Court File and Parties
Court File No.: 547/16 Date: 2017-02-17 Superior Court of Justice – Ontario
Re: Jones Collombin Investment Counsel Inc. and 2466043 Ontario Inc., Plaintiffs And: David W. Fickel and Beverley Collombin, Defendants
And
David W. Fickel, Plaintiff by Counterclaim (Moving Party)
And
Jones Collombin Investment Counsel Inc. and 2466043 Ontario Inc., Defendants by Counterclaim (Responding Parties)
Before: Kiteley J.
Counsel: Paul H. Le Vay and Carlo Di Carlo, for David W. Fickel, plaintiff by Counterclaim/Moving Party Alan J. Lenczner, Jaan E. Lilles and Sam Johansen, for the Plaintiffs/Defendants by Counterclaim/Responding Parties
Heard: In writing
Endorsement
Introduction
[1] The Plaintiff by Counterclaim David W. Fickel seeks leave pursuant to rule 62.02(4)(b) of the Rules of Civil Procedure to appeal from part of the order of Penny J. dated October 26, 2016, in Jones Collombin Investment Counsel Inc. v. Fickel, 2016 ONSC 6536. In the motion, Jones Collombin moved for partial summary judgment for damages for breach of a share purchase agreement. The issue in that motion was whether a restrictive covenant contained in the share purchase agreement prohibited the defendant, David Fickel, from accepting former clients of the plaintiff as clients of his new firm in the absence of any influence or encouragement from Mr. Fickel to transfer their accounts. The motion judge concluded at paragraph 40 that the language of section 5 of the share purchase agreement did not prohibit Mr. Fickel or RBC DS from merely accepting former customers of Mr. Fickel/JCIC as customers of the new firm, provided that the customers had acted independently and that Mr. Fickel (or RBC DS on his behalf) had taken no action to encourage or influence the customers to leave JCIC and follow him to RBC DS. At paragraph 49, the motion judge concluded that on the limited issue of the proper interpretation of the restrictive covenant in section 5 of the share purchase agreement, there were no issues of material fact the resolution of which required the forensic machinery of the trial. Jones Collombin has appealed that decision to the Court of Appeal.
[2] As plaintiff by counterclaim, Mr. Fickel had brought a cross motion for summary judgment seeking payment on a promissory note in the amount of $400,000 which became due on May 13, 2016. At paragraph 58, the motion judge concluded that there was no set-off available and he granted judgment in favour of Mr. Fickel against 2466043. However, at paragraph 59 and 60 he ordered that execution of that judgment be stayed pending final resolution of JCIC’s claim in the main action. Mr. Fickel seeks leave to appeal from the stay. The following paragraphs of the decision are relevant:
Rule 20.08 of the Rules of Civil Procedure provides that the enforcement of a summary judgment may be stayed pending the determination of any other issue in the action or a counterclaim, cross-claim or third party claim, on such terms as are just. A stay of execution involves the exercise of discretion, taking into account the nature of the defendant’s claims and the equities between the parties, Comtract Air Compressors Inc. v. A.W. Service Industries Inc., [2000] O.J. No. 1867 (S.C.J.).
There is no question that JCIC’s claims for breach of the share purchase agreement are tied up with Mr. Fickel’s claims for payment under the share purchase agreement. They arise out of the same contract. There is, in my view, the potential for a circuity of action in these claims given the nature of the claims and the stage of proceedings at which they will be resolved. In the circumstances, I order that execution of this judgment be stayed pending final resolution of JCIC’s claim in the main action.
Test for Leave to Appeal
[3] The test for granting leave to appeal under Rule 62.02(4) of the Rules of Civil Procedure is well-settled. It is recognized that leave should not be easily granted and the test to be met is a very strict one.
[4] Under Rule 62.02(4)(b) of the Rules of Civil Procedure, 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] O.J. No. 3442; Ash v. Lloyd’s Corp., 8 O.R. (3d) 282). 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., 57 O.R. (2d) 569; Greslik v. Ontario Legal Aid Plan, 65 O.R. (2d) 110).
[5] Counsel for the moving party takes the position that there is good reason to doubt the correctness of the decision because the motion judge failed to apply or consider the “special grounds” test for a stay on a judgment based on a bill of exchange, such as a promissory note; alternatively, he failed to apply or consider the “sufficiently meritorious” threshold to stay a judgment based upon a bill of exchange; and in the further alternative, he failed to apply or consider that absent “exceptional circumstances” a stay on a judgment based on a bill of exchange can only be granted where the defendant is required to pay the amount of the judgment into court.
[6] Counsel also takes the position that the proposed appeal involves matters of importance that transcend the interests of the parties because it deals with the issue of the test to apply to stay a judgment based on a bill of exchange, an issue on which there is a lack of clarity in the case law and the uncertainty of which may undermine the reliance that commercial markets place on such instruments; and it raises the issue of the appropriateness of requiring the payment of judgment funds into court as a condition of such a stay, an issue which is treated divergently by lower courts and the uncertainty of which may have impacts on commercial markets.
Analysis
[7] Rule 20.08 of the Rules of Civil Procedure is as follows:
Where it appears that the enforcement of a summary judgment ought to be stayed pending the determination of any other issue in the action or a counterclaim, crossclaim or third party claim, the court may so order on such terms as are just.
[8] In Iraco Ltd. et al. v. Staiman Steel Ltd., [1987] O.J. No. 233 (CA) the Court of Appeal ordered a stay of judgment on a bill of exchange pending the determination of a counterclaim and identified three reasons for exercising its discretion, the third of which is relevant here, namely that the counterclaim arises out of the same transactions that gave rise to the cheque (in the case before me, a promissory note) that was the subject of the lawsuit. As indicated in paragraph 60 above, the motion judge referred to that factor as the basis for exercising his jurisdiction. There is no reason to doubt the correctness of the decision on that basis.
[9] In his alternative argument, counsel for the moving party takes the position that the motion judge failed to properly apply the “sufficiently meritorious” test that he says arises from the decision in Comtract. I agree with counsel for Jones Collombin that that is not a distinct test but a reflection on the necessity of considering the merits of the claim of the party seeking the stay and its connection to the subject matter of the judgment. Paragraph 60 shows that the motion judge was alert to that factor. There is no reason to doubt the correctness of the decision on that basis.
[10] In his further alternative argument, counsel for the moving party argues that the motion judge failed to apply or consider that, absent “exceptional circumstances”, a stay on a judgment based on a bill of exchange can only be granted where the defendant is required to pay the amount of the judgment into court. As counsel for the respondent pointed out, the factum of the moving party does not refer to any authority on which to base the proposition that the exercise of judicial discretion is so limited. Counsel for the respondent also referred to Freedom International Brokerage Co. v. Anastakis, [2006] O.J. No. 3664 to the contrary. There is no reason to doubt the correctness of the decision on that basis.
[11] The motion judge exercised his discretion in the context of the appropriate legal principles. As indicated in Schreiber v. Canada (Attorney General), [2001] O.J. No. 4778 (CA), an appellant seeking to overturn a motion judge’s exercise of discretion faces a very high hurdle which the moving party on this motion for leave has failed to overcome.
[12] I am not satisfied that the moving party has satisfied the first part of the test in rule 62.02(4)(b) of the Rules of Civil Procedure and consequently I need not move on to the second part of the test. However, on that aspect, I agree with counsel for the responding party that this motion for leave does not engage two distinct legal tests in relation to the determination of whether a stay on a judgment on a promissory note is warranted. The underlying share purchase agreement is unique to these parties. There is no aspect of this dispute that involves questions of general or public importance that go beyond the interests of the immediate parties.
Order
[13] The motion for leave to appeal is dismissed.
[14] Mr. Fickel shall pay costs to Jones Collombin and 2466043 in the amount of $3,000.
Kiteley J. Date: February 17, 2017