SUPERIOR COURT OF JUSTICE – ONTARIO
COURT FILE NO.: 10-17240 (Hamilton)
DATE: 2013/12/31
RE: Category 5 Imaging Ltd. (Plaintiff) v. Angelo Antoniadis and Clarke Productions (1982) Limited (Defendants)
BEFORE: The Honourable Mr. Justice R.A. Lococo
COUNSEL:
Philip J. Kennedy, for the Plaintiffs
Michael G. Emery, for the Defendant
HEARD: December 9, 2013
E N D O R S E M E N T
I. Introduction
[1] Category 5 Imaging Ltd. is a commercial printer based in Burlington. Category 5 uses only digital printing equipment.
[2] Clarke Productions (1982) is a commercial printer based in Dundas. Clarke Productions uses primarily screen and lithographic printing processes.
[3] Angelo Antoniadis was an officer, director and 20% shareholder of Category 5 from 2006 to 2009. Mr. Antoniadis was dismissed as an officer of Category 5 in July 2009. On December 9, 2009, Mr. Antoniadis entered into a Share Purchase Agreement and a Non-Competition, Non-Disclosure and Non-Solicitation Agreement with Category 5, terminating his relationship with Category 5. The same day, Mr. Antoniadis entered into a Release with Category 5 and its other shareholders. Even though the Release was signed on December 9, 2009, the Release was dated and effective as of July 6, 2009, the date of Mr. Antoniadis’ termination as an officer. The Release provided that nothing in the Release will release Mr. Antoniadis from any obligations that he has to Category 5 under the Share Purchase Agreement or the Non-Competition, Non-Disclosure and Non-Solicitation Agreement.
[4] Shortly after his termination as an officer of Category 5 in July 2009, Mr. Antoniadis went to work for Clarke Productions. In January 2010, Category 5 started an action against Mr. Antoniadis and Clarke Productions, alleging breach of the Non-Competition, Non-Disclosure and Non-Solicitation Agreement by Mr. Antoniadis. Category 5’s claim against Clarke Production is for unjust enrichment, as well as damages for inducing breach of contract and interference with economic relations. Category 5 alleges that Mr. Antoniadis assisted Clarke Productions in the acquisition of digital printing equipment in September 2009 and solicited clients and employees of Category 5, in contravention of the Non-Competition, Non-Disclosure and Non-Solicitation Agreement.
[5] Clarke Productions has brought a motion seeking, among other things, dismissal of the action as against it by way of summary judgment. That part of the motion is scheduled to be heard in April 2014.
[6] As part of the same motion, Clarke Productions is also seeking a stay of the action pending the hearing and decision on the summary judgment motion. Alternatively, Clarke Productions is seeking a temporary stay of document production required pursuant to the Endorsement of Justice Taliano dated March 14, 2013. Under Justice Taliano’s endorsement, Clarke Productions was required to provide to Category 5, among other things, documents relating to Clarke Productions’ digital business. Clarke Productions was required to comply with that order by June 13, 2013, 30 days after the date the order was entered.
[7] Clarke Productions argued that it would be unfair to require it to produce competitively sensitive documents to Category 5 until a decision is made on its summary judgment motion. According to Clarke Productions, it has met the required onus to justify either stay of the action or stay of the operation of Justice Taliano’s endorsement pending hearing of summary judgment motion. A stay is resisted by Category 5, who argues that the required onus has not been met.
[8] Under section 106 of the Courts of Justice Act,[^1] the court has jurisdiction to stay any proceeding on such terms as are considered just. As well, pursuant to clause 59.06(2) of the Rules of Civil Procedure,[^2] the court may suspend the operation of an order upon the motion of a party.
[9] Consistent with the decision of this court in Canadian Express Ltd. v. Blair,[^3] the parties are agreed that in order to justify a stay of proceedings, the defendant must satisfy the court that the following two conditions are met:
(a) The continuation of the proceedings would cause an injustice to the defendant because it would be oppressive or vexatious or would be an abuse of the process of the court in some other way, and
(b) A stay would not cause an injustice to the plaintiff.
[10] The issues to be determined on this motion are therefore as follows:
Injustice to the Defendant – Has Clarke Productions demonstrated that failure to grant a stay would cause an injustice to Clarke Productions?
Injustice to the Plaintiff – Has Clarke Productions demonstrated that granting a stay would not cause an injustice to Category 5?
[11] I will deal with each of these issues in turn.
II. Injustice to the Defendant
[12] Has Clarke Productions demonstrated that failure to grant a stay would cause an injustice to Clarke Productions?
[13] Defendant’s counsel argued that it would be manifestly unfair to Clarke Productions if it is required to comply with Justice Taliano’s production order by producing competitively sensitive information with respect to its digital business to Category 5 before the hearing and deciding of Category 5’s summary judgment motion. If the stay is not granted and Clarke Productions is ultimately successful on the summary judgment motion, it will have produced such information to a professed competitor to its possible detriment, according to Defendant’s counsel. Defendant’s counsel noted in particular that in reaching his decision to order production of information with respect to Clarke Productions’ digital business, Justice Taliano expressly stated that he did not take into account the effect of the Release, since it had not been pleaded in Clarke Productions’ Statement of Defence. According to Defendant’s counsel, Clarke Productions did not do so because the existence of the Release was not disclosed by either Category 5 or Mr. Antoniadis in their pleadings or the Affidavits of Documents. In fact, Clarke Productions was not aware the terms of the Release until January 2013 when a copy was provided by counsel for Mr. Antoniadis. Clarke Productions will be relying on the Release on its motion for summary judgment as a basis for dismissing the action against Clarke Productions, in whole or in part.
[14] Defendant’s counsel also argued that that there could be no claim against Clarke Productions for inducing breach of contract for the period prior to the entering into of the Non-Competition, Non-Disclosure and Non-Solicitation Agreement on December 9, 2009, since there was no agreement in effect prior to that date. As well, he argued that the Release could also be read as barring any claim against Clarke Productions.
[15] Having considered the evidence before me and the arguments of Defendant’s counsel, I have concluded that Clarke Productions has not satisfied the onus of demonstrating that allowing the action to proceed would cause an injustice to Clarke Productions. In particular, Clarke Productions has not demonstrated that it would be unfair to require it to comply with Justice Taliano’s production order before the summary judgment motion is heard. Justice Taliano gave cogent reasons for his order requiring production of information relying to its digital business and no appeal was taken from that order. As noted by counsel for Category 5, the information that Justice Taliano ordered to be produced would likely be producible to Category in any event upon cross-examination of the affidavit filed by Clarke Production in support of the summary judgment motion. I also took into account the fact that while Defendant’s counsel refers to the information in question as competitively sensitive, Clarke Productions does not, in fact, take the position that it is a competitor of Category 5. As noted in its Statement of Defence, Clarke Productions’ position is that it does not compete with Category 5, contrary to the position taken by Category 5.
[16] In reaching the conclusion that failure to grant a stay would cause an injustice to Clarke Productions, I also considered the argument of Defendant’s counsel that I should apply a broader “interests of justice” test in deciding whether to suspend temporarily the operation of Justice Taliano’s order pursuant to clause 59.06(2) of the Rules of Civil Procedure. In this regard, he relied on the Ontario Court of Appeal decision in Martin v. Goldfarb,[^4] which related to the suspending of a costs order made at trial after a successful appeal on the issue of damages pending reconsideration of damages by the trial judge. Having considered that reasons in that case, I do not read it as imposing a less onerous test than would be required for a stay imposed under section 106 of the Courts of Justice Act. In any event, consistent with my reasoning in this endorsement, I do not agree with Defendants’ counsel that the broader interests of justice would be served in this case by suspending the operation of Justice Taliano’s order.
III. Injustice to the Plaintiff
[17] My finding on the issue of injustice to Clarke Productions would provide a sufficient basis for dismissing Clarke Productions’ motion. Although not necessary to do so, I have also concluded that Clarke Productions has not demonstrated that granting a stay would not cause an injustice to Category 5. Therefore, the motion would fail on second branch of the test for granting a stay as well.
[18] In particular, I agree with Category 5’s counsel that the production of information pursuant to Justice Taliano’s motion may well result in the disclosure of information that would be relevant in deciding the summary judgment motion. Such information would also be of assistance to Category 5 in the preparation of an expert report on damages, which Category 5 requires to prepare its case against not only Clarke Productions but also Mr. Antoniadis, the latter of whom is not seeking dismissal of the action by way of summary judgment.
IV. Conclusion
[19] For the foregoing reasons, Clarke Productions’ motion to stay the proceedings or temporarily suspend the operation of Justice Taliano’s production order is dismissed.
[20] If the parties are unable to agree on costs, each party shall serve and file a costs outline and brief written submissions (not to exceed three pages) within 21 days. Each party will have an opportunity serve and file brief reply submissions within seven days thereafter. Should counsel both parties agree on a different timetable or settle the costs issue, please advise the Trial Co-ordinator.
The Honourable Mr. Justice R.A. Lococo
Released: December 31, 2013
2013 ONSC 7989
COURT FILE NO.: 10-17240 (Hamilton)
DATE: 2013/12/31
SUPERIOR COURT OF JUSTICE - ONTARIO
BETWEEN:
Category 5 Imaging Ltd.
Plaintiff
- and -
Angelo Antoniadis and Clarke Productions (1982) Limited
Defendants
BEFORE: The Honourable Mr. Justice R.A. Lococo
COUNSEL:
Philip J. Kennedy, for the Plaintiff
Michael G. Emery, for the Defendants
ENDORSEMENT
Lococo J.
Released: December 31, 2013
[^1]: R.S.O. 1990, c. C.43.
[^2]: R.R.O. 1990, Reg. 194.
[^3]: 1992 7535 (ON SC), [1992] O.J. No. 2029, 11 O.R. (3d) 221 (Gen. Div.), applying Varnum v. Canada (Minister of National Health and Welfare) (1987), 12 F.T.R. 34 at 36.
[^4]: [2001] O.J. No. 1886 (C.A.) at para. 12.