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Corporations - Appeals. Morgan Investments Group Inc. v. Adi Development Group Inc.
In Morgan Investments Group Inc. v. Adi Development Group Inc. (Ont Div Ct, 2025) the Ontario Divisional Court granted a motion to quash an appeal, here argued that it was in the wrong court on final versus interlocutory grounds.
Here the court considers appeals under OBCA s.255 ['Appeal']:[19] On the second issue, the affiliated lenders submit that even if the Order is interlocutory, they have a right of appeal by virtue of s. 255 of the OBCA, which provides that an appeal lies to this Court from an order made under the OBCA.
[20] It has long been established that s. 255 does not provide an appeal as of right from an interlocutory decision under the OBCA.
[21] In the seminal case of Watkin v. Open Window Bakery Ltd. (1996), 1996 CanLII 11788 (ON SC), 28 O.R. (3d) 441 (Div. Ct.), this Court considered the issue in like circumstances and held that s. 255 applied to final orders only. We reiterate the following observations from Watkin. The list of possible orders that can be made under the OBCA is endless. The affiliated lenders’ position would amount to innumerable appeals as of right from any interlocutory order made under the OBCA, clogging this Court. This would also cause potential disruption of the ongoing commercial proceedings.
[22] Since Watkin, multiple courts have confirmed that leave to appeal is required even if the OBCA (or like statutes) is invoked. Those cases need not be listed here. The affiliated lenders rely on a brief obiter phrase in a single decision, specifically Foglia v. Grid Link Corp., 2024 ONSC 588 (Div. Ct.).
[23] There are multiple decisions in Foglia, which make it clear that the decision at issue was final. First, there is the Court of Appeal decision at 2023 ONCA 560, quashing an appeal to that Court. The Court of Appeal held that the order at issue was a substantive order and the appeal was to the Divisional Court. The final nature of the order in Foglia is also apparent in the appeal decision of this Court on the merits of that appeal, at 2024 ONSC 5715.
[24] The affiliated lenders rely on an endorsement of this Court before the appeal hearing, which confirmed that leave to appeal was not required. As a final order, leave to appeal would not be required. That short endorsement includes the sentence, “Given the plain wording of s. 255 of the [OBCA], leave to appeal the decision on the motion is not required”: 2024 ONSC 588, at para. 8. Since the order at issue in Foglia was final, we do not agree that this sentence, or the endorsement as a whole, stands for the proposition advanced by the affiliated lenders. If read more broadly, it is obiter and does not displace considerable established jurisprudence requiring leave if an order is interlocutory. . Lagana v 2324965 Ontario Inc.
In Lagana v 2324965 Ontario Inc. (Div Court, 2023) the Divisional Court considered (and partially allowed) an appeal of a s.253 OBCA application to "enforce his right as a shareholder to receive audited financial statements" (an 'accounting'):[9] The parties disagreed on the scope of the order. Following the application judge’s final order, the appellants brought this appeal, which although styled in the Court of Appeal, was argued in the Divisional Court. Section 255 of the OBCA provides: “An appeal lies to the Divisional Court from any order made by the court under this Act. R.S.O. 1990, c. B.16, s. 255.” . Kong v. Au
In Kong v. Au (Div Court, 2023) the Divisional Court considered a situation where a party sought to hear corporate oppression appeals respecting two corporations, one under the OBCA and the other under the CBCA, together - despite the fact that they have different appeal routes:[2] There is a jurisdiction issue regarding this appeal. One of the two companies at issue is an Ontario corporation – 1802606 Ontario Inc – incorporated under the Business Corporations Act, R.S.O. 1990, c. B.16 (“OBCA”). The other company – Taknology (Canada) Inc. – is a Canada Business Corporations Act, R.S.C. 1985, c. C-44 (“CBCA”). The appeal materials seek to pursue an appeal under both statutes and seek interrelated remedies.
[3] The appeal routes under the above statutes are different. An appeal under the OBCA is to the Divisional Court. However, an appeal under the CBCA is to the Court of Appeal.
[4] The Court raised this jurisdiction issue with the parties last week. It was not raised by either side of this dispute prior to that time.
[5] This Court has the discretion to transfer a matter that has been brought in the wrong court to the proper court, under s. 110 of the Courts of Justice Act, R.S.O. 1990, c. C.43. Relevant factors include the merits of the proposed appeal, whether the respondents will suffer undue prejudice as a result of further delay while the appeal is waiting to be heard, and whether the appellant moved expeditiously after becoming aware that jurisdiction was in dispute.
[6] In this case, we must also consider the issue of divided jurisdiction. The issues on this appeal relate to both companies and are intertwined. The Divisional Court cannot hear or transfer both appeals. However, the Court of Appeal has jurisdiction, under s. 6(2)(3) of the Courts of Justice Act, to transfer a matter already commenced in the Divisional Court if an appeal in the same proceeding lies and is taken to the Court of Appeal. Upon transfer of the CBCA appeal to the Court of Appeal, the appellant could seek an order from the Court of Appeal under s. 6 and potentially have the whole matter considered together. The appellant intends to do so. That relief is not available in the Divisional Court.
[7] Having considered the submissions and cases put forward by both sides of this dispute, we conclude that the CBCA appeal should be transferred to the Court of Appeal. The relevant statutory provisions regarding appeal rights were expressly stated in the appeal materials but neither counsel identified the issue, accounting for most of the delay. With respect to prejudice, the respondents rely on their legal costs incurred and the costs order below being automatically stayed. The legal costs can still be claimed in the ongoing proceedings. We are not persuaded that there is significant prejudice. As for the merits, they should be heard.
[8] The CBCA appeal is therefore transferred to the Court of Appeal. The OBCA appeal is adjourned to permit the appellant to seek relief from the Court of Appeal under s. 6 of the Courts of Justice Act. . Bernier v. Kinzinger
In Bernier v. Kinzinger (Div Court, 2023) the Divisional Court considered the appeal route for OBCA appeals:7. Jurisdiction over this appeal lies in the Divisional Court pursuant to s. 255 of the OBCA. An “appellate standard of review” applies. Questions of law are reviewable on a correctness standard. Questions of fact are reviewable on the standard of palpable and overriding error. Mixed questions of fact and law are reviewable on the deferential standard that applies to questions of fact, except to the extent that they disclose an extricable question of law, which is reviewable on a correctness standard. See: Housen v. Nikolaisen, [2002] 2 SCR 33. A trial court’s findings respecting contractual terms are generally questions of fact or of mixed fact and law reviewable on a deferential standard: Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, para. 50.
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