SUPERIOR COURT OF JUSTICE – ONTARIO

COURT FILE NO.: 455/15

DATE: 20151214

RE: DANIEL LOCKING, Plaintiff/Respondent

AND:

RONALD MCCOWAN, Defendant/Moving Party

BEFORE: MOLLOY J.

COUNSEL:
Paul H. LeVay, Samuel Robinson, and Carlo DiCarlo for the Moving Party

John Archibald and Paul J. Bates, for the Plaintiff/Responding Party

HEARD: In writing

ENDORSEMENT

Introduction

[1] The defendant Ronald McCowan seeks leave to appeal from the Order of Belobaba J. dated August 19, 2015. In that Order, the motion judge held that the plaintiff had properly pleaded a cause of action against the defendant for knowing assistance of breach of trust. The plaintiff had commenced a class proceeding against Mr. McCowan and numerous other parties. Justice Belobaba decided to bifurcate the certification hearing and to first determine issues under s. 5(1)(a) of the Class Proceedings Act, which requires that the pleading disclose a cause of action.

[2] It is well-settled that the test under s. 5(1)(a) of the CPA is the same as under Rule 21 of the Rules of Civil Procedure.

[3] The plaintiff had pleaded that Mr. McCowan had: (1) breached a fiduciary duty owed to the plaintiff; and (2) knowingly assisted Trustee Allan Weinberg to commit a breach of trust.

[4] Justice Belobaba held that Mr. McCowan did not owe a fiduciary duty to the plaintiff and the cause of action for breach of fiduciary duty was struck out. However, Justice Belobaba ruled that the cause of action for knowingly assisting a breach of trust had been properly pleaded, applying the Rule 21 test, and could proceed.

[5] The parties agree that given the bifurcation of the issues, the appeal routes set out in s. 30 of the CPA do not apply. The determination that the statement of claim discloses a cause of action is an interlocutory order and leave to appeal is required.

Test for Leave to Appeal

[6] The test for granting leave to appeal under Rule 62.02(4) is well-settled. It is recognized that leave should not be easily granted and the test to be met is a very strict one. There are two possible branches upon which leave may be granted. Both branches involve a two-part test and, in each case, both aspects of the two-part test must be met before leave may be granted.

[7] Under Rule 62.02(4)(a), the moving party must establish that there is a conflicting decision of another judge or court in Ontario or elsewhere (but not a lower level court) and that it is, in the opinion of the judge hearing the motion, “desirable that leave to appeal be granted.” Conflicting decisions are not asserted. The moving party relies on Rule 62.02(4)(b).

[8] Under Rule 62.02(4)(b), the moving party must establish that there is reason to doubt the correctness of the order in question and that the proposed appeal involves matters of such importance that leave to appeal should be granted. It is not necessary that the judge granting leave be satisfied that the decision in question was actually wrong – that aspect of the test is satisfied if the judge granting leave finds that the correctness of the order is open to “very serious debate”: Nazari v. OTIP/RAEO Insurance Co., 2003 40868 (ON SC), [2003] O.J. No. 3442 (S.C.J. per Then J.); Ash v. Lloyd’s Corp. (1992), 1992 7652 (ON SC), 8 O.R.(3d) 282 (Gen. Div. per Farley J.). In addition, the moving party must demonstrate matters of importance that go beyond the interests of the immediate parties and involve questions of general or public importance relevant to the development of the law and administration of justice: Rankin v. McLeod, Young, Weir Ltd. (1986), 1986 2749 (ON SC), 57 O.R. (2d) 569 (H.C.J. per Catzman J.); Greslik v. Ontario Legal Aid Plan (1988), 1988 4842 (ON SCDC), 65 O.R. (2d) 110 (Div. Ct.).

Analysis

[9] The moving party submits that the appeal raises issues of general importance including: (1) the proper approach to a Rule 21 type analysis; (2) the type of conduct required to establish knowing assistance; and (3) the obligations and duties of officers of real estate investment trusts.

[10] I do not agree that the issues raised meet the test required under the Rule. The test under Rule 21, and by extension under s. 5(1)(a) of the CPA, is well known. The principles to be applied have been established for many, many years. The issue in this appeal is not the nature of the test, but whether the motion judge correctly applied it. That is a matter of interest to the parties involved, but does not raise a general issue of law important to the administration of justice or the development of the law.

[11] With respect to the type of conduct that might meet the test for knowing assistance, and with respect to the obligations of officers of real estate investment trusts, the difficulty is that this is merely a pleadings motion. The test to show a viable cause of action is a low hurdle. There is nothing about the decision under appeal, nor any appeal from that decision, that would settle or develop the law in this area. The implications of the decision at this stage do not go beyond the fact that the action will proceed. No duties or obligations have been established. The extent of such duties and obligations will only be ascertained from a full evidentiary basis at trial.

[12] In my view, the appeal does not raise matters of general importance beyond the interests of the parties. Accordingly, the test under Rule 62.02(4)(b) is not met and the motion for leave to appeal is dismissed.

Costs

[13] On consent, costs to the respondent (plaintiff) are fixed at $4500.00, payable in 30 days.

MOLLOY J.

Date: December 14, 2015