





CITATION:
BTR Global Opportunity Trading Limited v. RBC
          Dexia Investor Services Trust, 2011 ONCA 620



DATE: 20110929



DOCKET: M40432 (C53335)



COURT OF APPEAL FOR ONTARIO



Laskin J.A. (In Chambers)



BETWEEN




BTR
          Global Opportunity Trading Limited, BTR Global Growth Trading Limited, BTR Global Arbitrage Trading
          Limited, and BTR Global Prospector Trading Limited



Plaintiffs (Respondents/Responding Parties)



and



RBC Dexia Investor Services Trust and

Lehman Brothers International (Europe)



Defendants (
Appellant/Moving Party
)



Christopher D. Bredt, for the moving party



Jeffrey Leon, for the responding parties



Heard: September 12, 2011



On a motion to stay the order of Campbell J. of the Superior
          Court of Justice dated January 25, 2011 pending leave to appeal to the
          Supreme Court of Canada.



Laskin J.A.:



A.

INTRODUCTION

[1]

The moving party, Lehman Brothers International (Europe) (LBIE), asks to
    stay the order of Campbell J. pending a decision on its motion for leave to
    appeal to the Supreme Court of Canada.  The responding parties, the
BTR Funds, oppose the stay.

[2]

BTR placed publicly and privately traded
    securities with LBIE under various brokerage contracts.  In September 2008,
    LBIE became insolvent.  BTR then brought two separate proceedings in Ontario to
    recover their securities  one in respect of the Canadian privately traded
    securities, and the other in respect of the Canadian publicly traded
    securities.  The motion before me concerns the action for recovery of the
    publicly traded securities.

[3]

LBIE sought a permanent stay of this
    action on the ground that the parties had agreed that a New York court would
    have exclusive jurisdiction over any proceeding relating to their contracts. 
    Campbell J. refused to grant the stay.  In his view, even if the exclusive jurisdiction
    clause governed the parties dispute, BTR had shown strong cause why it
    should not be enforced.

[4]

On July 8, 2011 this court dismissed
    LBIEs appeal from Campbell J.
s order.  For somewhat different reasons,
    this court also concluded that BTR had shown strong cause not to give effect to
    the exclusive jurisdiction clause.  It is from this courts decision that LBIE
    seeks leave to appeal to the Supreme Court of Canada.  Earlier this month, LBIE
    perfected its leave motion.

B.

BACKGROUND

(1)

The parties and their contracts

[5]

LBIE was a trading and brokerage company
    registered in England.  Three years ago it went into administration, in other
    words, it became insolvent.

[6]

BTR had invested in a variety of privately
    traded and publicly listed securities.  Between 2002 and 2008, BTR entered into
    brokerage contracts with LBIE to settle trades in these securities.

(2)

The litigation

[7]

BTR started three proceedings, two in Ontario
    and one in New York.  In each proceeding it claimed beneficial ownership of the
    securities held by or for LBIE.

[8]

The first proceeding, for the recovery of
    Canadian private securities located in Toronto, was started in Ontario in
    October 2008.  Although not a party to that proceeding, LBIE was aware of it
    and chose not to participate.  In that proceeding, BTR obtained an order that
    it beneficially owns the Canadian private securities.  LBIE was given a copy of
    the order.  It took no steps to have it varied or set aside.

[9]

The second proceeding is an action in Ontario
    started in April 2010 for recovery of the Canadian publicly listed securities. 
    Because LBIE has claimed an ownership interest in these securities, it is a
    named defendant in the action.  This action is the subject of the stay motion
    before me.

[10]

The third proceeding, also started in April 2010,
    is an action in the Supreme Court of New York for the recovery of United States
    privately traded securities physically located in the State of New York.  In
    this action, LBIE has counter-claimed for a declaration that it owns
all
the securities  publicly and privately traded, Canadian and American  that
    BTR has placed with it.

[11]

Because of LBIEs counter-claim, both the New
    York action and the Ontario action raise the identical question: who is the
    beneficial owner of the Canadian publicly listed securities?  LBIEs
    counter-claim also seeks to re-litigate the question of the ownership of the
    Canadian privately traded securities, which was determined in Ontario nearly
    three years ago.

[12]

In the New York action, pleadings have been
    completed and documentary production has begun.  LBIEs attorneys are pressing to
    move forward with examinations for discovery.  They will not agree to delay
    examinations in New York unless BTR agrees to a stay of its action in Ontario
    for recovery of the Canadian public securities.

[13]

Meanwhile, in Ontario, BTRs action has been
    stalled by the various stay motions brought by LBIE.  BTR has delivered a
    statement of claim; LBIE has not delivered a statement of defence, and does not
    wish to do so.  It relies on the exclusive jurisdiction clause, and does not
    want to attorn to the jurisdiction of the Ontario court.

(3)

BTRs undertakings

[14]

BTR wants to proceed with the Ontario action. 
    It is content to have LBIE deliver a statement of defence without filing it
    with the court.  It undertakes not to argue that delivery of the statement of
    defence or participation in examinations for discovery constitute acts of
    attornment.  BTR also undertakes not to invoke the jurisdiction of the Ontario
    court, by, for example, a motion for summary judgment, while LBIEs leave
    motion is outstanding.

[15]

Against this background, I turn to the issues on
    the stay motion.

C.

ANALYSIS

[16]

The test for a stay pending appeal, including a
    motion for leave to appeal to the Supreme Court of Canada, is well
    established.  The moving party, here LBIE, must show that it has raised a
    serious issue to be adjudicated, that it will suffer irreparable harm if a stay
    is not granted, and that the balance of convenience favours a stay.  These
    three components of the test are interrelated in the sense that the overriding
    question is whether the moving party has shown that it is in the interests of
    justice to grant a stay.

[17]

In my view, LBIE has not shown that it is in the
    interests of justice to stay the Ontario action pending the determination of its
    leave motion.  Three considerations underlie my conclusion: the dubious merit
    of the leave motion; BTRs undertaking; and the ongoing New York litigation.

(i)
Serious issue - the merit of the leave motion

[18]

Ordinarily, the threshold for showing a serious
    issue to be adjudicated is low.  However, the criteria for granting leave to
    appeal to the Supreme Court of Canada add another layer to this component of
    the test.  Under s. 40(1) of the
Supreme Court Act
, R.S.C. 1985, c.
    S-26, the Supreme Court of Canada typically grants leave to appeal only in
    cases of public or national importance.  Thus, a provincial appellate court
    judge hearing a motion for stay pending leave to appeal to the Supreme Court of
    Canada must take account of the stringent leave requirements in the
Supreme
    Court Act
: see
Merck & Co. v. Nu-Pharm Inc.
(2000), 5 C.P.R. (4
th
)
    417 (F.C.A.) and
Ontario Public Service Employees Union v. Ontario (A.G.)
(2002), 158 O.A.C. 113.

[19]

The Supreme Court of Canada itself decides when
    leave should be granted and does not give reasons for doing so. As Rothstein
    J.A. noted in
Merck
, this puts provincial appellate court judges in a
    somewhat awkward position. Nonetheless, the stay test requires that I make
    some preliminary assessment of the merit of the leave motion.  And having made
    that assessment, I think that LBIEs leave motion has very little merit for the
    following three reasons.

[20]

First, LBIEs leave motion does not raise any
    real issues of national importance.  The general issue on which LBIE seeks
    leave, the contours of the strong cause test, has already been addressed by the
    Supreme Court of Canada quite recently in
Z.I. Pompey Industrie v. ECU-Line
    N.V.
, [2003] 1 S.C.R. 450.  Since
Pompey
was decided, several
    appellate court decisions have elaborated on the strong cause test.  One
    example is this courts decision in
Expedition Helicopters Inc. v. Honeywell
    Inc.,
2010 ONCA 351
.

[21]

If the appellate decisions post-
Pompey
conflicted
    with each other or with
Pompey
itself, that would improve LBIEs
    prospects for obtaining leave. In those circumstances the Supreme Court of
    Canada might wish to revisit
Pompey
and clarify the law.  But there is
    no conflict among the later decisions, and moreover, they are consistent with
Pompey.

[22]

In
Pompey
, Bastarache J. emphasized that
    the assessment of strong cause is a fact driven inquiry, in which the court
    should take account of all the circumstances of a given case.  When this court
    dismissed LBIEs appeal, it did precisely that.  After noting that BTR disputed
    whether the exclusive jurisdiction clause applied to the contracts it relied
    on, the panel concluded that even if the clause did apply, BTR had shown strong
    cause not to enforce it.  In so concluding, this court, like Campbell J., was
    particularly critical of LBIEs conduct, especially its failure to raise the
    question of Ontarios jurisdiction in the 2008 proceedings that dealt with the
    Canadian privately traded securities.  This court did not even call on BTR to
    respond LBIEs appeal.

[23]

Second, this is not a criminal, constitutional
    or administrative law case.  Those types of cases form the bulk of the Supreme
    Court of Canadas case load, and constitute most of the approximately 11 per
    cent of cases in which leave is granted. Therefore, it follows that those types
    of cases most often raise issues that the Supreme Court considers to be of
    public importance. This consideration further diminishes LBIEs prospect for
    obtaining leave.

[24]

Of course, the Supreme Court does grant leave
    in private law cases.  One recent example is this courts decision in
Momentous.ca
    Corporation v. Canadian American Association of Professional Baseball Ltd.
,
    2010 ONCA 722.  That case, however, raises entirely different questions,
    including one of major national importance, which is not present here: the effect
    of attornment on the application of an exclusive jurisdiction clause.  LBIEs
    motion raises no similar important issue.

[25]

Third, the order sought to be appealed is
    discretionary, thus warranting appellate deference.  Campbell J.s order is
    consistent with both the jurisprudence of this court and the Supreme Court of
    Canada.  The discretionary nature of the order further militates against additional
    appellate review.

[26]

For these three reasons, in my opinion, LBIEs
    leave motion has little merit.

(ii)
Irreparable harm  the effect of BTRs undertaking

[27]

LBIE argues that it will be irreparably harmed
    if a stay is not granted because it will be forced to attorn to the
    jurisdiction of the Ontario court, thus rendering its leave motion moot.  BTRs
    undertaking, however, addresses LBIEs claim of irreparable harm.

[28]

If LBIE decides to deliver a statement of
    defence, BTR will not require it to be filed with the court, will not argue
    that it amounts to an act of attornment, and will not invoke the jurisdiction
    of the Ontario court until LBIEs leave motion is decided.

[29]

LBIE contends that the undertaking is
    unsatisfactory and in support of this contention points to the decision of Lang
    J.A. in
M.J. Jones Inc. v. Kingsway General Insurance Co.
(2004), 242
    D.L.R. (4
th
) 139.  Without commenting on the correctness of that
    decision, I simply observe that the present case is distinguishable.  In
M.J.
    Jones
, Lang J.A. dealt with whether a court order requiring a defendant to
    deliver a statement of defence would amount to attornment.  She held that a
    court order requiring a defendant to participate in an action, even though
    involuntarily, might amount to attornment.  Therefore, she held that despite
    the plaintiffs undertaking not to treat the defendants participation as attornment,
    refusing a stay could cause irreparable harm.

[30]

Here, no court order or involuntary
    participation is required because BTR asks LBIE only for a statement of defence
    to permit it to move ahead with discoveries.  Furthermore, Lang J.A. appears to
    have contemplated and approved of this very scenario.  She wrote at para. 52:

This disposition does not
    necessarily preclude all parties to this action cooperating by exchanging
    documents and answering questions about the merits of the disputes between
    them.  Such exchange, if done outside the formal bounds of these court
    proceedings, would, in my view, not be considered an attornment to Ontarios
    jurisdiction.  It would simply be an efficient exchange of information that,
    with the agreement of the parties, could later be used either in the Ontario
    proceeding, or in any subsequent Michigan proceeding.

[31]

As BTR asks LBIE for documents outside of the
    formal bounds of the court proceedings, I do not consider that the delivery
    of a statement of defence or participation in discoveries, would amount to
    attornment.  If there is no attornment, the risk of LBIEs appeal becoming moot
    is eliminated. LBIE, therefore, has not made out irreparable harm.

(iii)
Balance of convenience - the effect
    of the ongoing New York         litigation

[32]

LBIE submits that the balance of convenience
    favours a stay because without one it will be prejudiced.  It argues that
    proceeding with the Ontario action while the issue of the Ontario courts
    jurisdiction has not been finally decided will result in duplication, waste the
    courts and the parties time and resources, and create a risk of inconsistent
    judgments.

[33]

Respectfully, this argument overstates any
    prejudice to LBIE from refusing a stay.  I accept that there may be some modest
    increase in costs if the litigation proceeds concurrently in New York and
    Ontario.  However, costs can be reduced by consolidating discoveries, a process
    that counsel for BTR advised would indeed be used. The risk of inconsistent judgments
    from the refusal of a stay is practically non-existent because the Supreme
    Court of Canada will likely decide LBIEs leave motion within the next three to
    four months, or at least long before the Ontario action comes to trial.

[34]

If the Supreme Court of Canada refuses leave
    then the parties will eventually have to deal with the risk of different
    results in the two jurisdictions. However, that risk arises from the existence
    of the two proceedings themselves, not from any decision on the stay motion. 
    If, on the other hand, the Supreme Court of Canada grants LBIEs motion for
    leave to appeal, then LBIE would be at liberty to renew its stay motion and
    would have a compelling argument that it be granted.

[35]

However, while the leave motion is pending, the
    balance of convenience is very much against granting a stay. Tactics play a
    role here.  LBIE wants the issue of beneficial ownership decided in New York
    and thus, wants to move the New York action along while delaying the Ontario
    action.  BTR wants the issue of beneficial ownership of the publicly traded
    securities decided in Ontario, especially as it already has a decision in its
    favour on the issue of ownership in respect of the Canadian privately traded
    securities.

[36]

Whether this turns out to be a race to the swift
    is not for me to decide; however, BTR is at least entitled to be on an even
    footing.  If LBIE is proceeding on its counter-claim in New York, BTR should be
    allowed to proceed on its claim in Ontario.

[37]

The motion for a stay is dismissed.  If the
    parties cannot agree on costs, they may make brief submissions in writing.

RELEASED:  Sep. 29, 2011

JL                                                                                                   John
    Laskin J.A.


