CITATION: Cadeau v. Aprile, 2016 ONSC 7898

COURT FILE NO.: 488/16

DATE: 20161219

SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Dee-Ann Cadeau, Estate Trustee of the Estate of James Francis Aprile, Plaintiff (Moving Party)

AND:

Michael Aprile et al, Defendants (Responding Parties)

BEFORE: Molloy J.

COUNSEL: David Rubin, for the Plaintiff/Moving Party

David Taub, for the Defendants (Responding Parties)

HEARD: In writing

ENDORSEMENT

Introduction

[1] The plaintiff seeks leave to appeal from the order of Conway J. dated September 15, 2016. In that order, the motion judge dismissed the plaintiff’s motion for an order requiring the defendants to deliver affidavits of documents disclosing certain documents and an order for production of those documents.

[2] The plaintiff is the Estate Trustee of an Estate which holds a 15% minority shareholding in the defendant Elirpa Construction & Materials Limited (“Elirpa”) and seeks oppression remedies under the Ontario Business Corporations Act. The action is being managed on the Commercial List. One of the remedies sought is for an order that the other shareholders purchase the 15% shareholding of the plaintiff in Elirpa at fair market value.

[3] The defendants delivered affidavits of documents but did not list, and refused to produce documents relevant to the financial affairs of Elirpa that would be necessary in order to determine the fair market value of the shares.

[4] The motion judge ruled that the plaintiff was entitled to production of financial records relevant to determining whether there has been oppression, but that “at this point in the proceeding” it was “premature, invasive and not warranted” to require production of documents for the purposes of enabling the plaintiff to have her own expert carry out a valuation of Elirpa.

Test for Leave to Appeal

[5] 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.

[6] 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.” A “conflicting decision” must be with respect to a matter of principle, not merely a situation in which a different result was reached in respect of particular facts: Comtrade Petroleum Inc. v. 490300 Ontario Ltd. (1992), 1992 7405 (ON SC), 7 O.R. (3d) 542 (Div. Ct.).

[7] 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

[8] I am satisfied that leave to appeal ought to be granted under Rule 62.02(4)(b). I do not agree with the statement of the motion judge that her order did not result in a bifurcation of the trial. The result of her order is that the trial will proceed with respect to issues of liability: i.e. whether there has been oppression. The motion judge held that the court could also determine the appropriate remedy and how it would be implemented, which could include the appointment of a valuator to determine the fair market value of the company. That is possible, but it may not be the only appropriate remedy. It would not be possible for the plaintiff to even determine if that is a remedy she wants without knowing the fair market value of the shares. Settlement of the action prior to disclosure of this information would also be extremely difficult, if not impossible. There was no consideration or determination by the motion judge of whether production of the material sought would seriously prejudice a party (as arguably would be required under Rules 30.04(8) and 31.06(6)).

[9] In effect, the result of the motion judge’s decision is bifurcation – with liability being decided in the first part of the action, and remedy being dealt with only after liability has been established. This is not the usual method of proceedings in civil litigation in Ontario and there is considerable merit to the plaintiff’s argument that this cannot be done without consent, as stipulated in Rule 6.1.01 and as held by this Court in Bondy-Rafael v. Potrebic, 2015 ONSC 3655 (Div.Ct.). The plaintiff has therefore met the first branch of the test that there is good reason to doubt the correctness of the decision.

[10] Rule 6.1.01 did not come into force until 2010. The issue of bifurcation under that rule has not been dealt with by the Divisional Court in the context of an oppression case. There was a vigorous dissent in Bondy-Raphael, which was a personal injury action. There are important issues involved with respect to the general principles of: the desirability of finding the most expeditious and least expensive ways of resolving disputes and whether bifurcation frustrates or facilitates that; the desirability of promoting early settlement and whether that can be fully informed without complete disclosure at an early stage; whether different principles for production should be applied in commercial litigation; and the burden on parties of complicated and expensive document production that might prove to be pointless if there is no finding of oppression. These principles have broad impact beyond the issues in this particular case. This is an area of the law that could benefit from appellate guidance.

Question Upon Which Leave is Granted

[11] Accordingly, leave is granted on the following question:

Did the motion judge err in holding that documents relevant to the valuation of the subject company need not be disclosed or produced until after there has been a determination in the action that there had been oppression, particularly in view of Rules 6.1.01, 30.04(8) and 31.06(6)?

Costs

[12] The motion judge ordered costs of $7500 to the defendants, who had been successful on the motion before her. The moving party plaintiff sought costs of $10,065.51 for this motion for leave to appeal. The responding parties filed material claiming $8904.10 if they are successful on the leave to appeal motion. Counsel for the responding parties pointed out that the plaintiff’s lawyer spent 23.5 hours on the motion as opposed to his 22.1 hours in responding. He submitted, therefore, that his own bill of costs must be seen as reasonable and within the contemplation of the plaintiff.

[13] While I would not normally make a cost order as high as this on a motion for leave in writing, there is considerable logic to the position taken by the defendants (responding parties). Accordingly, each party shall be entitled to the costs claimed for of the motion for leave to appeal if they are successful on the appeal: $10,065.51 to the plaintiff if the appeal is successful; $8904.10 for the defendants if the appeal is dismissed.

MOLLOY J.

Date: December 19, 2016