COURT OF APPEAL FOR ONTARIO

CITATION: Drywall Acoustic Lathing Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2020 ONCA 375

DATE: 20200612

DOCKET: M51262 and M51557 (C67841)

Benotto, Zarnett and Thorburn JJ.A.

BETWEEN

The Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund

Plaintiffs (Moving Parties[^1]/Responding Parties[^2])

and

SNC-Lavalin Group Inc., Kevin G. Lynch, Neil Bruce, Sylvain Girard, Jean Raby, Alain Rhéaume, Eric D. Siegel and Benita M. Warmbold

Defendants (Moving Parties[^3])

Joel P. Rochon, Peter R. Jervis, Douglas Worndl, Ronald Podolny and Peter Proszanski, for the Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund, moving parties in M51262 and responding parties in M51557

Michael G. Robb, Garett M. Hunter, Anthony O’Brien, Karim Diallo, Erika Provencher and Serge Kalloghlian, for Ruediger Martin Graaf, responding party in M51262 and M51557

Katherine L. Kay, Daniel S. Murdoch and Libby Nixon, for SNC-Lavalin Group Inc., Kevin G. Lynch, Neil Bruce, Sylvain Girard, Jean Raby, Alain Rhéaume, Eric D. Siegel and Benita M. Warmbold, moving parties in M51557

Heard: In Writing

Zarnett JA:

INTRODUCTION

[1] In 2019, two proposed class actions were commenced against SNC-Lavalin Group Inc. (“SNC”) and certain of its officers and directors (collectively with SNC, the “Defendants”). The class actions allege that the Defendants made misrepresentations and failed to make required disclosures affecting the price or value of SNC’s securities.

[2] The first action was commenced by Ruediger Martin Graaf (the “Quebec Plaintiff”) in February 2019 in the Superior Court of Quebec (the “Quebec Action”). The second action was commenced by the Trustees of the Drywall Acoustic Lathing and Insulation Local 675 Pension Fund (the “Ontario Plaintiff”) in June 2019 in the Ontario Superior Court of Justice (the “Ontario Action”).

[3] The Quebec Plaintiff and the Defendants each moved to stay the Ontario Action. On November 21, 2019, the motion judge, Belobaba J., dismissed each motion to stay: 2019 ONSC 6512.

[4] The Quebec Plaintiff, taking the position that the dismissal of his request to stay the Ontario Action was a final order, has appealed the dismissal to this court.[^4] As a precautionary measure, the Quebec Plaintiff has also filed a motion for leave to appeal the dismissal to the Divisional Court, in the event it is determined to be interlocutory. The Defendants did not appeal the dismissal of their request to stay to this court; they have instead moved for leave to appeal to the Divisional Court.

[5] The Ontario Plaintiff now moves to quash the Quebec Plaintiff’s appeal to this court on the basis that the dismissal of his request to stay the Ontario Action is an interlocutory order and can only be appealed to the Divisional Court with leave. The Ontario Plaintiff submits that this court has no jurisdiction to hear the Quebec Plaintiff’s appeal.

[6] The Defendants move for certain directions in the event that the Quebec Plaintiff’s appeal is determined to be properly before this court.

[7] For the reasons that follow, I conclude that the dismissal of the Quebec Plaintiff’s request to stay the Ontario Action is an interlocutory order, not a final order. No appeal lies from it to this court. I would therefore quash the Quebec Plaintiff’s appeal. It follows that the Defendant’s motion for directions must also be dismissed.

THE MOTION JUDGE’S DECISION

[8] The motion judge described the situation giving rise to the motions to stay as follows:

A law firm files a proposed national class action against the defendant in Quebec. A different law firm representing a different plaintiff files a proposed national class action against the defendant in Ontario. The pleadings in the two actions allege securities misrepresentations in the secondary market and end up being substantially similar in scope and content. The damages claim is in excess of a billion dollars. Neither action has yet been granted leave to proceed under provincial securities law or has been certified as a class proceeding. The leave and certification motions in both actions will be argued sometime next year.

[9] The Quebec Plaintiff’s position is that the Quebec and Ontario actions are substantially similar in scope and content—they have substantially overlapping class definitions, class periods, defendants, impugned disclosure documents, and causes of action.[^5] In other words, the actions advance substantially similar claims against substantially the same defendants, on behalf of substantially the same proposed class.

[10] The motion judge stated that, in order to succeed, the Quebec Plaintiff had to show that the Ontario Action was an abuse of process because it was duplicative and served no legitimate purpose when it was commenced. The motion judge rejected the suggestion that it was, stating at para. 33:

The question… is whether the Ontario action when filed was duplicative of the Quebec action as it was at that time. The answer is “no.” Abuse of process has not been…established on the evidence before me. The two stay motions must be dismissed.

[11] In its Notice of Appeal to this court, the Quebec Plaintiff submits that the motion judge erred in the way he considered the duplicative and no legitimate purpose argument. He also submits that the motion judge should have considered broader matters, including “factors relevant to both the best interests of the class members and the fair and efficient administration of justice”.

[12] Although the motion judge dismissed the motions to stay, he observed that the Quebec Plaintiff and the Defendants could argue, at the certification stage, that the Ontario Action should not proceed because of the Quebec Action. He stated at para. 41:

If the Ontario action clears the leave hurdle and advances to certification, both the defendant as a party and [the Quebec Plaintiff] as a “participant”, could argue that the Quebec action should be preferred under the s. 5(1)(d) [of the Class Proceedings Act, 1992, S.O. 1992, c. 6] analysis and the Ontario action should be stayed. The value of doing so at certification is that this court would have the benefit of a more complete record.

[13] The motion judge went on to state that even if he were wrong that those arguments could be addressed at the certification stage, he was still required to dismiss the motions to stay that were before him.

[14] Because of the view I take of the matter, I need not decide if the Quebec Plaintiff will or will not have a chance at the certification stage of the Ontario Action to argue for a stay, nor the extent (if any) to which any such argument would be restricted by the dismissal of the earlier stay motion.

ANALYSIS

[15] It is common ground between the Ontario Plaintiff and the Quebec Plaintiff that even though the Ontario Action is a proceeding under the Class Proceedings Act, 1992, S.O. 1992, c. 6 (the “Class Proceedings Act”), the appeal route in this case is governed by the Courts of Justice Act, R.S.O. 1990, c. C.43 (the “CJA”). There is no provision in the Class Proceedings Act that governs appeals for this type of order: see, generally, Class Proceedings Act, s. 30. It is also common ground between the parties that under the CJA, an appeal lies to this court only if the order is final: s. 6(1)(b). If the order is interlocutory, the appeal lies to the Divisional Court, with leave: CJA, s. 19(1)(b).

[16] An interlocutory order is one which does not determine the real matter in dispute between the parties—the very subject matter of the litigation—or any substantive right to relief of a plaintiff or substantive right of a defendant. Even though the order determines the question raised by the motion, it is interlocutory if these substantive matters remain undecided: Hendrickson v. KalIio, 1932 CanLII 123 (ON CA), [1932] O.R. 675 (C.A.), at p. 678; Ball v. Donais (1993), 1993 CanLII 8613 (ON CA), 13 O.R. (3d) 322 (C.A.).

[17] In Sun Life Assurance Co. of Canada v. York Ridge Developments Ltd., 1998 CarswellOnt 4534 (C.A.), Weiler J.A. distinguished substantive matters, which are the subject of final orders, from procedural rights, which are not. She stated, at para. 13:

As stated in Holmsted and Watson on Ontario Civil Procedure at 62-24: “…to be final an order must deal with the substantive merits as opposed to mere procedural rights, no matter how important the procedural rights may be. The test focuses on whether the order under appeal finally disposes of the rights of the parties, in the sense of substantive rights to relief (in the case of a plaintiff) or a substantive defence (in the case of a defendant).”

[18] In Locking v. Armtec Infrastructure Inc., 2012 ONCA 774, 299 O.A.C. 20, this court considered whether an order resulting from a ‘carriage dispute’ between competing Ontario class actions is final or interlocutory. In a carriage dispute, the court is called upon to consider which of two competing class actions should be allowed to proceed—in other words, which representative plaintiff and counsel should be allowed to continue with the action they commenced for the benefit of the class and which representative plaintiff and counsel should have their proposed class action stayed. Mr. Locking was unsuccessful in the carriage dispute and his action was stayed. The motion judge refused to stay the competing action and permitted it to continue. Mr. Locking sought to appeal the decision to this court.

[19] This court held that it did not have jurisdiction over Mr. Locking’s appeal because the disposition of a carriage dispute is interlocutory. The order staying Mr. Locking’s action did not bring an end to his proceedings, as his action was not stayed for all purposes, but simply as a class action. The stay did not determine or terminate the claim. He could still prosecute his lawsuit as an ordinary action. Furthermore, the refusal to stay the competing action did not make the disposition final. If the plaintiff in the competing action succeeded in obtaining certification, Mr. Locking could opt out of the class and continue with his own action. The only effect of the impugned order was to prevent Mr. Locking from bringing an application to have his action certified as a class proceeding. As the court stated, at para. 17, Mr. Locking had “not lost his right to sue the defendants. He may remain as part of the [competing] proposed class action and may also seek to actively participate to protect his interests pursuant to s. 14 of the [Class Proceedings Act]. He may also opt out and pursue his individual action independently.”

[20] Applying these principles to this case, it is clear that the refusal to stay the Ontario Action at the request of the Quebec Plaintiff is an interlocutory order. The dismissal of his stay request does not determine the subject matter of the Ontario Action or of any action. It does not determine any substantive right to relief that the Quebec Plaintiff, the Ontario Plaintiff, or any potential class member has against the Defendants, nor does it determine any substantive defence. It does not terminate the Quebec Plaintiff’s right to proceed with the Quebec Action. It does not determine the Quebec Plaintiff’s right or any potential class member’s right to opt out of the Ontario Action if the latter is certified as a class proceeding. Nor does it determine anyone’s right to pursue an individual claim.

[21] The refusal to stay the Ontario Action can only be said to affect the Quebec Plaintiff’s procedural rights. The Quebec Plaintiff considers that the class affected by the Defendants’ alleged wrongdoing would be better off if only the Quebec Action went forward as a class proceeding and the Ontario Action did not. Locking makes clear that, from an Ontario law perspective, a determination of which of two competing actions should proceed as a class action affects procedural rights. This is consistent with the view that the Class Proceedings Act is itself a procedural statute: Hislop v. Canada (Attorney General), 2009 ONCA 354, 95 O.R. (3d) 81, leave to appeal refused, [2009] S.C.C.A. No. 264, at para. 42.

[22] Although Locking was a contest between two competing Ontario actions, the conclusion it reached about appeal rights is applicable to this case where the contest is between competing proposed national class actions in different provinces. This is so because of the nature of the dispositions made on each type of motion and their lack of effect on substantive rights. It is not dependent on whether or not the factors that are considered in deciding a carriage dispute are the same as those to be considered on an interprovincial motion to stay. If anything, the conclusion that the refusal to stay the Ontario Action is interlocutory resounds with even greater force here than it did in Locking. There, Mr. Locking’s own action was stayed and he was prevented from seeking to have it certified as a class proceeding. Here, the Quebec Plaintiff’s action was not stayed and the order does not purport to affect his ability to seek its approval as a class proceeding. Even from a procedural standpoint, the refusal to stay the Ontario Action is less far-reaching than the order in Locking.

[23] The Quebec Plaintiff notes that, before the motion judge, the Ontario Plaintiff argued that the motion to stay should not be conflated with a carriage motion. This argument was made by the Ontario Plaintiff in response to submissions on the proper factors to be applied for a motion to stay. The Ontario Plaintiff took the position that the Quebec Plaintiff was incorrectly asserting that the test on a motion to stay should be taken from jurisprudence relating to carriage motions. The Quebec Plaintiff suggests that the Ontario Plaintiff’s position in the court below is a reason why Locking ought not to apply to the appeal route issue here.

[24] I do not consider that point to be germane. First, the question before this court is one of jurisdiction, and jurisdiction cannot be conferred by the parties’ characterizations in the court below, for a different purpose, about the similarity to a carriage dispute (the characterizations are in any event conflicting). Second, the issue on the motions under consideration here is not what factors should be applied in deciding a motion to stay and how similar those factors are to the factors on a carriage motion; the issue is the similarity of the type of order that results from a carriage dispute and the type of order here.

[25] The Quebec Plaintiff relies on the decision in Ontario v. Lipsitz, 2011 ONCA 466, 281 O.A.C. 67, leave to appeal refused, [2011] S.C.C.A. No. 407. He argues that Lipsitz stands for the proposition that the refusal to stay an action on the grounds of abuse of process results in a final order when the refusal does not leave open the right to argue abuse of process later in the action. As mentioned, it is unclear whether the motion judge’s decision has foreclosed any future arguments on whether the Ontario Action should be stayed in favour of the Quebec Action (see paras. 12 and 13 of these reasons). But in any event, Lipsitz is of no assistance to the Quebec Plaintiff.

[26] In Lipsitz, the plaintiff alleged that several defendants improperly forced his sleep disorder clinics to close. After filing their statements of defence, the defendants moved to dismiss and to stay the plaintiff’s action. The motion to stay was premised on the assertion that the plaintiff’s action was a collateral attack on administrative decisions relating to the licensing of sleep clinics. The collateral attack/abuse of process argument was one of the defendants’ substantive responses to the merits of the plaintiff’s claim. The motion judge largely dismissed the defendants’ motion. In doing so, he finally disposed of the defendants’ substantive response that the plaintiff’s action was an impermissible collateral attack, without reserving the issue for trial. Accordingly, this court held that the motion judge’s order was final: Lipsitz, at paras. 40-41.

[27] In contrast, the Quebec Plaintiff’s motion to stay did not raise for determination any of the Defendants’ substantive responses to the merits of the Ontario Plaintiff’s claim, let alone result in the determination of any such substantive response.

[28] Nor is this case similar to cases like Smith Estate v. National Money Mart Company, 2008 ONCA 746, 92 O.R. (3d) 641, leave to appeal refused, [2008] S.C.C.A. No. 535, relied on by the Quebec Plaintiff. Smith Estate dealt with a refusal to stay an action in favour of arbitration. Sharpe J.A., at para. 30, considered the order final because it finally deprived the defendant of a substantive contractual right to arbitration.[^6] Nor is this case similar to M.J. Jones Inc. v. Kingsway General Insurance Co. (2003), 2003 CanLII 37356 (ON CA), 233 D.L.R. (4th) 285 (Ont. C.A.), where the court held that a refusal to stay an action for lack of territorial jurisdiction over the defendant and on forum non conveniens grounds was final. As Sharpe J.A. stated, those motions finally determine substantive questions with constitutional implications about the power of the court to adjudicate claims against the defendant: M.J. Jones, at para. 10; see also Microvoice Applications Inc. v. Ice Consultants Inc., 2004 CarswellOnt 6310 (C.A.). Nothing similar is present here.

[29] The Quebec Plaintiff also submits, citing Smerchanski v. Lewis (1980), 1980 CanLII 1699 (ON CA), 117 D.L.R. (3d) 716 (C.A.), at p. 720, that an order made in a contest between a party to an action and a non-party is final if it finally disposes of their rights in the issue raised between them. He argues that the order here is final because he is a non-party to the Ontario Action, and the decision of the motion judge finally determined whether he could obtain a stay of the Ontario Action on the grounds raised by him when the motion was decided.

[30] I would not give effect to that argument. Smerchanski dealt with an order made during a trial, at the request of strangers to the action, to quash subpoenas directed to the strangers. The statement in Smerchanski must be read in light of what was in issue, and not as a statement that all orders made concerning non-parties are final. In CC&L Dedicated Enterprise Fund (Trustee of) v. Fisherman, 2001 CarswellOnt 3354 (C.A.), this court said, at para. 16:

When given its broadest interpretation, the principle in Smerchanski v. Lewis, supra, does not fit comfortably with the general test for determining whether an order is interlocutory or final, as set out in Hendrickson v. Kallio, 1932 CanLII 123 (ON CA), [1932] O.R. 675 (C.A.) and clarified in subsequent cases such as Ball v. Donais (1993), 1993 CanLII 8613 (ON CA), 13 O.R. (3d) 322 (C.A.). Smerchanski was not intended to mean that all orders directed to a non-party must be final, and the principle expressed therein should not be further expanded in that way.

[31] Similarly, in Ambrose v. Zuppardi, 2013 ONCA 768, 368 D.L.R. (4th) 749, at para. 8, this court stated: “Smerchanski should be restricted to cases in which there are like circumstances – a ruling made in the course of a trial quashing a subpoena of a witness in circumstances where the information sought to be obtained from the witness cannot be obtained from the [parties] themselves.”

[32] The circumstances here are not like those in Smerchanski. Nor are they circumstances that should attract any variant of its principle. The Quebec Plaintiff is not a party to the Ontario Action in the formal sense. But he does not premise his request to stay the Ontario Action on being a complete stranger; rather he does so on the basis that the Ontario Action overlaps, in all material respects, including in respect of the class on whose behalf it is brought, with the Quebec Action. This case parallels the situation in Locking, where Mr. Locking was not a party to the competing class action, although he was a member of its proposed class. Mr. Locking’s status as a non-party to one of the actions, and the fact that he was affected by the result of the carriage dispute, did not make the order there final. The Quebec Plaintiff’s non-party status in the Ontario Action does not lead to a different result here.

CONCLUSION

[33] For these reasons I would quash the Quebec Plaintiff’s appeal. In light of that disposition, I would also dismiss the Defendants’ motion for directions.

[34] If the parties are unable to agree on costs, I would require that they each make written submissions within ten days of the release of these reasons. Those submissions should not exceed two pages in length.

Released: JUN 12, 2020 “MLB”

“B. Zarnett J.A.”

“I agree. M.L. Benotto J.A.”

“I agree. Thorburn J.A.”

[^1]: Moving parties in M51262, the motion to quash. [^2]: Responding parties in M51557, the motion for directions. [^3]: Moving parties in M51557. [^4]: Appeal file number C67841. [^5]: The Quebec Plaintiff also takes the position that the Quebec Action is slightly broader in scope. [^6]: In TELUS Communications Inc. v. Wellman, 2019 SCC 19, at para. 91 (per Moldaver J.), it was suggested that decisions under s. 7(6) of the Arbitration Act, 1991, S.O. 1991, c. 17, cannot be appealed at all. Whether or not this affects the decision in Smith Estate, it further underscores the inapplicability of the jurisprudence on stays in favour of arbitration to the situation in the case at bar.