Court File and Parties

DIV. COURT FILE NO.: 607/16 DATE: 20170425 SUPERIOR COURT OF JUSTICE – ONTARIO

RE: Canadian National Railway Company, Plaintiff/Respondent AND: Scott Holmes et al, Defendants/Moving Parties

BEFORE: Kiteley J.

COUNSEL: Monique J. Jilesen, Brendan F. Morrison and Laura E. Robinson for the Plaintiff/Respondent Margaret L. Waddell and John K. Phillips, for the Defendants/Moving Parties

HEARD: in writing

Endorsement

[1] The applicant seeks leave to appeal from the order of Hainey J. dated December 5, 2016 in which he dismissed the motion of the Holmes defendants for an order inter alia setting aside or vacating a Mareva order and ancillary orders on the ground that the Holmes Defendants had waived any right to move to set aside the Mareva order, including on grounds of after-acquired evidence.

Background

[2] On August 8, 2008, Lederman J. made Mareva and Anton Pillar orders that have been treated as ex parte orders.

[3] On August 10, 2008 the plaintiff and the Holmes defendants entered into a Forbearance Agreement in which CN agreed not to execute on the Anton Piller order, and the Holmes defendants signed an Undertaking and Acknowledgment Agreement by which they agreed to abide by the Mareva order. The Forbearance Agreement included a term that the Holmes defendants did not acknowledge that the orders were properly sought or made and without prejudice to their right to challenge, seek to vary or set to set aside the orders.

[4] On August 18, 2008, Newbould J. signed a consent order continuing the Mareva injunction.

[5] On August 26, 2008 Spence J. signed an order appointing a monitor.

[6] On November 13, 2008 the lawyer then acting for the Holmes defendants exchanged emails with the lawyer for the plaintiff in which the lawyer for the Holmes defendants wrote: “Peter, we do not want to move to set aside the order. Rather, we want necessary productions, for the reasons earlier discussed.” As a result of the exchange of emails, counsel for the plaintiff agreed to a confidentiality protocol with respect to disclosure.

[7] On December 4, 2008 C. Campbell J. made an order appointing the Monitor as a Receiver which order contained the following term:

29. THIS COURT ORDERS that any interested party may apply to this Court to vary or amend this Order on not less than seven (7) days’ notice to the Receiver and to any other party likely to be affected by the order sought or upon such other notice, if any, as this Court may order.

[8] On February 18, 2010 C. Campbell J. dismissed the motion by the Holmes defendants to set aside the orders dated August 8. In his provisional endorsement [Canadian National Railway Company v. Holmes, 2010 ONSC 1122], he indicated that the basis upon which that motion was brought was an allegation that counsel for the plaintiff had failed to communicate to Lederman J. what he knew of a criminal investigation by CN of Scott Holmes such that the order should be set aside. C. Campbell J. concluded at paragraph 14 that he was not persuaded that disclosure of that information could or would have been material to the granting of the orders.

[9] In an endorsement dated May 21, 2010 Ferrier J. dismissed the motion for leave to appeal. [Canadian National Railway Company v. Holmes, 2010 ONSC 2982] His endorsement indicated at paragraph 6 that, in addition to the lack of materiality, it was open to C. Campbell J. to have dismissed on the grounds of waiver arising from the email dated November 13, 2008.

[10] In June 2012, the Holmes defendants brought a motion to discharge, set aside or vary the Mareva injunction order dated August 8, 2008 and on June 12, 2012 [Canadian National Railway Company v. Holmes, 2012 ONSC 3366], C. Campbell J. dismissed the motion on the basis that there was no evidence to support the proposition that the Mareva order should not have been granted and the fact that the Receiver sought its discharge based on lack of assets on which to continue was not conclusive as to whether Mr. Holmes had available assets to live on and continue defence of the actions. C. Campbell J. observed that “what is needed is closer management of these actions so that a trial date may be set and the contentious issues finally resolved.” He directed counsel to discuss and file a discovery plan.

[11] On January 30, 2015, McEwen J., as Case Management Judge, heard motions for, inter alia, an order setting aside the August 8, 2008 order or varying the order. In his endorsement dated March 10, 2015 [Canadian National Railway Company v. Holmes, 2015 ONSC 1475] McEwen J. dismissed the motion for several reasons including, at paragraph 10, that the factual underpinnings of the Mareva order had not substantially changed based on the record that was placed before him. At paragraph 13, he held that although the Mareva order had been in place for several years it ought not to be vacated in circumstances where the delay could be substantially attributed to the moving defendants; where the moving defendants had received large amounts of money; and where the moving defendants had not provided meaningful information with respect to alleged loans/gifts.

[12] In August 2016, the Holmes defendants brought their fourth motion to set aside the August 8, 2008 order and they sought an order declaring that all ancillary orders (including August 18, 2008, August 26, 2008 and December 4, 2008) be declared void ab initio or vacated. The grounds on which they relied was that, in August 2008, the plaintiff had failed to disclose material information to the court, including, among other things, that it had not suffered any loss, but had profited from the invoices the Holmes defendant companies rendered to it. In support of the motion, counsel filed the affidavit of Scott Holmes sworn August 30, 2016 attached to which were 33 exhibits including transcripts of examination for discovery. In response counsel for the plaintiff filed affidavits of the current and former Financial Officer at CN as well as other material including the email chain on November 13, 2008. Mr. Holmes’ supplementary affidavit was sworn October 28, 2016 attached to which were 13 exhibits. In addition, transcripts and other documents were filed. In other words, the record for the motion heard December 5, 2016 was substantial. There was strong evidence on the part of the plaintiff that it had not failed to disclose material information to the court and vigorous evidence that the affidavits of Mr. Holmes were not accurate or reliable.

[13] At the outset of the motion, both counsel made oral submissions on the issue of waiver. In his endorsement dated December 5, 2016, the motion judge dismissed the motion on the basis that the Holmes defendants agreed in November 2008 to waive any right to challenge the Mareva order and that the question of the waiver had already been adjudicated upon by the Divisional Court and the issue was res judicata.

Test for Leave to Appeal

[14] The test for granting leave to appeal under Rule 62.02(4) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 is well-settled. It is recognized that leave should not be easily granted and the test to be met is a very strict one.

[15] 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) 7 O.R. (3d) 542 (Div. Ct.)]

[16] 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] O.J. No. 3442 (S.C.J. per Then J.); Ash v. Lloyd’s Corp. (1992), 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), 57 O.R. (2d) 569 (H.C.J. per Catzman J.); Greslik v. Ontario Legal Aid Plan (1988), 65 O.R. (2d) 110 (Div. Ct.)].

Analysis

[17] Pursuant to rule 62.02(4)(a) counsel for the moving party takes the position that the decision of the motions judge is in conflict with the decision of the Saskatchewan Court of Appeal in Arslan et al. v. Sekerback Tas [Arslan et al. v. Sekerback Tas, 2016 SKCA 77]. In that case, the order included a term that it “shall remain in effect . . . or until further order” and the court interpreted a statute the provided for the basis upon which a consent preservation order would be extended, renewed, modified or terminated.

[18] In this motion for leave, counsel took the position that the language of paragraph 29 of the December 4, 2008 receivership order set out above was sufficiently similar that the December 5, 2016 decision was in conflict.

[19] I disagree. Arslan deals with statutory interpretation in the context of a consent preservation order. The decision differs in many respects including the absence of any issue of waiver. The Holmes defendants seek to set aside the December 4, 2008 order but only as a consequence of the August 8 order being set aside. The fact that there was language in the December 4 order that allows for variation does not have an impact on the August 8 order. Arslan is not a decision in conflict on a question of principle.

[20] Having not met the first element of the test in rule 62.02(4)(a), I need not deal with the second element but I will do so briefly. Counsel takes the position that it is desirable to grant leave to appeal where the motion judge refused to consider whether the new facts asserted by the Holmes defendants were such that the Mareva order ought never to have been granted. I disagree. It is not desirable to grant leave to appeal which would serve to condone the fourth attempt to set aside a 2008 order. Furthermore, I do not agree that, having dismissed the motion, the motion judge denied the Holmes defendants their “fundamental right to have the court consider the propriety of the order made in 2008”. This is a motion within the action. The Holmes defendants have the right to challenge the original order at the trial.

[21] With respect to rule 62.02(4)(b) counsel for the moving party takes the position that the correctness of the order is open to very serious debate because the motion judge interpreted the waiver so broadly that it has had the effect of precluding the Holmes defendants from ever seeking to vacate the Mareva order on the basis of facts supressed from the original motion judge and subsequently discovered, or on any other grounds. I disagree. The Mareva order had been made in August 2008 and was followed by the order appointing the Monitor. In the month leading up to the order appointing the Receiver, counsel had an exchange in which the email was sent by counsel on behalf of the Holmes defendants. It was open to the motion judge to interpret that waiver as he did and to find that the issue was res judicata. There is no reason to doubt the correctness of the order.

[22] Having not met the first element of the test in rule 62.02(4)(b) I need not continue but I will do so briefly. Counsel argues that the proposed appeal involves matters of such importance that leave to appeal should be granted. I disagree. The circumstances of this case are unique to the parties. There is no aspect of this proposed appeal that transcends the interests of these parties.

[23] At paragraph 106 of the factum filed on behalf of the plaintiff, counsel noted that “given the history of the matter and the delay occasioned by these repeated motions and meritless efforts to appeal, none of which have been successful, the Holmes Defendants should be precluded from bringing any further motions without leave of the Court”. That factum is dated March 22, 2017. Counsel for the Holmes defendants had no opportunity to respond. Under such circumstances, I will not make an order. However, I repeat the observation of C. Campbell J. in his endorsement dated June 12, 2012 that what is needed is closer management of these actions so that a trial date may be set and the contentious issues finally resolved.

[24] Counsel agreed on costs of $7,500 all inclusive, subject to outcome.

Order

[25] The motion for leave to appeal the order of Hainey J. dated December 5, 2016 is dismissed.

[26] The Holmes defendants shall pay costs to the plaintiff in the amount of $7,500 all inclusive, payable within 30 days.

Kiteley J. Date: April 25, 2017