CITATION: 2582376 Ontario Inc. v. 2227418 Ontario Inc., 2022 ONSC 787
DIVISIONAL COURT FILE NO.: 664/21 DATE: 20220204
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
2582376 ONTARIO INC.
Ian Klaiman, for the Respondent
Plaintiff/Respondent
– and –
2227418 ONTARIO INC.
Peter-Paul Du Vernet, for the Moving Party
Defendant/Moving Party
HEARD at Toronto (by videoconference): January 31, 2022
Matheson J. (Orally):
[1] This is a motion for leave to extend the time to appeal the decision of Justice Sugunasiri, then Associate Justice Sugunasiri. The decision arises from an endorsement dated April 1, 2021, with a supplementary endorsement dated July 19, 2021. The related order dismisses the moving party’s cross-motion before her (the “Order”).
[2] By way of brief background, this action arises from a commercial transaction under which the moving party (defendant) agreed to sell a business including a convention centre premises and other assets to the respondent (plaintiff) for $15.5 million.
[3] In this action, the respondent (plaintiff) alleges misrepresentation regarding the financial statements provided by the moving party (defendant), among other issues, and seeks a number of remedies including damages. The moving party denies the claim and has made a counterclaim. The counterclaim relates to a vendor take-back mortgage among other things. Among the relief sought in the counterclaim, the moving party seeks possession of certain personal property, including books and records of the business.
[4] The Order at issue before me arises from two motions in the nature of discovery motions: a motion brought by the plaintiff and a cross-motion brought by the defendant. It is the cross-motion that gives rise to this request for an extension of time to appeal. The relief sought on the cross-motion is described in the Order at page 2, as follows:
The Plaintiff, 2582376 Ontario Inc. disclose and produce for inspection all of the financial records and statements, HST records, and day-to-day business documents of 2227418 Ontario Inc. and a related corporation, 1867207 Ontario Inc. (the “Financial Documents”) which are in the possession, control or power of the Plaintiff, including any Financial Documents which may have been at any time in the possession of Aneal Thansingh, within 30 days of the making of this Order;
The Plaintiff serve a further and better Affidavit of Documents to include the Financial Documents that are in the Plaintiff’s possession, control or power;
In the alternative, for recovery of possession of the Financial Documents.
[5] Paragraph 4 of the Order simply says that the cross-motion of the defendant is dismissed.
[6] There was a dispute about the proper date for this Order, as between the dates of the two endorsements that I have just mentioned. The dispute arose due to the potential impact of the date of the Order on the timeliness of the appeal steps. The Order, as signed and entered, bears both dates. The Order was formally settled by the Registrar.
[7] This motion raises the issue of whether the notice of appeal was timely because the time period ran from the later date on the Order and because the time period to appeal was 30 days. This is on the basis that the Order is a final order. In the alternative, the moving party submits that if the notice of appeal was not timely, an extension of time is requested.
[8] There is no dispute between the parties about the proper considerations in a motion to extend the time. They were set out by the Court of Appeal in Enbridge Gas Distribution v. Froese, 2013 ONCA 131, at para. 15, and are quoted in the moving party’s factum at para. 30, as follows:
(a) whether the appellant formed a bona fide intention to appeal within the relevant time period;
(b) the length of, and explanation for, the delay;
(c) any prejudice to the responding party caused, perpetuated, or exacerbated by the delay; and,
(d) the merits of the proposed appeal.
All of this must be analyzed with a view to the overall justice of the case.
[9] As I just mentioned, the moving party’s position was predicated on the proposed appeal being from a final order. Because of that position, I raised the issue, before the hearing of this motion, of whether or not the Order was final or interlocutory. That issue has a direct impact on the timeliness of the notice of appeal and at least an indirect impact on the merits of this motion and the justice of the case, if not a direct impact also. I asked the parties to address that issue at the hearing of this motion. When I raised the issue, I was advised of an early case conference direction that has had an impact on the parties’ expectations about dealing with the issue.
[10] More specifically, the moving party noted that in a very early direction the case management judge indicated that the issue of whether the Order was final or interlocutory would be addressed before the panel hearing the appeal in the Divisional Court.
[11] At the time of those directions, this motion had not yet been commenced. The next step in the proceeding would have been the hearing of the appeal. However, this motion was then brought and became a new step to be determined before an appeal. As I have just said, the type of order is, in my view, relevant to this motion. I therefore gave the parties an opportunity to properly consider the issue and provide submissions on it, and they have done so.
[12] As set out in the respondent’s factum on this motion, the test for whether a motion is final or interlocutory is well-settled. That is certainly the case. However, that has not lessened arguments about whether that test, applied to any particular case, gives rise to a particular outcome.
[13] The Catalyst Capital Group Inc. v. Moyse, 2015 ONCA 784, at paras. 11 and 12, summarizes the test and acknowledges that the application of the test can be unclear:
In fairness to the parties, this court's decisions on the final/interlocutory distinction have not been models of clarity. Much ink has been spilled, and court and counsel time wasted in exploring the nuances. But the root principle that all can and do accept was expressed by Middleton J.A in Hendrickson v. Kallio, 1932 123 (ON CA), [1932] O.R. 675, [1932] O.J. No. 380 (C.A.) [at para. 20]:
The interlocutory order from which there is no appeal is an order which does not determine the real matter in dispute between the parties -- the very subject matter of the litigation, but only some matter collateral. It may be final in the sense that it determines the very question raised by the applications, but it is interlocutory if the merits of the case remain to be determined.
This important case is one to which this court frequently returns. See, for example, Waldman v. Thomson Reuters Canada Ltd., [2015] O.J. No. 395, 2015 ONCA 53, per MacFarland J.A., at para. 22. On the Hendrickson v. Kallio.
[14] I have also been provided with Paulpillai Estate v. Yusuf, 2020 ONCA 655, which provides some helpful summary principles underlying the test for whether an order is interlocutory or final, at para. 16:
The main principles that determine whether an order is interlocutory or final are well known:
An appeal lies from the court’s order, not from the reasons given for making the order: see Grand River Enterprises v. Burnham (2005), 2005 6368 (ON CA), 197 O.A.C. 168 (C.A.), at para. 10; Amphenol Canada Corp. v. Sundaram, 2019 ONCA 932, at para. 21; and Fram Elgin Mills 90 Inc. v. Romandale Farms Limited, 2016 ONCA 404, 131 O.R. (3d) 455, at para. 33.
An interlocutory order “does not determine the real matter in dispute between the parties — the very subject matter of the litigation — or any substantive right[.] Even though the order determines the question raised by the motion, it is interlocutory if these substantive matters remain undecided”: Drywall Acoustic Lathing Insulation Local 675 Pension Fund v. SNC-Lavalin Group Inc., 2020 ONCA 375, at para. 16, citing Hendrickson v. Kallio, 1932 123 (ON CA), [1932] O.R. 675 (C.A.), at p. 678; Ball v. Donais (1993), 1993 8613 (ON CA), 13 O.R. (3d) 322 (C.A.). See also Amphenol, at para. 18.
In determining whether an order is final or interlocutory, “one must examine the terms of the order, the motion judge’s reasons for the order, the nature of the proceedings giving rise to the order, and other contextual factors that may inform the nature of the order”: Prescott & Russell (United Counties) v. David S. Laflamme Construction Inc., 2018 ONCA 495, 142 O.R. (3d) 317, at para. 7.
The question of access to appellate review “must be decided on the basis of the legal nature of the order and not on a case by case basis depending on the application of the order to the facts of a particular case”: Laurentian Plaza Corp. v. Martin (1992), 1992 7561 (ON CA), 7 O.R. (3d) 111 (C.A.), at p. 116; see also Amphenol, at para. 19. In other words, the characterization of the order depends upon its legal nature, not its practical effect: see Ontario Medical Assn. v. Miller (1976), 1976 679 (ON CA), 14 O.R. (2d) 468 (C.A.), at p. 470; Deltro Group Ltd. v. Potentia Renewables Inc., 2017 ONCA 784, 139 O.R. (3d) 239, at para. 3.
[15] I have considered a number of other cases brought forward by the parties and the very recent decision of the Ontario Court of Appeal in Johnson v. Ontario, 2021 ONCA 650, which not only sets out the governing principles but also elaborates on them in a useful way.
[16] The parties’ positions differ. The moving party (defendant) acknowledges a hybrid nature of the Order but speaks of a concern that the moving party may face an estoppel argument at trial regarding the relief sought in the counterclaim, in particular the return of personal property including financial records. The moving party also argues that, simply put, it needs those documents in order to defend itself in the litigation. That second reason is in the nature of a complaint about an unsuccessful discovery motion, which would ordinarily be regarded as interlocutory.
[17] In response, the respondent takes the position that the Order is clearly interlocutory, not final, and there would be no estoppel issue at trial.
[18] On this issue, I agree with the respondent. The Order is interlocutory. It arises from a discovery motion under r. 30 and a request for interim possession under r. 44 and does not include a final determination of any substantive matter. It remains open to the moving party to have determined at trial the questions of whether or not any of its property, including records, is in the possession of the plaintiff, and if so whether or not any property should be returned to it under the counterclaim. There has been no final determination of those matters.
[19] Having decided that the Order is interlocutory, this gives rise to an issue of which court this appeal should be in. The outcome is simple. As an interlocutory order, under r. 62 the defendant has a right of appeal to a single judge of the Ontario Superior Court and does not need to pursue those appeal rights in the Divisional Court.
[20] The appeal is under r. 62.01(2), which requires that the appeal be brought within seven days of the order appealed from. In turn, under r. 2.03 of the Rules of Civil Procedure there is jurisdiction to extend the time to appeal, applying the same general principles that I have articulated above.
[21] Both parties agree that I can continue today to hear this motion sitting as a single judge of the Ontario Superior Court. That is the case. I have been given the authority of Anthes Equipment Ltd. v. Wilhelm Layher GmbH, 1986 2755. I note that this case has been followed in a number of cases, including in this court.
[22] I have therefore proceeded to hear the motion for an extension of time as a single judge of the Superior Court. I now move to address the relevant considerations on this motion.
[23] With respect to a timely intention to appeal, the moving party has put forward an affidavit from the corporate secretary, who is involved in the day to day administration of the company. The witness indicates that the company did intend to seek a review of the Order, noting that certain activities were taking place and expectations were held about the potential for further steps arising from the motion and cross-motion. That explanation led to the appeal not being brought until after the second endorsement was released. Further, the position that the Order was final meant the appeal was not brought within seven days of that second endorsement.
[24] The respondent submits that the moving party has experienced counsel and submits strongly that the explanation given is inadequate. With respect to the length of the delay and the explanation for the delay, the respondent also notes that if one looks at the delay from the first endorsement, the delay is about four months. As compared to a seven-day period, it is a lengthy delay.
[25] The moving party notes that there were very lengthy delays in other steps on these motions. There was a very lengthy delay between the bringing of the motions and hearing of the motions, and another lengthy delay between the hearing of the motions and the disposition of the motions. In general, the moving party submits that although four months is not short, it is not that long if taken in the overall context.
[26] Moving to the subject of prejudice, the moving party notes that the respondent will not suffer any prejudice with the extension of time. The prejudice put forward by the respondent is the delay in collecting the costs ordered below and the incurring of more costs to have to proceed with an appeal. In my view, that is not significant prejudice, and no other prejudice has been put forward.
[27] Moving to the merits of the appeal, the moving party relies on a simple proposition. Specifically, the Associate Justice gave a very cursory reason for her decision to dismiss the cross-motion, said to be based on logic, which the moving party submits is illogical. In particular, the Associate Justice stated, in para. 2 of her first endorsement, as follows:
As a matter of logic, there would be no reason for the Plaintiff to maintain that it does not have the documents that it needs to advance its case. On this basis alone, I dismiss the Defendant’s request to produce the financial documents for inspection or serve a further and better affidavit of documents. I understand that the return of the personal property is no longer in issue and make no order.
[28] In the second endorsement, the Associate Justice made a very similar statement, saying that it “defies logic” that the respondent would proceed as it did if it had the documents.
[29] The moving party submits that it does not defy logic if the documents are unhelpful to the respondent, as the moving party says they are.
[30] In response the respondent says two things. First, there is an overlap in the documents the respondent was seeking on its motion for production and the documents that the moving party says are in the possession of the respondent in relation to the business. I accept that there may be an overlap, but not that they are all the same documents. The respondent also submits that the standard of review should be taken into account and I have done so.
[31] I then move to the overall consideration, which is the justice of the case. Considering all factors, including all submissions of the parties and the evidence before me, I conclude that the justice of the case calls for an extension of time.
[32] I therefore grant the motion.
[33] I order that the appeal from the Order shall proceed as if the Order was rendered today. The moving party must therefore comply, going forward, with the seven-day period within which a notice of appeal must be delivered.
[34] I pause to say that I know that the moving party already delivered a notice of appeal as a precautionary measure if this was interlocutory, which was done quite some time ago. Given that timing and given that at least there is a theoretical possibility that some amendment might be desired to the notice of appeal, I believe that it is more straightforward to give the order this way.
[35] As for any future steps in the appeal, those will be determined in the ordinary course. I am not making any other determination today.
[36] There shall be no order as to costs.
___________________________ Matheson J.
Date of Reasons for Judgment: January 31, 2022
Date of Release: February 4, 2022
CITATION: 2582376 Ontario Inc. v. 2227418 Ontario Inc., 2022 ONSC 787
DIVISIONAL COURT FILE NO.: 664/21 DATE: 20220204
ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT
BETWEEN:
2582376 ONTARIO INC.
Plaintiff/ Respondent
– and –
2227418 ONTARIO INC.
Defendant/ Moving Party
ORAL REASONS FOR DECISION
Matheson J.
Date of Reasons for Decision: January 31, 2022
Date of Release: February 4, 2022