Ontario – exceptional case grants appeal court jurisdiction over single judge’s decision mistakenly denying leave to appeal – #373

In McEwen (Re), 2020 ONCA 511, Ontario’s Court of Appeal repurposed an exception, developed in its  1996 decision involving leave to appeal an arbitration award, which permitted a three (3) member panel to review the decision of a single judge denying leave to appeal.  McEwen (Re) involved a panel’s jurisdiction under Ontario’s Courts of Justice Act, RSO 1990, c C.43 to review the decision of a single judge denying leave to appeal under the Bankruptcy and Insolvency Act, RSC 1985, c B-3. The Court’s reasons highlighted the distinction between (i) leave to appeal decisions which mistakenly decline jurisdiction and (ii) leave to appeal decisions which decide the merits of the application for leave to appeal. Only the former qualify for the exception to “apparently absolute rule”.

Appellant sought leave to appeal a decision of a single judge of the Court of Appeal which denied leave to appeal a decision involving the Bankruptcy and Insolvency Act, RSC 1985, c B-3 (“BIA”). As preface to its summary of the lengthy procedural history covered at paras 4-45 of its reasons, the Court observed that “[a]though the issues on this motion are narrow, the events that led up to the 2019 Review Order require some detail to explain”.

Having set the context for its involvement, the Court then paused to determine whether it had jurisdiction  To do so, the Court looked back to its recent, albeit brief decision in Business Development Bank of Canada v. Aventura II Properties Inc., 2016 ONCA 408, leave to appeal refused, Revital Druckmann v. Pollard & Associates Inc., et al., 2016 CanLII 66266 (SCC) (“Aventura II”). That decision held that a three (3) member panel did not have jurisdiction to hear an appeal of a decision of a single judge of the Court of Appeal granting or denying leave to appeal under section 193(e) of the BIA. The reasoning in Aventura II at paras 3-4 was brief:

[3] We agree with the respondents that this court does not have jurisdiction to review the order.  We apply the decision of this court in R. v. Scherba, 2001 CanLII 4208 (ON CA) where the court held that there is no right of review of a decision of a single judge to grant or deny leave under s. 839(1) of the Criminal Code of Canada, R.S.C. 1985, c. C-46.  The court based its decision on two grounds: the first was that the Criminal Appeal Rules, S.I./93-169, do not provide for such an appeal.  The BIA also does not provide for such an appeal.

[4] The second ground was that s. 7(5) of the Courts of Justice Act, R.S.O. 1990, c. C.43, which gives a panel of the court the authority to review a decision of a single judge, does not apply to a leave motion, which must be decided by a panel. The analysis in the second ground applies equally to this case.  We add that having heard full submissions, we would not have granted leave”.

The Court in McEwen (Re) observed that it had “strong reservations about the reasons offered in Aventura II in support of its conclusion that a panel of this court lacks the jurisdiction to review a decision of a single judge of this court denying leave to appeal under BIA s. 193(e)”.  Though at paras 54-60 it distinguished the brief reasoning given in its earlier decision, at para. 61 the Court conceded that it “must treat the decision in Aventura II as binding”.

Despite this concession, the Court did consider whether the “apparently absolute rule” in Aventura II had any exceptions.  It did. 

The Court identified the reasoning given in Hillmond Investments Ltd. v. Canadian Imperial Bank of Commerce, 1996 CanLII 413 (ON CA) (“Hillmond”).  In that case, appellant sought leave to appeal an interim award on a question of law.  Leave was refused and appellant applied to the Court of Appeal.  Respondent applied to have the appeal quashed.  The Court of Appeal granted Respondent’s motion, quashing the appeal.  In doing so, the Court of Appeal noted the restrictions placed on appeals from decisions granting or denying leave to appeal.  The following are excerpts from the reasoning in Hillmond:

I think it is clear on authority that when a statute such as the Arbitration Act, 1991 provides a mechanism for appealing an arbitral award, that mechanism must be complied with. The appellate method of judicial review is entirely the creation of the legislature and where, as here, leave is required to appeal the award to an appellate court, there can be no appeal without that leave. At this moment, the court is without jurisdiction to hear this matter”.

In Hillmond, the Court rebuffed appellant’s attempt to not just correct for the motion judge’s decision but to exercise its powers under section 134(1)(a) of the CJA and “make any order or decision that ought to or could have been made by the court or tribunal appealed from”.  As appellant’s only objections to the motion judge’s decision is that the judge failed to recognize the arbitrator’s alleged errors in law when issuing the award, “the effect of this request is that we would simply proceed to hear the merits of the appeal from the award of the arbitrator as if no leave was required”.

The Court in Hillmond resisted that path to relief:

I think that the very nature of the relief sought underscores the fundamental problem facing the appellant. While the appeal is nominally from the order of Davidson J. for refusing to grant leave to appeal, the result is a request that we by-pass the leave requirement, review the award of the arbitrator, and determine the correctness of that award. If, as authority suggests (see Industrial Acceptance Corp. v. Canada Permanent Trust Co., 1931 CanLII 67 (SCC), [1931] S.C.R. 652 at p. 655, [1932] 1 D.L.R. 287), the leave requirement is intended to prevent frivolous and unnecessary appeals, that purpose would be frustrated if an appeal as of right could be had from decisions refusing to grant leave or, for that matter, from decisions granting leave”.

The Court examined the nature of a decision refusing leave to appeal, resisting that such decisions be considered final orders.  In its reasons, the Court in Hillmond looked to House of Lords in Lane v. Esdaile, [1891] A.C. 210, 64 L.T. 666.

The House of Lords held that if leave to appeal could be had from a refusal to grant leave to appeal, the whole object of the concept of leave, which is to grant an appellate tribunal the power to stop unnecessary or frivolous appeals, would be defeated. Lord Halsbury stated at pp. 211-12:

But when I look not only at the language used, but at the substance and meaning of the provision, it seems to me that to give an appeal in this case would defeat the whole object and purview of the order or rule itself, because it is obvious that what was there intended by the Legislature was that there should be in some form or other a power to stop an appeal — that there should not be an appeal unless some particular body pointed out by the statute . . . should permit that an appeal should be given. Now just let us consider what that means, that an appeal shall not be given unless some particular body consents to its being given. Surely if that is intended as a check to unnecessary or frivolous appeals it becomes absolutely illusory if you can appeal from that decision or leave, or whatever it is to be called itself. How could any Court of Review determine whether leave ought to be given or not without hearing and determining upon the hearing whether it was a fit case for an appeal?

I find this language most compelling even in contemporary circumstances. Modern systems of alternative dispute resolution, commonly referred to as A.D.R., are designed to help parties solve disputes efficiently without resort to formal litigation and with a minimum of judicial interference. Allowing an appeal from a refusal to grant leave to appeal defeats the object of arbitration by frustrating the legislated impediment to appeals as of right. The purpose of s. 45 of the Arbitration Act, 1991 is to stop an appeal unless the Ontario Court (General Division) grants leave.

The function of the General Division as a check on unnecessary or frivolous appeals is defeated if the Court of Appeal may hear an appeal from the General Division’s refusal to grant leave. The Court of Appeal could then hear every case”.

The Supreme Court of Canada in Canadian Utilities Ltd. v. Deputy Minister of National Revenue, 1963 CanLII 88 (SCC), [1964] S.C.R. 57, 41 D.L.R. (2d) 429 endorsed the decision by the House of Lords.

Despite further analysis across other elements raised by the finality of leave to appeal decision, the Court in Hillmond did acknowledge the possibility of “exceptional cases”:

It is argued that there must be an avenue of redress in exceptional cases. I agree. If a General Division judge mistakenly declines jurisdiction on a leave motion by acting upon a wrong principle, redress should be had to an appellate court”.

The Court in McEwen (Re) focused in on that possibility of “exceptional cases” and applied it.  Referring to Denison Mines Ltd. v. Ontario Hydro (2001), 2001 CanLII 5681 (ON CA), 56 O.R. (3d) 181 (C.A.) (“Denison Mines”) paras 4-11, the Court found precedent to a judge mistakenly declining jurisdiction on a leave motion by acting upon a wrong principle.  In Denison Mines, the Court distinguished between (i) a decision which declined jurisdiction and (ii) a decision on the merits of the application for leave to appeal.

[9] Denison relies upon this exception in the present case. It submits that Macdonald J. erred in concluding that the arbitration agreement dealt with appeals on questions of law (s. 45(1) of the Arbitration Act, 1991), that is, that the parties had “contracted out” of a right of appeal and, accordingly, erred in declining jurisdiction.

[10] I appreciate that in many cases the meaning of “jurisdiction” can be fraught with difficulty. In the present case, however, I think that the principle stated by Cartwright J. [in Canadian Utilities Ltd. v. Deputy Minister of National Revenue, 1963 CanLII 88 (SCC), [1964] S.C.R. 57, 41 D.L.R. (2d) 429] can be applied with some degree of confidence. He distinguished between declining jurisdiction and reaching a decision on the merits of the application. In the present case, the parties did not argue the merits of the application before Macdonald J. By agreement they argued whether or not Macdonald J. had jurisdiction to grant leave to appeal. If she had decided that she had jurisdiction, they would have continued the hearing of the application on the merits. I think that the exception applies.

The Court in McEwen (Re) promptly distinguished that situation from one in which the judge “has not mistakenly declined jurisdiction but has reached a decision on the merits of the application”.  In the latter case, no appeal would lie from the decision refusing leave. 

At para. 68, The Court further looked to the practice developed by the Divisional Court which was consistent with that distinction for panel review motions under section 21(5) of the CJA. 

The Divisional Court jurisprudence holds that a panel may only interfere if the single judge declined jurisdiction by acting on a wrong principle, including applying the wrong test in deciding whether to grant leave, disregarding a statutory right, or failing to give the moving party the right to be heard: Millcraft, at para. 28; Universal Am-Can Ltd. v. Tornorth Holdings Ltd. et. al. (2003), 2003 CanLII 17582 (ON SCDC), 177 O.A.C. 297 (Div. Ct.), at para. 3; Tseng v. Toronto (City), 2011 ONSC 191 (Div. Ct.), at para. 2; Exchange Tower Ltd. v. Municipal Property Assessment Corp., Region No. 9, 2012 ONSC 415 (Div. Ct.), at para. 5”.

At para. 71, the Court held that the Hillmond exception applies “because the reasons of the Chambers Judge do not disclose that he reached a decision on the merits of Traders’ leave to appeal motion, resulting in him mistakenly declining jurisdiction”.  The Court added that “his reasons, when read in context and applying the functional approach, do not explain how he dealt with the critical issues that Traders argued merited granting leave to appeal”.

Applying the exception to the record, the Court of Appeal proceeded to analyse the facts and the issues raised and held at para. 75 that the “reasons of the Chambers Judge are not sufficient to explain why he denied Traders leave to appeal, which leads me to conclude that the Chambers Judge declined jurisdiction by not making a decision on the merits of the leave motion”.

In light of the applicable legislation and the record, the Court then decided that leave should be granted.

urbitral note – First, see also:

Cooperators General Insurance Co. v. Great Pacific Industries, 1998 ABCA 272;

Lombard Canada Co. v. Axa Assurance Inc., 2007 ONCA 550; and,

Broadband Communications North Inc v. I-Netlink Incorporated, 2018 MBCA 116 and I-NetLink Incorporated et al. v. Broadband Communications North Inc., 2014 MBCA 38.