SS & C TECHNOLOGIES v. BANK OF NEW YORK MELLON et al

2021 ONSC 4682

COURT FILE NO.: CV-17-11727-00CL DATE: 20210630

SUPERIOR COURT OF JUSTICE – ONTARIO (Commercial List)

RE: SS & C TECHNOLOGIES CANADA CORP., Applicant – AND– THE BANK OF NEW YORK MELLON CORPORATION and CIBC MELLON GLOBAL SECURITIES SERVICES COMPANY, Respondents

BEFORE: Koehnen J.

COUNSEL: William Black, Brandon Kain, Eli Mogil and Erin Chesney, J. Thomas Curry, Brain Kolenda and Christopher Yung Counsel for the moving parties The Bank of New York Mellon Corporation and CIBC Mellon Global Securities Services Company

Chris Paliare, Ren Bucholz Counsel for SS & C Technologies, respondent on the motion

HEARD: June 22 and 23, 2021

ENDORSEMENT

1The Bank of New York Mellon Corporation and CIBC Mellon Global Securities Services Company are respondents in the underlying application. For ease of reference, I will refer to them collectively as BNY. I will refer to the applicant in the main proceeding, the responding party on the motion, as SS & C.

2BNY brings this motion for an order: to adjourn the damages trial in this matter until after disposition of its pending appeal of the liability decision; allowing the parties to adduce further evidence in the damages trial; and settle the form of judgment on the liability issue.

3For the reasons set out in greater detail below, I dismiss the motion. I am not satisfied that BNY has met the test for an adjournment. There was some suggestion during oral argument that I should allow the Court of Appeal to determine when the liability trial should proceed without making a finding about that issue myself. I do not think that would be an appropriate way to proceed. The plaintiff has brought a motion to adjourn the trial. That motion should be ruled on so that the Court of Appeal has a full record of the proceedings and reasons for the decisions made to date.

4I recognize that the Court of Appeal may come to a different view about the timing of the trial on damages. There is not necessarily anything inconsistent with the Court of Appeal coming to a different view. The Superior Court and the Court of Appeal each have to weigh a number of factors relating to the issue, including the orderly administration of justice. A Superior Court judge and a Court of Appeal judge may have different concerns in that regard given their different roles in the administration of justice. To the extent the Court of Appeal comes to a different view than I do, its view obviously prevails. It may, however, be helpful for an appellate judge to have the views of the first instance judge when coming to their own view on the issue.

A. The Underlying Application

5In the underlying application, SS & C claims damages from BNY for breach of a contract pursuant to which BNY purchased data from SS & C. BNY took the position that it was entitled to share the data it purchased from SS & C with all BNY entities engaged in the custodial business. SS & C took the position that the only party entitled to use the data was the signatory to the contract. I heard the application over three days in late 2020 and concluded that there had been a breach of contract in reasons I issued on April 14, 2021, now indexed as SS & C Technologies v. Bank of New York Mellon et al. 2021 ONSC 2657.

6During the hearing of the application, SS & C presented two models to calculate damages. The first arrives at damages of $889,752,087. The second arrives at damages of $317,076,007. BNY submitted that even if there were liability, damages came to zero, because, had the parties turned their minds to the issue, they would have entered into a new contract with new pricing that would, in effect, have arrived at the same financial result as the contract on which SS & C sued.

7Damages appeared to be a complex, fact intensive issue. They turn in part on how many BNY entities used the data of SS & C and for what period of time they did so. This is coupled with the issue of damages for spoliation pursuant to which SS & C alleges that BNY destroyed documents that would have allowed the court to determine how many entities used the data and when they began using it. I noted in paragraph 92 of my reasons that:

The damages issue raises contradictions in the evidence that I cannot resolve on paper. The damages issues are addressed in a series of affidavits, reports, responding affidavits, responding reports, followed by reply, sur-replies and cross examinations. References to that evidence are then found in lengthy, detailed footnotes in experts’ reports. Presenting data intensive evidence in this way does not provide an adequate way in which to absorb and truly understand it.

8As a result, I ordered that the issue of damages proceed as a trial of an issue before me with viva voce evidence.

9To prevent any unfairness arising because of efforts of one side or the other to introduce new evidence at the damages hearing, I ordered in paragraph 93 that:

The reference to damages should proceed on the record as it currently exists unless both sides agree otherwise.

10That struck me as a fair way of proceeding because both sides had already filed complete records on the application. In those circumstances, neither side should be permitted to use the trial on damages as an opportunity to shore up their case or pursue a new case unless both sides agreed.

11The difficulty I had was not that the record was so inadequate as to make it impossible to render a decision on damages, but that it was so voluminous and complex that it could not be presented in a calm, methodical fashion given the limited court time that had been allocated. The evidence on damages involved issues of such a level of factual intensity and disagreement that a paper record was not an appropriate way of explaining them to a judge of first instance. At the same time, the quantum of damages sought was such that a trial of an issue on the point did not strike me as a disproportionate way of proceeding.

12BNY has sought to appeal from the liability finding. It seeks to adjourn the trial on damages until appeals on the liability finding have been exhausted.

13BNY characterizes the issue on its motion as a request to adjourn a trial. SS & C characterizes the issue as a motion to stay a trial. The two characterizations are subject to slightly different legal tests. I will address both below. In my view, BNY’s motion fails on either test.

B. The Motion for an Adjournment

14BNY submits that Rule 52.02 allows a judge to postpone or adjourn the trial on such terms as are just. In doing so the court must balance the interests of each party and the interests of the administration of justice in the orderly processing of civil trials on their merits.¹

15BNY relies heavily on Ariston Realty Corp. v. Elcarim Inc. 2007 CanLII 13360 where Perell J. set out the following 10 factors to consider when determining whether the adjournment should be granted:

(i) The principles of natural justice;

(ii) The particular circumstances of the request for an adjournment and the reasons and justification for the request;

(iii) The overall objective of a determination of the matter on its substantive merits;

(iv) Whether the ability of the party requesting the adjournment to fully and adequately prosecute or defend the proceeding would be significantly compromised if the adjournment were refused;

(v) That justice not only be done but appear to be done;

(vi) The practical effect or consequences of an adjournment on both substantive and procedural justice;

(vii) The competing interests of the parties in advancing or delaying the progress of the litigation;

(viii) The need of the administration of justice to effectively enforce court orders;

(ix) The prejudice not compensable in costs, if any, suffered by a party by the granting or the refusing of the adjournment; and

(x) The need of the administration of justice to process civil proceedings in an orderly manner.²

16In both their written and oral arguments, BNY grouped several of the factors together. I will follow the same grouping as BNY did.

Factors #1 and #2: Natural Justice, and the Circumstances, Reasons and Justification for the Adjournment Request

17With respect to these factors, BNY relies heavily on the right to appeal. It argues that it is contrary to the principles of natural justice to proceed with a trial in the face of an appeal. In doing so relies it on Popovich v Financial Investment Centre Inc.³

18In my view, Popovich is distinguishable. Popovich and the other cases on which BNY relied are cases where a party sought to adjourn a trial before it had started.

19In the case before me, the matter proceeded by way of application. There had been no bifurcation of the trial agreed to. As a result, everyone’s expectation was that a single decision would be rendered on both liability and damages at the end of the application hearing.

20I came to the view that I could not make a responsible determination on damages given the complex, detailed record before me without hearing viva voce evidence on the point. My decision to require viva voce evidence on damages is somewhat analogous to a mid-trial ruling. It was not intended to affect the manner in which appeals were taken from the underlying proceeding. I could just as well have directed the parties to proceed to a trial on damages without making any findings on liability and have reserved reasons on both issues until after the conclusion of the trial on liability. In my view, that would not have been fair to the parties. It would have come as no great surprise to the parties that, if I were putting them through the trouble of a trial on damages, I had come to the view that BNY was liable. Given the obvious nature of that conclusion, I thought it only fair to disclose my liability analysis to the parties because it might be that some aspects of liability might relate to damages. Had I not disclosed my reasons for liability, the possibility that some of my liability findings might influence my damages findings would have remained just as present. The only difference is that the parties would have been blind to them.

21The fact that I have given the parties additional insight into my thinking should not, however, disrupt the usual way in which and the time at which appeals are taken. There is no unfairness and no breach of natural justice in having parties proceed through to determinations of both liability and damages before proceeding to an appeal.

22If anything, adjourning the trial would constitute a breach of natural justice. Our system of adjudication is set up so that parties expect findings of liability and damages at approximately the same time with a single appeal being taken from both findings. While the parties can change that ordinary rule by agreeing to bifurcate liability and damages, they did not do so here. By adjourning the damages trial, I would be imposing bifurcation that the parties had never agreed to. Rule 6.1.01 provides that liability and damages can only be bifurcated on consent of the parties. It would not be consistent with natural justice to override that rule simply because BNY would like to.

Factors #3 and #4: Determining Matters on their Substantive Merits; Would the Ability of the Party Requesting the Adjournment to Fully and Adequately Defend the Proceeding be Significantly Compromised if the Adjournment Were Refused

23BNY submits that allowing the damages issue to proceed when the merits of the liability decision are under review undermines the goal of having a final adjudication on the substantive merits. This is so, argues BNY, because it cannot adequately defend the proceedings without knowing whether the merits of liability will be changed by the Court of Appeal, thereby preventing it from knowing the extent of the case it needs to defend during the damages trial.

24That, however, is no different than any other proceeding. In the vast majority of cases, defendants are required to defend the damages issue without even knowing what the judge’s findings on liability are, let alone whether they will be overturned on appeal.

Factors #5 and #6: The Practical Effect of an Adjournment on Substantive and Procedural Justice and that Justice Not Only Be Done but Appear to Be Done

25BNY submits that it would be substantively and procedurally unfair to require it to defend a damages trial when the liability decision is under review. In support of this proposition, it relies on the following quotation from Popovich:

Commencing the trial before the leave to appeal motion could be heard and decided would significantly and seriously erode the access of the Woodall defendants to justice. While an adjournment of the trial will delay the plaintiffs’ right to have the trial held, it does not permanently deprive [the plaintiffs] of their substantive right to have their claim adjudicated.⁴

26Popovich, was however quite a different case. In Popovich, the plaintiff had failed to pay outstanding cost awards to the defendant. The defendant moved to dismiss the action approximately one month before trial because of the plaintiff’s failure to pay the costs awards. The defendant’s motion was dismissed. The defendant sought leave to appeal and sought to adjourn the trial until its motion for leave to appeal and any resulting appeal had been disposed of.

27In those circumstances, a lengthy trial would have deprived the defendants of access to justice because, prima facie, they need not even go to trial if the plaintiff has failed to honour outstanding cost awards.

28The case before me raises no such issues. As noted, the proposal in the case before me is simply to proceed as courts do in the vast majority of cases in this province; namely to make findings of liability and damages from which the unsuccessful party is free to appeal once findings on both issues have been made.

29There is no adverse impact on BNY in proceeding in this manner because paragraph 96 of my reasons expressly preserves BNY’s appeal rights on liability by suspending appeal periods until the reasons on damages have been released. That will allow appeals on liability and damages to proceed together as both parties originally intended.

30A case closer to the facts of the case at bar than Popovich is Toronto (City) v. 1291547 Ontario Inc.⁵ In that case, the applications judge had determined that the respondent had violated zoning bylaws and had set a trial to assess damages. The respondent moved to adjourn the trial for damages until its appeal on the finding of the zoning bylaw violation had been heard. Osborne A.C.J.O. rejected the motion holding:

[8] What the appellants are really seeking on this motion to stay is the adjournment of a trial scheduled to commence on May 14, 2001 by direction of Backhouse J. The appellants approach this matter on the basis that if they are successful on their now perfected appeal, the trial will be unnecessary because the substratum for the remedy issues which will be before the Superior Court on May 14, 2001 will have been removed. Thus, the appellants contend that I should stay Nordheimer J.’s declaration that the appellants’ business operation at 1900 Lakeshore Blvd. West violates the provisions of the City’s zoning by-law. They emphasize the costs that they will incur in proceeding with the expedited trial.

[9] To the extent that I might look at the issue before me as a disguised application to a judge of the Court of Appeal for Ontario to adjourn a trial, I say simply that I do not think it is my business to determine when trials will take place in the Superior Court. …

[11] … The only harm to which the appellants may be exposed that is worthy of consideration is the expense that they will incur if the trial goes ahead on May 14th and it is later determined by this court that there was no proved breach of the City’s zoning by-law or that the by-law is void for vagueness. In my opinion, any harm suffered by the appellants can be taken into account in costs or damages. In the circumstances, I see no irreparable harm.

31Those comments are apposite here. A direction was given that addressed how this matter was to proceed. There has been no good reason advanced for changing that way of proceeding. At worst, BNY will be forced to participate in a trial that will have turned out to be unnecessary if the application is dismissed entirely on appeal. That, however, is no different than the ordinary situation any litigant faces. The only potential harm to BNY is the cost of the trial on damages. That can, however, be compensated for in a cost award. SS & C is a large, multinational corporation. There has been no suggestion that it is not capable of honouring any cost award for the damages trial if such an award arises out of a subsequent appeal.

Factors #7 and #8: The Competing Interests of the Parties in Advancing or Delaying the Progress of the Litigation and The Need of the Administration of Justice to Effectively Enforce Court Orders

32BNY submits that allowing the appeal on liability to proceed before the adjudication of damages will prevent the waste of resources that will have arise if it is required to proceed with the damages trial but then succeeds on the liability appeal. BNY submits that this interest “trumps any delay that will result from adjourning the damages trial.”

33This approach puts BNY’s interests before those of SS & C or those of the administration of justice.

34Most defendants have an economic interest in delay. At a minimum, delay postpones the payment of damages to a later date. Given the extremely low rates of prejudgment interest, most defendants will prefer to defer paying damages for as long as possible and use funds they would otherwise have to pay as damages to earn a rate of return superior to the prejudgment interest rate for as long as they can. Given the substantial amount of the damages claim, the difference between BNY’s liability for prejudgment interest and what BNY can earn on funds by either reinvesting them into its own business or investing them otherwise, is not inconsequential.

35If BNY is unsuccessful in the Court of Appeal it is unlikely to stop there and will likely seek leave to the Supreme Order of Canada. That creates further potential delay which prejudices SS & C as much as it benefits BNY.

36In addition, there is inherent prejudice in delay where the events at issue occurred many years ago. That is the case here. BNY appears to have begun sharing data within the broader BNY group as of 2007. People’s memories fade over time. Recalling in 2021 events that occurred back to 2007 is already difficult enough. Appeals to the Court of Appeal and the Supreme Court of Canada are likely to add 2 to 3 years to the process depending on whether leave to the Supreme Court is granted. This creates the risk of witnesses memories fading even further and making it even more difficult for an applicant like SS & C to establish its damages case.

Factor #9: Prejudice, Not Compensable in Costs, Arising Out of Granting or Refusing an Adjournment

37I can see no prejudice to BNY in refusing the adjournment other than the ordinary inconvenience that any defendant faces by being required to address damages even though it may avoid liability either at first instance or on appeal. That inconvenience is readily compensable in costs.

38As noted in paragraph 36 above, delay does cause prejudice to SS & C that cannot be compensated for in costs.

Factor #10: The Need of the Administration of Justice to Process Civil Proceedings in an Orderly Manner

39The judicial system has an interest in having its resources used as efficiently as possible. The ordinary practice of pursuing a single appeal from decisions on liability and damages provides for the most efficient and speedy way of addressing the high volume of cases that the justice system needs to deal with. Fragmenting cases and having each aspect of the case be pursued to a final appeal will delay the overall administration of justice at both the trial and appeal court level.

40It is not in the interests of justice to allow parties to slice and dice proceedings in order to have as many rounds of appeal as possible thereby delaying not only the resolution of the case immediately under appeal but also other cases waiting to be heard.

41The interest of the justice system lies in developing a method of appeal which balances rights of all parties in the justice system, not just the parties in the immediate case before the court. The rules in place have done so by creating a default position whereby a judge releases a single set of reasons on liability and damages followed by an appeal on both issues at once. The fact that I elected to share my reasons on liability before the damages trial should not change that fundamental default position.

C. Stay of Proceedings Pending Appeal

42SS & C characterizes the issue somewhat differently than does BNY. SS & C submits that the real relief that BNY seeks is a stay of proceedings pending appeal. SS & C submits that the test for a stay pending appeal is the same as the test for an interlocutory injunction namely, that the moving parties are required to show that:

(a) The pending appeal raises a serious issue to be tried;

(b) They will suffer irreparable harm if the stay is not granted; and

(c) The balance of convenience favours granting a stay.⁶

43SS & C argues that BNY must demonstrate a “strong case” for a stay to reflect the fact that an adjudication on the merits has already taken place.⁷ In addition, SS & C submits that the court must also ask itself whether granting the stay is in the interests of justice.⁸

44Given that is not my place to assess the quality of BNY’s appeal, I will assume that there is a serious issue to be tried on the appeal.

45BNY has not advanced any argument to demonstrate irreparable harm. The only harm it has advanced is, as noted above, the fact that it may be forced to incur costs of a trial on damages in circumstances when the finding of liability might be set aside. The only damage suffered in that respect is costs. BNY has not suggested that an entity of its size will suffer irreparable harm by incurring the cost of a on trial damages.

46The cost of participating in a trial on damages does not, in and of itself, justify a stay of the damages trial pending an appeal.⁹ While the analysis may be different where the cost of participating in the damages trial is “crippling” or represents an “existential threat” to the party seeking the stay,¹⁰ that is not the case here. BNY is one of the largest financial institutions in the world and will not be crippled by or suffer an existential threat because of the cost of a six day damages trial.

47The balance of convenience in my view weighs against a stay. The ordinary rule is that there is a single appeal from both liability and damages issues. There is good reason for that rule. It expedites the substantive resolution of cases for the parties and enhances judicial efficiency for the courts. While the parties are free to change that rule and agree to bifurcated liability and damages trials, that was not the case here.

48Courts have been clear that a single appeal is the most effective and fair use of public and party resources.¹¹ As Richetti J., noted while sitting as a judge of the Ontario Divisional Court, in Urbacon Building Groups Corp. v. Guelph (City):

Permitting appeals in between phases of the trial is the antithesis to securing "the just, most expeditious and least expensive determination " of the proceeding (See Rule 1.04(1)).It also is contrary to the avoidance of multiplicity of proceedings (See s. 138 of the Courts of Justice Act). Where there is a stated intention or possibility of an appeal part way through a bifurcated trial, was a sufficient reason not to grant a bifurcation order (See Noon et al v. City of Greater Sudbury et. al, 2010 ONSC 185 at para 19).

49In my view, the absence of irreparable harm and the balance of convenience outweigh the assumption that BNY has a serious issue for appeal. Proceeding with the damages trial does not deprive BNY of the appeal and, if anything, ensures that appellate court can deal with all issues at once rather than run the risk of multiple appeals on liability only to be followed by further multiple appeals on damages.

E. Should Additional Evidence be Permitted?

50The issue of additional evidence arises out of paragraph 95 of my reasons in which I asked whether it was appropriate to calculate damages as a percentage of assets under administration or as a percentage of fees or revenue. I also asked whether the record contained sufficient evidence to apply that method and asked both sides to address the issue during the damages trial.

51SS & C submits that there is sufficient evidence in the record to address the methodology I inquired about but that the methodology is not appropriate.

52BNY submits that if one of the methods I referred to in paragraph 95 is used, then it should have the right to provide additional evidence because the methodology was not raised during the initial hearing and BNY has not presented evidence with respect to the proposed method.

53I agree that if the method I raised in paragraph 95 were pursued, BNY should have the right to present new evidence on it. BNY could not have anticipated the need for such evidence before I raised the method in my reasons.

54As noted earlier, I indicated in my reasons that the damages trial should proceed on the record as it currently exists unless both sides agree otherwise. BNY seeks to admit new evidence of an undisclosed nature. SS & C does not agree to the admission of new evidence. In these circumstances, the better approach is to withdraw the question I raised in paragraph 95 of my reasons and proceed with the assessment of damages on the record as it exists and on the theories that the parties have already raised in the record.

55BNY suggests that it would nevertheless like to introduce new evidence because the record before me did not allow me to come to a responsible view on damages.

56My issue was with the complexity of the record. Live evidence tends to strip away much of the excess detail and present things in a simpler manner than they are presented in lengthy written submissions. That is the purpose of the trial on damages. The purpose is not to have the parties pursue new theories or introduce new evidence to support existing theories.

57In my view it would not be fair to allow BNY to introduce new evidence unless both parties agree. Both parties had a full opportunity to file whatever evidence they wanted on the application. The fact that I am asking that the evidence on damages be explained using viva voce evidence does not mean that the parties are entitled to file a new evidence. Indeed, doing that would be profoundly unfair. It would essentially be allowing one party the opportunity to reframe its case halfway through trial. That is not consistent with natural justice or the orderly administration of proceedings.

58An issue arose during the hearing of this motion about the ability of SS & C to introduce demonstrative evidence through the testimony of its experts. Provided that the demonstrative evidence simply reflects the evidence already in the record, it would be admissible at the damages trial. That does not amount to new evidence. Rather it is simply re-formulating evidence already in the record.

F. Finalizing the Order

59BNY seeks an order finalizing the form of judgment arising from my reasons of April 14, 2021. SS & C objects to finalizing the form of judgment at this point. SS & C submits that aspects of the damages trial will have an impact on the form of the liability order including the amount of monetary damages for individual causes of action.

60I am inclined to hold off issuing a formal order until after the liability issue has been determined. As a general rule, appeals are taken from orders or judgments, not from reasons. As a result, I am concerned that BNY’s request for a formal judgment may be an attempt to bootstrap itself into a right of appeal. That was never the intention in the reasons I issued and I would be disinclined to grant BNY that ability.

G. Disposition and Costs

61For the reasons set out above, I dismiss BNY’s motion to adjourn the damages trial; order that the damages trial be limited to the viva voce presentation of evidence that is already in the record and decline to settle the form of order until after my reasons on damages have been released.

62BNY submits that costs should be in the cause. The parties have, however agreed that if I am inclined to order costs of the motion, they should be fixed at $15,000. I see no reason why costs should not follow the event and fix costs at $15,000 payable by BNY to SS & C.

Footnotes

1. 1Bhimji Khimji v Dhanani, 2004 CanLII 12037 (ONCA) at para 14; Dhatt v Beer, 2021 ONCA 137 at para 10; Turbo Logistics Canada Inc v HSBC Bank Canada, 2016 ONCA 222 at para 18.
2. 2Ariston Realty Corp v Elcarim Inc, 2007 CanLII 13360 (ONSC) at para 34.
3. 3Popovich v Financial Investment Centre Inc, 2017 ONSC 1514 at para 61.
4. 4Popovich v Financial Investment Centre Inc, 2017 ONSC 1514 at para 62.
5. 5Toronto (City) v. 1291547 Ontario Inc., 2001 CanLII 7244 (ON CA).
6. 6Fiala Estate v. Hamilton, 2008 ONCA 784, at para. 14; RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311 at p. 334.
7. 7International Corona Resources Ltd. v. LAC Minerals Ltd., 1986 CarswellOnt 525 (C.A.), at para. 11; Ogden Entertainment Services v. Retail, Wholesale/Canada, 1998 CarswellOnt 1787 (C.A.), at para. 5.
8. 8BTR Global Opportunity Trading Limited v. RBC Dexia Investor Services Trust, 2011 ONCA 620, at para. 16.
9. 9Toronto (City) v. 1291547 Ontario Inc., 2001 CanLII 7244 (ON CA), at para. 11; Urbacon Building Groups Corp. v. Guelph (City), 2014 ONSC 3840, at paras. 58, 62
10. 10Buccilli v. Pillitteri (unreported, November 29, 2013), Toronto, court file no. M43034 (Ont. C.A.), at paras. 30, 42,
11. 11Korea Data Systems (USA), Inc. v. Aamazing Technologies Inc., 2012 ONCA 756, at para. 23.