Court File and Parties

CITATION: SFC Litigation Trust v. Pöyry Forestry Industry Consulting Limited, 2014 ONSC 5824

DIVISIONAL COURT FILE NO.: 311/14

COMMERCIAL LIST COURT FILE NO. CV-14-10441-00CL

DATE: 20141104

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: COSIMO BORRELLI, IN HIS CAPACITY AS TRUSTEE OF THE SFC LITIGATION TRUST Plaintiff/Responding Party

AND:

PÖYRY FORESTRY INDUSTRY CONSULTING LIMITED, ANDREW FYFE, DAVID NICOLL, DAVID SKILTON, DOUG PARSONSON, JAKKO VEIKKO EMANUEL PÖYRY, JAKKO PÖYRY MANAGEMENT CONSULTING (ASIA PACIFIC) LIMITED, OLIVER SOMERVILLE, PÖYRY (BEIJING) CONSULTING COMPANY LIMITED, PÖYRY FORESTRY INDUSTRY (SHANGHAI) CO. LTD., PÖYRY FORESTRY INDUSTRY LIMITED, PÖYRY FORESTRY INDUSTRY PTE LIMITED, PÖYRY MANAGEMENT CONSULTING (SHANGHAI), STEVE CROSKERY, AND BILL LILEY Defendants/Moving Parties

BEFORE: H. Sachs J.

COUNSEL: John Pirie and David Gadsden, for the Defendants/Moving Parties, Pöyry (Beijing) Consulting Company Limited, Jakko Pöyry Management Consulting (Asia Pacific) Limited, Pöyry Forestry Industry Limited and Pöyry Forestry Industry Pte Limited

Robert Staley and Amanda McLachlan, for the Plaintiff/Responding Party

HEARD at Toronto: September 24, 2014

Endorsement

[1] The Moving Parties seek leave to appeal to the Divisional Court from the order of Wilton-Siegel J., dated June 20, 2014, that dismissed their Rule 21 motion. In dismissing the motion, the motion judge determined that a Bar Order granted in the Ontario and Quebec class actions brought by Sino-Forest Corporation’s (“SFC”) security holders against SFC and its advisors did not bar this action, which is brought by the SFC Litigation Trust.

[2] The factual background to this motion is accurately and completely set out by the motion judge in his reasons and I will not repeat it in this endorsement.

[3] On the motion, the motion judge determined that the claims asserted in the action at bar were “independent claims”, that is, independent of the claims asserted in the class actions by the class action plaintiffs. As such, they were not precluded by the Bar Order. In making this determination, the motion judge reviewed a number of factors, which included the following:

(a) The action at bar asserts a contractual relationship between the parties; the class actions did not.

(b) The claims asserted by the plaintiff in this action involve claims for damages based on alleged breaches of tortious and contractual duties owed by the defendants to the plaintiffs. The claims asserted in the class actions were by people who had purchased SFC securities on the primary and secondary markets on the basis of alleged misrepresentations. These claims included tortious claims. However, the principal claims relied upon were statutory remedies available to the purchasers of securities.

(c) The damages at issue in the two actions were different. In the class actions those damages pertained to the diminution in value of the class action plaintiffs’ securities. In the action at bar those damages are quantified by reference to the damage arising from the Moving Parties’ alleged breach of their contractual and tortious obligations to SFC.

[4] The motion judge then looked at the explicit terms of the Bar Order, which barred “all claims for contribution, indemnity or other claims over…relating to the Released Claims which could have been brought in the within proceedings…” Before the motion judge, the Moving Parties submitted that the claims in the action at bar fell within the words “other claims over”. The motion judge disagreed.

[5] On the motion for leave to appeal, the Moving Parties are essentially asserting that the motion judge erred when he found that the claims being advanced in the action at bar could not have been advanced in the class actions as “a claim over”. In making this submission, the Moving Parties point to the wording of Rule 28.01 of the Rules of Civil Procedure that defines a cross-claim as including a claim “for an independent claim for damages or other relief arising out of, (i) a transaction or occurrence or series of transactions or occurrences involved in the main action; or (ii) a related transaction or occurrence or series of transactions or occurrences.” According to the Moving Parties, the claims at issue in the action at bar arose out of transactions or occurrences that were either the same as or related to the transactions or occurrences giving rise to the class actions.

[6] In my view, Rule 28.01 is not applicable to the Bar Order, which does not reference the Rule nor track the language in the Rule. The wording used in the Bar Order is “all claims for contribution, indemnity or other claims over”. This wording is similar to the wording of the predecessor to Rule 28.01, namely, Rule 167 of the Rules of Civil Procedure, and it is wording that has been the subject of judicial interpretation. Specifically, in Allan v. Bushnell TV Co. Ltd., [1968] 1 O.R. 720 (C.A.), Laskin J.A. found that the phrase “other relief over” (the equivalent of the phrase “other claim over”) must be in respect of the same damages as the plaintiff’s claim. In other words, the relief claimed must be to recoup some portion of the damages that the defendant has to pay to the plaintiff.

[7] Further, the interpretation urged by the Moving Parties is one that ignores the context of the phrase “other claims over” in the Bar Order. Those words are preceded by the words “contribution or indemnity”, both of which are claims that defendants can make against other defendants or third parties in relation to any damages of the plaintiff that they are found liable for. If “other claims over” had the meaning ascribed to it by the Moving Parties, there would be no need for the words “contribution or indemnity”.

[8] Finally, the paragraph where the disputed phrase appears is immediately followed by the paragraph that limits the right of settling class members to recover from non-settling defendants the “proportionate liability” of the released parties arising from any claim for “contribution and indemnity or other claims over”. The definition of “Proportionate Liability” is imported from the Settlement Agreement that provides that Proportionate Liability “means that proportion of any judgment that, had they not settled, the Ontario Court would have apportioned to the Releasees”. If these paragraphs are read in harmony, it is clear that the phrase “other claims over” cannot be meant to capture claims of the non-settling defendants for claims that were not based on the claims of the class action plaintiffs.

[9] For these reasons, I find that there is no reason to doubt the correctness of the motion judge’s decision. I also find that there is no basis for the Moving Parties’ assertion that the decision is in conflict with the prevailing case law concerning bar orders. The motion judge’s decision is entirely consistent with the decision of Winkler J., in Ontario New Home Warranty Program v. Chevron Chemical Co. (1999), 46 O.R.(3d) 130 (Sup. Ct. J.), and applied the same principles to a different fact situation, that were adopted by Nordheimer J., in Gariepy v. Shell Oil Co., [2002] O.J. No. 4022 (Sup. Ct. J.).

[10] For these reasons, the motion for leave to appeal is dismissed. As agreed by the parties, the Responding Party is entitled to its costs of the motion fixed at $12,500.00, all inclusive.

SACHS J.

Date: 20141104