



COURT OF APPEAL FOR ONTARIO

CITATION: Houle v. St. Jude Medical Inc., 2018 ONCA 88

DATE: 20180201

DOCKET: M48474 (C64361)

Simmons, Roberts and Nordheimer JJ.A.

BETWEEN

Shirley Houle and Roland Houle

Responding Parties (Appellants)

and

St. Jude Medical Inc. and St. Jude Medical
Canada, Inc.

Moving Parties (Respondents)



Brandon Kain and Vladimira Ivanov, for the moving
parties/respondents

Margaret Waddell, for the responding parties/appellants
and proposed class counsel

Benjamin Zarnett and David Lederman, for
Bentham IMF Capital Limited

Heard: January 18, 2018

Nordheimer J.A.:



[1]

The appellants have appealed from the order of Justice Paul Perrell of
the Superior Court of Justice dated August 29, 2017. The moving parties bring this
motion to quash the appeal on the basis that the order in issue is an
interlocutory, not final, order and thus is only appealable to the Divisional
Court with leave. This motion represents yet another salvo in the seemingly
never ending battle over what orders are final and what orders are
interlocutory.

[2]

The plaintiffs are proposed representative plaintiffs in a proposed
class action. The proposed representative plaintiffs and proposed class counsel
sought third party litigation funding from Bentham IMF Capital Limited
(Bentham). The proposed representative plaintiffs, proposed class counsel and
Bentham entered into a funding agreement dated August 6, 2017 (the Funding
Agreement) under which Bentham agreed to pay a portion of the legal fees and
disbursements for the proposed class action on certain terms.

[3]

The proposed representative plaintiffs brought a motion seeking approval
of the Funding Agreement and for an order that would make the Funding Agreement
binding on all putative class members. The motion judge conditionally approved
the Funding Agreement, subject to certain changes being made to certain of its
terms, failing which the approval motion would be dismissed. The proposed
representative plaintiffs, proposed class counsel and Bentham all objected to
the required changes. As a result, rather than make the changes to the Funding Agreement,
they appealed the conditional approval order. In apparent recognition that
there might be an issue over jurisdiction, appeals were taken both to this
court and by way of a motion for leave to appeal to the Divisional Court.

[4]

The moving parties contend that the order in issue is an interlocutory
order and therefore any appeal lies to the Divisional Court with leave 
Courts
of Justice Act
, R.S.O. 1990, c. C.43, s. 19(1)(b). The responding parties
contend that the order is final and thus the appeal lies to this court 
Courts
of Justice Act
, s. 6(1)(b).

[5]

The problem that this motion once again raises is that there is no
definition in the
Courts of Justice Act
as to what constitutes a final
order. This problem is exacerbated by the fact that, notwithstanding the many
decisions on the subject, they have not always followed a consistent approach
for determining whether an order is final or interlocutory.  As Laskin J.A.
said in

Capital Gains Income Streams Corp. v. Merrill Lynch Canada Inc
.,
2007 ONCA 497, 87 O.R. (3d) 443, at para. 37:

And yet, despite the very large number of decisions on whether
a particular order is final or interlocutory, our court's jurisprudence on the
distinction has been anything but a model of consistency.

[6]

In an effort to resolve the problem, it is of assistance to return to
what appears to be the first decision by this court that attempted to delineate
the difference between final and interlocutory orders, that is,
Hendrickson
v. KalIio
, [1932] O.R. 675 (C.A.). In that decision, Middleton J.A. said,
at p. 678 :

The interlocutory order from which there is no appeal is an
order which does not determine the real matter in dispute between the parties 
the very subject matter of the litigation, but only some matter collateral. It
may be final in the sense that it determines the very question raised by the
applications, but it is interlocutory if the merits of the case remain to be
determined.

[7]

Subsequent cases have expanded on that definition. The decision in
Ball
v. Donais

(1993), 13 O.R. (3d) 322 (C.A.) held that where a
substantive right of a party was determined, even if other aspects of the
proceeding remained to be determined, the resulting order was a final order. This
approach was explained in
Sun Life Assurance Co. v. York Ridge Developments
Ltd.
(1998), 116 O.A.C. 103 where Weiler J. A. said, at para. 13:

As stated in Holmsted and Watson on
Ontario Civil Procedure
at 62-24: "
Ball
holds that what the
Hendrickson
test really
means is that to be final an order must deal with the substantive merits as
opposed to mere procedural rights, no matter how important the procedural
rights may be. The test focuses on whether the order under appeal finally
disposes of the rights of the parties, in the sense of substantive rights to
relief (in the case of a plaintiff) or a substantive defence (in the case of a
defendant)."

[8]

In support of their position, the moving parties point to various
decisions that have dealt with this issue and which have held that the
following are all interlocutory orders in the context of class proceedings: orders
for security for costs, carriage orders, and orders denying approval of a
settlement.

[9]

The issue in this case is complicated, however, by the fact that two of
the parties appealing the conditional approval order are not, strictly
speaking, parties to the proceeding. Where non-parties are involved, the
question of whether an order is final or interlocutory is made more difficult.
[1]
Indeed, these cases would appear to demonstrate the lack of consistency to
which Laskin J.A. referred.  Needless to say, the responding parties key in on
this distinction to advance their position that the order in issue here is
final.

[10]

The
responding parties begin with the decision in
Smerchanski

v.
Lewis
(1980), 30 O.R. (2d) 370 (C.A.) where Arnup J.A. said, at p. 374:

This Court has held that an order made in a contest between a
party to an action and someone who is not a party is a final order, appealable
without leave, if the order finally disposes of the rights of the parties in
the issue raised between them.

[11]

The
responding parties refer to certain decisions that have followed on that
principle including
Morse Shoe (Canada) Ltd. v. Zellers Inc.
(1997)
,
100 O.A.C. 116;
Pennington
v. Hawley
, [2005] O.J. No. 3591 (C.A.) and
C
anWest MediaWorks Inc.
v. Canada (Attorney General)
, 2007 ONCA 567, 227 O.A.C. 116.

[12]

It
is difficult, in my view, to reconcile the rationale expressed in many of these
non-party decisions with the fundamental principle that was set out in
Hendrickson
,
as further explained in
Ball
. It seems difficult to understand how the
issues raised in those decisions, in most instances, could be seen as anything
but collateral, as that term was used in
Hendrickson
, even if the
particular issue involving the non-party was finally determined.  It is also
inconsistent with the point made in
Waldman v. Thomson Reuters Canada Ltd
.,
2015 ONCA 53, 330 O.A.C. 142, where MacFarland J.A. said, at para. 22:

This submission presumes that, to be a final order, an order
need only dispose finally of whatever issue was before the motion judge
irrespective of whether the order terminates the action or resolves a
substantive claim or defence of the parties. Were that so, the distinction
between interlocutory and final orders would cease to exist.

[13]

This
point has been picked up in more recent decisions of this court where an effort
has been made to confine the decision in
Smerchanski
to its particular
facts. As Finlayson J.A. said in
CC&L Dedicated Enterprise Fund
(Trustee of) v. Fisherman
(2001)
,
55 O.R. (3d) 794 (C.A.), at para. 16:

When given its broadest interpretation, the principle in
Smerchanski
v. Lewis
,
supra
, does not fit comfortably with the general test
for determining whether an order is interlocutory or final, as set out in
Hendrickson
v. Kallio
, [1932] O.R. 675 (C.A.) and clarified in subsequent cases such
as
Ball v. Donais
(1993), 13 O.R. (3d) 322 (C.A.).
Smerchanski
was not intended to mean that all orders directed to a non-party must be final,
and the principle expressed therein should not be further expanded in that way.

[14]

The
effort to confine
Smerchanski
was repeated in
Ambrose v. Zuppardi
,
2013 ONCA 768, 368 D.L.R. (4th) 749, where this court agreed with the view
expressed above in
CC&L
.

[15]

All
of that said, it is not necessary to fully and finally reconcile all of these
cases, assuming that would be possible, in order to determine the issue here. That
is because, in my view, the order in issue here did not finally dispose of the
rights of proposed class counsel and Bentham. On that point, the contents of
the actual formal order are important. The operative part of the order reads:

THIS COURT ORDERS that the Funding Agreement is approved if an
amended Funding Agreement, revised in accordance with the directions in the
Reasons released August 29, 2017, is delivered to the Court within 60 days,
failing which the motion for approval is dismissed.

[16]

The
motion judge did not dismiss the approval motion. Rather, his order conditionally
approves the Funding Agreement, subject to certain revisions being made to it. Subject
to making the required revisions, the proposed representative plaintiffs, proposed
class counsel and Bentham got what they had asked the motion judge for 
approval of the funding agreement.

[17]

Instead,
the responding parties decided not to revise the Funding Agreement, and, as a
result, their motion for approval was dismissed. In that respect, the order
here is akin to other forms of conditional orders, such as an order for
security for costs. Where security for costs is ordered, if the security is not
posted, the proceeding may come to an end. Nevertheless, the order requiring
that security be posted is still an interlocutory order. On this point, I adopt
the observation in
Inforica Inc. v. CGI Information Systems and Management
Consultants Inc.
, 2009 ONCA 642, 97 O.R. (3d) 161, where Sharpe J.A. said,
at para. 26:

I recognize that failure to satisfy an order for security for
costs may lead to a dismissal of the claim, but the sanction for non-compliance
with an order cannot alter the nature of the order itself.  But if the claim
is dismissed, the dismissal flows from the party's failure to comply with the
interlocutory or procedural order, not from the order itself, and does not
alter the interlocutory or procedural nature of the order that led to dismissal.

[18]

In
my view, that point is apposite to the issue that is raised here. It is also
consistent with the point made in
Sun Life
that, in order to be a
final order, the order must deal with the substantive merits as opposed to
mere procedural rights, no matter how important the procedural rights may be. No
substantive right was determined by the conditional approval order. While the
responding parties say that the result is the end of the litigation because the
proposed representative plaintiffs will not have funding to pursue their claim,
that result is a consequence of the responding parties decision not to amend the
Funding Agreement. It is not a necessary result of the order. Consequently, I
conclude that the order in issue is an interlocutory order, only appealable to
the Divisional Court with leave.

[19]

In
light of that conclusion, I do not need to address the other issue raised by
the moving parties, that is, whether Bentham has standing to appeal the order.

[20]

The
appeal is quashed. The moving parties are entitled to their costs of the motion
fixed in the agreed amount of $5,000 inclusive of disbursements and HST.

Released: IVB FEB 1 2018

I.V.B. Nordheimer J.A.

I agree. Janet Simmons J.A.

I agree. L.B. Roberts J.A.





[1]

While I accept that proposed class counsel and Bentham are
non-parties, that is not the same thing as accepting that they are
strangers to the proceeding as that term has been used in many of the
non-party cases. I leave for another day whether that distinction suggests that
a different approach should be taken to the final/interlocutory analysis.



