SUPERIOR COURT OF JUSTICE - ONTARIO
COURT FILE NO.: 128/14
DATE: 20140530
RE: Michael Cannon, Plaintiff/Respondent
AND:
ParkLane Financial Group Limited, Trafalgar Associates Limited and Trafalgar Trading Limited, Defendants/Applicants
AND:
Gacich Financial Enterprises Inc. et al, Third Party Defendants/Respondents
BEFORE: Dambrot J.
COUNSEL:
Samuel S. Marr and Margaret Waddell, for the Plaintiff/Respondent
Junior Sirivar and Stephanie Sugar, for the Defendants/Applicants
Peter Jervis and Ramissa Hirji, for the Gacich Third Parties
HEARD: May 20, 2014
ENDORSEMENT
background
[1] Following the certification of this action as a class proceeding, the ParkLane defendants served a third party claim in which they seek contribution and indemnity from their commissioned sales force of over 400 individuals and corporations, referred to as the Distributors. The Distributors facilitated the class members' participation in the Donations for Canada leveraged charitable Gift Program.
[2] The original certified common issues were intended to focus on the conduct of, and documents produced by the defendants. However, the ParkLane defendants took the position that all the Distributors were necessary parties whose presence was required at the trial of the common issues. While the plaintiff disagreed with the ParkLane defendants' view, he brought a motion to refine the common issues to make it abundantly clear that the third parties were not necessary parties to the trial of the common issues, and to stay the third party claim. The idea was that if the common issues were so refined, they would focus solely on the legality of the conduct of the ParkLane and Appleby defendants. It necessarily followed that the third party claim ought to be stayed until the completion of the common issues trial. Only at that stage – dependent upon the trial results – might the third parties need to be engaged as active parties in the individual issues litigation.
[3] The motion was adjourned on a number of occasions, at the instance of the court, to allow the parties to reach a consensus on reframing the common issues so that the stay order might follow on consent or unopposed. Although significant headway was made among the parties, no consensus could be reached. Ultimately, the motion was argued before Justice Belobaba on February 14, 2014, including submissions on alternative drafts of the language to be incorporated into the formal stay order. The motions judge had the advantage of reading a total of thirty facta and other forms of written submissions from the parties before the motion was argued.
[4] The motions judge accepted the plaintiff’s proposed refinement of the common issues, subject to a minor “footnote” modification which was sought by the defendant, Appleby Services Bermuda Limited, and which was thereafter agreed upon by the plaintiff and Appleby.
[5] The order amending the common issues and staying the third party claim was granted by Belobaba J. purportedly exercising his broad discretionary case management powers under sections 8(3), 12 and 13 of the Class Proceedings Act, which permit the court to amend the certification order, stay any proceeding related to the class proceeding on such terms as it considers appropriate, or make any other order or impose any terms on the parties that it considers appropriate to ensure the fair and expeditious determination of the class proceeding.
[6] In addition to staying the third party claim, the order provides that any findings made at the common issues trial in respect of any acts or omissions of the distributors shall not be binding on the distributors, individual class members or the defendants in any individual issues trials in the action, or in the third party claim. The order also makes clear that it in no way limited the defendants from pursuing any defences, cross-claims or counter-claims, or from leading or seeking evidence relating to them in the action.
[7] It is clear from his direction dated February 14, 2014, that the motions judge made his order staying the third party claims on his understanding that the stay, together with an appropriately refined list of common issues would, consistent with the intention of Strathy J. who made the original certification decision, achieve the objective of making the common issues trial carefully focussed and more manageable. It is also plain that Belobaba J. was of the view that once the common issues were narrowed, the stay order would not compromise anyone’s legal rights and would be fair to all.
This motion
[8] The ParkLane defendants do not object to the refined common issues, only to the stay order. They seek leave pursuant to Rule 62.02 (4)(b) (there is good reason to doubt the correctness of the order, and the proposed appeal involves matters of such importance that leave should be granted) and pursuant to Rule 62.02 (4)(a) (there is a conflicting decision by another judge in Ontario or elsewhere and it is desirable that leave be granted).
[9] With respect to Rule 62.02(4)(b), the ParkLane defendants argue that:
The stay order conflicts with fundamental principle of law governing third party claims; and
The stay order is contrary to:
(a) s. 138 of the Courts of Justice Act;
(b) Rule 5.05 and 29.05 of the Rules of Civil Procedure; and
(c) s. 27(3) of the Class Proceedings Act.
[10] With respect to Rule 62.04(4)(a) the ParkLane defendants argue that the stay order conflicts with the decision made in Robertson v. Proquest Learning and Information LLC., [2010] O.J. No. 3262 (Sup. Ct.).
Rule 62.02(4)(b)
[11] I will begin with the first issue raised with respect to Rule 62.02(4)(b). It is plain that the order was made to ensure the fair and expeditious determination of this class proceeding. The ParkLane defendants argued that it will fail to do so. Instead, they assert, the fact that any findings made at the common issues trial in respect of any acts or omissions of the distributors will not be binding together with the modest participation permitted to counsel for the distributors in the common issues trial will result in relitigation of issues and other unfairness, to the detriment of the defendants. Accordingly, the stay order conflicts with the fundamental principle of law governing third party claims.
[12] I do not agree. The common issues were revised over a six-month period with the participation of all parties, and the ultimate approval of the judge, in order to ensure that the common issues trial focusses solely on the paper produced by the defendants, and the post-donation activities of the defendants; to preclude the requirement of any consideration of discussions between the distributors and the class members; and to prevent any findings being made that would necessitate the presence of the third parties. All the while, the order leaves it open to the defendants to advance any defence, cross-claim or counterclaim they choose, including ones relating to the acts or omissions of the distributors, and to lead any evidence in support.
[13] In my view, there is no basis to conclude that the order will fail to accomplish its intended result: helping to ensure the fair and expeditious determination of this class proceeding. Nor is there a basis to conclude that the order does not conflict with fundamental principle of law governing third party claims. There is no reason to doubt the correctness of the order on this ground.
[14] With respect to the second issue, in my view the Rules and sections cited by the ParkLane defendants in no way restrict the jurisdiction of the motions judge to make the order he made. On the contrary, the broad jurisdiction afforded to the court by sections 12 and 13 of the Class Proceedings Act provides ample authority to make the order in issue.
[15] Those sections provide:
The court, on the motion of a party or class member, may make any order it considers appropriate respecting the conduct of a class proceeding to ensure its fair and expeditious determination and, for the purpose, may impose such terms on the parties as it considers appropriate.
The court, on its own initiative or on the motion of a party or class member, may stay any proceeding related to the class proceeding before it, on such terms as it considers appropriate.
[16] These provisions are obviously intended to empower judges dealing with class actions to craft flexible and sometimes innovative tools beyond what is available in the Rules of Civil Procedure in order to facilitate the fair and expeditious determination of otherwise complex and complicated matters. Of course judges are not given carte blanche to do whatever they want. Their orders must be principled and consistent with the purpose of class actions and fundamental fairness. But the broad discretion afforded by sections 12 and 13 should not be read down to merely duplicate the civil rules.
[17] On this issue, the defendant began its argument with Rule 5.05(d). Where it appears that the joinder of multiple claims or parties in the same proceeding may unduly complicate or delay the hearing or cause undue prejudice to a party, that rule permits a court to stay the proceeding against a defendant or respondent pending the hearing of the proceeding against another defendant or respondent, on condition that the party against whom the proceeding is stayed is bound by the findings made at the hearing against the other defendant or respondent. Rule 5.05(e) permits the court, in such circumstances, to make such order as is just.
[18] The defendants complain that by virtue of Rule 5.05(d), if Belobaba J. was of the view that a stay was necessary, he was obliged to make the order subject to a condition that the party against whom the proceeding is stayed is bound by the findings made at the hearing against the other defendants.
[19] In my view, this argument fails. Even if Rule 5.05(d) has the effect advanced by the defendants in an ordinary civil proceeding, an interpretation that I consider doubtful, it cannot have that effect in a class proceeding in relation to a stay ordered under s. 12 and s. 13, for the reasons I have already explained. It is axiomatic that a broad power to make a particular type of order in a broad range of circumstances should not be read in a narrow fashion to permit only the making of a similar but narrower order permitted by a narrower provision in narrower circumstances.
[20] With respect to Rule 29.05, subsection (2)(b) provides that a third party who delivers a statement of defence in the main action is bound by any order or determination made in the main action between the plaintiff and the defendant who made the third party claim. Again, I do not think that this section can prevail against an order made under the Class Proceedings Act staying a third party claim pending a common issues trial in a class proceeding on condition that the issues determined in the common issues trial are not binding.
[21] Nor can s. 138 of the Courts of Justice Act preclude the sort of stay order made in this case. That section simply reads: “[A]s far as possible, multiplicity of legal proceedings shall be avoided.” The fact is, absent settlement, a class action proceeding inevitably involves a multiplicity of legal proceedings. The section does no more than encourage the limiting of those proceedings to the extent possible.
[22] I turn finally to s. 27(3) of the Class Proceedings Act. That subsection provides that:
A judgment on common issues of a class or subclass binds every class member who has not opted out of the class proceeding, but only to the extent that the judgment determines common issues that,
(a) are set out in the certification order;
(b) relate to claims or defences described in the certification order; and
(c) relate to relief sought by or from the class or subclass as stated in the certification order.
[23] It is plain that this provision is irrelevant to the issues on this motion. It concerns the binding effect of a judgment on common issues on all members of a class.
[24] In the result, while I am not called on to definitively determine whether or not the stay order made in this case is precluded by any of s. 138 of the Courts of Justice Act; Rule 5.05 and 29.05 of the Rules of Civil Procedure; and s. 27(3) of the Class Proceedings Act, I am of the view that the defendants’ argument does not provide good reason to doubt the correctness of the impugned order.
Rule 62.02 (4)(a)
[25] I turn next to the argument made pursuant to Rule 62.02 (4)(a). The ParkLane defendants argue that the stay order conflicts with the decision made in Robertson v. Proquest Learning and Information LLC, and that it is desirable that leave be granted.
[26] In Robertson, in a certified class action, the plaintiff alleged infringements of the class members’ copyrights by the defendants publishing their work electronically or authorizing such publication by others. Two of the defendants alleged that the class members licenced the print publishers to publish electronically and authorized others to do so. The defendants argued that the terms of the licences given by the authors and the circumstances surrounding them will necessarily be involved in the determination of liability between the plaintiff and defendants, and said that they had no knowledge of the interactions between the class members and the third and fourth parties. The motions judge concluded that one of the common issues that was critical to liability was whether the licenses granted by the class members to print publishers included an implied term permitting the print publishers to authorize a defendant to republish the works electronically. As a result, he denied a request to sever or stay more than one hundred third and fourth party claims.
[27] The ParkLane defendants say that that case is nearly identical to this one. I disagree. The short answer to the defendants’ argument is that both that case and this one were decided on the basis of the same principles. The differing results flowed not from any difference in law or in principle, but rather from a difference in the material circumstances, specifically the extent to which, in each case, there were issues to be determined at the trial of common issues that would impact on third parties.
[28] In Robertson, the trial judge concluded that an issue that was to be decided at the common issues trial would also determine the third and fourth party claims. Here the trial judge concluded that the determination of the common issues, as refined, would not affect the third party claims. The cases are distinguishable. As a result, the decision in this case is not in conflict with the decision made in Robertson v. Proquest Learning and Information LLC and it is not desirable that leave be granted on this ground.
Disposition
[29] For these reasons, leave to appeal is denied.
[30] If the parties cannot agree on costs, they may make brief written submissions as to costs. The respondents shall make their submissions within seven days of the release of these reasons; the applicants shall have seven days from receipt of the respondents’ submissions to respond.
M. Dambrot J.
Date: March 30, 2014