2012 QCCA 1577, 2012 QCCA 1577

Cuscuna c. Ferrarelli 2012 QCCA 1577 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-022879-126 ( 500-17-070816-122 ) MINUTES OF THE HEARING DATE: September 5, 2012 THE HONOURABLE CLÉMENT GASCON, J.A. PETITIONER ATTORNEYS TERESA CUSCUNA Mtre Edwin Monzon Me Cory R. Levi LAZARUS CHARBONNEAU RESPONDENT ATTORNEY JOSEPH FERRARELLI Mtre Caroline Francoeur PASQUALE ARTUSO & ASSOCIÉS MISES EN CAUSE ATTORNEY GESTION FERRARELLI INC. GARDERIE ST. MICHEL F.C. INC.

PETITIONER'S MOTION FOR LEAVE TO APPEAL DE BENE ESSE Clerk: Robert Osadchuck Courtroom: RC.18 HEARING 10 h 30 Commencement of the hearing. Identification of counsel. 10 h 30 Submission by Mtre Monzon. 10 h 53 Submission by Mtre Francoeur. 11 h 06 Reply by Mtre Monzon. 11 h 09 Recess. 11 h 31 Resumption of the hearing. 11 h 31 By the Judge: Motion granted, costs to follow. Reasons to be filed in the court record by the end of the week. Reasons filed in the court record on September 7, 2012.

Robert Osadchuck Clerk JUDGMENT [ 1 ] Teresa Cuscuna seeks leave to appeal de bene esse from a judgment rendered on July 10, 2012 by Mr. Justice Claude Auclair of the Superior Court for the District of Montreal. This judgment dismissed Mrs. Cuscuna's Application for Authorization to Act on behalf of a Corporation, whereby she sought the authorization to bring an action in the name and on behalf of the mise en cause, Garderie St. Michel F.C. Inc. [ 2 ] Mrs. Cuscuna's application was made pursuant to Sections 445 to 449 of the Quebec Business Corporations Act [1] .

It was filed and decided within the context of proceedings in damages for an amount in excess of $1,000,000 instituted by Mrs. Cuscuna against Joseph Ferrarelli, her co-shareholder of Garderie St. Michel F.C. Inc. [ 3 ] When these proceedings in damages were instituted, an Anton Piller Order was issued by the Madam Justice Claude Dallaire on March 5, 2012. Pursuant to the execution of this Anton Piller Order, Levi Litigation Services Inc. filed a Forensic Expert Report

whereby it was allegedly established that Mr. Ferrarelli was indebted towards Garderie St. Michel F.C. Inc. for an additional amount of more than $1,200,000. Hence, the reason for Mrs. Cuscuna applying for an authorization to also institute a derivative action for and on behalf of Garderie St. Michel Inc. against Mr. Ferrarelli. [ 4 ] In essence, Auclair J. dismissed Mrs.

Cuscuna's application because it was not the appropriate recourse under the circumstances given 1) the fact that long delays had elapsed since the relevant facts became known to the shareholders of the corporation and 2) the fact that apparently Mrs. Cuscuna was as much to blame as Mr. Ferrarelli for diverting funds from the corporation.

Auclair J. considered that the appointment of a judicial sequestrator or liquidator would be more appropriate. [ 5 ] In the context of the current proceedings, Auclair J. judgment is an interlocutory judgment as it does not put a final end to the pending proceedings in damages in which Mrs. Cuscuna elected to file her application. The mere fact that she could have made such an application in a separate court proceedings instead of the existing court proceedings pending between her and Mr.

Ferrarelli is not sufficient to allow me to qualify this interlocutory judgment as a final one. [ 6 ] That said, I consider that this is an interlocutory judgment contemplated by Articles 29(1) and 511 C.C.P. On the one hand, it definitely decides some of the issues that Mrs. Cuscuna wanted to raise in the current proceedings, in that it dismisses her request to be authorized to institute a derivative action for and on behalf of the corporation against Mr. Ferrarelli. [ 7 ] On the other hand, the pursuit of justice requires that leave be granted under the circumstances.

The amounts at issue are important and the alleged wrongful behaviors criticized by the expert report filed following the execution of the Anton Pillar Order are serious. In addition, the criteria for which a court may grant or refuse an application for a derivative action pursuant to the new provisions of Sections 445 and 446 of the Quebec Business Corporation Act that recently came into force is an issue that, in my view, should be submitted to the Court of Appeal. [ 8 ] Mrs.

Cuscuna has however not convinced me that granting her leave to appeal of Auclair J. judgment justifies ordering the suspension of her action in damages in Superior Court. As such is still at a very early stage, and considering that it involves for instance the execution of an Anton Pillar Order, the continuation of the proceedings in first instance appears to be the proper course to follow. This is even more true in a context where the Court will manage the appeal process so that it proceeds rapidly without the necessity to file factums.

FOR THESE REASONS, THE UNDERSIGNED: [ 9 ] GRANTS the Petitioner's Motion for Leave to Appeal de bene esse ; [ 10 ] AUTHORIZES the Petitioner to appeal the judgment rendered by the Honourable Justice Claude Auclair of the Superior Court on July 10, 2012, in the court file number 500-17-070816-122; [ 11 ] ORDERS the continuation of the proceedings in first instance; [ 12 ] PLACES the case on the role of January 18, 2013 for a 60 minutes hearing; [ 13 ] ORDERS the Petitioner, after having served a copy upon the Respondent, to file in the office of the Court, no later than October 1st, 2012 , four copies of a written argument not exceeding 15 pages, of the exhibits that would normally have made up schedules I, II and III of her factum and of her authorities; [ 14 ] ORDERS the Respondent, after having served a copy upon the Petitioner, to file in the office of the Court, no later than November 1st, 2012 , four copies of a written argument not exceeding 15 pages, of his supplementary documents and of his authorities; [ 15 ] ORDERS the parties to present their written arguments on 21.5 cm X 28 cm (8 ½ X 11 in.) paper, with line spacing of at least 1.5 lines (except in the case of quotations, which must be single-spaced and indented), and the computer-prepared text shall be in 12- point type, with no more than 12 characters per 2.5 cm, the use of the font ARIAL-12 being strongly recommended; [ 16 ] ORDERS that the documents filed by the parties carry a continuous pagination or tabs, a front cover and a general table of contents; [ 17 ] COSTS TO FOLLOW.

CLÉMENT GASCON, J.A.