Mull v. National Bank of Canada, 2011 ONCA 488

CITATION: Mull v. National Bank of Canada, 2011 ONCA 488

DATE: 20110705

DOCKET: C53213

COURT OF APPEAL FOR ONTARIO

MacPherson, Juriansz and Karakatsanis JJ.A.

BETWEEN

John Mull

Plaintiff (Appellant) (Respondent by Cross-Appeal)

and

National Bank of Canada and National Bank Financial Inc.

Defendants (Respondents in Appeal) (Appellants by Cross-Appeal)

Raymond M. Slattery and Catherine Francis, for the appellant John Mull

Linda Plumpton and Justin Necpal, for the respondents

Heard: June 29, 2011

On appeal from the order of Justice Colin Campbell of the Superior Court of Justice dated December 17, 2010.

ENDORSEMENT

[1] This is an appeal by the appellant, Dr. John Mull, from the Order of Campbell J. staying and dismissing his action pursuant to s 106 of the Courts of Justice Act, R.S.O. 1990, c. C-43 and Rule 21.01(3)(d) of the Rules of Civil Procedure.

[2] Campbell J. found that to permit this claim, well known to the appellant at the time of the restructuring, to proceed would operate as a “manifest unfairness” to the other market participants, including the respondents, who compromised their claims as part of the Plan of Compromise and Arrangement under the CCAA that restructured the Canadian market for ABCP.

[3] The appellant submits that the motion judge erred in principle by not accepting the facts pleaded as proven, by making findings of prejudice without evidence, and in not properly articulating or applying the test for granting a stay.

[4] We reject these grounds of appeal.

[5] To the extent that the motion judge referred to any significant facts or circumstances not part of the pleadings, they were reasonable inferences available to him from the pleadings, the record and the circumstances of the prior proceedings.

[6] The motion judge exercised his discretion to stay the appellant’s claim as an abuse of process on the basis of the Release that formed part of the Plan. He considered the purpose of the Plan, the context and language of the Release and concluded that the Release clearly applied to bar the claims asserted in this action. It is implicit in his decision that he considered that it was the “clearest of cases”, or “plain and obvious and beyond doubt” that the Release disposed of this claim.

[7] The appellant argues that it is not plain and obvious that the Release bars this claim, which is founded in contract and arises from the respondents’ publicly announced re-purchase program, or alternatively based upon the way the respondents set up his account. He submits that the claim does not relate to the ABCP market claims and the Release was not intended to relieve the respondents of their contractual obligations outside the provision of the Plan.

[8] We do not accept the appellant’s submissions that this claim could be characterized as unrelated to the Plan or falling outside the scope of the Release; that on a purposive approach, the Release could be construed as limited only to tort or similar claims that would give rise to third party proceedings; or that such a determination could be made only at trial, with a full factual matrix.

[9] As noted by this court in the previous appeal, in the context of these CCAA proceedings, the Release was a necessary component of the Plan and is very broadly drafted and bars all claims relating to ABCP, including those against the respondents, except for claims for fraud which were specifically carved out. The language of the Release itself clearly captures any claims “whether in tort or contract ... relating to or otherwise in connection with the ABCP market in Canada, the business and affairs of any of the Released Parties relating to or otherwise in connection with the Affected ABCP” and arising out of any “activities undertaken as a result of the Standstill, in anticipation of or preparation for the restructuring of the Affected ABCP or CCAA Proceedings.”

[10] Finally, the appellant argues that the motion judge erred by relying upon estoppel principles in the absence of a full record. In particular, the appellant submits that he could not have changed the market restructuring, could not have opted out of the Plan, and that it was not appropriate to have raised his claim in the sanction hearing because the Monitor had advised him that it was not relevant to the matters before the court in the CCAA proceeding.

[11] The circumstances surrounding the appellant’s participation in the CCAA proceedings were relevant to the motion judge’s exercise of discretion in this case. The motion judge noted the appellant’s active participation in the CCAA proceedings and in the challenge to the scope of the Release through his legal counsel, as part of the Ad Hoc Committee of Investors. Further, the court was specifically advised of the general nature of the appellant’s claim for the purpose of adjudicating on the scope and fairness of the release in the sanction hearing.

[12] The motion judge concluded that it would be unjust for the appellant to proceed with his claims for the full value of his original ABCP notes, when the other note holders had received only a portion of the value of their notes under the Plan. He noted that the appellant had voted in favour of the Plan and had not brought a motion to carve out his claim, nor sought any determination that his claim was not caught by the release, nor joined in the appeal relating to the scope of the Release.

[13] We agree with the motion judge that it is not appropriate for this claim to proceed in isolation. We see no error in principle in the exercise of his discretion. The appeal is dismissed.

[14] The cost award in this case was unusual. However, the motion judge was aware of all the circumstances, not only in this motion but in the underlying CCAA proceedings. He was in the best position to weigh the competing factors and to determine what was fair and reasonable in these particular circumstances. We defer to the exercise of his discretion in this case.

[15] The appeal and cross-appeal are dismissed. The respondents shall have costs fixed in the amount of $20,000, inclusive of disbursements and HST.

“J.C. MacPherson J.A.”

“R.G. Juriansz J.A.”

“Karakatsanis J.A.”