2012 NBCA 31, 2012 NBCA 31

COURT OF APPEAL OF NEW BRUNSWICK 28-09-CA 68-09-CA TRIFIDUS INC. (Plaintiff) APPELLANT TRIFIDUS INC. (Demanderesse) APPELANTE - and - - et - SAMGO INNOVATIONS INC. (Defendant) RESPONDENT SAMGO INNOVATIONS INC. (Défenderesse) INTIMÉE - and - - et - SAMUEL GAUDET (Defendant) RESPONDENT SAMUEL GAUDET (Défendeur) INTIMÉ - and - - et - CLAUDE GAUTHIER (Third Party) RESPONDENT CLAUDE GAUTHIER (Mis en cause) INTIMÉ Trifidus Inc. v. Samgo Innovations Inc. et al., 2012 NBCA 31 Trifidus Inc. c.

Samgo Innovations Inc. et autres, 2012 NBCA 31 CORAM: The Honourable Justice Richard The Honourable Justice Bell The Honourable Justice Quigg CORAM : L’honorable juge Richard L’honorable juge Bell L’honorable juge Quigg Appeal from a decision of the Court of Queen’s Bench: April 24, 2009 Appel d’une décision de la Cour du Banc de la Reine : Le 24 avril 2009 History of Case: Historique de la cause :

Decisions under appeal: April 24, 2009 (Unreported) 2008 NBQB 23 (January 23, 2008) Décisions frappées d’appel : Le 24 avril 2009 (inédite) 2008 NBBR 23 (le 23 janvier 2008) Preliminary or incidental proceedings: 2011 NBCA 59 (July 7, 2011) Procédures préliminaires ou accessoires : 2011 NBCA 59 (le 7 juillet 2011) Motion heard: January 10, 2012 Motion entendue : Le 10 janvier 2012 Decision on motion rendered: March 29, 2012 Décision sur la motion rendue : Le 29 mars 2012 Counsel at hearing: For the appellant: Sylvie I. Michaud For the respondents: No one appeared for Samgo Innovations Inc.

Samuel Gaudet appeared in person Claude Gauthier appeared in person Avocats à l’audience : Pour l’appelante : Sylvie I. Michaud Pour les intimés : Personne n’a comparu pour Samgo Innovations Inc. Samuel Gaudet a comparu en personne Claude Gauthier a comparu en personne THE COURT The motion for clarification is allowed. There is no order of costs. LA COUR La demande de clarification est accueillie. La Cour n’accorde aucuns dépens. English version of the judgment rendered by THE COURT I. Introduction

[1] This is a motion for clarification of a decision rendered by this Court on July 7, 2011, reported at 2011 NBCA 59 , 375 N.B.R. (2d) 14 . II. Issue [2] Trifidus Inc. (Trifidus) requests a clarification respecting an issue it submits was not addressed by the Court in the July 2011 decision. Trifidus states that three grounds of appeal were raised at the appeal, yet only two were addressed in the decision. The third ground of appeal was presented as follows: [TRANSLATION]

a) conflicting decisions were rendered by two judges of the same court on an issue that was raised in the appeal; (

i) the January 23, 2008, decision by Landry, J. gives Claude Gauthier leave to introduce an action in the name and on behalf of Trifidus Inc. against the respondents Samuel Gaudet and Samgo Innovations; (ii) the April 24, 2009, decision by Dionne, J. directs that the solicitor who will act for Trifidus be chosen by agreement of Claude Gauthier and Samuel Gaudet within 30 days of the decision; failing an agreement of the parties, either party may apply to the court for the appointment of such solicitor;

b) in the appeal, the appellant was requesting: (

i) that the January 23, 2008 decision of Landry, J. be reinstated in its entirety and that the necessary amendments to the November 10, 2008, decision by McNally, J. be ordered (concerning the scheduling of pre-trial proceedings); (ii) that if the Court of Appeal finds that the current solicitor for Trifidus was in a conflict of interest (an issue that was decided by the Court of Appeal), the Court of Appeal should use its discretion to decide the remaining issues raised by the orders of the honourable trial court;

c) despite the aforementioned requests, the Court of Appeal was silent on them in its July 7, 2011 decision. III. Background Necessary for This Motion [3] The facts of this case are more fully canvassed in this Court’s original decision. Claude Gauthier and Samuel Gaudet incorporated Trifidus in May 2004. In November 2006, Mr. Gauthier contacted a lawyer, Mr. Aubin, and advised of difficulty he was experiencing with Trifidus and his concerns over the protection of Trifidus’ interests. Mr. Gauthier advised Mr. Aubin he believed Mr.

Gaudet was using Trifidus’ property to advance his personal interests, as well as the interests of Samgo Innovations Inc. (“Samgo”), a second company with which Mr. Gaudet was involved. In December 2006, Mr. Aubin wrote to Mr. Gaudet explaining Mr. Gauthier’s concerns and requesting that Mr. Gaudet correct the situation. Mr. Aubin communicated with the lawyer for Mr. Gaudet and Samgo throughout 2007, until December of that year, when Mr. Gaudet’s lawyer alleged that Mr. Aubin was in a conflict of interest because of his prior work for Mr.

Gaudet and as the lawyer who had incorporated Trifidus. [4] At this point, Mr. Gauthier instructed Mr. Aubin to file a motion with the Court of Queen’s Bench requesting permission to commence a derivative action in the name of Trifidus against Mr. Gaudet and Samgo. At the motion hearing in January 2008, Mr. Gaudet (a non-lawyer) represented both himself and Samgo. The absence of counsel for Samgo was mentioned during the hearing, but did not affect the proceedings. There was no mention of the allegation of conflict of interest involving Mr. Aubin. Mr. Gauthier’s motion was allowed on January 23, 2008.

This decision permitted Mr. Gauthier to proceed with the litigation on behalf of Trifidus. It is important to note this decision was not appealed. Counsel for Trifidus commenced the action; however, neither Mr. Gaudet nor Samgo filed a Statement of Defence within the timeframe provided and were noted in default on March 12, 2008. Mr. Gaudet and Samgo filed a motion requesting the removal of the default judgment and both were represented by counsel at the November 25, 2008,

hearing. On that date, an order was signed by a different judge of the Court of Queen’s Bench setting aside the default judgment. The order also contained a

schedule outlining when documents were to be filed, deadlines for hearing pre-discovery motions and the deadline for the date the discovery was to be held. [5] On March 5, 2009, a hearing was held before yet another judge, wherein Mr. Aubin represented Trifidus, and Mr. Gaudet represented both himself and Samgo. Mr. Gaudet had previously filed a Notice of Change of Solicitor, indicating he would be representing Samgo. The only issues to be addressed at the hearing were whether Mr.

Aubin was in a conflict of interest and whether Samgo was required to retain a lawyer to represent it, pursuant to Rule 17 of the Rules of Court . At the conclusion of the hearing, the judge determined Mr. Gaudet could represent Samgo and reserved decision regarding the issue of the potential conflict of interest. In a decision dated April 24, 2009, the judge determined Mr. Aubin was in a conflict of interest and would have to withdraw from the file. More importantly, with respect to the question specifically before us now, the judge, of his own accord, directed that Messrs.

Gauthier and Gaudet were to choose the lawyer to represent Trifidus within 30 days of the decision. If they could not agree, either of them could return to court and a judge of the Court of Queen’s Bench would appoint a lawyer. This relief had not been requested in the Notice of Motion. [6] Trifidus appealed the judge’s decision. In its Notice of Appeal and in the written submission filed in support, Trifidus sought to have the judge’s decision reversed in three respects: (1) whether Samgo should be represented by counsel; (2) whether Mr.

Aubin was in a conflict situation; and, (3) whether the judge could give Mr. Gaudet a right to participate in the selection of counsel. However at the outset of the oral hearing, counsel for Trifidus informed the Court there were two issues to consider, being the first two enumerated above, and focused exclusively on these in his arguments. However, the third issue was never abandoned and was fully argued in the written submission.

In our original decision on this matter, we addressed the issues that had been argued at the hearing and did not rule on the question of whether or not a judge of the Court of Queen’s Bench could effectively overturn a previous decision of that same Court on the matter of the selection of counsel. [7] Trifidus brings a motion for clarification of our decision, asking us to rule on the matter. We agree that it is appropriate for us to do so. As stated above, the matter was raised in the Notice of Appeal and addressed in the written submissions.

Moreover, the parties have had an opportunity to present oral arguments on the issue at the hearing of the motion for clarification. [8] The sole issue to be determined in this motion is whether the decision dated April 24, 2009, which imposed directly upon the parties a procedure for the selection of counsel for Trifidus, takes precedence over the January 23, 2008, decision, which authorized Mr. Gauthier to commence a derivative action on behalf of Trifidus against the respondents, and to retain the lawyer of his choice.

Stated differently, could the judge, in April 2009, of his own accord, effectively overrule the 2008 decision of the same Court? IV. Appellant’s Position [9] Trifidus submits a Court of Queen’s Bench judge cannot overturn a previous order issued by a judge of the same Court. In January 2008, the Court authorized Mr. Gauthier to proceed with the derivative action through the lawyer of his choice and that right cannot be altered by a subsequent decision of the same Court. V.

Respondent’s Position [10] The respondent submits the April 2009 decision should take precedence, as the judge at that hearing received further evidence that was unavailable to the judge in 2008. The respondent submits the judge who rendered the 2009 decision was attempting to provide a fair and balanced method for the selection of counsel for Trifidus. VI. Analysis [11] In our view, the question posed above as the issue in this case must be answered in the negative. The order of January 2008, giving Mr.

Gauthier the sole right to chose counsel for Trifidus is a valid order and has never been challenged on appeal or otherwise. A different judge of the Court of Queen’s Bench had no jurisdiction to review and vary the original order. Once the original decision had been made, the Court was functu s with respect to that issue.

[12] In Harrison v. Harrison, 2007 BCCA 120, [2007] B.C.J. No. 350 (QL), Finch C.J.B.C. states: In Canada Transport v. Alsbury, (BC CA), [1953] 1 D.L.R. 385 (B.C.C.A.), Mr. Justice Bird described the generaleffect of an order made by a Superior Court judge: The order under review is that of a superior court of record, and is binding and conclusive on all the world until it is set aside or variedon appeal. No such order may be treated as a nullity. Mr.

Justice Sidney Smith said: ... the order of a superior court is never a nullity; but, however wrong or irregular, still binds, cannot be questioned collaterally, and hasfull force until reversed on appeal. (Authorities omitted.) In Wilson v. The Queen, (SCC), [1983] 2 S.C.R. 594 the majority of the Supreme Court of Canada approved of thisstatement made by Mr. Justice Monnin (as he then was): The record of a superior court is to be treated as absolute verity so long as it stands unreversed. [paras. 24-26] [13] In Kumra v. Luthra, 2009 ABCA 174, [2009] A.J.

No. 479 (QL), Berger J.A., dissenting in part, discusses theauthority to amend existing decisions: The common law rule regarding whether a court has power to amend a judgment already entered was articulated by the Supreme Court inPaper Machinery Ltd. et al. v. J.O. Ross Engineering Corp. et al., (SCC), [1934] S.C.R. 186 at 188: "[T]here is no power to amend a judgment which has been drawn up and entered, except in two cases:

(1) Where there has been a slip indrawing it up, or

(2) Where there has been error in expressing the manifest intention of the court (In re Swire [(1885), 30 Ch. D. 239];Preston Banking Company v. Allsup & Sons, [[1895] 1 Ch. 141]; Ainsworth v. Wilding,[ [1896] 1 Ch. 673]). ...". [para. 21] [14] This view is echoed in Chand v. Insurance Corporation of British Columbia, 2009 BCCA 559, [2009] B.C.J.No. 2449 (QL), where Kirkpatrick J.A. says: Once the order is entered, the court is functus officio. In R. v.

Roberts, 2004 BCCA 436, this Court said that "[i]t is well settled that thecourt remains seized of a matter and is not functus officio until the formal judgment of the court is entered and, until that time, the courthas the power to reconsider, vary or revoke its judgment" (at para. 7). [para. 42] [15] In New Brunswick, variation is expressly authorized in certain circumstances, by the Rules of Court, underRule 60.03(5):

60.03 Preparation, Entry and Correction of Judgment […]

(5) After judgment is entered, a party may apply on motion to the court to amend the judgment where (

a) there is a clerical mistake in the judgment or an error arising from an accidental slip or omission, (

b) the judgment does not conform to the order or decision directing judgment, or (

c) the court has failed to specify the time for compliance with a judgment requiring a person to do or abstain from doing

an act. 60.03 Rédaction, inscription et modification du jugement […]

(5) Une

partie peut demander à la cour de modifier un jugement après que celui-ci a été inscrit, lorsque l’un des cas suivants se présente :

a) le jugement comporte une erreur d’écriture, un lapsus ou une faute d’inattention,

b) le jugement n’est pas conforme à l’ordonnance ou à la décision prescrivant la remise du jugement ou

c) la cour a omis de préciser le délai d’exécution d’un jugement prescrivant à une personne de faire ou de ne pas faire quelque chose. [16] The issue before us does not concern a clerical error or any of the other situations outlined in Rule. 60.03(5) and therefore does not engage the “slip rule”. In this case, a judge of the Court of Queen’s Bench has, in effect, “overturned” an existing decision and order issued by another Queen’s Bench judge.

The judge who issued the April 24, 2009, order had no jurisdiction to do so. [17] For these reasons, the appeal from the order issued on April 24, 2009, is allowed, and the order imposing limits on the manner of selecting counsel for Trifidus is set aside. The January 23, 2008, order remains in full force and effect. There shall be no order of costs. __________________________________ J.C. Marc Richard, j.c.a. __________________________________ B. Richard Bell, j.c.a. __________________________________ Kathleen A. Quigg, j.c.a.