CITATION: Vecchio Longo Consulting Services inc. v. Aphria Ltd., 2021 ONSC 5953

DIVISIONAL COURT FILE NO.: 704/21

DATE: 20210908

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: Vecchio Longo Consulting Services Inc., Plaintiff / Responding Party

AND:

Aphria Inc., Victor Neufeld, Carl Merton, Cole Cacciavillani, Clarus Securities Inc., Canaccord Genuity Corp., Cormark Securities Inc., Haywood Securities Inc. and Infor Financial Group Inc., Defendants / Moving Parties

BEFORE: D.L. Corbett J.

COUNSEL: Caitlin Sainsbury, Graham Splawski and Megan Hodges, for the Moving Parties

Peter Jervis, Ron Podolny, Doug Worndl and Joel Rochon, for the Responding Party

Dana Peebles, for the Aphria Defendants

HEARD: by ZOOM videoconference on September 3, 2021

ENDORSEMENT

[1] This is a motion for an interlocutory stay pending disposition of the moving party’s motion for leave to appeal.

[2] The impugned order is an aspect of a decision of Perell J. in a class proceeding for which he is the certification motion judge. The operative part of the decision for which leave to appeal is sought is an order that the moving party produce a list of names and other identifying information of persons (the “Information”) who invested in the primary market pursuant to an Offering Memorandum of the defendant Aphria. The order requires that this information be “delivered” within thirty days and that the information be attested to by affidavit.

[3] The test for a stay pending appeal reflects the test in RJR MacDonald:

(a) Is there some merit (a serious issue to be tried) in respect to the leave motion;

(b) Will the moving party suffer irreparable harm if the stay is not granted; and

(c) Does the balance of convenience favour granting the stay?

[4] The stay motion is granted on an interim basis, without prejudice to the position of the parties on a motion for a stay pending appeal if leave to appeal is granted. The court provides these reasons in a reported decision to show how this court addresses these issues, given the use of CaseLines and the availability of prompt in-writing hearings of motions for leave to appeal.

[5] Appeal rights are substantive rights. The impugned aspect of the order of Perell J. is interlocutory and may not be appealed without leave. The operative part of the impugned order is a disclosure requirement. Leave is seldom granted to appeal such an order. “Seldom” is not “never”.

[6] Where a party wishes to seek leave to appeal, this court must try to accommodate the leave motion so that it can be decided on its merits by a panel of this court.

[7] Where, as here, a party wishes to seek leave to appeal, and the delay to obtain a ruling on the leave motion could impact on the ongoing process below in the Superior Court of Justice, this court will usually defer a full-blown analysis of the question of an interlocutory stay until after the leave decision is rendered. If leave is denied (as is the result of most leave motions), then the interlocutory stay motion will never be heard on the merits.

[8] The court will expedite the schedule for exchange of motion materials for the leave motion and the hearing of the leave motion itself, to minimize any prejudice in granting, or refusing to grant, an interim stay pending the motion for leave to appeal. Parties will be expected in most cases to agree on terms for interim stays, without prejudice, pending the motion for leave to appeal, and to agree on an expedited schedule for exchange of motion materials, based on all the circumstances of the case.

[9] In the case at bar, during argument of the stay motion, the parties agreed to an expedited schedule to exchange and upload all leave motion materials to CaseLines by October 8, 2021. They shall follow this schedule, and the motion for leave to appeal shall be placed before a panel of three judges of the Divisional Court, in writing, on October 12, 2021, or as soon after that as the motion may be heard.

[10] I note that the leave motion materials could have been exchanged and the leave motion heard even more quickly. The decision of Perell J. was made in July 2021. The parties are sophisticated and represented by very capable, experienced, and well-resourced counsel. If these matters were urgent, they could have been done faster. This is not a criticism. I do not consider that the issues at play on this leave motion are “urgent”. They are “time sensitive”. They should be done on an expedited schedule, but they do not require that counsel and the parties “stand on their (collective) heads” and put all other professional and personal matters aside to address the motion in a matter of days. In future, on the basis of the approach described in this endorsement, a moving party would be well advised to commence preparation of motion materials as soon as the decision to move for leave to appeal is made, to minimize any delay and consequent prejudice, and responding parties are encouraged to take a similar approach to beginning preparation of their responding materials. But the alacrity that must be brought to bear should depend on all the circumstances, including any real prejudice that may be attenuated by greater speed.

[11] An interim stay pending the motion for leave to appeal will have no appreciable impact on the overall schedule of this case. The motions judge ordered that the disputed production be made “within thirty days” and afforded plaintiff’s counsel one hundred days to take certain steps thereafter before returning before the court for further directions. Both deadlines will have to be extended by the time required to complete the stay motion. If the parties had moved immediately to exchange motion materials, the additional delay might have been a month or less. As matters have unfolded, the overall delay may be two months or slightly longer. There is no evidence that this delay will have material negative consequences for the case below, and counsel for the plaintiff candidly conceded that prejudice from delay was the prejudice that would result by the “delay by a thousand cuts” – delay arising from an appeal, if leave is granted, and potential further delay of potential proceedings in the Court of Appeal and the Supreme Court of Canada.

[12] I conclude that it is better to weigh the consequences of delay – immediate and potentially long-term – after a decision is made on the motion for leave to appeal, for the following reasons:

(a) The leave decision is made by a panel of three judges on full consideration of the motion for leave to appeal. The panel is the authoritative arbiter of whether the proposed appeal meets the high test for granting leave to appeal. Where it is practical to do so, it is better to leave it to the panel to make this decision.

(b) Where leave is granted, this adds an important element to the balancing exercise to be undertaken on a stay motion: three judges of this court have determined there is some merit to the appeal and that the appeal is worthy of the appellate process.

(c) Where leave is granted and a contested stay motion is then argued, the parties and the court will have the time necessary to decide the stay issue on complete materials and the court will have the time to give the matter mature consideration. As is illustrated by the motion before me, materials on the stay motion were exchanged in a matter of days, the motion was heard the Friday of a long weekend, and the decision is being rendered shortly after the long weekend. If the decision was to refuse the stay, this court, sitting as a single motions judge, would have largely terminated the moving party’s appeal rights, since, in the circumstances of this case, it would be almost impossible to undo the practical effect of disclosure after the fact.

(d) Where leave is not granted, the appeal process is at an end. There are no appeals from leave decisions.

(e) As a result of technological innovation at this court during COVID-19, the court can direct that all materials be provided to the court electronically, that access be given to these materials to three judges located anywhere in Ontario, and then to convene a ZOOM conference accessible to judges anywhere in Ontario, on short notice, to decide the motion. If the parties can provide the court with materials within two to three weeks, the court can often provide the leave decision within a week or ten days thereafter, and even faster if the matter is truly urgent.

[13] Taking all of these points into account, and addressing the current stay motion on the principles in RJR MacDonald, I conclude as follows:

(a) The motion for leave to appeal has some prospect of success. While that prospect is not high, I am satisfied that it is not so low that the moving parties should be deprived of the opportunity to seek leave to appeal as they are entitled to do under the Rules of Civil Procedure;

(b) If a stay is not granted pending decision on the leave motion, it probably will not be possible for the court to put the parties back into the position they are currently in if leave to appeal is granted and the appeal succeeds. By this I do not just mean that the documents will have been disclosed, but also that, as a result of that disclosure, plaintiff’s counsel will have been able to move forward with the litigation in ways that could not be undone after a successful appeal. I consider this to be irreparable harm sufficient to satisfy the second branch of the leave test, for the purposes of an interim stay pending the motion for leave to appeal.

(c) The balance of convenience weighs in favour of granting the limited stay required until the motion for leave to appeal is decided. I assess this balance solely on the probable delay in the case below of 1-2 months, in the context of a class action that will unfold over a period of years, involving claims currently estimated by plaintiff’s counsel as potentially exceeding $100 million.

[14] The general approach set out in these reasons has been the practical way in which the court has approached requests for an interim stay pending a motion for leave to appeal since the onset of COVID-19. This approach should not be construed mechanically: it is context driven. For example, in interlocutory family law appeals of substantive orders, the court generally requires compliance with orders below pending the motion for leave to appeal, except in rare cases where a stay is required to preserve the court’s ability to do justice on appeal. In landlord and tenant matters, where there is a statutory stay of an eviction order of the Landlord and Tenant Board, and where there are material arrears, the court will routinely require payment of ongoing rent and substantial payments towards arrears to secure the position of the landlord pending appeal and to make it clear that the statutory stay does not enable tenants to obtain extended periods of further rent-free occupancy. This case and the other contexts I have described all illustrate the underlying animating principle: the goal is to expedite matters where necessary to limit the need for or the prejudice caused by a stay – or its absence – and to try to fashion interim terms that best position the court to do justice between the parties when the court disposes of the case on the merits.

Disposition

[15] The motion for an interim stay pending the motion for leave to appeal is granted with the effect of also extending the deadline imposed on counsel for the plaintiff to return before the court below. This interim stay is without prejudice to the position of the parties on any motion that may be brought for a stay pending appeal if leave to appeal is granted. Counsel are directed to provide the court with a draft order setting out the stay terms reflecting this decision.

[16] In its argument on the issue of irreparable harm, the moving party raised an issue respecting the potential harm of complying with the motion judge’s direction that the impugned disclosure be “delivered” (that is, served and filed in the court file). The formal order has not been issued and entered. It does not appear that the requirement to place the disclosure in a public court file was raised directly with the motion judge. The parties should raise this issue with the motion judge when they come to settle the formal order: this is an issue best addressed at first instance.

[17] Costs of this stay motion shall be considered part of the costs of the leave motion.

D.L. Corbett J.

Date: September 8, 2021