnity basis.

6. The evidence and arguments entailed arrows lobbed by the protagonists in the Cayman corporate litigation against each other. These included allegations that the Morrow group had gone “rogue” and had committed financial offences resulting in the imposition of a worldwide Mareva injunction obtained by Scully’s bankers against the assets of Scully including the shares in 112 and the beneficial interest in the royalties. The Milfam group also accused Mr. Morrow of evading service by being domiciled in Shanghai and by obstructing efforts to replace the officers and directors on the B.C. corporate register. 112, as directed by Mr. Morrow, has also brought a suit in Newfoundland alleging that Tacora’s non-payment of the royalty was an act in furtherance of a conspiracy to interfere with 112’s economic interests.

7. I cannot adjudicate the merits of these allegations and the responses in this rule 43 application. My threshold task is to determine whether the allegations, at a categorical level, fit into the basic architecture of the rule as “adverse claims” justifying payment into court pending the court’s resolution of the claims. I have concluded that the application must be dismissed with certain interim relief pending determination by another court, because the dispute over the proper receipt of the funds cannot be determined by this court. I have organized my reasons for arriving at this conclusion, under two logical headings:

8. Nature of the “Adverse Claims”

9. Relief from Liability for Tacora under Rule 43

10. NATURE OF THE “ADVERSE CLAIMS”

11. Rule 43 permits Tacora to seek an interpleader order (Form 43A) in respect of property, including a debt, if two or more persons have made adverse claims to the property, if Tacora has no beneficial interest in it beyond a lien for costs, fees, or expenses, and if Tacora is willing to deposit the property or dispose of it as the court directs. Rule 43.04 and Form 43A contemplate that the funds paid into court remain there to await the outcome of a proceeding. Rules 43.03 and 43.04 contemplate that the proceeding determining the rightful owner or recipient of the property can be an existing action or application or the trial of an issue in the interpleader application.

12. The combined requirements of adverse claims and a procedure for absolving the applicant’s liability imply that there are competing claims to the property as between the claimants and as against the applicant. Such competing claims present the applicant with the dilemma of having to choose the party to pay, only to be exposed to double jeopardy if the payment turns out to have been made to the unentitled party. The fact that there is only one contractual creditor in the piece ostensibly takes the application out of the rule. The parties all relied on two court decisions in which the holder of the indebtedness faced a dilemma between competing payment directions, even though there was a lone corporate creditor.

13. Savage v. First Canadian Financial Corp., 1996 CarswellBC 1840, paras. 9-10, was a decision of Master Joyce in an interpleader application by a bank regarding funds and contents of a safety deposit box to absolve itself of liability against the competing claims of the company’s Class A and Class B shareholders. The court had already issued injunctions regarding the operation of the bank account, in a separate suit between the opposed shareholder groups. The Master held that conflicting instructions from two shareholder groups could constitute “claims” against property, even though the property belonged to the single entity and not its shareholders.

14. In 2823373 Ontario Inc. et. al. v. Dar et. al., 2024 ONSC 4313, at paras. 100-104, this court applied the reasoning in Savage to hold that funds held in trust by a law firm from the resale of an investment property could be subject to completing claims, if the corporate seller’s shareholders could not agree whether to distribute the proceeds or to keep holding them in trust. The court ultimately declined to grant the order, on other grounds. As in Savage, the competing parties’ litigated their dispute in the jurisdiction.

15. Tacora and the Milfam respondents argued that these decisions were applicable to this application, because the demand by 112, issued to Tacora under the direction of Mr. Morrow, to pay the royalty or face enforcement of the default conflicted with the Milfam group’s notice to Tacora of Mr. Morrow’s lack of authority and request to pay the funds into court. Tacora construed the notice that the current B.C. company registration for 112 may be inaccurate as presenting the risk of duplicate claims for the same royalties. The request to pay the funds into court is in form a conflicting demand or instruction, but it would be circular logic to construe a request for an interpleader procedure as grounds for an interpleader order. The only potential conflict to Tacora’s payment obligation is therefore the temporary request by the Milfam group not to pay the royalty.

16. 112’s counsel also stated that the two decisions were correctly decided, because they involved directly competing instructions or demands by the stakeholders of the companies to whom the applicants owed an obligation to pay, one as a debtor and the other as trustee. This stood in contrast to the issue facing Tacora, because no one disputed that it owes the royalties to 112. 112 is not the entity whose governance is being litigated in the Cayman court. If the direction of 112 is the dispute, it is subject to B.C. law and the B.C. court. 112 submitted that Tacora faces no real dilemma, because ultimately it owes the royalty to 112 and will continue to owe it, no matter who controls the parent organization and no matter the composition of the 112 board appointed by the parent. The absence of “an actual dilemma” facing the debtor removes the element of the competing claims: Devry Smith Frank LLP v. Fingold, 2021 ONSC 2762, at para. 28.

17. I drew the parties’ attention to the decision in Delahunty v. Dynacare Health Group Inc., 1997 CarswellOnt 4743, 75 A.C.W.S. (3d) 621 (C.A.), affirming 1996 CarswellOnt 4567. There, the applicant Dynacare sought an interpleader order to avoid having to pay monthly contractual payments to Delahunty, because of the objection by a group of doctors who had brought an action against Delahunty for receiving funds that should have first been paid to them instead of Delahunty. The Court of Appeal affirmed and adopted the application judge’s reasoning that the interpleader procedure was not available, because there was no claim by a party other than by the party to whom it had made the payments for the previous six years.

18. The Delahunty decision differs from the other cited cases, because the Court of Appeal’s decision is binding on this court. Following and applying the guidance in Delahunty, I conclude rule 43 is unavailable if the corporate control dispute within the parent company does not establish a claim against Tacora in this court diverging from the liability to 112.

19. I appreciate that the letter from the Milfam group’s lawyers alleging lack of authority to receive the funds would put Tacora on guard. The indoor management rule could be ineffective, if Tacora had knowledge of the alleged impersonation as stated in Business Corporations Act, SBC 2002, c 57, s. 146. The letter also did not, however, expressly state that 112 under different governance would construe payment to 112 under current registered leadership to be payment to an imposter. Even if Tacora’s knowledge of impersonation capable of defeating the indoor management rule were a live issue, that would not be an issue within this court’s competence, as I will elaborate further in the next section.

20. RELIEF FROM LIABILITY FOR TACORA UNDER RULE 43

21. The court must be sympathetic to the position in which Tacora found itself. It did not ask for the choice arising from the alleged corporate shake-up under litigation in the Caymans. 112 pointed out that Tacora has not always paid the royalty in a timely way. That is not an issue that concerns the court. Responsibility for the circumstances sit with the participants in the Scully governance dispute, and I lack the jurisdiction to delve into the traded allegations. The process under rule 43 exists for the purpose of providing parties such as Tacora a forum to be relieved from double liability for the real contestants to fight over the property.

22. The difficulty, however, with Tacora’s recourse to this court is that this court lacks authority to grant a declaration relieving it of liability and to determine the corporate disputes indirectly controlling the authority to receive the royalty payment. These issues are inextricable. While it may appear practical for the Ontario court to serve as the escrow agent for parties to a dispute to be conducted elsewhere, the court’s jurisdiction to grant a final order cannot extend beyond questions justiciable in this court.

23. The Ontario courts can consider Tacora’s contractual indebtedness to 112, which is not in dispute. This differs from a situation where competing interests within a company seek to obtain the funds for themselves. That struggle is at the parent level. The essential legal question of authority to receive the funds on behalf of 112 can only be litigated elsewhere. Ostensibly, that involves two steps, on the facts presented. As a corporate personality patented by the government of British Columbia, jurisdiction over its governance is seated in the B.C. Supreme Court, pursuant to the definition of “court” under the Business Corporations Act, SBC 2002, c 57, s 1. The immediate question of the accuracy of the corporate register of officers and directors of the B.C. company cannot be answered by this court. Because 112 is a wholly owned subsidiary, the root arbiter of the dispute is the court in the Cayman Islands. Thus, the facts appear to call for tandem proceedings in those jurisdictions. But not here.

24. The purpose of the interpleader order is also baked into the form of order contemplated by the authority rule 43.04 confers is defined by payment into court “to await the outcome of a specified proceeding.” Form 43A, as specified by rule 43.02, also requires a proceeding “in this court.” Rule 1.03 defines a “proceeding” as an action or application. The Rules of Civil Procedure employ that terminology throughout, as reference to originating processes under the Ontario rules of court. Although there is no need for an action or application separate from the interpleader application, the purpose of the interpleader is to have the court hold property pending the court’s resolution of the entitlement. It is trite law that a foreign court’s judgment is not open to re-litigation, absent exceptional circumstances going to the foreign court’s exercise of jurisdiction: Beals v. Saldanha, 2003 SCC 72, [2003] 3 SCR 416, at para. 39-42. Here, if the court were to grant the rule 43 order, it would essentially be holding the funds for another court. This court has no jurisdiction to come to such court’s assistance, if the other court has not requested it. Absent such a court-to-court request, the court’s jurisdiction to grant an interpleader is limited to property the disposition of which it can determine. The only determination that this court can make is that Tacora’s payment to 112 is overdue. It must be paid.

25. Rule 43 is therefore narrower than the power to grant interim relief, even though the final resolution can only be granted in a foreign forum: Brotherhood of Maintenance of Way Employees Canadian Pacific System Federation v. Canadian Pacific Ltd., [1996] 2 SCR 495, at para 16. The power to grant interim relief cannot be extended to final relief. Thus, despite Tacora’s position as the innocent debtor caught in the crossfire, the bank account of the Superior Court cannot serve as a bare escrow facility for Ontario business corporations pending dispute among parties whose causes lie elsewhere. I will not opine whether B.C. or the Caymans would be the more appropriate forum.

26. The rationale for refusing the rule 43 motion does not open the issue up for invocation of the court’s inherent jurisdiction: Dar, at para. 127. However, in exceptional cases, it can fill a gap: East West Investment Management Corporation v. Higgins et al., 2023 ONSC 5077, at paras. 30-47. In my view, the exceptionality of this application is that the determinative issue cannot be adjudicated by the Ontario court.

27. I expect that the result of this application will not be the final word. Even if my decision is not appealed, the skirmish will likely continue in the other jurisdictions, as I have explained. To avoid injustice and to allow the parties to set up the proceedings elsewhere, I will exercise my inherent authority under the principles stated in Brotherhood to allow the litigation to shift to the other courts in an orderly manner. Procedurally, the agent with apparent authority to accept any payment on behalf of 112 is the law firm employing 112’s counsel on the application. The parties and the court can rely on the Stewart McKelvy firm to have taken appropriate steps to accept 112’s retainer and to avoid being duped. To prevent any conflict of interest, the order will permit the law firm to appoint independent counsel to whom it may direct the payment from Oslers, while interpleader processes are set in motion in the other jurisdiction(s).

CONCLUSIONS AND COSTS

24. For the above reasons, I will dismiss the application for an interpleader order.

25. On an interim basis, I will direct that Tacora may satisfy its liability to 112 by paying the royalty into 112’s counsel’s trust account or to such other counsel as the Stewart McKelvey firm may direct. I justify this interim payment direction through operation of rule 15 governing the agency of lawyers appearing for corporate clients in this court, as well as the ethical obligations of Canadian lawyers and law firms. This direction might not provide Tacora the level of absolution it seeks, but it is likely to protect Tacora to a large extent from double jeopardy in respect of its royalty payment obligation. Because I can only grant interim relief, I will impose a 90-day sunset provision.

26. Despite this procedural result, I hold that the application was brought in good faith and for the best reasons. It will be for another court to determine who, between the two camps in the Scully governance, was in the wrong in creating the situation. Accordingly, I will exercise my discretion under rule 57.01(2) to award costs to Tacora, on a full indemnity basis, payable as a set-off against the royalty payments.

27. Based on my review of the costs outline, I am satisfied that the full indemnity amount of $173,917.95 is commensurate with applications and motions of similar importance and complexity in this court. In a procedurally losing cause, the amount reflected the expectations of the parties for the legal work to protect Tacora from having to pay the royalty twice.

Additional pages attached:

Yes

X

No

Released: March 16, 20

26

[[Applied Signature]]

Date of Endorsement (Rule 59.02(2)(c)(ii))

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