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Stays - General. Pesorama Inc. v. Borden Ladner Gervais LLP.
In Pesorama Inc. v. Borden Ladner Gervais LLP. (Div Court, 2024) the Divisional Court considered an appeal from a associate-judge issued stay order [under CJA s.106], here of an action alleging "solicitor-client negligence, breach of fiduciary duty and other wrongs". The primary issue was the effectiveness of a forum selection clause that required proceedings to be conducted in Alberta.
Here the court considers the nature of a CJA 106 stay:[10] Section 106 of the CJA reads:Stay of proceedings
106 A court, on its own initiative or on motion by any person, whether or not a party, may stay any proceeding in the court on such terms as are considered just. R.S.O. 1990, c. C.43, s. 106. [11] There is no limit on the law or circumstances that can support a stay of proceedings under s 106 of the CJA. In Momentous.ca Corp. v. Canadian American Association of Professional Baseball Ltd., 2010 ONCA 722 at para. 45, Laskin J.A. refers to the fact that parties may move to challenge the jurisdiction of Ontario courts under “s. 106 of the Courts of Justice Act R.S.O. 1990, c. C. 43, rules 17.06 and 21.01(3)(a) of the Rules of Civil Procedure.”
[12] That is what the Respondents did in their motion. They moved to challenge the jurisdiction of the Ontario courts on the basis of forum non conviens and relied on the forum selection clause in the retainer agreement.
[13] In his June 20, 2023 reasons staying the Ontario action, the Associate Justice cited Novatrax International Inc. v. Hagele Landtechnik GmbH, 2016 ONCA 771, which in turn referred to the Supreme Court of Canada decision in Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27. He cited these principles from Novatrax International:. The law favours the enforcement of forum selection clauses in commercial contracts;
. Where a forum selection clause exists, that is the starting point for the forum non conviens analysis;
. A stay of an action should be granted unless there is “strong cause” the case is exceptional, and the forum selection clause should not be enforced;
. A forum selection clause pervades the forum non conviens analysis and must be given full weight in consideration of other factors. ....
[17] In the case at bar, the Associate Justice defined the issue as “not whether the plaintiff can sue [the] defendants,” but as “where the plaintiff can sue these defendants.” He grounded his analysis in the issue defined by the parties, that is, by applying the doctrine of forum non conviens. He correctly identified the leading authorities applied the two-step test, including Douez v. Facebook Inc. 2017 SCC 33, [2017] 1 SCR 751. This two-step test applies to instances of valid forum selection clauses, as differentiated from the “ordinary” cases which apply the forum non conviens doctrine in the absence of such a clause: see Pompey at para. 21.
[18] Under the test for forum selection clauses, at step one, the party seeking a stay of proceedings must establish that there was a valid, clear, and enforceable forum selection clause in the contract that applies to the cause of action before the court: Douez at para. 28; Pompey at para. 30. The enforceability of the contract at this first stage is limited to defences of undue influence, fraud, or unconscionability: Douez at para. 28; Pompey at para. 31.
[19] At step two of the test, once the party seeking to stay the proceedings establishes there is a valid forum selection clause, the onus shifts to the plaintiff. The plaintiff must then show “strong cause” why the parties should not be held to their agreement: Douez at para. 29; Pompey at para. 19, 30-31. At this stage, the court is to exercise its discretion by considering all the circumstances, including fairness, convenience, public policy, and the interests of justice: Douez at para. 29; Pompey at para. 19 and 30-31.
[20] The Associate Justice applied the correct test as articulated in Douez and Pompey. He found:In my view, the conclusions of the Supreme Court support the forum and law selection clause in this within case being upheld. The agreement, and the clause, is “valid, clear and enforceable” and I find that it applies to the cause of action which the plaintiff brings. The parties in this matter are, moreover, sophisticated. Mr. Bhaloo was not a vulnerable individual retaining a lawyer for the first time on, for example, a family law matter or to make a simple will. Again the evidence is clear he was a business-person consulting counsel for high level business purposes, including to eventually have his company “go public”. [21] The Appellants have provided no authority for their submission that a stay under s. 106 is not available where the issue involves the specialized subset of a forum non conviens analysis involving a forum selection clause, and the two-step test with its shifting onus. The agreement of the parties to a forum for the resolution of disputes does not affect the jurisdiction of the courts over the subject matter of a dispute simply by virtue of their private agreement: see Douez at para 27.
[22] In its brief endorsement upholding the Ontario Court of Appeal in Momentous.ca the Supreme Court of Canada agreed that applying a forum selection clause is discretionary, writing:In Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27, [2003] 1 S.C.R. 450, this Court confirmed that, in the absence of specific legislation, the proper test in determining whether to enforce a forum selection clause is discretionary in nature. It provides that unless there is a “strong cause” as to why a domestic court should exercise jurisdiction, order and fairness are better achieved when parties are held to their bargains.
See Momentous.ca 2012 SCC 9 (CanLII), [2012] 1 SCR 359 at para. 9. [23] The Associate Judge exercised his discretion under s. 106 of the CJA to determine whether a stay of proceedings should be entered based on the applicable jurisprudence relative to a specific subset of the forum non conviens equitable doctrine where forum selection clauses are in play. He did not purport to exercise jurisdiction under Rule 21 of the Rules. The fact that such a clause might form the basis of a motion under Rule 21 (or Rule 17 for that matter) does not mean that it cannot or does not apply to a motion to stay a proceeding under s. 106 of the CJA.
[24] I conclude that the Associate Justice did not err in either citing the principles in Novatrax or in adjudicating the question of whether Ontario was a forum non conviens based on the applicable test where the retainer agreement signed by the parties included a forum selection clause. . Lithium Royalty Corporation v. Orion Resource Partners
In Lithium Royalty Corporation v. Orion Resource Partners (Ont CA, 2023) the Court of Appeal considers a moderately complex stay matter, initiated as a motion for stay pending appeal. Most 'stays pending appeal' seek to prevent enforcement of already-made lower court orders, but stays can also apply to proceedings - as here. Here the court considers staying an as yet incomplete (bifurcated) trial, and also the appeal itself.
Stays are adjudged on the RJR-McDonald interlocutory injunction test, and the quotes below [see them fully at paras 47-74] address that test regarding staying the remaining trial (a variation on the normal 'stay pending appeal' scenario):[3] For the reasons that follow, I am dismissing the moving parties’ motion for a stay of the entire underlying action pending appeal, but I am granting a partial stay of proceedings against the respondents, Bellatrix Ltd., and Orion Mine Finance (Master) Fund I LP, on terms that I find to be just. Those terms are intended to permit the action as a whole to continue to be litigated but will prevent enforcement action from being undertaken against Bellatrix Ltd. and Orion Mine Finance (Master) Fund I LP. These terms are in the interests of justice since they will enable the litigation to be concluded efficiently while insulating Bellatrix Ltd. and Orion Mine Finance (Master) Fund I LP from being prejudiced by enforcement action undertaken before an appeal in this matter can be heard, bearing in mind the apparent strength of their appeals.
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A. SHOULD A STAY OF THE UNDERLYING PROCEEDINGS BE GRANTED?
[44] I am not prepared to grant the stay of the underlying trial proceedings pending appeal that the Orion Respondents request, as I am not satisfied that the test adapted from RJR-MacDonald Inc. v. Canada (Attorney General), 1994 CanLII 117 (SCC), [1994] 1 S.C.R. 311 warrants a stay of the entire action. I will, however, grant a partial stay of the proceedings pending appeal against Bellatrix Ltd., and Orion Mine Finance (Master) Fund I LP, on terms I find to be just, outlined below.
[45] In this context, the RJR-MacDonald Inc. test inquires whether the interests of justice call for a stay of proceedings pending appeal: Dieffenbacher v. Dieffenbacher IV, 2023 ONCA 189, at para. 10, citing Zafar v. Saiyid, 2017 ONCA 919, at paras. 17-18. This determination is to be informed by the consideration of three, non-exhaustive and potentially overlapping factors which can compensate for one another, including: (1) whether there is a serous question to be tried; (2) whether the moving party will suffer non-compensable harm if the stay is not granted, and (3) the balance of convenience: Dieffenbacher, at para. 10, citing Zafar, at paras. 17-18.
[46] The Orion Respondents argue that where an appeal is brought during an unfinished trial proceeding which raises questions that may affect the course of the trial, the underlying trial ought to be stayed absent “very special reasons”: Popovich v. Financial Investment Centre Inc., 2017 ONSC 1514, at paras. 53-54, citing Esquimalt & Nanaimo Railway Company v. Dunlop, 1918 CanLII 619 (BC CA), [1918] 3 W.W.R. 828 (B.C.C.A.). The fact that the resolution of issues on an appeal could render the completion of the trial moot is doubtlessly an important consideration, and I have given it full consideration. . Waxman v. Waxman
In Waxman v. Waxman (Ont CA, 2022) the Court of Appeal considered a permanent stay as a remedy at trial for non-disclosure of litigation-related settlements which the court held to be an abuse of process:[42] The appellants argue that an automatic stay is a “draconian” remedy for abuse of process in a case such as this and that the motion judge should have exercised his discretion to redress the failure to disclose through other means.
[43] The appellants further submit that while an automatic stay may be justified in the face of Mary Carter agreements that are not disclosed, in this case, “the plaintiffs did nothing wrong and did not deceive or mislead anyone.” They argue the motion judge erred by applying an automatic stay in these circumstances without considering the alternatives.
[44] I disagree.
[45] In Aecon, MacFarland J.A. stated, at para. 16:The obligation of immediate disclosure is clear and unequivocal. It is not optional. Any failure of compliance amounts to abuse of process and must result in consequences of the most serious nature for the defaulting party. Where, as here, the failure amounts to abuse of process, the only remedy to redress the wrong is to stay the Third Party proceedings and of course, by necessary implication, the Fourth Party proceedings commenced at the instance of the Third Party. Only by imposing consequences of the most serious nature on the defaulting party is the court able to enforce and control its own process and ensure that justice is done between and among the parties. To permit the litigation to proceed without disclosure of agreements such as the one in issue renders the process a sham and amounts to a failure of justice. [Emphasis added.] [46] Citing Aecon, the motion judge reiterated, at para. 44, “The Court of Appeal described the obligation to disclose as clear and unequivocal and noted that its breach constituted an abuse of process. Only by imposing a stay is the court able to control and enforce its own process to ensure that justice is done.”
[47] I see no basis on the facts of this case to depart from the clear consequences for a breach of this principle set out by this court in Aecon and affirmed a number of times since then, including in Handley Estate, at para. 45, and most recently in Tallman, at para. 28. In Tallman, after imposing the automatic stay as the only remedy appropriate for an undisclosed settlement agreement, the court added, at para. 28, “This remedy is designed to achieve justice between the parties. But it does more than that – it also enables the court to enforce and control its own process by deterring future breaches of this well-established rule.”
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