In Ontario, the delivery of a notice of appeal automatically stays any
order, final or interlocutory, for payment of money, other than a support order
or a support enforcement order - rule 63.01(1) of the Rules of Civil Procedure (Rules). Judgment debtors knowing
that an appeal may have little or no merit, will often deliver a notice of appeal as
a matter of course in order to buy themselves more time to delay or frustrate
the ability of a judgment creditor to enforce the judgment.
The Rules also provide that: “A judge of the court
to which the appeal is taken may order, on such terms as are just, that the
stay provided by subrule (1) does not apply' - rule 63.01(5).
In the case of Antunes v. Limen Structures Ltd. 2016 ONCA
61, Justice Lauwers of the Ontario Court of Appeal, made an order pursuant
to rule 63.01(5), lifting the automatic stay in respect of an award of wrongful
dismissal damages, prejudgment interest and costs. He reserved the costs
of the motion to the panel who would hear the appeal.
Antunes successfully sued Limen Structures for
wrongful dismissal. Justice C. Brown rendered judgment on June 2, 2015
awarding Antunes damages for wrongful dismissal in the amount of $105,000 plus
prejudgment interest and costs. Justice Brown also found that Antunes was
entitled under his employment contract to 5% of Limen Structures’ shares and
awarded “other damages” in the amount of $500,000 representing the value of the
shares.
Limen Structures filed a notice of appeal in respect of the
award of damages for $500,000 but did not appeal the award of wrongful dismissal
damages, prejudgment interest or costs. However, the effect of the notice
of appeal was an automatic stay of the entire judgment pending appeal pursuant
to rule 63.01(1).
Antunes brought a motion to lift the automatic stay in
respect of the wrongful dismissal damages, prejudgment interest and costs since
those were not appealed. In response, Limen Structures filed a
supplementary notice of appeal appealing from those amounts. The
supplementary notice of appeal would have been out of time if it had been the
original notice of appeal, but the Rules entitle an appellant to amend a notice
of appeal without leave before the appeal is perfected.
On the motion before Justice Lauwers, Antunes argued that
the financial condition of Limen Structures had deteriorated and continued to
deteriorate. He submitted that by the time the appeal was argued the
company would be insolvent and its assets dissipated. In fact, Limen
Structures’ lawyer had stated to Antunes’ lawyer on many occasions that the
company did not have the financial ability to pay the judgment. In
addition, Limen Structures’ financial statements showed an operating loss in
excess of $5 million and an accumulated deficit of $2.9 million with secured
loans to related parties of greater than $3.4 million.
Finally, Antunes doubted the honesty of Limen Structures. Based on the trial judge’s reasons, she was also satisfied that at the time of
entering into the contract and at the time of terminating the employment of
Antunes, the company had failed to act honestly in its contractual performance.
Justice Lauwers reviewed the test for lifting the
stay. He accepted that the stay of execution imposed by rule 63.01 was
intended to offer some protection to an appellant against payments which it
might not eventually be obliged to make. The test for lifting the stay
requires the court to consider a number of factors including the grounds of
appeal, the parties’ position at trial, what has happened since the trial, the
general circumstances of the case including the trial judge’s reasons, the
probable delay between trial and appeal that cannot be controlled by the
parties.
The Court of Appeal in a previous case (SA Horeca
Financial Services v. Light 2014 ONCA 811) stated: “In considering
whether to lift a stay the court should have regard to three principal
factors: (1) financial hardship to the respondent if the stay is
not lifted; (2) ability of the respondent to repay or provide security
for the amount paid; and (3) the merits of the appeal.”
In applying that test to this case, Justice Lauwers observed
that at trial, Antunes testified and was found by the trial judge to be
credible. By contrast, Limen Structures had called no evidence at
trial. The trial judge was critical of the company’s failure to call its
President with whom Antunes had negotiated the employment contract.
On the issue of hardship, Antunes had been unable to find
employment for almost a year and a half from the date of termination.
That employment was short-lived and since he had only found short-term
consulting work. As a result, he was unable to repay or provide security for the amount of the wrongful dismissal damages. His lawyer offered to offered to hold the money in his trust account pending the outcome of the appeal.
At all times, Limen Structures had asserted its inability to
pay. Justice Lauwers accepted that businesses can find themselves in
financial difficulties for many reasons having nothing to do with the wrongful
dismissal claim of a former employee. But he took into account the
“scorched earth” trial and appeal tactics taken by the company.
In respect of the merits of the wrongful dismissal appeal,
Justice Lauwers found that the company’s challenge was not one of law but of
the weight that the trial judge had accorded to the factors which determined the
length of the period of reasonable notice. To succeed on that ground, the company would
be required to demonstrate that the trial judge had made a palpable and overriding
error.
In conclusion, Justice Lauwers held that the merits of the
wrongful dismissal appeal were weak, as was implicitly acknowledged by the
company’s late amending of its notice of appeal to add the wrongful dismissal
appeal in response to the motion. Antunes had demonstrated financial
hardship.
Despite the fact that Antunes would be unable to repay any amounts if required, Justice Lauwers found that "the interests of justice" favoured the exercise of his discretion in favour of Antunes. He did not require Antunes' lawyer to hold any amount in trust. Justice Lauwers ordered the stay in respect of the award
of wrongful dismissal damages, prejudgment interest and costs lifted.
Regards,
Blair
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