COURT FILE NO.: CV-20-00643091-00CL

DATE: 20220527

SUPERIOR COURT OF JUSTICE - ONTARIO

RE: GREGORY ZENTNER, Moving Party

AND:

GFA WORLD, PAT EMERICK, GOSPEL FOR ASIA, INC., K.P. YOHANNAN, DANIEL PUNNOSE, and DAVID CARROLL, Responding Parties

BEFORE: Justice Cavanagh

COUNSEL: Paul D. Guy and John McKiggan Q.C. for the Gregory Zentner

Rahool Agarwal and Cole Pizzo for Gospel for Asia, Inc., Kadappiliaril Punnose Yohannan, Daniel Punnose and David Carroll

Ranjan Agarwal and Ilan Ishai for GFA World and Pat Emerick

Mario Forte for PricewaterhouseCoopers Inc., in its capacity as the Monitor for GFA World

HEARD: May 24, 2022

ENDORSEMENT

[1] Gregory Zentner is the plaintiff in a proposed class action commenced in the Nova Scotia Supreme Court against GFA World, Gospel for Asia, Inc. (“GFA USA”), Pat Emerick, K.P. Yohannan, Daniel Punnose, and David Carroll (collectively, the “GFA Parties”).

[2] Mr. Zentner and the GFA Parties agreed that Mr. Zentner’s claim would be adjudicated as part of GFA Canada’s within proceedings under the Companies’ Creditors Arrangement Act, R.S.C. 1985, C. c-36, as amended (“CCAA”).

[3] A Litigation and Mediation Process Agreement dated October 3, 2020 (the “LMP Agreement”) was made and later approved by this Court.

[4] Section 7 of the LMP Agreement reads:

The Parties acknowledge that the parties’ discovery rights for the determination of the Zentner Claim shall be governed by the Ontario Rules of Civil Procedure subject always to the discretion of the CCAA court. Furthermore, the Parties agree that in the event a Party decides to appeal a final judgment or order disposing of all or a portion of the Zentner Claim, the other Parties agree that they will not oppose a motion for leave to appeal.

[5] In Reasons for Judgment released on March 17, 2022 (the “Certification Decision”), I dismissed a motion by Mr. Zentner for (i) an order appointing him as the representative of the class defined in the Statement of Claim in the Nova Scotia action (the “Class”) and authorizing Mr. Zentner to instruct counsel on behalf of the Class; and (ii) a declaration that the requirements for certification under Nova Scotia’s Class Proceedings Act, 2007 are satisfied. In reaching this decision, I held that Mr. Zentner had failed to show that the pleadings in the Zentner Claim disclose a cause of action.

[6] Mr. Zentner has brought a motion under the CCAA to the Court of Appeal for Ontario for leave to appeal the Certification Decision.

[7] Mr. Zentner relies on the LMP Agreement and takes the position that the GFA Parties are contractually precluded from opposing his motion for leave to appeal.

[8] The GFA Parties have advised that they intend to oppose Mr. Zentner’s motion for leave to appeal. They contend that they are not precluded from opposing this motion by the LMP Agreement.

[9] Mr. Zentner moves before me for an order declaring that the GFA Parties cannot oppose his motion for leave to appeal.

Analysis

[10] In Sattva Capital Corp. v. Creston Moly Corp., 2014 SCC 53, the Supreme Court of Canada held, at para. 47:

... the interpretation of contracts has evolved towards a practical, common-sense approach not dominated by technical rules of construction. The overriding concern is to determine “the intent of the parties and the scope of their understanding” [citations omitted]. To do so, a decision-maker must read the contract as a whole, giving the words used their ordinary and grammatical meaning, consistent with the surrounding circumstances known to the parties at the time of formation of the contract.

[11] I first address Mr. Zentner’s submission that the Certification Decision is an order disposing of a portion of the Zentner Claim and, therefore, the LMP Agreement applies and precludes the GFA Parties from opposing his motion for leave to appeal the Certification Decision.

[12] In the LMP Agreement, the term “Zentner Claim” is defined in the introductory paragraph:

THE PARTIES, by their counsel, agree to the following process for the next steps for the resolution of Zentner v. Gospel or Asia, Inc. et al (NSSC Hfx. No. 496980) (the “Zentner Claim”) in the CCAA proceedings (the “Litigation and Mediation Process”) ...

[13] The reference to “NSSC Hfx. No. 496980” is to the action commenced in the Nova Scotia Supreme Court. In that action, Mr. Zentner has filed a Notice of Action and a Statement of Claim that is attached thereto, each bearing this court file number.

[14] In the Statement of Claim, Mr. Zentner claims, in paragraph 1(a), “an order certifying this action as a class proceeding and appointing the plaintiff as representative plaintiff for the class; ...”. Mr. Zentner pleads in paragraphs 6, 7, and 8 of the Statement of Claim that he seeks to certify this proceeding as a class proceeding under the Nova Scotia Class Proceedings Act, and that (i) he does not have any interest adverse to any other member of the Class (as defined), (ii) the Class is an identifiable class that would be fairly and adequately represented by him, (iii) the claims of the members of the Class raise common issues, and (iv) a class proceeding would be the preferable procedure for the resolution of such common issues.

[15] In the Statement of Claim, Mr. Zentner also makes claims for substantive relief including declarations that the defendants engaged in wrongful and unlawful conduct, return of money allegedly misdirected to GFA USA, and compensatory and punitive damages, based on the causes of action pleaded.

[16] The GFA Parties submit that the Certification Decision is an interlocutory order and not a final order and, therefore, the LMP Agreement, which applies where there is a motion for leave to appeal “a final judgment or order disposing of all or a portion of the Zentner Claim”, does not apply. The GFA Parties submit that this Court’s denial of certification was not a disposition of the Zentner Claim and did not finally determine his or other class members’ rights of recovery. They submit that the Certification Decision did not strike out or dismiss the Zentner Claim, in whole or in part, and the only legal consequence of the Certification Decision is that the proposed class cannot use the procedural machinery of class proceedings legislation to determine their claims.

[17] The GFA Parties focus on whether the Certification Decision is a determination, in whole or in part, of the merits of the Zentner Claim. The language used in section 7 of the LMP Agreement is not so limited. This section applies where there is an “order disposing of … a portion of the Zentner Claim”.

[18] The word “final” clearly modifies the word “judgment” in section 7. The word “final” is, however, not repeated as expressly modifying the word “order”. For section 7 of the LMP Agreement to become engaged, the word “order”, read in context, need not be a final order that disposes of all or a portion of the Zentner Claim on its merits, provided that it disposes of all or a portion of the Zentner Claim. As I have noted, one claim made in the Zentner Claim is for a procedural order certifying the action as a class proceeding and requiring that the action proceed accordingly.

[19] When the words used in section 7 of the LMP Agreement are given their ordinary and grammatical meaning, reading the LMP Agreement as a whole, I conclude that section 7 of the LMP Agreement applies to an “order disposing of all or a portion of the Zentner Claim”, regardless of whether the order is an interlocutory order or a final order, and regardless of whether the order disposes of a claim for a procedural order or a claim for substantive relief.

[20] In the Certification Decision, Mr. Zentner’s motion for a declaration that the requirements for certification under Nova Scotia’s Class Proceedings Act, 2007 are satisfied was dismissed. As a result of this decision, the portion of the Zentner Claim seeking a procedural order that it proceed as a class action was disposed of, subject to Mr. Zentner’s appeal rights.

[21] I conclude that pursuant to section 7 of the LMP Agreement, the GFA Parties agreed that they will not oppose a motion for leave to appeal the Certification Decision.

[22] As a result of this conclusion, it is not necessary for me to decide whether, for the purpose of determining whether section 7 of the LMP Agreement applies, my decision in the Certification Decision that Mr. Zentner failed to show that the pleadings disclose a cause of action should be regarded as a final judgment disposing of all of the Zentner Claim.

Disposition

[23] For these reasons, Mr. Zentner’s motion is granted.

[24] I make an order declaring that the GFA Parties shall not oppose Mr. Zentner’s motion for leave to appeal the Certification Decision.

[25] I encourage the parties to resolve the costs of this motion. If they are unable to do so, they may provide brief written submissions in accordance with a schedule to be agreed upon and approved by me.

Cavanagh J.

Date: May 27, 2022