CITATION: Price et al v. Smith & Wesson Corp., 2021 ONSC 7652

DIVISIONAL COURT FILE NO.: 176/21

DATE: 20211119

SUPERIOR COURT OF JUSTICE – ONTARIO

DIVISIONAL COURT

RE: SAMANTHA PRICE, SKYE MCLEOD, KENNETH PRICE, CLAIRE SMITH, PATRICK MCLEOD, and JANE MCLEOD, Plaintiffs/Moving Parties

AND:

SMITH & WESSON CORP., Defendant/Respondent

BEFORE: Matheson, Kristjanson & Nishikawa JJ.

COUNSEL: Malcolm N. Ruby, Michel Drapeau and Joshua Juneau, for the Plaintiffs/Moving Parties

Scott Maidment and Jennifer Dent, for the Defendant/Respondent

HEARD: November 10, 2021, by video conference

ENDORSEMENT

[1] The plaintiffs move for an order staying or adjourning the defendant’s motion for leave to appeal from the decision of Justice Perell dated February 11, 2021 (the “Decision”), in this proposed class proceeding.

[2] The plaintiffs submit that the defendant’s motion for leave to appeal is a collateral attack on Justice Perell’s case management directions regarding the disposition of two motions before him, specifically the certification motion and the defendant’s motion to strike out this claim under Rule 21.01(1)(b) of the Rules of Civil Procedure. Justice Perell directed that the certification motion would be heard in two steps. First, the cause of action requirement under s. 5(1)(a) of the Class Proceedings Act, 1992, S.O. 1992, c. 6 (the “CPA”), would be heard together with the defendant’s Rule 21 motion. Second, if a cause of action remained, the balance of the certification motion would be heard and decided.

[3] The Decision struck out part, but not all, of the plaintiffs’ claims. The plaintiffs ask that the leave motion be postponed until after Justice Perell deals with the second stage of the certification motion, which is moving forward to a hearing in March 2022. We have focused on the request for what would be a temporary stay of proceedings pending the outcome of the certification motion. We do not find that the request for an adjournment adds significantly to the analysis.

[4] The defendant submits that its motion for leave to appeal should proceed. It submits that it is an exceptional case and not a collateral attack because Justice Perell made no order curtailing its appeal rights nor did he have jurisdiction to do so. The defendant submits that its motion for leave to appeal should proceed even though the balance of the certification motion has yet to be decided.

[5] For the reasons set out below, the motion is granted.

Brief background

[6] This proposed class proceeding arises from the tragic shooting on the Danforth in 2018, in which the shooter used a handgun manufactured by the defendant. The Statement of Claim alleges that the defendant is liable to members of the proposed class for negligently designing, manufacturing, and distributing the gun without what they describe as “authorized user” or “smart gun” technology. The plaintiffs further claim that there should be strict liability and they claim in public nuisance. The proposed class includes the people injured or killed and their families.

[7] On this motion, the plaintiffs rely on events from two case conferences. On July 6, 2020, counsel for the parties attended a case conference before Justice Perell, the case management judge under the CPA for the proposed class proceeding. At that case conference, the schedule for the two motions was discussed. The moving parties have put forward an affidavit of one of their counsel who attended the case conference.

[8] At the case conference, there was a discussion about deciding the certification motion in two stages, with the Rule 21 motion being decided together with the first stage of the certification motion. The affiant recounts that because of the concept of two stages, plaintiffs’ counsel raised the issue of appeal rights. Counsel asked that appeals be deferred until after the certification motion was completed. The affiant attested that case management judge agreed to put that in his directions.

[9] The judge’s directions, as released, said nothing about appeal rights. The case management judge gave the direction that there would be a bifurcated certification motion, the first stage of which would be combined with the Rule 21 motion.

[10] No steps were taken to address the absence of any reference to appeal rights in the judge’s directions.

[11] The first stage of the certification motion proceeded, together with the Rule 21 motion, giving rise to the Decision. The plaintiffs’ claims for public nuisance and strict liability were struck out, but the negligence claim was not. In turn, the negligence claim was found to be sufficient to satisfy the s. 5(1)(a) cause of action criteria in the CPA. Therefore, the court concluded that the certification motion “shall continue to the second phase”.

[12] Ordinarily, the defendant would have the right to seek leave to appeal that part of its Rule 21 motion that it lost. The defendant brought its motion for leave to appeal.

[13] Plaintiffs’ counsel wrote setting out their position that the motion was premature and had to await the conclusion of the certification motion. They said this arose from the statements made by the case management judge at the July 6 case conference. The plaintiffs also served their notice of appeal to the Court of Appeal with respect to that portion of their claim that was struck out, as a cautionary measure.

[14] In response to the plaintiffs’ position, defendant’s counsel replied that they did not share plaintiffs’ counsel’s recollection of the discussion at the case conference. They noted that the directions arising from the July 6th case conference made no provision for the timing of any appeals and imposed no limitation on appeal rights.

[15] The parties were next in front of the case management judge on April 13, 2021. The plaintiffs raised the appeal rights issue. In the endorsement arising from that case conference, the case management judge stated that it was his intention that there be no appeals until the certification motion was completed. However, he went on to note as follows:

I have no jurisdiction to address the parties’ appeal rights, and it is to be left to them to respond to the leave motion to the Divisional Court and to the perfection of the appeal to the Court of Appeal as they may be advised.

What I have jurisdiction to do is to set a timetable for the completion of my original plan. [Schedule then set out.]

[16] On July 30, 2021, the plaintiffs brought this motion to stay or adjourn the defendant’s motion for leave to appeal. The certification motion continues to move forward and is scheduled to be heard in March 2022.

Issues and Analysis

[17] The issue on this motion is whether the defendant’s motion for leave to appeal should be stayed until the remaining part of the certification motion has been decided by the case management judge.

[18] This Court has the discretion to stay the motion for leave to appeal under s. 106 of the Courts of Justice Act, R.S.O. 1990, c. C.43, s. 106.

[19] The plaintiffs focused on these grounds to obtain a stay:

(1) that the motion for leave to appeal is a collateral attack on the directions given by the case management judge at the July 6, 2020 case conference; and,

(2) that the broad powers of a case management judge under the CPA extend to the timing of the exercise of appeal rights.

[20] The first argument, based on collateral attack, lacks an adequate starting point. The case management judge made no order and gave no directions about appeal rights. We reject the submission that a discussion at a case conference that does not result in an order or directions can be elevated to become a decision that is binding on the parties. If a party believes that directions given or an order made is inaccurate or incomplete, they can take steps to seek a correction. No steps were taken here.

[21] Further, when this issue was drawn to the attention of the case management judge, he expressly indicated that he had no jurisdiction and that the issue was a matter for this Court.

[22] Before us, all parties agree with the case management judge’s statement that he had no jurisdiction. We are not persuaded that the broad powers of a CPA case management judge extend to appeal rights. At most, the case management judge could have stayed his own decision under Rule 63.02(1)(a). That limited jurisdiction does not assist the plaintiffs.

[23] Both parties have also put forward considerable law on the prematurity principles that this Court applies to appeals and judicial review applications arising from administrative tribunal decisions. The plaintiffs submit that the motion for leave to appeal is premature. The defendant submits that this is one of those exceptional cases that should proceed.

[24] This body of administrative law does not directly apply to this case. This case is civil litigation under the Courts of Justice Act, modified to some extent by the CPA. The question of when this Court will hear an appeal from an interlocutory decision is decided by applying the test for leave to appeal in Rule 62.02(4). That is the motion that the plaintiffs seek to stay.

[25] There is certainly some overlap between the considerations that arise in the prematurity law put forward by the parties and the principles that apply to this motion. However, the request for a stay of proceedings is more properly framed under Rule 63.02(1)(b) and s. 106 of the Courts of Justice Act, which give the Court the jurisdiction to stay the proceedings in this Court on such terms as are just. As a general matter, the injunction test applies, as set out in RJR MacDonald Inc. v. Canada (Attorney General), 1994 117 (SCC), [1994] 1 S.C.R. 311, specifically (1) whether there is a serious issue to be decided; (2) whether to proceed would result in irreparable harm; and, (3) whether the balance of convenience favours a stay.

[26] The plaintiffs put forward Hester v. Canada (National Revenue), 2008 6193 (ON SCDC), in which this Court denied leave to appeal from a stay order under s. 106. In that case, the proceedings in the Superior Court were stayed pending Tax Court proceedings, relying on s. 106 as well as s. 138 (which discourages multiplicity of proceedings).

[27] We have considered all the arguments put forward by the parties, which generally fit under one or more of the elements of the s. 106 test. We highlight the significant arguments as follows.

[28] On the first element of the stay test, a preliminary assessment of the merits of the leave application, the defendant argues strongly that this will be a very important appeal. As put by the defendant, the decision below is the first case in Canada to hold that a manufacturer owes a duty of care to persons intentionally harmed by a third-party criminal’s misuse of its product. The defendant submits that no Canadian court has ever previously found that the relationship between a manufacturer and the victim of a deliberate crime involved sufficient proximity and foreseeability to justify the imposition of a duty of care.

[29] The plaintiffs have not put forward any authority to undermine the above submissions. As a result, for the purposes of this interlocutory stay motion, we proceed on the basis that the leave application has sufficient merit.

[30] The plaintiffs then submit that they will suffer irreparable harm due to the multiplicity of proceedings and added expense and delay. This is not a strong argument for the plaintiffs. Added court costs may be recovered in civil proceedings. They are usually not irreparable harm and no special circumstances are advanced here. Further, the certification motion has not been delayed. It is proceeding. The main issue is the multiplicity of proceedings, which we will address under the third element of the test, the balance of convenience.

[31] Moving to the balance of convenience, the defendant submits that its motion, and hoped for appeal, should proceed now. The defendant submits that, at best, the decision below creates uncertainty because the court below failed to properly address the criteria of relational proximity. Further, it could give rise to a multiplicity of new tort claims before the existence of, or boundaries of, such a tort could be clarified by an appellate court.

[32] Further, the defendant notes that the proposed appeal deals with a threshold issue. If decided in the defendant’s favour it would bring the litigation to an end. It is also a question of law and does not need the certification motion factual record.

[33] In addition, the defendant relies on the recent amendment to the CPA, introducing s. 4.1:

If, before the hearing of the motion for certification, a motion is made under the rules of court that may dispose of the proceeding in whole or in part, or narrow the issues to be determined or the evidence to be adduced in the proceeding, that motion shall be heard and disposed of before the motion for certification, unless the court orders that the two motions be heard together. [Emphasis added.]

[34] The defendant accepts that, under the transition provisions, this new section does not apply to this claim. However, it does reflect a change in favour of deciding motions akin to the defendant’s Rule 21 motion before the certification motion, subject to the court’s discretion to do otherwise.

[35] The plaintiffs submit that postponing the defendant’s leave motion until the case management judge decided the rest of the certification motion will avoid multiple proceedings and related delay. As the events have unfolded, the appeals arising from the Rule 21 motion and the full certification motion could be addressed together, without a lengthy delay. Further, if leave is granted, the plaintiffs have agreed to request that defendant’s appeal be addressed together with their appeal from the Rule 21 motion, at the Court of Appeal.

[36] The status of the balance of the certification motion is a significant factor. It is proceeding. No one has sought an order that it await appeals from the Decision. It is scheduled to be heard not long from now – March 2022. Overall, we conclude that in the circumstances of this case the balance of convenience favours granting the stay.

[37] The issue for us is whether, in all the circumstances, the interests of justice are better served by a stay of proceedings. Bearing in mind all the relevant factors, we grant a stay as set out below.

Disposition

[38] The defendant’s motion for leave to appeal the February 11, 2021 decision of Justice Perell is stayed until 30 days after the release of the decision on the second stage of the certification motion, subject to further order of this Court. The defendant shall notify the Divisional Court office of whether or not it intends to proceed with its motion for leave to appeal within that 30-day period.

[39] On consent, the plaintiffs shall have costs of $35,000, all inclusive, in the cause.

Matheson J.

Kristjanson J.

Nishikawa J.

Date: November 19, 2021