A public inquiry into the death of a young girl who spent much of her life in foster care will go ahead after Manitoba's highest court dismissed an attempt to scuttle the hearing.

The union representing Manitoba social workers argued before the Court of Appeal last week that an inquiry wasn't the best way to examine the case of Phoenix Sinclair.

The young girl was in and out of foster care before dying in 2005 from prolonged abuse at the hands of her mother and stepfather. Her death went unnoticed for nine months and her mother continued to collect child benefit cheques.

The inquiry was established 10 months ago and was weeks away from hearing testimony when lawyers representing the Manitoba Government and Employees' Union concluded the inquiry was overstepping its bounds.

The union argued the inquiry, headed by Commissioner Ted Hughes, didn't have jurisdiction to look into why and how the little girl died. It suggested an inquest would be more appropriate.

The Appeal Court disagreed Thursday and said the inquiry should proceed. An inquest focuses on a cause of death and cannot subpoena witnesses. An inquiry has broader powers that include looking into any systemic issues.

"Much, if not most, of what the respondent is mandated to ascertain has not yet been ascertained, and could not be imposed on an inquest judge," wrote Justice Martin Freedman.

If the union's motion had been granted, it would have opened the floodgates to all kinds of appeals aimed at derailing or delaying other public inquiries, Freedman suggested.

"It is not difficult to imagine that parties who are apprehensive about what a commissioner might report could seek to obstruct the proceedings by this method, perhaps on a repeated basis, and perhaps with little justification for the requests," he wrote. "The commissioner would have no choice under the act but to state the case as requested and suspend all proceedings."

Spokesman Jeremy Peterson said the union is pouring over the 36-page decision and has 15 days to decide whether to appeal.

"We're not happy with the decision and, more importantly, we're not happy for our members," he said.

Commission counsel Sherri Walsh said commission officials are pleased with the decision. They never questioned the commission's jurisdiction, Walsh said, but the Appeal Court confirms the inquiry's scope and mandate.

"It just allows us to carry on with preparing for the public hearings and allows the commissioner to fulfil his mandate." she said.

Walsh said the commission continued working, but the appeal did delay proceedings. Commission staff had to reschedule interviews with union members, so the public hearings -- which were supposed to start in May -- might be delayed slightly as a result, she said.

Attorney General Andrew Swan said the province is pleased with the decision and is anxious for the commission to get underway.

"We want the inquiry to proceed as soon as possible. We want there to be justice for Phoenix Sinclair. This was a terrible case that has touched most Manitobans," he said. "We want to get the commissioner's report as soon as possible to give us advice on how to improve the protection of children in Manitoba."

Phoenix was five when she was killed by her mother, Samantha Kematch, and stepfather, Karl McKay, after years of abuse. Both were convicted of first-degree murder in 2008 and have exhausted their appeals.

The pair neglected, confined and repeatedly beat the little girl. Court was told she was shot with a BB gun and forced to eat her own vomit. She died from her extensive injuries on a cold basement floor on the Fisher River reserve in 2005. Her body was concealed in a shallow grave near the community dump.

The girl was taken by Child and Family Services at least twice during her short life -- once at birth and again three years later -- but she was returned to her mother each time.

The commission is mandated to determine the circumstances surrounding Phoenix's death and to make recommendations for improving Manitoba child welfare.

Hughes was appointed last March under the Manitoba Evidence Act, which allows inquiries into matters that are "not otherwise regulated." Union lawyers argued Child and Family Services is regulated by a number of other pieces of legislation so an inquiry wasn't appropriate.

The motion was widely criticized. Aboriginal leaders denounced the attempt as a stalling tactic that could delay recommendations that could save the lives of young children.

The province argued the motion was "frivolous" and could derail an inquiry that was in the public interest.