COURT OF APPEAL FOR ONTARIO

DATE: 2006-01-18

DOCKET: C44012

RE: LUXUS PACK PACKAGING INDUSTRIAL CO., LTD. (Plaintiff (Respondent)) – and – CONROS CORPORATION (Defendant (Appellant))

BEFORE: FELDMAN, LANG and LAFORME JJ.A.

COUNSEL: Ronald G. Chapman for the appellant Nicole Broley for the respondent

HEARD & RELEASED ORALLY: January 13, 2006

On appeal from the order of Justice Carolyn Horkins of the Superior Court of Justice dated August 12, 2005.

E N D O R S E M E N T

[1] The motion judge declined to order a stay of a summary judgment against the appellant pending determination of its counterclaim against the respondent, a Taiwanese company. The appellant proposed to pay into court the full amount of the judgment including interest pending the determination of the counterclaim, which we are told is proceeding expeditiously and has been listed for trial.

[2] The respondent’s claim was for payment for an order of two-sided tape delivered in 2004 and on which claim it successfully obtained summary judgment in the amount of U.S. $77,066.81. The appellant’s counterclaim was for damages for the delivery of faulty security tape in 2002. The counterclaim requires a trial to determine if the tape is defective and, if so, the appropriate remedy. The amount of that claim is U.S. $110,250.

[3] The primary reason why the motion judge refused to grant a stay was because, in her view, the subject matter of the two claims was not closely connected. In our view, the motion judge misapprehended the evidence on this issue. The claims were closely connected because negotiations over the resolution of the alleged problem of the security tape continued until November 2004, after the two-sided tape had been ordered and delivered.

[4] Furthermore, because of this timing, there is no suggestion that the order for the two-sided tape was an attempt by the appellant to gain an advantage. To the contrary, several orders of product had been made and paid for while negotiations over the security tape problem were ongoing.

[5] Furthermore, the motion judge purported to apply the reasoning in the case of Cuddy Food Products v. Puddy Bros. Ltd. (2002), 35 C.P.C. (5th) 159. However, in that case, the defendant was attempting to gain a financial advantage by retaining funds it owed pending the determination of its counterclaim and not paying those funds into court. No such advantage is sought in this case. The monies are proposed to be paid into court. There was also a suggestion in Cuddy that the defendant was attempting to gain an advantage over other creditors of the plaintiff.

[6] In our view, therefore, the motion judge made an error in apprehension of the evidence and in law that allows this court to substitute its discretion for that of the motion judge.

[7] In our view, based on the case law, this is a proper case for a stay of the respondent’s summary judgment on condition that the appellant pay into court, pending the determination of the counterclaim, the full amount of that judgment plus prejudgment interest for six months and subject to necessary increases if the trial is delayed. See, for example: Iraco Ltd. v. Staiman Steel Ltd. (1987), 62 O.R. (2d) 129 (Ont. C.A.), Amhil Enterprises Ltd. v. Select, Inc., [2002] O.J. No. 1232 (Ont. C.A.), and Marketing Products Inc. (c.o.b.) Great Lakes Audio and Video) v. 1254719 Ontario Ltd. (c.o.b.) Tech Electronic Services, [2000] O.J. No. 5092 (Ont. C.A.). The funds shall be paid into court within seven days, failing which, there will be no stay.

[8] Cost of the appeal to the appellant fixed at $6,000 on the partial indemnity scale inclusive of disbursements and G.ST.

[9] As a result of discussion with counsel, the amount to be paid into court will be the amount of the judgment that includes prejudgment interest, plus six months interest at the post judgment rate of four percent, plus a net amount for trial costs of $10,000.

Signed: “K. Feldman J.A.” “S.E. Lang J.A.” “H.S. LaForme J.A.”