Court File and Parties

Court of Appeal for Ontario Date: 20210903 Docket: (M52585) C69439

Thorburn J.A. (Motions Judge)

Between

SS & C Technologies Canada Corp. Applicant (Respondent/Responding Party)

and

The Bank of New York Mellon Corporation and CIBC Mellon Global Securities Services Company Respondents (Appellants/Moving Parties)

Counsel: J. Thomas Curry, Brian Kolenda and Christopher Yung, for the appellants/moving parties Chris Paliare, Ren Bucholz, Glynnis Hawe and Catherine Fan, for the respondent/responding party

Heard: July 20, 2021 by video conference

Endorsement

Relief Sought

[1] The appellants/moving parties, The Bank of New York Mellon Corporation (“BNY Mellon”) and CIBC Mellon Global Securities Services Company (“CIBC Mellon”) (together “the appellants”) request that:

1. The appeal of the application judge’s decision on liability of April 14, 2021 (“the Liability decision”) be heard on an expedited basis; and
2. They be relieved of the requirement to file a signed copy of the order appealed from because the application judge declined to issue a formal order.

[2] The respondent/responding party, SS&C Technologies Canada Corp. (“SS&C”, “the respondent”), opposes the motion and submits that:

1. The orderly resolution of the appeal and the application judge’s trial on damages (“Damages trial”) requires that the appeal not be scheduled until the Damages trial is adjudicated; and
2. The appeal cannot be perfected because a final order has not been issued or entered, and the appellants have not appealed the application judge’s decision in that regard.

[3] An application was brought by the respondent to address both liability and damages.

[4] The application judge rendered the Liability decision and held that both appellants were liable to the respondent for breach of contract. However, he decided that he was unable to determine the quantum of damages without oral evidence. He therefore directed that there be a six-day trial to determine the quantum of damages. He directed that the appeal period for the Liability decision be suspended to allow any appeal of liability and damages to proceed together.

[5] The Damages trial will proceed in Spring of 2022 unless there is an earlier opening on the commercial list.

[6] The issues to be addressed on this motion are whether (a) it is in the interests of justice to allow the appellants to expedite the Liability decision and allow the appeal of the Liability decision to be heard before the Damages trial, and (b) whether the appellants should be relieved of the requirement to file a signed copy of the order appealed from.

Background

[7] The appellant BNY Mellon was formed in 2007 following the merger of Mellon Financial Corporation and the Bank of New York. BNY Mellon provides financial services to its customers worldwide, including custody and asset servicing. The appellant CIBC Mellon is a Canadian joint venture formed in 1996 between Mellon Financial Corporation and CIBC.

[8] The respondent, SS&C, is a global financial services and technology company. SS&C is a successor to Securities Valuation Company Inc. (“SVC”). SS&C’s business includes collecting and distributing pricing data, which SS&C licenses to financial institutions, including BNY Mellon and CIBC Mellon.

[9] In 1999, SVC entered into an agreement with “Mellon Trust” (“the Mellon Trust Agreement”) to provide securities pricing data. It entered into a second agreement with CIBC Mellon (“the CIBC Mellon Agreement”). Both agreements limited the use of data to the “Client”.

[10] The Mellon Trust Agreement identified Mellon Trust as the “Client” and the CIBC Mellon Agreement identified CIBC Mellon as the “Client”. BNY Mellon submitted that Mellon Trust was not a legal entity and was the brand name under which BNY Mellon and its predecessor operated its business through its subsidiaries and affiliates.

[11] In its Notice of Application, SS&C claimed that:

1. BNY Mellon breached the Mellon Trust Agreement by providing SS&C data to those other than the Client;
2. CIBC Mellon was in knowing receipt of SS&C data obtained under the Mellon Trust Agreement and was unjustly enriched as a result; and
3. BNY Mellon owes damages for breach of contract, among other claims.

[12] BNY Mellon took the position that it was entitled to share the data it purchased from SS&C with all BNY Mellon subsidiaries and affiliates who operated a custodial business, while SS&C claimed the only party entitled to use the data was the signatory to the contract.

[13] In the Liability decision dated April 14, 2021, the application judge held that “the respondents did breach their agreements”. However, the appellants submit that no breach of contract claim was brought against CIBC Mellon. Instead, SS&C claimed restitution from CIBC Mellon for knowingly receiving proprietary data belonging to SS&C and being unjustly enriched as a result.

[14] The application judge did not determine the issue of damages. He noted that SS&C presented two models to calculate damages. The first resulted in damages of $889,752,087; the second, in damages of $317,076,007.

[15] As a result, he ordered that the determination of damages proceed as a trial of an issue before him with viva voce evidence. He also ordered that any appeal periods arising from the Liability decision be suspended until the release of the decision on damages to allow any appeals on liability and damages to proceed together.

[16] On May 14, 2021, the appellants served a Notice of Appeal in respect of the Liability decision (the “Liability appeal”). The appellants claim that:

1. The application judge applied the wrong burden and legal test in assessing the limitation period defence; and
2. The application judge erred by finding that CIBC Mellon breached its agreement with SS&C because breach of contract was not pleaded against CIBC Mellon.

[17] The appellants purported to perfect their appeal on June 18, 2021, except that they did not file a signed and entered order, as the formal order had yet to be issued.

[18] On June 30, 2021, the application judge dismissed the appellants’ request to adjourn the Damages trial pending appeal of the Liability decision, instead ordering a six-day Damages trial.

[19] In his endorsement of June 30, 2021 refusing to adjourn the Damages trial, the application judge concluded:

Damages appeared to be a complex, fact intensive issue. They turn in part on how many BNY entities used the data of SS & C and for what period of time they did so. This is coupled with the issue of damages for spoliation pursuant to which SS & C alleges that BNY destroyed documents that would have allowed the court to determine how many entities used the data and when they began using it.

[20] He also noted that damages were the subject of a number of affidavits, reports and transcripts of cross-examinations and other documents.

[21] He held that there were a number of issues to be decided at the Damages trial including:

1. How many BNY Mellon entities used SS&C’s Market Data and for what period;
2. Whether BNY Mellon spoliated relevant records that would prove the full extent of the unauthorized access; and
3. What damages arise from BNY Mellon’s breaches of the Data Services Agreement.

[22] He noted that the parties had not elected to bifurcate the proceeding and stated that “[o]ur system of adjudication is set up so that parties expect findings of liability and damages at approximately the same time with a single appeal being taken from both findings.”

[23] He concluded, “the proposal in the case before me is simply to proceed as courts do in the vast majority of cases in this province; namely to make findings of liability and damages from which the unsuccessful party is free to appeal once findings on both issues have been made.” At present, the first available date is in Spring of 2022. The application judge declined to sign and issue a formal order arising from the Liability decision.

Analysis and Conclusion

A. Whether the Appeal Should be Allowed to Proceed Before Adjudication of the Damages Trial

[24] The appellants seek to expedite the Liability appeal as they claim it is in the interests of justice that the Liability appeal be heard and decided before the Damages trial. The respondent submits that the Liability appeal should not be scheduled until the Damages trial has taken place.

[25] First, the appellants submit that the outcome of the Liability appeal may render the Damages trial unnecessary or materially affect its outcome. At a minimum, this court’s guidance will be of assistance to the court below and to the parties.

[26] Both BNY Mellon and CIBC Mellon defended the application on the basis that the limitation period, pursuant to s. 5 of the Limitations Act, 2002, S.O. 2002, c. 24, Sched. B., had expired years before SS&C brought its claim.

[27] The application judge concluded that SS&C’s claims were not time-barred because no directing mind of SS&C knew of the acts or the injury within the two-year limitation period. The appellants submit that he did not consider whether SS&C was presumed to possess knowledge of its data usage on the date such usage took place or whether a reasonable person in SS&C’s position ought to have known of its claims.

[28] The appellants claim that the limitation period issues are questions of law reviewable on the standard of correctness. Thus, no deference is owed and this court can substitute its own findings for those of the application judge, eliminating the need for the Damages trial: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 8; Teal Cedar Products Ltd. v. British Columbia, 2017 SCC 32, [2017] 1 S.C.R. 688, at para. 44.

[29] Moreover, the appellants point out that both BNY Mellon and CIBC Mellon were found liable for breaching their agreements, although the only cause of action pleaded against CIBC Mellon was restitution for “knowing receipt” of SS&C’s pricing data under the Mellon Trust Agreement. The appellants therefore claim that the application judge’s finding of liability for breach of contract against CIBC Mellon cannot be sustained since no such claim was brought, there was no argument on the point, and CIBC Mellon was denied the opportunity to present evidence on this issue.

[30] The appellants assert that if the Liability decision is set aside in whole, the Damages trial will be unnecessary. If the Liability decision is set aside in part, the Damages trial may have to be entirely redone (including after potential further proceedings concerning liability). For these reasons, they claim it would be most efficient for the Liability appeal to be heard before the Damages trial so as not to expend resources on the Damages trial before the outcome of the Liability appeal.

[31] Section 138 of the Courts of Justice Act, R.S.O. 1990, c. C.43 (“CJA”), makes clear that “[a]s far as possible, multiplicity of legal proceedings shall be avoided”; see also Vaeth v. North American Palladium Ltd., 2016 ONSC 5015, at para. 37. This court held in Elcano Acceptance Ltd. v. Richmond, Richmond, Stambler & Mills (1986), 55 O.R. (2d) 56 (C.A.), at p. 5, that the power to split a proceeding “must be regarded as a narrowly circumscribed power.”

[32] Courts generally seek to avoid a multiplicity of proceedings and the potential of inconsistent results. One appeal dealing with all issues is ordinarily the most effective and fair use of both public and private resources: Korea Data Systems (USA) Inc. v. Aamazing Technologies Inc., 2012 ONCA 756, 29 C.P.C. (7th) 51, at paras. 23-25.

[33] This is particularly true when there is a real possibility that one or both parties may bring further appeals of the application judge’s decision: Toronto (City) v. 1291547 Ontario Inc. (2001), 148 O.A.C. 212 (C.A.), at para. 13.

[34] In Toronto (City), the respondent moved to adjourn the trial for damages until its appeal on the trial judge’s finding of liability had been heard. This court held, at para. 13, that the balance of convenience supported the completion of the adjudication of all the issues in the Superior Court of Justice, as then both the liability and damages issues could be dealt with in one appeal.

[35] In Korea Data Systems, this court heard an appeal of a liability decision, while a hearing on damages and other outstanding issues was scheduled concurrently by the court of first instance. This court held that the “interests of justice” favoured staying the appeal to allow the damages hearing to be completed first, as this approach “avoids a multiplicity of proceedings and the potential of inconsistent results”: Korea Data Systems, at para. 23. Notwithstanding that the issues on appeal were serious, the issues were separate and discrete from those remaining to be determined at first instance, and little prejudice would result in allowing the appeal to proceed, this court held that the overall interests of justice favoured the disposition of all issues before hearing the appeal: Korea Data Systems, at paras. 23-25.

[36] In Canadian Planning and Design Consultants Inc. v. Libya, 2015 ONCA 661, 390 D.L.R. (4th) 267, this court held, at para. 53, that “[i]t is not an efficient or appropriate use of judicial resources to have two different courts determining the merits of the same issues in what is essentially the same litigation, especially where multiple appeals to this court may result”. The concerns of judicial economy and avoiding the risk of inconsistent rulings were held to favour adjourning the appeal pending resolution of a motion in the Superior Court of Justice: Libya, at para. 53.

[37] Where the only harm the appellants might be exposed to is the expense they would incur if the trial went ahead before the appeal and this court on appeal determines that there was no proved breach, the harm suffered by the appellants can be taken into account in costs or damages: Toronto (City), at para. 11.

[38] As noted in the cases cited above, the ordinary practice is to pursue a single appeal from decisions on liability and damages. The moving party must establish that it is in the interests of justice to do otherwise. Fragmenting appeals, particularly in large and complex cases such as this, may well delay the overall administration of justice at both the trial and appeal court level by having appeals of different aspects of the case heard at different times.

[39] I recognize that the appellants have raised serious issues in their appeal of the Liability decision and, if successful, the appeal may dispose of some or all of the claims. However, if the Liability appeal is scheduled now, there will be a multiplicity of proceedings being heard and resolved concurrently.

[40] It is not realistic to expect that the Liability appeal will be heard and decided prior to the Damages trial. SS&C’s responding materials on this appeal have yet to be filed, and this court will be required to find a hearing date that can accommodate the appellants’ request for a full day hearing. Given the volume and complexity of the record, the panel is likely to reserve its judgment and will require time to render its decision.

[41] Scheduling the Liability appeal before the Damages trial would require the parties to divide their efforts between preparing for the full day Liability appeal while concurrently preparing for the six-day Damages trial. This is particularly so as the appellants have not appealed the application judge’s decision to refuse to adjourn the Damages trial, nor have they sought to expedite the Damages trial.

[42] As noted by the application judge, there is some hope that the Damages trial may be able to be scheduled earlier.

[43] Moreover, there is a real possibility that one or both parties may bring further appeals of the application judge’s decisions.

[44] While there may well be costs thrown away if one or both of the appellants’ grounds of appeal are successful, there is no urgency to the determination of these issues. Any additional time and effort incurred by the appellants, if they are ultimately successful in whole or in part on appeal, can be addressed in an award of costs.

[45] For these reasons, I find that it is not in the interests of justice to expedite the Liability appeal to be heard before the Damages trial. As the application judge pointed out, either party may appeal the Liability or Damages decisions once formal orders on both issues have been made.

B. Perfecting the Appeal

[46] Given my decision that it is not in the interests of justice to hear the Liability appeal before the adjudication of the Damages trial, it is not necessary for me to address whether the appeal could proceed without a formal order in respect of the Liability decision.

Conclusion

[47] For these reasons, the motion to allow the appeal of the application judge’s Liability decision to be heard on an expedited basis before the Damages trial, is dismissed.

[48] In accordance with the agreement between the parties, costs to the respondent in the amount of $7,500, all inclusive.

“J.A. Thorburn J.A.”