2018 NLCA 25, 2018 NLCA 25

RJG Construction Limited (appellant/applicant) v. Marine Atlantic Inc. (respondent) (18/21) Indexed As: RJG Construction Limited v. Marine Atlantic Inc. 2018 NLCA 25 2 C.A.N.L.R. 700 Court of Appeal of Newfoundland and Labrador Hoegg J.A. May 2, 2018 A CONFIDENTIALITY ORDER applies to portions of this judgment.

Summary: RJG Construction Limited applied, pursuant to rule 42 of the Court of Appeal Rules , NLR 38/16, to stay the order of a Supreme Court judge pending an appeal of the decision. RJG also applied for a confidentiality order respecting certain financial information filed in support of the stay application. Held: Application to stay the enforcement of an order under appeal granted, with conditions; application for a confidentiality order granted.

Hoegg J.A.: The test for staying enforcement of an order under appeal requires that the applicant establish that there is a serious issue to be tried on appeal, that the applicant will suffer irreparable harm if the stay is not granted, and that the balance of convenience must favour the applicant’s position. Marine Atlantic did not argue or suggest that the appeal does not present a serious issue. Additionally, a review of the grounds of appeal indicated that there is a serious issue to be tried on appeal. RJG argues that it will suffer irreparable harm if the application for the stay is not granted.

RJG maintains that it would have to layoff highly skilled marine construction workers to free up the required capital to pay the judgment, which would result in irreparable harm. Marine Atlantic disagrees and argues that the information RJG has filed on its application is insufficient to establish irreparable harm. Marine Atlantic also maintains that RJG would not face irreparable harm if required to pay the judgment due to it being a large and successful marine construction company.

RJG’s loss of highly skilled marine construction workers as a result of the layoffs would not be something that can be easily remedied if RJG is ultimately successful, in whole or in part, on the appeal. Similarly, the need to sell off highly specialized equipment in order to pay the judgment presents the same problem. Furthermore, the reduction in RJG’s available credit would negatively impact its ability to bid on large-scale construction projects. As such, RJG has established the real possibility of irreparable harm to its ongoing and future operations if the stay is not granted.

RJG also established that the balance of convenience is in its favour. If the stay is not granted, the judgment would put RJG’s viability as a vibrant company in jeopardy. On the other hand, Marine Atlantic is a Crown Corporation which will not be in jeopardy if it does not realize immediately on the judgment it obtained at trial, nor is it depending on the proceeds of the judgment for its ongoing viability. As such, the balance of convenience tips in RJG’s favour. Marine Atlantic does raise a legitimate concern; that it might never be able to realize on its judgment if it is upheld on appeal.

The value of the judgment, together with estimated interest and costs, computes roughly to 1.8 million dollars. RJG’s performance bond on the project has a value of approximately 1.6 million dollars, leaving a difference of approximately $200,000. As such, RJG is ordered to pay

$200,000 in cash into the Court within 14 days of this decision as security to help reduce the risk to Marine Atlantic of not being able toultimately realize on its judgment if it prevails on appeal. RJG has also applied for a confidentiality order respecting certain financial information it filed to support its stay application.

Whendeciding to impose a confidentiality order, the open court principle and the Charter value of freedom of expression must be considered.In this case, failing to grant a confidentiality order would provide an advantage to RJG’s competitors by giving them access to RJG’ssensitive commercial and financial information which they could use to their own advantage and to RJG’s disadvantage. In thecircumstances, a confidentiality order would not inappropriately jeopardize the open court principle. Therefore, the application for aconfidentiality order is granted. Cases cited: RJR-MacDonald Inc. v.

Canada (Attorney General), (SCC), [1994] 1 S.C.R. 311 E.M. v. Y.C., 2018 NLCA 21 Rees v. Fong, 2017 NLCA 43 Weir’s Construction Limited v. Warford Estate, 2016 NLCA 65, 1 C.A.N.L.R. 282 King v. King, 2015 NLCA 54, 372 Nfld. & P.E.I.R. 115 Livent Inc. v. Deloitte & Touche, 2016 ONCA 395, 131 O.R. (3d) 784 Canada (Royal Canadian Mounted Police) v. Rees, 2005 NLCA 4, 244 Nfld. & P.E.I.R. 72 Tremblett v. Tremblett, 2013 NLCA 53, 340 Nfld. & P.E.I.R. 135 Sierra Club of Canada v. Canada (Minister of Finance), 2002 SCC 41, [2002] 2 S.C.R. 522 Vancouver Sun (Re), 2004 SCC 43, [2004] 2 S.C.R. 332 Counsel: Paul D.

Dicks Q.C. and Megan Sheppard, for the appellant/applicant; John V. O’Dea Q.C., for the respondent. This application was heard on April 10 and 11, 2018 before Hoegg J.A. The following judgment was delivered on May 2, 2018 by Hoegg J.A. ______________________________________________________________ Hoegg J.A.: [1] RJG Construction Limited (RJG) applies to stay the order of a Supreme Court Judge pending the appeal of his decision in 2018NLSC 41. [2] Rule 42 of the Court of Appeal Rules provides that a party may apply to this Court to stay the enforcement of an order underappeal. In pertinent part, it reads:

(1) Filing a notice of appeal shall not operate to stay enforcement of the order under appeal.

(2) Upon application, the Court may stay the enforcement of an order under appeal pending disposition of the appeal, provided that anapplication to stay the order under appeal has not been made in the Supreme Court, Trial Division. . . . [3] RJG has not applied for a stay in the Supreme Court of Newfoundland and Labrador.

[4] The test for staying enforcement of an order under appeal was established by the Supreme Court of Canada in RJR-MacDonaldInc. v. Canada (Attorney General), (SCC), [1994] 1 S.C.R. 311 and has been routinely applied by this Court, mostrecently in E.M. v. Y.C., 2018 NLCA 21, Rees v. Fong, 2017 NLCA 43, and Weir’s Construction Limited v. Warford Estate, 2016 NLCA65. In short, the jurisprudence requires an applicant to establish that:

(1) There is a serious issue to be tried on appeal;

(2) He or she will suffer irreparable harm if a stay is not granted; and

(3) The balance of convenience must favour his or her position. [5] Generally, if there is no serious issue to be tried on appeal, the stay application is dismissed (see E.M., and King v. King, 2015NLCA 54). If there is a serious issue to be tried on appeal yet no irreparable harm has been established, the application is generallydismissed without the need to consider the balance of convenience. If irreparable harm is established, then the balance of conveniencemust be weighed in making a final decision on whether to grant a stay.

Some courts have held that weak evidence supporting irreparableharm can be considered together with the balance of convenience so as to come to a decision which is in the interests of justice (LiventInc. v. Deloitte & Touche, 2016 ONCA 395, 131 O.R. (3d) 784. [6] RJG seeks a stay of the trial Judge’s order to afford it time to arrange its affairs so that the impact on its present and futureoperations of paying the judgment will be more manageable.

It also argues that it is likely to achieve some success on appeal and if so,the final amount payable will be reduced such that the severity of the impact on RJG would be reduced in any event. Serious Issue [7] In this case, RJG has filed a Notice of Appeal listing 17 grounds of appeal. The seventeenth ground of appeal alleges nine errorsthe trial judge made respecting his damages award. The grounds involve questions of fact, questions of mixed fact and law and perhapsextricable questions of law. [8] Whether there is a serious issue to be tried requires consideration of the merits of the appeal.

The threshold to be met is low(RJR-MacDonald at 337). In Weir’s, it was described as establishing that the appeal is not “frivolous or vexatious” (paragraph 16). InCanada (Royal Canadian Mounted Police) v. Rees, 2005 NLCA 4, 244 Nfld. & P.E.I.R. 72 this Court, quoting from RJR-MacDonald,stated the merits assessment should be based on “common sense and an extremely limited review of the merits of the case” (paragraph41). [9] I have reviewed the stated grounds of appeal and the record before me and considered the submissions of the parties.

Myreview of the merits is without the benefit of a complete record, legal argument and relevant jurisprudence. Nevertheless, I cannot saythat the appeal is frivolous and vexatious, or without merit. As well, common sense suggests that at least some of grounds of appealpresent serious issues to be tried. I also note that Marine Atlantic is not suggesting that the appeal does not present a serious issue. Accordingly, I find that RJG has established that there is a serious issue to be tried on appeal.

Irreparable Harm [10] The second part of the stay test involves considering whether RJG will suffer irreparable harm if the stay is not granted.

RJG hasadvanced several arguments in this regard, and filed affidavit evidence from Robert Giovannini, the president of RJG, and AliciaWilkins, the financial controller of RJG in support of its position. [11] RJG argues that if the trial judgment is executed and realized upon at this time, it will suffer the following irreparable harm to: (1) its ability to complete its ongoing operations and to bid on future projects by having to lay off highly skilled employees and sellspecialized equipment; (2) its ability to fund its ongoing operations in a timely manner due to the inevitable reduction in its working capital and line of credit; (3) its ability to bid on large marine construction projects as a result of a reduction in its bonding room; and (4) its good will, reputation, and continuing viability as the largest company in the province specializing in marine construction. [12] In addition, RJG claims that its diminished ability to compete for marine infrastructure work will have a harmful effect on theindustrial capacity of the provincial economy, which is already composed of only a small number of companies which are almost fullyfunded by federal and provincial governments and Crown corporations. [13] The affidavit evidence provided by RJG was supported by correspondence from CIBC showing the effect of having to pay thejudgment now on RJG’s line of credit, and by email correspondence from its bonding agency indicating the reduction in its bondingability which would affect its ability to bid on large projects. [14] Marine Atlantic objects to staying the enforceability of the trial judgment.

Marine Atlantic argues that the information RJG hasfiled on its application is insufficient to establish irreparable harm and moreover, is insufficient to enable Marine Atlantic to challengethe information put forward by RJG on its stay application.

Marine Atlantic claims to need RJG’s financial statements in order to do so. [15] Marine Atlantic points out that RJG initiated the law suit, and therefore had plenty of time to assess whether its suit or thecounterclaim of Marine Atlantic would succeed, and argues that RJG ought to have already adjusted its affairs and operations in order todeal with the possibility of losing at trial.

Marine Atlantic underscores RJG’s lack of planning in this regard by referring to the trialjudge’s comment that RJG did not sufficiently pre-plan for completion of the project in issue. [16] Marine Atlantic also maintains that if RJG is the large and successful marine construction company it professes to be, it should

be able to withstand payment of the judgment without irreparable harm, and suggests that any financial fragility resulting from having to pay the judgment can be remedied by an injection of capital from the shareholders of RJG. No authority was provided for this proposition.

Marine Atlantic objects to being RJG’s bankers pending resolution of the appeal and assures the Court that it will promptly return funds to RJG if RJG prevails on appeal. [ 17 ] While Marine Atlantic’s arguments are not without merit, I am obliged to say that our legal system does provide for staying the execution of trial judgments if certain criteria are met. RJG is simply asserting its legal rights by applying to stay the trial Judge’s order. [ 18 ] In my view, RJG has established the real possibility of irreparable harm to its ongoing and future operations if a stay is not granted.

The loss of highly skilled marine construction workers as a result of layoffs required to free up capital to pay the judgment is not something that can be easily remedied if RJG is ultimately successful, in whole or in part, on appeal. Such skilled workers are likely to reestablish themselves elsewhere so as to remain gainfully employed. As well, the need to sell off highly specialized equipment, perhaps at firesale prices, in order to pay the judgment presents the same problem. The loss of such equipment directly affects RJG’s ability to complete its ongoing work and bid on future work.

The effects of delay and the loss of future work occasioned by fewer employees and less equipment are harms which cannot be remedied by money damages, and thus are irreparable. Even if workers and equipment could eventually be replaced, and RJG might be able to resume its present status, the losses occasioned in the meantime are irreparable as Green C.J.N.L. observed in Tremblett v. Tremblett , 2013 NLCA 53 , 340 Nfld. & P.E.I.R. 135 at para. 75 . [ 19 ] The reduction in RJG’s available credit (supported by the CIBC information attached to Ms.

Wilkins’ affidavit) would cause the same delay and bidding problems for RJG’s ongoing and future operations as the staff layoffs and equipment sales would, thereby causing irreparable harm. Likewise, RJG’s inability to bid on large projects as a result of its reduced bonding room is also a loss which could not be remedied by money damages. Balance of Convenience [ 20 ] RJG has also established that the balance of convenience is in its favour. I accept that its viability as a vibrant company is in jeopardy if a stay is not granted.

On the other hand, Marine Atlantic is a Crown Corporation which is neither in jeopardy if it does not realize immediately on the judgment it obtained at trial, nor dependent on the proceeds of the judgment for its ongoing viability. I am satisfied that the effect of RJG having to pay the full trial judgment at this time compared to the relative insignificance to Marine Atlantic not receiving the proceeds of the judgment now tips the balance of convenience in RJG’s favour. However, I would caution RJG to take immediate steps to free up capital to pay a judgment should it not prevail on appeal.

Lastly, to the extent that Marine Atlantic’s complaint that RJG’s information was deficient such that it could not completely challenge it, I would follow the reasoning in Livent and say that any weakness in the irreparable harm component of the test, when considered in the balance of convenience, justifies the result in these circumstances. [ 21 ] In the result, I am satisfied to grant a stay of the Judge’s order in 2018 NLSC 41 pending the outcome of the appeal.

Conditions of a Stay [ 22 ] Marine Atlantic is concerned that the delay occasioned by a stay would increase the chances that it might never be able to realize on its judgment if it is upheld on appeal. I agree that this is a legitimate concern. In this regard, Counsel have agreed that the value of the judgment, together with estimated interest and costs, computes roughly to 1.8 million dollars. RJG’s performance bond on the project giving rise to this matter has a value of approximately 1.6 million dollars, leaving a difference of approximately $200,000 between the agreed upon total and the bond.

Marine Atlantic advises that the bonding agency is refusing to honor the bond at this time, and that it has filed suit against the bonding agency, as is its right. The bonding agency’s defence, however, does not differ from RJG’s position at trial or on appeal, which suggests that payment to Marine Atlantic is secured by the bond should Marine Atlantic prevail on appeal. There remains the shortfall of $200,000. To allay Marine Atlantic’s concern about the shortfall, I order that RJG pay $200,000, in cash unless the parties agree otherwise, into Court within 14 days of this decision.

Accordingly, the paid security and the bond together substantially reduce the risk to Marine Atlantic of not being able to ultimately realize on its judgment if it prevails on appeal. If the parties encounter any process difficulties in paying the money into court, they have leave to apply for further direction. Application for a Confidentiality Order [ 23 ] RJG also applied for a confidentiality order respecting certain financial information it filed to support its stay application.

RJG asserts that this financial and commercial information is sensitive and that it shows RJG’s financial vulnerability to its competitors who will be quick to use the information to their advantage and to the disadvantage of RJG. RJG gave an example of how knowledge of Marine Atlantic’s success at trial has already prompted a competitor to contact RJG and offer to buy a piece of its highly specialized marine construction equipment for a firesale price. [ 24 ] The Supreme Court of Canada addressed the law respecting granting confidentiality orders in Sierra Club of Canada v.

Canada (Minister of Finance) , 2002 SCC 41 , [2002] 2 S.C.R. 522 . At paragraph 53 of the decision, the Court stated: … the test for whether a confidentiality order ought to be granted in a case such as this one should be framed as follows: A confidentiality order under Rule 151 should only be granted when: (

a) such an order is necessary in order to prevent a serious risk to an important interest, including a commercial interest, in the context of litigation because reasonably alternative measures will not prevent the risk; and (

b) the salutary effects of the confidentiality order, including the effects on the right of civil litigants to a fair trial, outweigh its deleterious effects, including the effects on the right to free expression, which in this context includes the public interest in open and accessible court proceedings. The Court went on to set out the test as follows:

54 … three important elements are subsumed under the first branch of this test. First, the risk in question must be real and substantial, in that the risk is well grounded in the evidence, and poses a serious threat to the commercial interest in question. 55 In addition, the phrase “important commercial interest” is in need of some clarification. In order to qualify as an “important commercial interest”, the interest in question cannot merely be specific to the party requesting the order; the interest must be one which can be expressed in terms of a public interest in confidentiality.

For example, a private company could not argue simply that the existence of a particular contract should not be made public because to do so would cause the company to lose business, thus harming its commercial interests... Simply put, if there is no general principle at stake, there can be no “important commercial interest” for the purposes of this test.

Or, in the words of Binnie J. in F.N. (Re) , [2000] 1 S.C.R. 880 , 2000 SCC 35 , at para. 10 , the open court rule only yields “where the public interest in confidentiality outweighs the public interest in openness” (emphasis added). 56 In addition to the above requirement, courts must be cautious in determining what constitutes an “important commercial interest”. It must be remembered that a confidentiality order involves an infringement on freedom of expression.

Although the balancing of the commercial interest with freedom of expression takes place under the second branch of the test, courts must be alive to the fundamental importance of the open court rule. See generally Muldoon J. in Eli Lilly and Co. v.

Novopharm Ltd. (1994), 56 C.P.R. (3d) 437 (F.C.T.D.) , at p. 439 . 57 Finally, the phrase “reasonably alternative measures” requires the judge to consider not only whether reasonable alternatives to a confidentiality order are available, but also to restrict the order as much as is reasonably possible while preserving the commercial interest in question. [ 25 ] I agree with RJG’s request and hereby grant the confidentiality order.

In so doing, I am cognizant of the open court principle and the Charter value of freedom of expression, as well as the need for vigilance and restraint in the granting of such orders. [ 26 ] The purpose of the open court principle is to provide public oversight and accountability of our justice system. In Vancouver Sun (Re) , [2004] 2 S.C.R. 332 , 2004 SCC 43 the Supreme Court described it this way: [24] The open court principle has long been recognized as a cornerstone of the common law: Canadian Broadcasting Corp. v. New Brunswick (Attorney General) , supra , at para. 21.

The right of public access to the courts is “one of principle . . . turning, not on convenience, but on necessity. [Authorities omitted.] [25] Public access to the courts guarantees the integrity of judicial processes by demonstrating “that justice is administered in a non- arbitrary manner, according to the rule of law”: Canadian Broadcasting Corp. v. New Brunswick (Attorney General) , supra , at para. 22. Openness is necessary to maintain the independence and impartiality of courts. It is integral to public confidence in the justice system and the public’s understanding of the administration of justice.

Moreover, openness is a principal component of the legitimacy of the judicial process and why the parties and the public at large abide by the decisions of courts. [ 27 ] Failing to grant a confidentiality order in this case would provide an advantage to RJG’s competitors by giving them RJG’s sensitive commercial and financial information which they could use to their own advantage and to RJG’s disadvantage. The open court principle cannot be blind to this reality, and in my view, cannot be permitted to expose a litigant’s vulnerability in the absence of good reason.

In Sierra Club , the Court stipulated that if a court grants a confidentiality order on the basis of an important commercial interest, the commercial interest cannot merely be specific to the party requesting the order, but must be one which can be expressed in terms of a public interest in confidentiality.

As I see it, the public interest at stake in cases like this is the ability of commercial litigants to vindicate their legal rights without exposing themselves to the real risk of harm. [ 28 ] In the circumstances of this case, the open court principle must yield for this narrow purpose and only for a short time. I do not see a confidentiality order in this case as inappropriately jeopardizing the open Court principle. [ 29 ] In the result, (

a) the contents of paragraphs 8, 10, 11, the last sentence of paragraph 14, paragraphs 17 and 18, the first sentence of paragraph 19, and the second sentence of paragraph 20, and Exhibits E and F of the affidavit of Robert Giovannini sworn on March 19, 2018 and (

b) the information contained in paragraphs 2 to 6, and paragraph 7 (except for the first sentence), of the affidavit of Alicia Wilkins sworn on March 20, 2018 are to be kept private and confidential to the parties, their counsel, and the Court, pending the appeal.

Schedule for Appeal [ 30 ] At the conclusion of the hearing, the parties agreed that the appeal be heard by this Court on September 12 and 13, 2018. RJG shall file its factum by August 20, 2018 and Marine Atlantic shall file its factum by September 4, 2018. [ 31 ] The costs of this application shall be in the cause. Applications allowed.