ONTARIO SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
NMI TAX CONSULTANTS INC.
Plaintiff
- and -
BLUE CIRCLE CANADA INC.
Defendant
Daniel Chitiz, for the Plaintiff
R. Reena Lalji, for the Defendant
HEARD: October 7, 2002
JARVIS J.: (Orally)
1The application involves a somewhat unique situation in which the plaintiff seeks a stay of its own action.
2Some time ago, the plaintiff was retained by the defendant to advocate in a tax dispute with the Attorney General of Ontario. The effort was not successful and no tax relief was immediately available. At the time of the retainer an agreement was signed between the parties which specified that a fifty percent reward to the plaintiff of any taxes saved. That agreement is not before me and has no bearing on the matter except in a notional fashion.
3The tax ruling having been received, the defendant for its own reasons decided to retain other counsel to appeal the tax decision. It appears that the relationship between the plaintiff in the present action and defendant had come to an end and the plaintiff in the present action took this action to protect was it perceived to its position with respect to any potential tax saving that might inure to the benefit of the defendant in the appeal.
4As I have said, the contract is not before me and I have no opinion to offer nor have I have any with respect to the enforceability of its contents. What is clear is that the action brought by the plaintiff against Blue Circle is entirely consequent upon the success or failure of the tax appeal in which Blue Circle is involved.
5The plaintiff complains that Blue Circle has taken no steps to bring the tax appeal forward and a number of years have passed by. The delay is not explained in any fashion by Blue Circle in its material and Blue Circle strenuously opposes the application by the plaintiff to stay its action.
6The purpose for the stay seems obvious. If the plaintiff is required to proceed to trial without its contingent liability having been established by the tax ruling, it would be in a position where it would be prosecuting an action in which the issue is moot; that is they would not have suffered any loss because the tax ruling has not yet been made in favour of Blue Circle and it would be surprising the trial court would entertain an action in those circumstances.
7The authorities are many and are all quite fact specific. In my view the plaintiff finds itself in a position where it is unable to do anything to enforce its rights as it has no status whatsoever to move the tax appeal matter along.
8The plaintiff is in a situation where time is running and at some point it may be required to proceed with the case in which it has no possibility of success absent a ruling on the tax issue.
9In fairness the only way in which the court can assist the plaintiff is to grant a stay of the proceedings. It's argued in opposition to this proposition that a notice of discontinuance would suffice. It is clear from the material that is has never been possible for the plaintiff to utilize this procedure as it is the expressed opinion of the defendant to commence an action for declaratory relief the moment the notice of discontinuance is delivered. This would give the defendant the benefit of being able to control the process regardless of the status of the tax appeal which would be unfair and unreasonable and of no other interest to justice.
10I am told that there has been difficulty with information emanating from the defendant regarding the status of the appeal and the lengthy delay in that proceeding causes some concern to the court that that proceeding is being manipulated in a fashion to the detriment of the plaintiff.
11In the circumstances I grant a stay of action numbers 01-CV-213502 and order that the defendant Blue Circle Canada Inc. report to the plaintiff NMI Tax Consultants on a quarterly basis with a summary report on the steps that have been taken in each intervening six months and the current status of the tax appeal so that they may effectively monitor its progress and take whatever steps that may appear to be in their interest when the reports are forthcoming.
JARVIS J.
Date of Reasons for Judgment: October 7, 2002
Date of Release: October 16, 2002
COURT FILE NO.: 01-CV-213502
DATE: 20021007
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
B E T W E E N:
NMI TAX CONSULTANTS INC.
Plaintiff
- and -
BLUE CIRCLE CANADA INC.
Defendant
ORAL REASONS FOR JUDGMENT
JARVIS J.
Date of Reasons for Judgment: October 7, 2002
Date of Release: October 16, 2002