Koroluk v KPMG Inc., 2021 SKCA 10

Court of Appeal for Saskatchewan Docket: CACV3678 Citation: Koroluk v KPMG Inc. , 2021 SKCA 10 Date: 2021-01-21 Between: Randy Koroluk Respondent/Appellant (Applicant/Respondent) And KPMG Inc. Applicant/Respondent (Respondent/Applicant) And PrimeWest Mortgage Investment Corporation, Dan Anderson, Tom Archibald, Francis Bast, Doug Frondall, Mike Hough, Wilson Olive, Tom Robinson, Irene Seiferling and Ernst & Young Inc. Non-parties/Respondents (Respondents) And Director of Corporations, Canada Revenue Agency, P.I.

Financial, Donald Zealand, Granite Enterprises and Debbie Gloria Burwash Non-parties (Non-parties) Before: Ottenbreit, Caldwell and Schwann JJ.A. (in Chambers) Disposition: Application denied Written reasons by: The Honourable Mr. Justice Ottenbreit In concurrence: The Honourable Mr. Justice Caldwell The Honourable Madam Justice Schwann On appeal from: QBG 1455 of 2019, Saskatoon Appeal heard: November 16, 2020 Counsel: E.F. Anthony Merchant, Q.C. for the Appellant Michael Russell and Nicholas Conlon for the Respondent Ottenbreit J.A. I.

Introduction [ 1 ] KPMG Inc. [KPMG] applies to quash the appeal of Randy Koroluk against the July 7, 2020, fiat of the Chambers judge [Fiat] on the basis that it discloses no right of appeal. The Fiat ordered that Mr. Koroluk and the members of the class he represents in a class action (QBG 1727 of 2018, Judicial Centre of Saskatoon [Class Action]) were not excluded from the liquidation proceedings involving PrimeWest Mortgage Investment Corporation [PrimeWest] (namely, QBG 1455 of 2019, Judicial Centre of Saskatoon).

KPMG is the liquidator in those proceedings. [ 2 ] For the reasons hereinafter set forth, the application is dismissed. II. Facts and Background [ 3 ] In June of 2019, Mr.

Koroluk, on behalf of himself and other members of a class who were shareholders of PrimeWest, filed a class action against PrimeWest and its current or former directors, as well as its auditor, Ernst & Young Inc. [ 4 ] In October of 2019, PrimeWest brought an application pursuant to ss. 204(8) , 210 , 215 , and 216 of The Business Corporations Act , RSS 1978, c B-10 [ BCA ], seeking approval of its proposed voluntary liquidation and dissolution. The draft version of the liquidation

order filed originally provided at

Article 14 that “no proceeding shall be commenced or continued against any of the former or currentdirectors or officers of the Corporation with respect to any claim except with leave of the Court” (emphasis added). [5] Mr. Koroluk opposed the terms of the proposed application, arguing that the directors of PrimeWest should not be permittedto avoid potential legal liability in the Class Action by virtue of that entity having fallen into liquidation and dissolution. He also opposedthe terms of the draft order set out above. After his objection, the reference to directors at

Article 14 was removed pursuant to a consentorder issued on October 31, 2019. [6] However,

Article 2(

b) of the liquidation order continued to expressly include the Class Action in the definition of “Claim”.The Plan of Liquidation and Dissolution, attached as

Schedule A to the liquidation order, also included a definition of “Claim”: “anyexisting or future right of any Person against any one or more of the Directors which arose or arises as a result of such Director’s position,supervision, management or involvement as a Director”. [7] Mr. Koroluk requested that reference to the Class Action in the definition of “Claim” in

Article 2(

b) of the liquidation order beremoved. PrimeWest agreed to this amendment. This change was reflected in an amended and restated liquidation order issued onNovember 25, 2019. While the term “Class Action” had been removed from the definition of “Claim” in

Article 2(b), the seconddefinition of “Claim” set out in the Plan of Liquidation and Dissolution (Schedule

A) was neither altered nor was the reference to the ClassAction removed. [8] In December of 2019, KPMG sought an order approving a claims process. This order was approved in January of 2020[Claims Process Order]. The Claims Process Order did not remove the reference to Class Action in the context of the claims process or theneed to file a proof of claim in respect to it. [9] Pursuant to the Claims Process Order, KPMG wrote to Mr. Koroluk in January of 2020, advising that, as an identified creditorof PrimeWest, he was required to file a proof of claim by the claims bar date, namely, March 10, 2020.

This notice caused Mr. Koroluk toapply for an order that the Class Action be excluded from the liquidation proceedings. KPMG concurrently applied for an order declaring,inter alia, that the Class Action was a claim pursuant to and subject to the Claims Process Order that had approved the plan of liquidationand dissolution. [10] The Chambers judge, in the Fiat issued on July 7, 2020, rejected Mr. Koroluk’s submission that the Class Action was excludedfrom the liquidation proceedings pursuant to the liquidation order and interpreted the terms of his earlier order as follows: [45] I therefore find: (

a) The representative plaintiff in the class action QBG 1727 of 2018, Randy Koroluk and the members of the class action he represents,are not excluded from the liquidation proceedings in QBG 1455 of 2019. [11] Mr. Koroluk appealed the Fiat in July of 2020. KPMG applies to quash his notice of appeal. III. Issues [12] The central issue in this application is whether leave to appeal is required, as submitted by KPMG, and, if so, whether theappeal should be quashed because Mr. Koroluk has failed to obtain leave.

Because of the analysis that follows, I need not address any ofKPMG’s ancillary arguments. [13] KPMG argues that the Fiat was issued pursuant to Rule 10-11 of The Queen’s Bench Rules [Rules] and not pursuant to theBCA. If the Fiat was issued pursuant to Rule 10-11, it argues, then there is no statutory right of appeal except as provided by The Court ofAppeal Act, 2000, SS 2000, c C-42.1 [CAA], in which case leave is required pursuant to s. 8(1) of the CAA because the Fiat isinterlocutory. [14] This argument has two branches: (

a) Was the Fiat issued pursuant to the BCA? (

b) Was the Fiat interlocutory? IV. Analysis A. Was the Fiat issued pursuant to the BCA? [15] KPMG concedes that s. 242 of the BCA provides a statutory right of appeal.

However, it submits this provision is inapplicablebecause the Chambers judge made no express order pursuant to the BCA, but instead simply clarified the November 25, 2019, liquidationorder in accordance with the Rules. [16] KPMG relies on Kelvin Energy Ltd. v Lee, (SCC), [1992] 3 SCR 235, and Rimmer v Adshead, 2003 SKCA 19,224 DLR (4th) 372 [Rimmer], arguing that where a statute establishes a right of appeal in relation to “orders made under or pursuant to”the statute in question, the right is limited to cases where the impugned order is made pursuant to a power expressly conferred by the samestatute (see Rimmer at para 4).

[17] Moreover, KPMG highlights a similar statement of this principle in Rimmer that: [8] … the right of appeal in the Divorce Act and The Family Property Act is limited to those judgments or orders arising from a powerspecifically conferred by those statutes, to the exclusion of the variety of interlocutory decisions which may be made under the Rules ofCourt. … (Emphasis added) [18] Accordingly, KPMG submits that the Fiat was not grounded in an express power conferred on the Court of Queen’s Bench bythe BCA but was instead a clarification of the Chambers judge’s previous order that was made in accordance with the Rules.

I disagree. [19] The Court of Appeal recently reiterated in Poffenroth Agri Ltd. v Brown, 2020 SKCA 68 at para 11 [Poffenroth] that“[g]enerally speaking, there is no right of appeal except as provided by statute”.

The BCA at s. 242 establishes a right of appeal to thisCourt: Appeal 242 An appeal lies to the Court of Appeal from any order made by a court under this Act. [20] This Court in Aquino v First Choice Capital Fund Ltd. (1995), (SK CA), 134 Sask R 241 (CA) [Aquino]interpreted the right of appeal expressed in s. 242 of the BCA as broad enough to encompass interlocutory orders as well as final ones: [13] I am satisfied the right to appeal granted by s. 242 of The Business Corporations Act ought to prevail. Commercial necessity wouldjustify such a statutory right of appeal.

Orders given pursuant to The Business Corporations Act may have significant financialimplications and the proceedings in some cases by their nature will be very lengthy. It may be necessary to deal with interlocutory orderson appeal in such circumstances. [21] Accordingly, whether the order is final or interlocutory is neither here nor there. The BCA provides an unconditional right ofappeal from any order made pursuant its provisions. [22] In my view, the Fiat was made pursuant to the provisions of the BCA. [23] Mr.

Koroluk’s notice of application seeking directions references The Queen’s Bench Act 1998, SS 1998, c Q-1.01, Rule 6-24and s. 204(8) of the BCA. The notice of application filed by KPMG sought an order providing the liquidator with advice and directions ofthe court in the discharge of its powers pursuant to the liquidation order and the Claims Process Order. KPMG’s notice of applicationstates that no Rules would be relied on for the purposes of the application.

The authority explicitly relied on was the BCA and no other. [24] Read as a whole, the reasons of the Chambers judge show that he addressed the applications of both Mr. Koroluk and of KPMGon the basis that the relief being sought was pursuant to the BCA. The Fiat does not state that it was grounded in Rule 10-11, nor was thereany reference at all to the Rules. By contrast, there are a number of explicit references to the BCA throughout the Fiat and, as highlightedabove, a reference to the wide discretionary power of the Court of Queen’s Bench authorized by the BCA. [25]

Section 204 of the BCA sets out the process to be followed in the event of liquidation. Subsection 204(8) establishes thepotential role of the Court of Queen’s Bench in liquidation: Supervision by court 204(8) The Director or any interested person may, at any time during the liquidation of a corporation, apply to a court for an order that theliquidation be continued under the supervision of the court as provided in this Division, and upon such application the court may so orderand make any further order it thinks fit. [26]

Section 210 of the BCA provides a non-exhaustive list of powers of the court in relation to liquidation proceedings, portions ofwhich read as follows: Powers of court 210 In connection with the dissolution or the liquidation and dissolution of a corporation, the court may, if it is satisfied that thecorporation is able to pay or adequately provide for the discharge of all its obligations, make any order it thinks fit including, withoutlimiting the generality of the foregoing: (

a) an order to liquidate; … (

d) an order determining the notice to be given to any interested person, or dispensing with notice to any person; (

e) an order determining the validity of any claims made against the corporation; ... (

g) an order determining and enforcing the duty or liability of any present or former director, officer or shareholder: (

i) to the corporation; or

(ii) for an obligation of the corporation; (

h) an order approving the payment, satisfaction or compromise of claims against the corporation and the retention of assets for suchpurpose, and determining the adequacy of provisions for the payment or discharge of obligations of the corporation, whether liquidated,unliquidated, future or contingent; … (

j) upon the application of a creditor, the inspectors or the liquidator, an order giving directions on any matter arising in the liquidation; … (

l) subject to

section 216, an order approving any proposed interim or final distribution to shareholders in money or in property; …. [27] The Chambers judge relied on the powers conferred on him by ss. 204(8) and 210 of the BCA in dealing with both applicationsand issuing the Fiat: [27] In this case, the directors of PrimeWest at an annual and special meeting of shareholders held on September 24, 2019, presented aplan of liquidation and dissolution pursuant to s. 204(1) of the [BCA].

Once the liquidation plan was approved by the shareholders,PrimeWest applied for court approval of the liquidation plan pursuant to ss. 204(8) and 210 of the [BCA]. Pursuant to these sections, theCourt has the authority to make any orders it sees fit in respect to the liquidation, including the power to appoint a liquidator. … [30] The liquidator has the power to apply to the Court, as it did in the present case, to obtain guidance in carrying out its duties and tofulfill its mandate of winding up the corporation. [31] One of the powers set out in s. 215 of the [BCA] is the power to settle or compromise.

Section 215(1)(

g) provides as follows: 215(1) A liquidator may: … (

g) settle or compromise any claims by or against the corporation. … [34] I am satisfied therefore that the liquidator had a duty to apply to the Court for direction in respect to the liquidation plan and theClaims Process Order.

Neither the orders, nor the plan of liquidation specifically stated that the class action would not be included in theClaims Process Order. (Emphasis added) [28] As pointed out by the Chambers judge, he understood the application of KPMG – namely, the application to determine if theClass Action was excluded from the liquidation – to be made pursuant to s. 215 of the BCA and in exercise of its powers as liquidator tocompromise or settle claims. The application can also be understood as one for directions under s. 210(

j) of the BCA. [29] For these reasons, I am satisfied the Fiat was issued pursuant to the jurisdiction and powers accorded to the Chambers judgeunder s. 210 of the BCA. [30] As s. 242 of the BCA provides a right of appeal that, following Aquino, applies to orders made pursuant to the BCA, leave toappeal is not required. The application of KPMG to quash the appeal can be dismissed on that basis alone. However, I will deal with thesecond branch of KPMG’s argument. B.

Was the Fiat interlocutory? [31] KPMG argues that the Fiat is interlocutory because it does not determine any rights within the liquidation proceedings and,accordingly, leave pursuant to the CAA is required. I have concluded that the order is not interlocutory and that leave would not, thereforehave been required if the order had been made under the Rules instead of the BCA. I will explain. [32] Section 7(2) of the CAA establishes a general right of appeal to this Court from decisions of the Court of Queen’s Bench.

Thisright of appeal is subject to s. 8(1) which, with certain exceptions enunciated in s. 8(2), provides that “no appeal lies to the court from aninterlocutory decision of the Court of Queen’s Bench unless leave to appeal is granted by a judge or the court”. [33] In Saskatchewan, the distinction between interlocutory and final orders was summarized in Saskatchewan Medical Associationv Anstead, 2016 SKCA 143, as follows: [56] It has long been the law in this jurisdiction that orders which do not finally dispose of the “substantive issue” in an action are notfinal but interlocutory: Beaver Lumber Co.

Ltd. v Cain, (SK CA), [1924] 3 WWR 332 (Sask CA), per Martin J.A. (as hethen was) at 334. Conversely, an order is final when, if allowed to stand, it finally disposes of the rights of the parties: AlexanderHamilton Institutes v Chambers (1921), (SK CA), 65 DLR 226 (Sask CA), per Turgeon J.A. (as he then was) at 228. InSilcorp Ltd. v KJK Holdings Inc. (1992), (SK CA), 90 DLR (4th) 488 (Sask CA), this Court approved the view thatorders may be final for one purpose but interlocutory for another (per Cameron J.A. at 489).

[34] In some contexts, however, the application of the interlocutory/final order framework is not necessarily obvious and priorjurisprudence may not have settled how a particular decision is to be characterized.

This point was noted by Jackson J.A. in CowessessFirst Nation v Phillips Legal Professional Corporation, 2018 SKCA 101, 43 CPC (8th) 237: [9] … It is sufficient to state that determining whether a particular order is final or interlocutory can be difficult when there has beenno prior decision of an appeal court resolving the status of that particular type of order. [35] Poffenroth was to the same effect and underscored that “[t]he answer often depends heavily on the facts of the particular case”(at para 16). [36] Poffenroth went on to discuss in more detail how to establish whether a decision disposes of the rights of the parties: [19] But how does one determine whether an order disposes of the rights of the parties, on a substantive issue, in a final and bindingway?

In Van de Wiel v Blaikie, 2005 NSCA 14, 230 NSR (2d) 186 [Van de Wiel], Cromwell J.A. (as he then was) had this to say: [12] In general, an order is interlocutory which does not dispose of the rights of the parties in the litigation but relates to matters takenfor the purpose of advancing the matter towards resolution or for the purpose of enabling the conclusion of the proceedings to beenforced: see Cameron v. Bank of Nova Scotia et al. (1981), (NS CA), 45 N.S.R. (2d) 303 (S.C.A.D.). [13] In Irving Oil Ltd. v. Sydney Engineering Inc. (1996), 1996 NSCA 5 , 150 N.S.R. (2d) 29 (C.A.

Chambers), Bateman, J.A.considered the distinction between interlocutory and final orders. Although finding it unnecessary to conclusively determine the nature ofthe order in the case before her, she cited with approval the first edition of The Conduct of an Appeal by Sopinka and Gelowitz (1993) atp. 15 which described the distinction as follows: Where such orders have a terminating effect on an issue or on the exposure of a party, they plainly “dispose of the rights of the parties”and are appropriately treated as final.

Where such orders set the stage for determination on the merits, they do not “dispose of the rightsof the parties” and are appropriately treated as interlocutory. (Emphasis added) [20] The approach set out in Van de Wiel is, in my view, consistent with the line of analysis that runs through this Court's decisions inAnstead, Cowessess, [PCL Construction Management Inc. v Saskatchewan (City), 2020 SKCA 12] and [Stevenson Estate v Bank ofMontreal, 2011 SKCA 51, 341 Sask R 198], among others.

That is to say, an order need not bring the entire dispute between the parties toan end to constitute a final order; an order can be final if it finally determines the particular proceeding before the court, notwithstandingthat there may be some other issues left to be determined in some other proceeding or by some other process. (Italicized emphasis in original; underlined emphasis added) [37] This is not to say that any order settling one issue but leaving others undetermined is always final.

As noted in Poffenroth, whatis critical is “the context of the action as a whole”: [21] However, one must be careful not to expand this proposition beyond its limits as, in one sense, any decision could be seen asconstituting a final decision, in that it finally resolves the particular application that was made in the broader proceedings. Thedetermination as to whether an order is final or interlocutory must take into account the context of the action as a whole. It is not the lossof every potential “right” that gives rise to a final decision.

As stated by MacFarland J.A. in Waldman v Thomson Reuters Canada Limited,2015 ONCA 53 at paras 22–23, 330 OAC 142: [22] The appellant’s argument amounts to a claim that, because this particular settlement agreement cannot be reconsidered if thelitigation goes forward, the order is a final order with respect to the agreement, and is therefore also a final order for the purposes of s.6(1)(

b) of the [Courts of Justice Act, RSO 1990, c C.43]. This submission presumes that, to be a final order, an order need only disposefinally of whatever issue was before the motion judge irrespective of whether the order terminates the action or resolves a substantiveclaim or defence of the parties. Were that so, the distinction between interlocutory and final orders would cease to exist. Some might saythat would be a good thing.

Still, I hearken back to the words of Middleton J.A. in [Hendrikson v Kallio, (ON CA),[1932] OR 675 (Ont CA) at 678]: ... it may be final in the sense that it determines the very question raised by the application, but it is interlocutory if the merits of the caseremain to be determined. [23] Here, although the settlement agreement was not approved, the litigation continues, and the parties cannot be said to have lost asubstantive right relating to the merits of the litigation.

The order is interlocutory and any appeal lies to the Divisional Court with leave. (Emphasis in original) [38] Applying this approach in context, the Fiat did not bring “the entire dispute between the parties to an end” (Poffenroth at para20). As a member of the Class Action, Mr. Koroluk was required to file a proof of claim with KPMG. In its role as liquidator, pursuant tos. 215(1)(

g) of the BCA, KPMG has the power to “settle or compromise any claims by or against the corporation”. In that sense, the ClassAction, as a dispute, continues. However, the effect of the Fiat was to change irrevocably and determine finally a very significant issue;the forum in which the Class Action would be adjudicated. [39] Counsel for KPMG contended in oral argument that liquidation proceedings were flexible enough to ensure that the rights of arepresentative plaintiff would not be abridged. It was also initially suggested that if Mr.

Koroluk was dissatisfied with a decision of theliquidator, then he could apply to the Court of Queen’s Bench to have that decision reviewed. That said, KPMG later pulled back from theposition that, as liquidator, it would make no decision about the merits of the representative plaintiff’s claim. I am not persuaded by any ofthose arguments and, in any event, they seem more properly advanced in the context of the appeal proper.

[ 40 ] However, these arguments are ultimately unpersuasive. The Fiat terminated the Class Action in its current form and recasts it within the very different procedural context of the liquidation proceedings. This ultimately may work to irrevocably abridge the rights of Mr. Koroluk and the class he represents. [ 41 ] Accordingly, in the context of this case, the Fiat is a final order. As such, the representative plaintiff has a right of appeal under s. 7(2) of the CAA and leave is not required. On this alternative basis, the application of KPMG is also denied. V.

Conclusion [ 42 ] The application of KPMG to quash the appeal is denied. Mr. Koroluk shall have his costs payable forthwith. “Ottenbreit J.A.” Ottenbreit J.A. I concur. “Caldwell J.A.” Caldwell J.A. I concur. “Schwann J.A.” Schwann J.A.