



COURT OF APPEAL FOR ONTARIO

CITATION: Gustafson v. Johnson, 2017 ONCA 581

DATE: 20170706

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
)

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: A
n
    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: 
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 corporations
    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.
(2004), 71 O.R. (3d) 258 (C.A.);
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 courts jurisdiction and
    the hearing of this appeal is scheduled for October 26, 2017. This does not
    affect this courts 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.


