COURT FILE NO.: 110/03

DATE: 20030311

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

CAPUTO J.

B E T W E E N:

IRVING BRONFMAN

Plaintiff

• and -

JOEL RICHLER and BLAKE CASSELS GRAYDON

Defendants

Richard P. Quance, for the plaintiff

C. Clifford Lax, Q.C., & David E. Gruber for the defendants

HEARD: February 28, 2003

CAPUTO J. :

1This is a motion brought by the defendants for leave to appeal to the Divisional Court from the judgment pronounced by endorsement on January 23, 2003. In that endorsement, the court dismissed the defendants' motion for summary judgment for an order dismissing the plaintiff's action or, alternatively, an order dismissing the plaintiff's action as being frivolous, vexatious or otherwise an abuse of the court's process.

BACKGROUND

2The plaintiff and his personal company commenced an application against his former partners in a business known as TaxSave Consultants Limited ("TaxSave"). The defendants in this action represented the former partners and TaxSave in the Oppression proceedings. [The application is hereinafter referred to as the "Oppression proceedings"].

3The Oppression proceedings were settled by payment to the plaintiff of $4.5 million and a release was signed.

4The plaintiff commenced this action against the defendants by Statement of Claim dated February 15, 2002, claiming damages for conspiracy and for unlawful interference with the plaintiff's contractual and economic relationships and for punitive, aggravated and exemplary damages. The plaintiff bases his claim on the circumstances in which the defendants represented the former partners and TaxSave.

5By Notice of Motion, dated April 17, 2002, the defendants brought a motion, pursuant to Rules 20.01(1), 20.04(2) and 21.01(3)(d) of the Rules of Civil Procedure for:

i) summary judgment against the plaintiff for:

a) an order dismissing the plaintiff's action; and

b) costs of the motion and the action on a full indemnity basis; or

ii) alternatively, an order:

a) staying or dismissing the action as being frivolous, vexatious or otherwise an abuse of the court's process; and,

b) costs of the motion and the action on a full indemnity basis.

6The Notice of Motion specifically did not refer to Rule 21.01(1)(b) of the Rules of Civil Procedure, i.e., a motion to strike out a pleading as disclosing no reasonable cause of action.

7Some of the grounds raised in the Notice of Motion were as follows:

i) This action arises out of an oppression application commenced by the Plaintiff and his personal holding company on December 15, 1992 in the Ontario Court (General Division), Court File No. RE 2122/92 (the "Oppression Action").

ii) The Defendant law firm, Blake, Cassels & Graydon LLP ("Blakes") represented the Respondents in the Oppression Action both during the conduct of that litigation. The Defendant Joel Richler was at all material times a partner of Blakes with principal carriage of representation of the Respondents in the Oppression Action.

iii) At all material times during conduct of the Oppression Action, the Plaintiff was represented by counsel.

iv) The Plaintiff claims that the Defendants conspired with the Respondents in the Oppression Action with the result that he was forced to accept an improvident settlement.

v) There was no conspiracy as pleaded, or at all. At all material times, Blakes (including Richler) acted solely as legal counsel to the respondents in the Oppression Action. All actions taken by Blakes (including Richler) were within the scope of Blakes [sic] retainer and on instructions from its clients. Blakes received no benefit other than its legitimate legal fees and disbursements.

vi) The settlement ultimately reached in the Oppression Action saw the Plaintiff paid consideration of $4.5 million. That settlement was not improvident. Had the Oppression Action proceeded to judgment, there was a substantial risk that the Plaintiff would have received a lesser amount.

vii) Furthermore, or in the alternative, the Plaintiff was not compelled to accept the settlement agreement. All of the allegations against Blakes and Richler raised in the present action were raised by the Plaintiff's counsel in the Oppression Action. If the allegations against the Defendants contained in the statement of claim were true, which is denied, and if the conduct of the Defendants caused the Plaintiff any loss, which is also denied, the Plaintiff would have obtained damages and/or costs therefor at the conclusion of the trial in the Oppression Action. Instead, with the full benefit of years of legal advice from senior litigation counsel, he elected to enter into a settlement agreement.

viii) As part of the settlement agreement, the Plaintiff executed a Mutual Release. In the Mutual Release, the Plaintiff covenanted not to sue the agents of the Respondents in the Oppression Action, or any third party who could seek contribution and indemnity from the Respondents in the Oppression Action. At all material times, Blakes and Richler acted as the agents of the Respondents in the Oppression Action and for that reason the Plaintiff is barred from bringing the present action by reason of his execution of the Mutual Release. Furthermore, if the allegations in the statement of claim were true, which is denied, the Defendants would be entitled to seek contribution and indemnity from the Respondents to the Oppression Action, and on that basis, as well the Plaintiff is barred by reason of the mutual release from bringing the present action against the Defendants.

ix) As a matter of law, no action for conspiracy or other tort lies against a solicitor or firm of solicitors for undertaking legal services on behalf of a client. To take legal action against Blakes (including Richler) for undertaking legal services on behalf of its clients, as the Plaintiff has done, is contrary to public policy, frivolous, vexatious and otherwise an abuse of the Court's process.

8The Oppression proceedings took eight years to reach trial. The action was settled on the second day of trial. Throughout the eight years, the plaintiff alleged improper conduct by these defendants. The plaintiff brought a motion to remove these defendants as solicitors for the former partners. On the return of the motion, the solicitors for the plaintiff requested an adjournment of the motion and, thereafter, did not bring the motion back on for a hearing.

9The factual allegations in the Oppression proceedings are found in the various motion records on file.

10The allegations of misconduct against these defendants in this action are the same allegations that were made in the Oppression proceedings.

11The defendants submit that these allegations would have been before the trial judge in the Oppression proceedings and dealt with appropriately.

12The plaintiff submits that the issues in each action are different, but did not point to any new factual allegation in this action.

13The defendants' motion came on for hearing before the motions judge on November 1 and 5, 2002. At the conclusion of the hearing, judgment was reserved. On January 23, 2003, the motions judge issued an endorsement dismissing the defendants' motion.

14Pursuant to Rule 62.02(4), leave to appeal to the Divisional Court from an interlocutory order of a judge will be granted if either:

i) there is a conflicting decision by another judge or court in Ontario or elsewhere on the matter involved in the proposed appeal and it is, in the opinion of the judge hearing the motion, desirable that leave to appeal be granted; or,

ii) there appears to the judge hearing the motion good reason to doubt the correctness of the order in question and the proposed appeal involves matters of such importance that, in his or her opinion, leave to appeal should be granted.

ANALYSIS

RE: RULE 62.02(4)(i) - CONFLICTING DECISION

15The defendants referred to four cases where courts in Ontario have examined similar fact situations to this case and concluded that the plaintiff was attempting to re-litigate the matter. The claims were found to be frivolous and vexatious and an abuse of the process.

i) Re Lang Michener et al. and Fabian et al. (1987), 59 O.R. 353 (H.C.J.);

ii) Carnegie v. Rasmussen Starr Ruddy et al. (1994), 19 O.R. (3d) 272 (Gen. Div.);

iii) Edwards v. Kiteley, [1987] O.J. No. 1190 (H.C.J.); and,

iv) Aristocrat v. Molot, [2003] O.J. No.142 (S.C.J.)

16The defendants submit that these cases are conflicting decisions by other judges on the matter involved in the present appeal such that it is desirable that leave to appeal be granted.

17It is insufficient to show that different judges have exercised their discretion in different ways producing different results. The defendants must show that there is a difference in principles chosen as a guide to exercising that discretion.

Comtrade Petroleum Inc. v. 490300 Ontario Ltd. (1992), 7 O.R. (3d) 543 (Div. Ct.)

18The "conflicting decisions" referred to involve the exercise of discretion based on the particular facts of the case rather than on a differing application of rules to be applied in exercising such discretion.

19I find that leave to appeal should not be granted under Rule 62.02(4)(i).

Re: RULE 62.02(4)(ii)

Re: CORRECTNESS

20The defendants submit that in the "conflicting decisions", the actions against counsel for the original defendants were all found to reuse the same arguments as in the original action and, therefore, were held to be frivolous and vexatious.

21The leading case on the matter, Re Lang Michener et al. and Fabian et al. (1987), 59 O.R. (2d) 353 (H.C.J.), outlined the applicable principles at p. 358:

(a) the bringing of one or more actions to determine an issue which has already been determined by a court of competent jurisdiction constitutes a vexatious proceeding;

(b) where it is obvious that an action cannot succeed, or if the action would lead to no possible good, or if no reasonable person can reasonably expect to obtain relief, the action is vexatious;

(c) vexatious actions include those brought for an improper purpose, including the harassment and oppression of other parties by multifarious proceedings brought for purposes other than the assertion of legitimate rights;

(d) it is a general characteristic of vexatious proceedings that grounds and issues raised tend to be rolled forward into subsequent actions and repeated and supplemented, often with actions brought against the lawyers who have acted for or against the litigant in earlier proceedings;

(e) in determining whether proceedings are vexatious, the court must look at the whole history of the matter and not just whether there was originally a good cause of action;

(f) the failure of the person instituting the proceedings to pay the costs of unsuccessful proceedings is one factor to be considered in determining whether proceedings are vexatious;

(g) the respondent's conduct in persistently taking unsuccessful appeals from judicial decisions can be considered vexatious conduct of legal proceedings.

LACK OF REASONS

22In his reasons, the motions judge did not address the issue of whether the grounds and issues raised were the same in both actions and, hence, frivolous and vexatious. This was the basis of the motion for summary judgment brought by the defendants.

23The plaintiff submits that the motion judge must have considered this submission because the motion judge listed the cases referred to by the defendants, albeit without comment. The plaintiff further submits that one does not appeal from the reasons but, rather, from the result.

Blair v. Consolidated Enfield Corp., [1995] O.J. No. 3271

24In the criminal context, the Supreme Court of Canada stated in Harper v. The Queen, [1982] 1 S.C.R. 2, where the record, including the reasons for judgment, discloses a lack of appreciation of relevant evidence and, more particularly, the complete disregard of such evidence, then it falls upon the reviewing tribunal to intercede.

25The Supreme Court of Canada explained in R. v. Burns, [1994] 1 S.C.R. 656, para. 20, that this does not impose a positive duty on the trial judges "to demonstrate in their reasons that they have completely appreciated each aspect of relevant evidence". It is only when the reasons show that the judge failed to grasp an important point or has chosen to disregard it that an appellate body can intervene.

26In R. v. Sheppard, 2002 SCC 26, [2002] S.C.J. No. 30, Binnie J., for the Court, stated at para. 12:

…the trial judge can be said to have erred in law in failing to provide an explanation of his decision that was sufficiently intelligible to permit appellate review.

27In R. v. Braich, 2002 SCC 27, [2002] S.C.J. No. 29, the court held that the test was whether there was a deficiency such that prejudice was suffered in the exercise of an appellate right to appeal. The test "in other words, is whether the reasons adequately perform the function for which they are required, namely to allow the appeal court to review the correctness of the trial decision". (at para. 31)

28In a civil context, the Court of Appeal noted that the functional approach espoused in Braich is reflected in the administrative context in the Supreme Court of Canada's comments in Baker (Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817.

…A statutory body's duty to give a rationale for its reasons, which is based on a duty of fairness, is flexible and variable and is defined by the context of the particular statute, the decision being rendered and the rights affected.

Corp. of the Canadian Civil Liberties Assn. v. Ontario (Civilian Commission on Police Services), [2002] O.J. No. 3737, at para. 87

29The Court of Appeal in Young v. Young, [2003] O.J. No. 67, stated that the underlying rationale in Sheppard applied equally well to a family law case or to a criminal case. At para. 27:

The desirability of reasoned reasons in a criminal case rests on three main rationales: public confidence in the administration of the justice system, the importance of telling the losing party the reasons for having lost, and making the right of appeal meaningful. These three rationales also apply to a family law case…

30The rationale of the case law in criminal, family and administrative law as it applies to statutory bodies, suggests that whether or not reasons are sufficient should be based on the following factors:

a) the need to know the rationale behind the decision , i.e., to assess whether to appeal;

b) counsel's ability to advise the client of the chances for success of an appeal;

c) an appellate court's ability to meaningfully review the decision; and,

d) the public's right to be given direction in an area of unsettled law.

31In leave cases such as this, where the Rule sets out thresholds that must be met, it is arguable that the rationale of the cases I enunciated in para. 31 should apply and that sufficient reasons should be given.

32In Geo. Cluth Manufacturing Co. v. ZTW Properties Inc. (1995), 23 O.R. (3d) 370 (Div. Ct.), the Court held that a solicitor may be liable for an intentional tort, notwithstanding he or she was acting within the scope of a retainer. Although the Court held there was an issue for trial, the Court also struck out part of the claim as being vexatious.

33The motions judge applied the wrong test, i.e., issue for trial, and did not address the fundamental argument as to whether the action was frivolous and vexatious.

Re: ISSUE FOR TRIAL

34The motions judge found that there is an issue as to whether the actions of the defendants constituted an intentional interference with the plaintiff's contractual relationship with his creditors.

35That specific issue was raised in the Oppression proceedings. There is and was an allegation that the defendants met with the plaintiff's creditors. There is no allegation that there was any agreement reached between the creditors and the defendants or that the plaintiff suffered any damages as a result of those meetings.

36The defendants submit that in order to constitute a tort, the plaintiff must have suffered damages by the action of the defendants.

37The question of a genuine issue for trial was not argued.

38Regarding the correctness element of the test, the threshold is met if the judge is satisfied that the correctness of the order is open to very serious debate.

Ash v. Lloyd's Corp. (1992), 8 O.R. (3d) 282 (Gen. Div.) at 284

39I find that there is good reason to doubt the correctness of the order in question.

Re: IMPORTANCE

40The requirement of "importance" refers to matters of public importance and matters relevant to the development of the law and the administration of justice and not to the importance of the appeal to the parties.

Ash v. Lloyd's Corp. (1992), 8 O.R. (3d) 282 (Gen. Div.) at 284

41In the Geo. Cluth case, it was held that issues similar to those being raised in this action were of sufficient significance so as to allow the Advocate's Society to intervene. The Court of Appeal considered the matter of sufficient importance to grant leave to appeal. The case was settled before the Court of Appeal heard the appeal.

42In my opinion, it is important to re-address the issue of whether the action was frivolous or vexatious. The motions judge may have misapplied and/or misinterpreted Cluth. Furthermore, the Court of Appeal granted leave to appeal in Cluth, which may indicate that the issue was not settled.

43In my opinion, the proposed appeal involves matters of such importance that leave to appeal should be granted.

44I need not deal with the issues regarding the release raised by the defendants.

45For the reasons above, leave to appeal is granted.

46If the parties cannot agree on costs, written submissions may be made through the Divisional Court Registrar.

CAPUTO J.

Released: 20030311

COURT FILE NO.: 110/03

DATE: 20030311

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

caputo j.