Noble v. Noble et al. [Indexed as: Noble v. Noble]

66 O.R. (3d) 165

[2003] O.J. No. 2924

Court File No. 365/03

Ontario Superior Court of Justice

Divisional Court

Lax J.

July 17, 2003

Civil procedure -- Orders and judgments -- Stay pending appeal -- Automatic stay of order "for the payment of money" -- Inspector appointed pursuant to Ontario Business Corporations Act -- Party ordered to fund inspector's work -- Order to fund not automatically stayed -- Order to fund inspector's work not an order for the payment of money under rule 63.01(1) of the Rules of Civil Procedure -- Business Corporations Act, R.S.O. 1990, c. B.6 -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 63.01.

An order that a party fund the work of an inspector appointed pursuant to the Ontario Business Corporations Act is not an order for the payment of money that is automatically stayed under subrule 63.01(1) of the Rules of Civil Procedure. [page166]

Motion to lift a stay of an order pursuant to rule 63.01(5) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194.

Cases referred to Aquino v. First Choice Capital Fund Ltd. (1997), 1997 9692 (SK CA), 148 Sask. R. 288, 134 W.A.C. 288, [1997] 3 W.W.R. 143, 30 B.L.R. (2d) 176 (C.A.), (1995), 1995 3974 (SK CA), 134 Sask. R. 241, 101 W.A.C. 241 (C.A.), revg in part (1995), 1995 5626 (SK QB), 130 Sask. R. 252, [1995] 5 W.W.R. 608 (Q.B.), supp. reasons, 1996 6660 (SK QB), [1996] 6 W.W.R. 33 (Sask. Q.B.); Charterways Transportation Ltd. v. 1022804 Ontario Inc., [1996] O.J. No. 1126 (QL) (Gen. Div.); Kiani v. Abdullah (1989), 1989 4352 (ON CA), 70 O.R. (2d) 697, 36 O.A.C. 34, 7 R.P.R. (2d) 161 (C.A.); Lee v. Lee (1995), 1995 10686 (ON SC), 23 O.R. (3d) 130 (Div. Ct.); S.G. & S. Investments (1972) Ltd. v. Golden Boy Foods Inc. (1991), 1991 5720 (BC CA), 56 B.C.L.R. (2d) 273, 81 D.L.R. (4th) 649, 3 B.L.R. (2d) 80 (C.A.), supp. reasons (1991), 1991 5735 (BC CA), 60 B.C.L.R. (2d) 305, 84 D.L.R. (4th) 751, 3 B.L.R. (2d) 93 (C.A.)

Statutes referred to Courts of Justice Act, R.S.O. 1990, c. 43, s. 128(1) Business Corporations Act, R.S.O. 1990, c. B.6

Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 63.01

Authorities referred to Watson, G.D., Holmested and Watson: Ontario Civil Procedure, vol. 5 (Toronto: Carswell, 2000)

Edward Babin and Michael Robb, for respondent. Robert J. Morris and Lisa Munro, for appellants.

[1] Endorsement of LAX J.: -- On May 12, 2003, Justice Farley ordered an investigation into the affairs of the appellant, Wellness Innovations Inc. ("W.I.C."), under the provisions of the Ontario Business Corporations Act, R.S.O. 1990, c. B.16. He appointed an Inspector to conduct the investigation and ordered the appellants to provide funding for his work. Prior to the hearing, the appellants W.I.C. and Edward Noble ("the appellants") sought an adjournment of the original date for hearing and the parties negotiated terms of the adjournment. As a term of obtaining an adjournment of the application from its original scheduled date of April 8, 2003, the appellants agreed that in the event Justice Farley ordered an investigation, they would waive any rights to seek a stay of the appointment of an Inspector pending any appeal of the order. The Inspector commenced his work.

[2] In early June, an appeal was filed. On June 20, 2003, the appellants advised the respondent that they did not intend to fund the Inspector's work until the disposition of the appeal. Their position is that, notwithstanding their agreement not to seek a stay of the order appointing the Inspector, the order to fund the Inspector [page167] is automatically stayed under the provisions of rule 63.01(1) [Rules of Civil Procedure, R.R.O. 1990, Reg. 194] because it is an order "for the payment of money". It is obvious that if the Inspector is not paid, his work will cease, and the appellants will have achieved indirectly a stay of the order for investigation.

[3] There is scant guidance on what constitutes "an order for the payment of money" under the rule. I was referred to several cases, but none are directly on point. In Lee v. Lee (1995), 1995 10686 (ON SC), 23 O.R. (3d) 130 (Div. Ct.), an order was made that certain moneys belonged to the respondent and should be held in trust by a bank. That order was not appealed. Subsequently, the bank was ordered to pay the money out to the respondent. An appeal was taken from that order. This court held that the automatic stay provided by Rule 63.01(1) refers to an order that "gives monetary relief". As the bank was not a party to the proceedings, but a stakeholder only, the order requiring it to turn over the funds to the respondent was not stayed by the appeal.

[4] In Kiani v. Abdullah (1989), 1989 4352 (ON CA), 70 O.R. (2d) 697, 7 R.P.R. (2d) 161 (C.A.), the court dismissed a motion for stay where a trial judgment under appeal had ordered rescission of an Agreement of Purchase and Sale. The court held that this was not an order for the payment of money, but an equitable remedy resulting in an imperative order, similar to an order for specific performance. Lee and Kiani are decisions of higher courts and in each instance, the phrase"an order for the payment of money", has been narrowly interpreted.

[5] Finally, in Charterways Transportation Ltd. v. 1022804 Ontario Inc., [1996] O.J. No. 1126 (QL) (Gen. Div.), the parties submitted to arbitration the determination of the fair market value of leased property giving the tenant the option to purchase. The arbitrator declined to award interest. The question arose whether the arbitrator's award was an "order for the payment of money" under s. 128(1) of the Courts of Justice Act, R.S.O. 1990, c. C.43. Cameron J. held that the arbitrator's order did not give monetary relief as it was the lease, and not the order that provided for the obligation to pay. He characterized the order as "declaratory" and relied on two decisions emanating from British Columbia. There, the court had to consider the distinction between a declaration of value and an order to pay under legislation in British Columbia that is similar to s. 128(1) of the Courts of Justice Act, requiring that interest be paid on a "pecuniary judgment". In addressing this issue, the British Columbia Court of Appeal viewed a "pecuniary judgment" as one which can be enforced by a writ of seizure and sale: see S.G. & S. Investments (1972) Ltd. v. Golden Boy Foods Inc. (1991), 1991 5720 (BC CA), 3 B.L.R. (2d) 80, 81 D.L.R. (4th) 649 (C.A.), per Southin J.A. [page168]

[6] Clearly, the order to fund the Inspector cannot be viewed as a declaratory order as it was in Charterways. Neither is it an order that can be enforced by a writ of seizure and sale. The Inspector is not a stake-holder as in Lee except in the sense that he is neutral as between the parties and is appointed by the court to assist it in resolving the dispute between them. In Lee, the order directing the bank, a non-party, to pay money to one of the parties did not attract the automatic stay provisions of the rule, although the effect of the court's decision that the stay did not apply was to put money into the hands of the respondent. Similarly, in Kiani, the effect of the court's decision that the stay did not apply was to require the vendor to return money to the purchaser. In both cases, one of the parties received money. Despite this, these were not orders for the payment of money. It seems to me that this is a stronger case since it is a non-party who is to be paid.

[7] It is interesting to note that the phrase"an order for the payment of money" is found in both rule 63.01(1) and in s. 128(1) of the Courts of Justice Act. The latter provision states in part:

128(1) A person who is entitled to an order for the payment of money is entitled to . . . an award of interest thereon ... from the date the cause of action arose to the date of the order.

[8] In my view, this supports the applicant's position that the phrase "payment of money" refers to an order that gives one party monetary relief from another party and does not apply to a non-party. It is the kind of order that can attract interest and/or can be enforced by a writ of seizure and sale. I would not want to restrict its meaning only to these circumstances, but they seem to be reasonable touchstones for deciding if it is an order that gives monetary relief. The funding order does not bear these characteristics. Rather, it is a customary and ancillary part of an order appointing an Inspector. It is not an order to pay money to a party.

[9] The policy underlying the rule is discussed in Holmested and Watson: Ontario Civil Procedure, Vol. 5, (2000), where the authors state at p. 63-13:

. . . Ontario has settled on a rule ... where maintaining the pre-judgment status quo is justifiable. This scheme adequately protects the defendant, and it responds to the interests of the plaintiff because in most cases any detriment may be redressed by the payment of post-judgment interest.

[10] The above reference reinforces my view that an order for the payment of money is one that would ordinarily result from a judgment requiring one party to pay money to another. This order gives no "monetary relief" to the applicant. I therefore conclude that this is not an order for the payment of money and as such, it is not automatically stayed pending the disposition of the appeal. [page169]

[11] In the event that my conclusion is in error, I exercise my discretion under rule 63.01(5) to lift the stay as it would be entirely unjust to maintain it for the following brief reasons.

[12] On the record before me, it is evident that from the time of Justice Farley's order, the parties proceeded on the basis that the Inspector would immediately begin his work and that he would be put in funds to do this. Justice Farley in fact ordered that he at all times have a reserve of $20,000. The Inspector, as an officer of the court, is mandated to conduct the investigation and he began to do so. He has already incurred expense. The Inspector should not be put in the invidious position of having to comply with an order to investigate without the funding contemplated by the parties and ordered by Justice Farley. In fact, the appellants had proposed to Justice Farley that the appellants and respondent fund the costs on a 50-50 basis. Justice Farley rejected that submission, but clearly, the appellants did not expect the Inspector to work for nothing. The Inspector would be quite justified in refusing to carry on under these circumstances and the appellants would have achieved a stay of the investigation although they expressly agreed not to seek a stay as a condition of obtaining the adjournment.

[13] The order appointing the Inspector was a discretionary order. Justice Farley found that certain allegations "cry out for an investigation". He based his decision on admitted conduct of the individual appellant, which is described at pp. 3 and 4 of his reasons. Before an appellate court may properly intervene in the exercise of judicial discretion, it must be shown that the discretion was exercised arbitrarily or capriciously, or was based upon a wrong, or inapplicable principle. The merits of this appeal appear to me to be tenuous.

[14] The appellants placed considerable emphasis on the fact that the appeal will be heard next month. I do not find this to be a sufficient reason to accede to the request made by cross-motion to grant a stay. The equities favour the respondent and the appellants have not met the test for granting a stay. In this regard, the facts in Aquino v. First Choice Capital Fund Ltd. (1995), 1995 3974 (SK CA), 134 Sask. R. 241, 101 W.A.C. 241 (C.A.), are apposite and the case provides a helpful analysis in circumstances that are not unlike the one before me.

[15] For these reasons, the motion is granted with costs fixed at $6,500, including disbursements and GST. The cross-motion is dismissed without costs.

Order accordingly. [page170]