CITATION: GEA Group AG v. Flex-N-Gate Corporation, 2009 ONCA 878
DATE: 20091211
DOCKET: C49842 and C49855
COURT OF APPEAL FOR ONTARIO
Weiler, Cronk and Blair JJ.A.
BETWEEN
GEA Group AG
Applicant (Respondent in appeal)
Ventra Group Co. and Timothy Graham
Respondents (Appellants)
and
Flex-N-Gate Corporation
(Appellant)
Bryan Finlay, Q.C. and Marie-Andrée Vermette, for the appellant Flex-N-Gate Corporation
William V. Sasso and Jacqueline A. Horvat, for the appellants Ventra Group Co. and Timothy Graham
Peter F.C. Howard and Samaneh Hosseini, for the respondent GEA Group AG
Heard: March 11, 2009
On appeal from the order of Justice Peter A. Cumming of the Superior Court of Justice, dated December 9, 2008, with reasons reported at 2008 70043 (ON S.C.).
ADDENDUM AND COSTS ENDORSEMENT
[1] By reasons dated August 21, 2009, we allowed the appeals in this matter in part, by setting aside the order of Wilton-Siegel J. of the Superior Court of Justice, dated July 9, 2008, that had granted “Norwich” relief to the respondent, GEA Group AG (“GEA”), based on the principles articulated in Norwich Pharmacal Co. v. Comrs. of Customs and Excise, [1974] A.C. 133 (H.L.) (the “Norwich Order”). In our reasons, we also: (1) awarded the appellant, Flex-N-Gate Corporation (“FNG”), the costs of its appeal and of an earlier stay motion before this court, in the total amount of $35,000, and (2) awarded the appellants, Ventra Group Co. (“Ventra”) and Timothy Graham (“Graham”), the costs of their appeal and of the stay motion, in the total amount of $22,000.
1) The December Order
[2] In our reasons, through inadvertence, we failed to confirm our decision to set aside the order of P.A. Cumming J. of the Superior Court of Justice (the “motion judge”), dated December 9, 2008 (the “December Order”) – the order from which the appeals formally were launched. As detailed in our reasons, we concluded that GEA had failed to establish that Norwich relief is required in this case. It follows that neither the Norwich Order nor the December Order can stand.
[3] It is appropriate, therefore, to amend paragraph 117 of our August 2009 reasons to indicate explicitly that, in addition to the Norwich Order, the December Order is set aside and we so order.
2) Costs of Proceedings Below
[4] Following the release of our reasons, counsel for the parties wrote to the court regarding the issue of the costs of the proceedings below that eventually led to the December Order. As a result of that correspondence, we invited the parties’ written submissions concerning those costs. We have now received and reviewed those submissions.
[5] The general rule is that costs follow the event on appeal. However, in our view, the unusual circumstances of this case justify a departure from this rule. We conclude that it is appropriate that no costs of the proceedings in the Superior Court leading to the December Order be awarded to any party. We reach this conclusion for the following reasons.
[6] First, as GEA points out, Norwich orders are generally confidential, of necessity. But in this case, GEA consented to the disclosure of the Norwich Order and of the Norwich proceeding to FNG, at Ventra’s and Graham’s request. On the record before us, this request and GEA’s associated consent were forthcoming, at least in part, because Graham failed to answer certain questions on his cross-examination on the affidavit he swore in support of Ventra’s and Graham’s motion to set aside the Norwich Order on the ground that the information sought had to be obtained from or on inquiry of FNG. Ultimately, an order was obtained from C. Colin Campbell J. of the Superior Court of Justice, dated September 3, 2008, permitting disclosure to FNG on certain terms.
[7] Not surprisingly, FNG thereafter became actively involved in the litigation. It brought its own motion to set aside the Norwich Order, filed affidavit and other materials for use on that motion and participated in the argument of the motion. While FNG was entitled to take these steps, its decision to do so – rather than, for example, assisting Ventra and Graham with their pending similar motion – necessarily delayed and prolonged the already complex pending proceedings.
[8] Moreover, although it is not entirely clear from this record, it is not apparent to us that Ventra and Graham used any information obtained from FNG after the September 2008 disclosure order to respond to the refusals on Graham’s cross-examination.
[9] Second, the appellants’ argument before this court focused on the claim that the information sought by GEA was not necessary to enable it to plead its case. This was not the appellants’ position before the motion judge. On the contrary, before the motion judge, FNG argued that GEA had no reasonable and bona fide claim against it at all. It did not assert, as it did in this court, that GEA was already positioned to plead. Ventra and Graham supported FNG’s argument before the motion judge, as they did in this court. They also claimed before the motion judge that GEA had no substantial evidence of any fraud. This claim was not central to the appeals.
[10] The matters raised on the appeals thus marked a significant shift in the appellants’ positions and in the focus of their attacks on the Norwich Order. One consequence of this was that much of the evidential record from the proceeding before the motion judge was not relied on by the appellants and became essentially irrelevant for the purpose of the appeals.
[11] There is a third significant consideration. The key issue raised by the appellants on the appeals – the role of the necessity to plead as a criterion under the test for a Norwich order – not only bore little, if any, relation to the issues in play before the motion judge, it also involved questions of unsettled law in Ontario. The guidance which this court ultimately sought to provide on the test for obtaining a Norwich order was not available previously under existing jurisprudence. Nor was it considered or developed before the motion judge.
[12] Finally, with respect to FNG, it must be remembered that FNG has been found by a final ruling of a German arbitral tribunal to have breached its contractual obligations to GEA, for which FNG is liable in damages. The entire litigation, in Germany and in Ontario, arose from FNG’s conduct and that of its representatives. Further, it appears that FNG remains indebted to GEA for an unsatisfied costs order made in Germany in the amount of €228,760.
[13] In combination, all these factors militate against awarding any of the appellants their costs of the proceedings below. That said, the effect of our decision is that the Norwich Order was unnecessary and should not have been granted. The latter factor compels the conclusion that no costs should be awarded to GEA in respect of the proceedings below.
[14] According, while our costs awards set out in our August 2009 reasons regarding the appeals stand, there shall be no order in favour of any party concerning the costs of the proceedings below. To the extent that it may be necessary to give effect to these reasons, we direct that the costs award made by the motion judge be set aside.
“K.M. Weiler J.A.”
“E.A. Cronk J.A.”
“R.A. Blair J.A.”