Court File and Parties

COURT OF APPEAL FOR ONTARIO DATE: 20221013 DOCKET: M53713 (C69754) Trotter J.A. (Motion Judge)

BETWEEN

2505243 Ontario Limited o/a ByPeterandPaul.com Plaintiff (Respondent)

and

Princes Gates GP Inc. in its capacity as General Partner of Princes Gates Hotel Limited Partnership Defendant (Appellant)

Counsel: Peter Carey, Paul Martin and Amanda Pilieci, for the appellant Lauren Rennie, for the respondent Jackie Esmonde, Ryan White and Cole Eisen, for the proposed intervener, Former Hotel X Hospitality Workers

Heard: September 28, 2022 by video conference

Reasons for Decision

Introduction

[1] This is a motion brought by 94 employees of the respondent, 2505243 Ontario Limited (“250”), to intervene as an added party on this appeal under r. 13.01 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The motion is opposed by the appellant, Princes Gates GP Inc. (“PGH”); 250 takes no position.

[2] The motion is dismissed for the following reasons.

Background

[3] PGH operated Hotel X, a luxury hotel in Toronto. 250 provided food and beverage services at various locations throughout the hotel. The applicants are 94 food and hospitality workers who lost their jobs in the fallout of a dispute between 250 and PGH.

[4] Hotel X closed to the public on March 23, 2020 when Ontario declared a COVID-19 state of emergency. This led to the underlying dispute between 250 and PGH. 250 sued PGH for breach of contract.

[5] After an eight-day trial, 250 was successful. In detailed reasons, the trial judge awarded over $7 million in damages to 250, less $735,879 owing to PGH: see 2505243 Ontario Limited o/a ByPeterandPaul.com v. Princes Gate GP Inc. et al., 2021 ONSC 4649. The trial judge set aside an additional $2.063 million for the potential claims made by 250’s ex-employees. This aspect of the damages award is addressed in paras. 449 to 451 of her decision:

Employee Termination Damages

449 While 250 claims these damages under a separate heading, they form part of the overall compensatory damages claimed. 250 claims employee termination damages of between $1.799M and $2.063M based on four different scenarios plus four decisions already rendered under the Employment Standards Act.

450 It is this Court's view that the termination damages were a reasonably foreseeable consequence of the termination of the Agreement without notice when 250 had several hundred employees working at the Hotel. I do not accept the Hotel's argument that these damages cannot be awarded because they are conditional and therefore the court has no jurisdiction to award them. 250's former employees should not suffer from the foreseeable consequence of the Hotel's conduct. A fair process for dealing with these damages must be determined.

451 The difficulty with such a process is not knowing exactly how much will actually be claimed. Therefore, $2.063M (the highest of the four scenarios calculated by the Plaintiffs) will be paid by the Hotel to the Trustee within 30 days of the date of this judgment. The Trustee will run a form of claims process over a six-month period and pay out the claims as they are received upon confirmation by the Trustee of the validity of the claim. Any amounts left after the claims process period will be returned to the Hotel. If the claims exceed the amounts paid to the Trustee, 250 will not be permitted to claim more from the Hotel. [Emphasis added.]

[6] Because 250 is insolvent, the trial judge ordered that these funds were to be held in trust; she declared that they do not form part of 250’s estate and are not available to other creditors.

[7] On appeal, PGH launches a broad challenge to the trial judge’s decision. It identifies seven legal errors, mostly related to breach of contract and whether 250 suffered damages at all. It devotes only two paragraphs to the propriety of the award made in favour of the former employees. PGH disputes the trial judge’s jurisdiction to make such an award. Moreover, it claims that the damages are contingent and uncertain. PGH also submits that the Ministry of Labour has already ruled that it is not in any way liable for any of the employees’ claims for termination pay or vacation pay.

[8] For its part, and in considerable detail, 250 strongly seeks to uphold this aspect of the trial judge’s damages award, countering each of PGH’s submissions.

[9] The proposed interveners wish to make submissions on this issue alone. They brought the same motion earlier this year, on April 26, 2022. I dismissed the motion as premature because, at that time, I did not have the benefit of the parties’ factums on appeal. Moreover, the proposed intervener had not provided a draft factum. Those issues have now been resolved.

[10] The appeal will be argued on November 29 and 30 of this year.

[11] Lastly, I have been advised by counsel that the proposed interveners are part of a group of 270 individuals who have commenced an action against PGH and 250 under the Class Proceedings Act, 1992, S.O. 1992, c. 6. They claim that the companies are common employers and that both are liable to the class as a result of the same contractual dispute that is at the heart of this appeal. No further details were provided, other than that this action is in its very early stages.

Discussion

[12] The test for intervention as an added party is set out in r. 13.01 of the Rules, which provides:

13.01(1) A person who is not a party to a proceeding may move for leave to intervene as an added party if the person claims,

(a) an interest in the subject matter of the proceeding;

(b) that the person may be adversely affected by a judgment in the proceeding; or

(c) that there exists between the person and one or more of the parties to the proceeding a question of law or fact in common with one or more of the questions in issue in the proceeding.

[13] The proposed interveners submit that they have a direct financial interest in the subject matter of the appeal. They submit that, although their interests align with the position taken by 250 on this appeal, they can still make a useful contribution to the argument of the issues on appeal. As set out in their factum on this motion:

The Proposed Intervenor brings a distinct perspective. Neither of the parties to the appeal represent the interests of the affected workers, indeed both take the position that the other is responsible for paying the employment standards entitlements. The workers are the only individuals who can speak, without other loyalties, to their own interests.

[14] The proposed intervener sets out five points on which it wishes to make submissions. They assert that their submissions would “complement but are not duplicative of 250’s legal arguments” because: (a) 250 does not address the extent to which the contractual terms make employee termination damages “reasonably foreseeable”; and (b) 250 does not address PGH’s position that the damages should not be owed because they did not employ the workers. The proposed intervener wishes to submit a factum of 15 pages, and asks for 15 minutes for oral argument.

[15] PGH strongly opposes the intervention. It takes the position that the proposed interveners will not be able to make a useful contribution to what are mostly straightforward issues of contractual interpretation. PGH submits that the proposed interveners stand in the same position as any other creditor of any insolvent respondent.

[16] PGH also submits that the proposed interveners seek to introduce a new issue on this appeal – whether PGH and 250 were “common employers” of the workers. No evidence was adduced on this issue at trial; the trial judge made no findings. This, PGH submits, is at the centre of the class proceeding referred to above. As PGH submits: “In short, the proposed intervenors have nothing to add to the appeal but wish to argue a non-issue for the ulterior purpose of bolstering their Class Action claim.”

[17] At the hearing of this motion, the proposed interveners deny that they raise the common employer issue. However, PGH contends that, while the issue is not explicitly identified in the proposed interveners’ written materials, in substance it is at the heart of the proposed interveners’ draft factum.

[18] Applying the criteria in r. 13.01, as interpreted by this court, although I am satisfied that the proposed interveners have an interest in the subject matter of the proceeding – i.e., the $2.063 million fund created for their benefit by the trial judge – other factors speak against allowing them to intervene as an added party.

[19] As a general matter, the nature of the dispute between the parties on appeal is crucial to this determination. In Jones v. Tsige (2011), 106 O.R. (3d) 721 (C.A.), Watt J.A. said, at para. 23:

The nature of the case is an important factor. Where the litigation in which the intervention is sought is a private dispute, rather than a public prosecution pitting an individual against the state, the standard to be met by the proposed intervenor is more onerous or more stringently applied…

This approach has been followed in other decisions of this court: see Foxgate Development Inc. v. Jane Doe, 2021 ONCA 745, 159 O.R. (3d) 274, at paras. 7, 39; Foster v. West, 2021 ONCA 263, 55 R.F.L. (8th) 270, at para. 11.

[20] This case is about a contractual dispute between two corporate entities. Yes, non-parties were adversely affected in the breakdown of this commercial relationship. But this is not unusual. The proposed interveners did not participate in the trial, yet they emerged with a very favourable damages award, impressed with a trust. In this respect, I do not accept PGH’s submission that the former employers now stand in the same position as any other creditor. But this is only one factor.

[21] The nature of the contribution that may be made by a proposed intervener is another important consideration. It must be able to demonstrate that it is able to make a useful contribution to the litigation. Referring again to Jones, Watt J.A. said at para. 29: “In the end, a proposed intervenor must have more to offer than mere repetition of the position advanced by a party. The ‘me too’ intervention provides no assistance” (citations omitted).

[22] The submissions of the proposed interveners substantially echo the position of 250 concerning the disputed aspect of the trial judge’s damages award. To the extent that their respective submissions diverge, the proposed intervener potentially introduces a new issue on appeal – whether 250 and PGH were common employers. This was not litigated at trial. The trial judge did not address the issue. It is being litigated in the class proceeding mentioned above.

[23] On balance, this is not one of those rare cases in which intervener status should be granted in an appeal involving a private dispute. The interests of the proposed intervener are more than adequately addressed in the submissions of 250.

Costs

[24] PGH seeks its costs against the proposed interveners in the amount of $22,000 on a partial indemnity basis for the previous appearance (on April 26, 2022) and for the day on which the motion was argued. In my previous Endorsement, I decided that no costs would be awarded for that appearance. The proposed interveners submit that no costs is the general rule in intervener proceedings.

[25] This is a difficult call in this case. On the one hand, the proposed interveners do not come to this court in a public interest capacity; their interest is purely monetary. This fact alone would ordinarily entitle the successful party to costs. However, I exercise my discretion to make no costs award. Although financial in nature, this litigation and the loss of jobs would appear to have been triggered, at least in part, by the COVID-19 pandemic and the historic shutdown measures in March of 2020. Many people in the service industry lost their jobs. Moreover, the motion was straightforward. The most recent hearing and the earlier appearance on April 26, 2022 were both well under an hour each.

Disposition

[26] The motion is dismissed. I make no order as to costs.

“G.T. Trotter J.A.”