Court File and Parties

CITATION: Colenbrander v. Savaria Corp., 2016 ONSC 8051

DIVISIONAL COURT FILE NO.: 74/16

DATE: 2016-12-22

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Anthony Colenbrander, Colenbrander Enterprises Canada Inc. and Karen Colenbrander, Plaintiffs/Respondents

AND:

Savaria Corporation, Defendant/Appellant

BEFORE: L. A. Pattillo J.

COUNSEL: H. Richard Bennett and Joseph Figliomeni, for the Plaintiffs/Respondents

Ryan A. Morris, for the Defendant/Appellant

HEARD: In writing

ENDORSEMENT

Introduction

[1] The Defendant, Savaria Corporation (“Savaria”), seeks leave to appeal from the Order of J. Wilson J. (the “Motion Judge”) dated February 2, 2016 (the “Order”). The Order dismisses Savaria’s motion for partial summary judgment, grants the Plaintiffs partial summary judgment for its share option claim, orders that the Plaintiffs’ damages are to be determined by further order of the court and awards costs to the Plaintiffs fixed at $84,930.68 in total.

[2] Savaria has brought this leave motion on the basis that the Motion Judge’s dismissal of its partial summary judgment motion is interlocutory (s. 19(1)(b), Courts of Justice Act, R.S.O. 1990, c. C-43, (“CJA”)). At the same time, however, because the quantum of the Plaintiffs’ damages for breach of the Option Agreement has not been determined, Savaria has filed appeals to both the Divisional Court (if less than $50,000, s. 19(2.1) CJA) and the Court of Appeal (s. 6(1)(b) CJA) in respect of that portion of the Order which grants partial summary judgment to the Plaintiffs. Both appeals have been stayed by agreement.

[3] Following receipt and review of the leave materials, I asked counsel, through the Divisional Court office, to address the issue of whether leave was necessary given my view that the substance of the Order allowing the Plaintiffs’ option claim was a final order. In response, Savaria’s counsel provided brief submissions supporting the requirement for leave, relying on the Court of Appeal’s decision in Cole v. Hamilton City (2002), 2002 49359 (ON CA), 60 O.R. (3d) 284 (C.A.). Counsel for the Plaintiffs agreed with Savaria’s counsel’s submissions.

[4] Cole was a motion for directions regarding the proper appeal route where both the plaintiffs and the defendants had brought summary judgment motions. The motion judge granted summary judgment to the defendants dismissing the action in its entirety and dismissed the plaintiffs’ motion for summary judgment on part of their claim. One order was issued dealing with both summary judgment motions.

[5] After reviewing the appeal routes for interlocutory and final orders under the CJA, Cronk J.A. concluded, relying on the earlier decision in Albert v. Spiegel (1993), 17 C.P.C. (3d) 90 (Ont. C.A.), that the Court of Appeal had no jurisdiction to hear an appeal from the motion judge’s order dismissing the plaintiffs’ partial summary judgment motion as it did not finally dispose of all their claims in the action and was therefore interlocutory. In order for the Court of Appeal to have jurisdiction to hear the plaintiffs’ appeal from the dismissal of its partial summary judgment motion, leave must be obtained from the Divisional Court and a motion brought under s. 6(2) of the CJA for an order directing that appeal be heard together with the plaintiffs’ appeal as of right from the order dismissing their action in its entirety.

[6] I consider the requirement for Savaria to obtain leave in respect of the dismissal of its partial summary judgment motion to be contrary to the principles of proportionality and judicial economy given it has an appeal as of right from the order granting the Plaintiffs judgment. Nevertheless, I am bound by the decision in Cole and accordingly will deal with Savaria’s leave motion.

Background

[7] The Plaintiffs’ claim is for, among other things, the balance owing to them pursuant to a share purchase agreement (the “Agreement”) entered into with Savaria. In addition, the Plaintiff Anthony Colenbrander (“Colenbrander”) claims damages for breach of a share option agreement dated August 3, 2010 (the “Option Agreement”) which he entered into with Savaria (the “Share Option Claim”). Savaria defended the action and counterclaimed for breaches of representations and warranties in the Agreement.

[8] As part of the purchase, Colenbrander entered into an employment agreement with Savaria dated August 3, 2010 (the “Employment Agreement”) which was terminable by either party on three months written notice. Savaria terminated the Employment Agreement effective June 15, 2011. Subsequently, Savaria took the position, based on the terms of the Option Agreement, that in light of Colenbrander’s termination from employment, the options were no longer available for exercise.

[9] Savaria’s motion for partial summary judgment was to dismiss the Share Option Claim. The issues before the Motion Judge included interpreting the Option Agreement; determining Colenbrander’s relationship with Savaria after its termination of the Employment Agreement; and whether by its actions Savaria breached its duty of good faith to Colenbrander.

[10] The Option Agreement provided that it was to be governed by the laws of Quebec. As a result, each party filed extensive expert evidence concerning the law of Quebec in respect of both the interpretation of contracts and the duty of good faith.

Test for Leave to Appeal

[11] The test for granting leave to appeal under rule 62.02(4) is well-settled. It is recognized that leave should not be easily granted and the test to be met is a very strict one. There are two possible branches upon which leave may be granted. Both branches involve a two-part test and, in each case, both aspects of the two-part test must be met before leave may be granted.

[12] Under rule 62.02(4)(a), the moving party must establish that there is a conflicting decision of another judge or court in Ontario or elsewhere (but not a lower level court) and that it is, in the opinion of the judge hearing the motion, “desirable that leave to appeal be granted.” A “conflicting decision” must be with respect to a matter of principle, not merely a situation in which a different result was reached in respect of particular facts: Comtrade Petroleum Inc. v. 490300 Ontario Ltd. (1992), 1992 7405 (ON SC), 7 O.R. (3d) 542 (Div. Ct.).

[13] Under rule 62.02(4)(b), the moving party must establish that there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted. It is not necessary that the judge granting leave be satisfied that the decision in question was actually wrong – that aspect of the test is satisfied if the judge granting leave finds that the correctness of the order is open to “very serious debate”: Nazari v. OTIP/RAEO Insurance Co., 2003 40868 (ON SC), [2003] O.J. No. 3442 (S.C.J.); Ash v. Lloyd’s Corp. (1992), 1992 7652 (ON SC), 8 O.R. (3d) 282 (Gen. Div.). In addition, the moving party must demonstrate matters of importance that go beyond the interests of the immediate parties and involve questions of general or public importance relevant to the development of the law and administration of justice: Rankin v. McLeod, Young, Weir Ltd. (1986), 1986 2749 (ON SC), 57 O.R. (2d) 569 (H.C.J.); Greslik v. Ontario Legal Aid Plan (1988), 1988 4842 (ON SCDC), 65 O.R. (2d) 110 (Div. Ct.).

Analysis

[14] While Savaria relies on both branches of the test in rule 62.02(4), its primary focus is on rule 62.02(4)(b) - good reason to doubt the correctness and the proposed appeal involves questions of general or public importance.

[15] Savaria’s reliance on conflicting decisions (rule 62.02(4)(a)) is generally a supplementary submission to each of its submissions concerning good reason to doubt the correctness of the Motion Judge’s decision. Specifically it submits that the Motion Judge failed to apply established principles dealing with contractual interpretation; whether Colenbrander was a consultant and the consideration of conflicting expert evidence. For the reasons that follow in respect of the correctness test, I do not accept Savaria’s submissions. In reaching her decision, the Motion Judge relied on the law of Quebec as she found it from the expert evidence. I do not consider that her decision was in conflict with existing principles.

[16] In respect of rule 62.02(4)(b), Savaria submits that there is good reason to doubt the correctness of the Motion Judge’s decision for the following reasons:

1. She applied incorrect principles of contractual interpretation in interpreting the Option Agreement;

2. She erred in determining that Colenbrander was a consultant to Savaria; and

3. She erred in holding that Savaria breached its duty of good faith.

[17] Having carefully reviewed the Motion Judge’s reasons, I do not agree there is good reason to doubt the correctness of her decision. Her decision was supported by the facts as she found them and by the law of Quebec as provided by the experts and found by her.

[18] The Motion Judge did not apply incorrect principles of contractual interpretation. She set out and applied the principles of contractual interpretation contained in the Code Civil Du Quebec (the “Code”) as deposed to by both experts.

[19] Savaria submits that the Motion Judge’s finding that s. 4(b) of the Option Agreement was ambiguous was irrelevant to the matters in issue. Yet Savaria pleaded that s. 4(b) of the Option Agreement was a complete bar to the claim under the Option Agreement. Clearly s. 4(b) and whether it was ambiguous was not irrelevant as submitted but went to the very core of the dispute between the parties. Nor do I consider her finding that s. 4(b) was ambiguous was incorrect. The finding of ambiguity entitled the Motion Judge to consider extrinsic evidence. In so doing, I do not consider that she erred in considering the evidence surrounding the execution of the Agreement and the Option Agreement as permitted by the Code.

[20] Nor in my view was the Motion Judge’s finding that Colenbrander was a consultant to Savaria both prior to the termination of the Employment Agreement and afterwards incorrect. It is a finding of fact which is supported by the evidence. The Motion Judge reviewed in some detail the facts surrounding the Agreement including the Employment Agreement; the Option Agreement and the Option Plan as well as the relationship between the parties both after the closing and after Colenbrander’s termination. She addressed Savaria’s arguments that Colenbrander was never a consultant and rejected them based on the facts as she found them. She also addressed in some detail why she did not consider the definitions of “employee” and “consultant” in the Option Plan to be applicable given the relationship between the parties.

[21] I also do not consider that the Motion Judge’s decision that Savaria breached its duty of good faith was incorrect based on the evidence which she accepted. The Motion Judge’s application and interpretation of the duty of good faith was informed by each expert’s opinion concerning the law of Quebec. She set out the provisions in the Code dealing with the duty of good faith and noted that the onus of proof rested with Colenbrander.

[22] I disagree that the Motion Judge failed to analyze the expert opinions. She set out in some detail the opinions of both experts concerning breach of duty of good faith. She concluded that the difference in the experts’ opinions concerning the extent of the duty of good faith arose from their factual assumptions. In concluding that Savaria had breached its duty of good faith to Colenbrander, the Motion Judge rejected Savaria’s expert’s opinion given the facts upon which it was based and accepted Colenbrander’s expert’s opinion on the bases that his factual assumptions were in accord with her factual findings. While the Motions Judge’s decision accorded with Colenbrander’s expert’s opinion, there is no doubt from her reasons that she independently applied her own conclusion to Quebec law as she found it.

[23] Finally, I do not consider that the issues raised by Savaria involve matters of such importance that leave should be granted. Simply put, they do not extend beyond the interests of the parties. They arise out of a determination of Colenbrander’s rights under the Option Agreement with Savaria and accordingly are specific to the dispute between the parties. They do not involve matters of general or public importance.

Conclusion

[24] For the above reasons, therefore, Savaria’s motion is dismissed.

[25] The Plaintiffs are entitled to their costs of the motion on a partial indemnity basis. In that regard they have submitted a bill of costs for partial indemnity costs totalling $11,638.89. Savaria, on the other hand, have submitted a costs outline totalling $8,172.96. The difference in the fees is mainly attributable to the fact that Savaria’s second chair was an articling student while the Plaintiff is a lawyer of four years’ experience.

[26] In my view, costs of $9,500.00 all-inclusive are both fair and reasonable, having regard to the issues raised on the motion. Payable by Savaria forthwith.

L. A. Pattillo J.

Date Released: December 22, 2016