



COURT OF APPEAL FOR BRITISH COLUMBIA




Citation:



Acciona Infrastructure Canada Inc. v. Allianz Global
  Risks US Insurance Company,









2015 BCCA 6




Date: 20150113

Docket:
CA042166

Between:

Acciona
Infrastructure Canada Inc. and Lark Projects (2004) Ltd.,

collectively doing
business as Acciona Lark Joint Venture

Respondents

Appellants on Cross
Appeal

(Plaintiffs)

And

Allianz Global
Risks US Insurance Company Compagnie DAssurance
Allianz Risques Mondiaux E.-U., Zurich Insurance Company Ltd.
Zurich Compagnie DAssurances SA, Temple Insurance Company; and in
French, La Compagnie DAssurance Temple, GCAN Insurance Company

Appellants

Respondents on Cross
Appeal

(Defendants)




Before:



The Honourable Mr. Justice Harris

(In Chambers)




On appeal from:  An
order of the Supreme Court of British Columbia,
dated August 19, 2014 (
Acciona Infrastructure Canada Inc. v. Allianz Global
Risks
US Insurance Company
, 2014 BCSC 1568, Vancouver Docket S111660).




Counsel for the Appellants:



R.B. Lindsay, Q.C.
  & S.W. Urquhart





Counsel for the Respondents:



D.L. Miachika





Place and Date of Hearing:



Vancouver, British
  Columbia

December 23, 2014





Place and Date of Judgment:



Vancouver, British
  Columbia

January 13, 2015










Summary:

The respondents, two contracting
companies, obtained judgment against the applicants, four insurance companies, which
provided them with insurance coverage in relation to a large construction
project. The applicants seek an order staying the execution of the judgment
pending appeal, arguing that there would be a risk of irreparable harm if the
monies are paid out, namely, that they would be unable to recover the funds if
their appeal is successful. Held: Application dismissed. The applicants have not
demonstrated that there would be a real or serious risk of non-recovery if they
pay out the damages to the respondents and are successful in their appeal.

Reasons
for Judgment of the Honourable Mr. Justice Harris:

[1]

This is an application for a stay of execution of an order in favour of
the respondents awarding damages in the amount of approximately $8.5 million
in respect of a claim made under an insurance policy.

[2]

The losses were alleged to have occurred during the construction of a
new 500-bed patient care facility at the Royal Jubilee Hospital in Victoria,
British Columbia.

[3]

The applicants, Allianz Global Risks US Insurance Company, Zurich
Insurance Company Ltd., Temple Insurance Company, and GCAN Insurance Company,
underwrote and issued a Course of Construction Insurance Policy, covering
certain defined risks arising during the construction of the project.

[4]

The respondents, Acciona Infrastructure Canada Inc. and Lark Projects
(2004) Ltd., collectively doing business as Acciona Lark Joint Venture, were the
design-build contractors for the project.

[5]

It is not necessary to delve into the background facts, save to observe
that the trial judge concluded that the insurance policy, which covered ALL
RISKS of direct physical loss of or damage to the property insured, covered a
portion of the losses suffered by the respondents and their losses were not
excluded by the operation of an exclusion clause.

[6]

The general principles governing a stay of execution were succinctly
summarized by Mr. Justice Smith (in Chambers) in
Gill v. Darbar
,
2003 BCCA 3:

[7]        The applicable
principles are not in dispute. Generally, a successful plaintiff is entitled to
the fruits of the judgment but this Court may stay proceedings if satisfied
that it is in the interests of justice to do so:
Voth Brothers Construction
(1974) v. National Bank of Canada
(1987), 12 B.C.L.R. (2d) 43 at 44-45
(C.A. [In Chambers]). The trial judgment must be assumed to be correct and
protection of the successful plaintiff is a pre-condition to granting a stay:
Morrison-Knudsen
Co. v. British Columbia Hydro & Power Authority
(1976), 112 D.L.R. (3d)
397 at 404 (B.C.C.A.). The applicant for a stay must satisfy the familiar
three-stage test, that is, the applicant must show that there is some merit in
the appeal, that the applicant will suffer irreparable harm if the stay should
be refused, and that, on balance, the inconvenience to the applicant if the
stay should be refused would be greater than the inconvenience to the
respondent if the stay should be granted:
British Columbia (Milk Marketing
Board) v. Grisnich
(1996), 50 C.P.C. (3d) 249 at 252 (B.C.C.A. [In
Chambers]).

[7]

These general principles are not in dispute. Nor is it seriously in
dispute that the applicants satisfy the threshold test on the merits, although
the respondents do not accept that the appeal has substantial merit. The issues
of relevance to this application focus on whether, if a stay is not granted and
the appeal is allowed, there would be a sufficient risk that the applicants would
not be able to recover the damages they will have paid out (a form of
irreparable harm) and whether, if that is so, the balance of convenience
favours granting the stay.

[8]

In my view, whether a stay should be granted depends principally on
whether the applicants have discharged their onus to demonstrate irreparable
harm. The applicants apprehension that there may be difficulty recovering the
judgment if the appeal succeeds is not sufficient reason for granting a stay.
There must be a risk of non‑recovery that rises to a sufficient level of
materiality to warrant granting a stay, thereby depriving the successful
plaintiffs of the fruits of the judgment, in circumstances where the trial
judgment is presumed to be correct.

[9]

In
Susan Heyes Inc. v. South Coast B.C. Transportation Society
,
2009 BCCA 348, Mr. Justice Chiasson (in Chambers) observed:

[16]      There always is a risk
a business will fail and recovery of a judgment made impossible. More is
required before a judgment holder is denied the fruits of successful litigation.

[10]

Mr. Justice Chiasson had this to say about the standard to be met:

[7]        The appellants must
show that there is a serious risk they will suffer irreparable harm, that is,
harm that could not be remedied. The financial position of the respondent is a
relevant consideration (
R.J.R.  MacDonald Inc.
[
v.
]
Canada
Attorney General
, [1994] S.C.R. 311, at pp. 340-341;
Bancroft-Wilson
v. Murphy
, 2008 BCCA 498;
Coburn v. Nagra
;
Zylstra v. Hughes
,
2000 BCCA 8)[.]

[11]

Madam Justice D. Smith (in Chambers) in
Bancroft-Wilson v.
Murphy
, 2008 BCCA 498, characterized the relevant level of risk in the
following way:

[12]       If the appellant
establishes that the respondents modest means presents a real risk that the
appellant would, if successful on appeal, be unable to recover a large portion
of the funds paid to the respondent as damages, the appellant may have
established that she could face irreparable harm in that sense:
Zylstra v.
Hughes
, 2000 BCCA 8, 133 B.C.A.C. 21 (Chambers), Hall J.A.

[12]

The applicants submit that they would be at risk of suffering
irreparable harm if the stay is not granted. In their materials, they say that there
would be at least some risk that the respondents would be incapable of repaying
the judgment if the appeal is successful.

[13]

The respondents have filed material intended to show that there would be
no serious risk that they would fail to repay the judgment if the appeal is
successful. That evidence discloses: that both respondents are active companies
providing construction and construction management services for major projects
in British Columbia and throughout Canada; that they have a history of
conducting business in the province and that they continue to be active within
the province; and that they are profitable, generate very large revenues, and
are financially stable.

[14]

Mr. Fisher, who is the President of the Lark Group, which includes
the respondent, Lark Projects, deposed that the Lark Group has operated in British
Columbia for over 40 years, providing services for construction and real
estate development. Lark Projects, in particular, has operated for over 10 years
in British Columbia in construction and real estate development projects, and
has been consistently profitable. He deposed that the company has significant
assets within the jurisdiction. His affidavit identified a variety of large
current projects in British Columbia, principally involving health care
facilities. He attached to his affidavit the most recent financial statements
for Lark Projects, which disclose,
inter alia
: assets of $39.4 million;
cash and cash in trust of $2.1 million; retained earnings of $12.2 million;
construction revenues of $92 million; gross revenues of $3.9 million;
and net income of $2.3 million. He expressed the opinion that the risk
that Lark Projects would not be able to repay the judgment, should the appeal
succeed, would be minimal.

[15]

Mr. Palomar swore an affidavit on behalf of Acciona Infrastructure
Canada, Inc. (Acciona Canada). Mr. Palomar is the Vice President,
Finance and Administration, of Acciona Canada.

[16]

He deposed that Acciona Canada has operated continuously in Canada for
over 10 years, providing construction and construction management services
in various provinces, primarily for large-scale infrastructure projects.
Although federally incorporated, Acciona Canada has offices in Toronto,
Montréal, and Calgary, and its head office is in Vancouver. Acciona Canada is
part of the Acciona Group, a Spanish company employing more than 30,000 professionals
and operating in over 30 countries. Its Canadian operations account for
approximately 8% of the groups global construction business, a contribution
valued in the billions of dollars. Mr. Palomar deposed to various major
ongoing projects across Canada with which Acciona Canada is involved.

[17]

Mr. Palomar deposed that, in his opinion, the risk that Acciona
Canada could not repay the judgment, should the appeal succeed, would be
extremely low.

[18]

In light of the affidavit material provided by the respondents, the
applicants refined their submissions. My attention was drawn to
Voth Bros.
Construction
(
1974) Ltd
.
v.

National Bank of Canada
(1987),
12 B.C.L.R. (2d) 43 (C.A.), to support an alternative argument that a stay be
ordered, in light of the significant amount involved, unless the applicants
provide security (in the form of a letter of credit) for the return of the
judgment amount, in the event the appeal is successful. In particular, emphasis
was placed on the comments of Mr. Justice Lambert identifying the risk
that if no order is made for a stay of execution and a plaintiff receives the
judgment amount, a defendant would have no assurance that the amount of the
judgment would be repaid if successful on appeal. As he pointed out, a
plaintiff will have had interest-free use of the funds, to which it was never
entitled. He went on to say at 46:

To avoid those problems, the practice has been adopted, where
the amount involved is significant, of ordering a stay of execution on payment
of the amount of the judgment into court by the defendant, and ordering payment
out [to] the plaintiff on terms first that if the defendant is successful on
its appeal it will be entitled to interest on the funds repaid to it and,
second, that the plaintiff provide sound security, sufficient to secure the
repayment of the amount paid out, together with an amount representing an
estimate of the defendants costs of the appeal on a party-and-party basis, and
an amount representing interest on the funds that would be repaid if the
defendant were to be successful in the appeal

The advantage of such an order is
that it gives the plaintiff the fruits of his judgment as soon as he is
entitled to them, but at the same time it protects the defendant against the
risk that he will not be repaid, and against the loss of the interest he would
earn from the use of the money which may ultimately turn out to have belonged
to him all along.

[19]

The applicants also argue that the affidavit material fails to give
sufficient assurance that the respondents would repay the judgment if the
appeal is successful. They argue that nowhere is it unequivocally stated that
the respondents would repay the judgment. The applicants expressed concern that:
the affidavit material does not clearly disclose what assets are available in
British Columbia to satisfy a judgment; does not disclose what kind of real
property is available within British Columbia; arguably overstates the value of
projects with which the respective respondents are involved; and presents an
unclear picture of how readily available assets would be to repay the judgment.
Furthermore, Acciona Canada is part of a complex group of companies
headquartered in Spain and although the group overall has very considerable
resources, the relationship of the Canadian company to the group as a whole is
unclear.

[20]

The applicants also point out that the respondents propose to use the
judgment proceeds to finance ongoing business operations. In their view, such
use could put the proceeds beyond recovery.

[21]

In brief, the applicants accept that the respondents are viable business
enterprises of significant scope and financial strength. They argue, however,
that the affidavit evidence is not sufficiently precise, clear, compelling, or
unequivocal to lay to rest a concern that recovery of the judgment proceeds
might not be possible, or could be uncertain or difficult if the appeal
succeeds.

[22]

On a review of the evidence, I am satisfied that the respondents are
large, well-established, viable, profitable, and financially stable enterprises
with a history of conducting business in British Columbia and Canada, each of
which has significant assets, including assets in British Columbia. I am
satisfied that there would be no real or serious risk that the judgment amount
would not be repaid in the event the appeal is successful. The criticisms of
the affidavit material offered by the applicants do not, in my view, materially
detract from that conclusion.

[23]

The parties to this litigation, on both sides, are very large
enterprises dealing in hundreds of millions, if not billions, of dollars of
business. I do not think that the judgment amount is particularly
significant or large in light of the financial resources of the parties. In
particular, the applicants deal with sums vastly in excess of what is in issue
in this litigation, given the nature of their business and resources. I am
not persuaded that, from the perspective of the applicants, the judgment amount
here should be regarded as sufficiently significant to invoke the principles
discussed in the
Voth
case.

[24]

The onus is on the applicants to meet the test for the granting of a
stay of execution. In my view, they have failed to establish that there would
be a real or serious risk that they would suffer irreparable harm if a stay is
not granted. Accordingly, the application is dismissed.

The Honourable Mr. Justice Harris


