2016 QCCA 1495, 2016 QCCA 1495

Droit de la famille — 162336 2016 QCCA 1495 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-026255-166, 500-09-026254-169 (500-04-065817-158) MINUTES OF THE HEARING DATE: September 9, 2016 THE HONOURABLE NICHOLAS KASIRER, J.A. No: 500-09-026255-166 PETITIONER COUNSEL RICHTER ADVISORY GROUP INC. Mtre Alexander Steinhouse ( Davies Ward Phillips & Vineberg s.e.n.c.r.l, s.r.

l) RESPONDENT COUNSEL G. C. Mtre joanne biron ( Miller Thomson SENCRL / LLP ) Mtre JEAN LORTIE ( McCarthy Tétrault s.e.n.c.r.l., s.r.l. ) IMPLEADED PARTIES COUNSEL

[Company A] [Company B] [Company C] [Company D] [Company E] [Company F] [Company G] the P. G. family trust the P. G. family trust no.2 the P. G. holdings trust the P. G. property trust [Company H] [Company I] [Company J] t.m.i.s.i. inc. PHILLIPS FRIEDMAN KOTLER Mtre linda schacHter Mtre tamar ajamian ( Devine Schachter Polak ) ABSENT Mtre DAVID KELLERMAN ( Kellerman Avocats ) Absent Mtre ROBERT PANCER ( Phillips Friedman Kotler s.e.n.c.r.l. ) No: 500-09-026254-169 PETITIONER COUNSEL PHILLIPS FRIEDMAN KOTLER Mtre ROBERT PANCER ( Phillips Friedman Kotler s.e.n.c.r.l. ) RESPONDENT COUNSEL

G. C. Mtre joanne biron ( Miller Thomson SENCRL / LLP ) Mtre JEAN LORTIE ( McCarthy Tétrault s.e.n.c.r.l., s.r.l. ) IMPLEADED PARTIES COUNSEL RICHTER ADVISORY GROUP INC. t.m.i.s.i. inc. [Company A] [Company B] [Company C] [Company D] [Company E] [Company F] [Company G] the P. G. family trust the P. G. family trust no.2 the P. G. holdings trust the P. G. property trust [Company H] [Company I] [Company J] Mtre Alexander Steinhouse ( Davies Ward Phillips & Vineberg s.e.n.c.r.l, s.r.

l) Mtre DAVID KELLERMAN ( Kellerman Avocats ) Absent Mtre linda schacHter Mtre tamar ajamian ( Devine Schachter Polak ) ABSENT DESCRIPTION: Application for leave to appeal from a judgment rendered in the course of the proceeding on June 29, 2016 by Joel A. Silcoff of the Superior Court, District of Montreal (arts. 31 & 32 C .C.P. )

Clerk: Annabel David Courtroom: RC-14 HEARING 16 h 00 The parties were instructed that their presence at the hearing was not required and, if absent, the judgment would be forwarded to them by email. Annabel David Clerk BY THE JUDGE JUDGMENT [ 1 ] Richter Advisory Group Inc. (Richter) and Phillips Friedman Kotler (PFK) have filed virtually identical motions for leave to appeal from a judgment of the Superior Court, District of Montreal, (the Honourable Mr Justice Joel A. Silcoff), rendered on June 29, 2016, which authorized G.

C. to proceed to pre-trial examinations of the petitioners’ named representatives, subject to the right to invoke objections founded on the attorney-client privilege or professional secrecy. [ 2 ] The dispute as to whether and when the petitioners should be required to submit to a pre-trial examination has arisen in the context of proceedings in separation from bed and board instituted by the respondent C. against P. G. on April 10, 2015. The separation proceedings included a request for a Mareva injunction. As legal and financial advisers to Mr G., the petitioners are named as “mises en cause” in that action.

Silcoff J. is the case management judge in the file. [ 3 ] On April 15, 2015, Masse J. of the Superior Court, Family Division, granted, ex parte , Ms C.’s request for a provisional Mareva injunction ordering the freeze of certain assets allegedly held by Mr G. and companies related to him. The judgment also orders that Richter and PFK, as mises en cause, not remove or alter any related financial or other records (para. [13]). As well, the judge acknowledged respondent C.’s undertaking to indemnify those affected by the Mareva injunction in the event it turns out to be unwarranted or wrongly executed (para. [20]).

The orders in the Mareva injunction were subsequently renewed, by consent and without admission. [ 4 ] Mr G. has brought a motion to contest the validity of the Mareva injunction. His “Motion to Dismiss the Mareva Injunction” is pending before the Superior Court. [ 5 ] As the judge explained in his reasons, Richter and PFK, along with Mr G., initially opposed the examinations sought by respondent C. outright, but later revised their position to oppose them only on the basis of their proposed timing.

The petitioners said in Superior Court that their representatives would agree undergo the examinations, subject to objections based on privilege, but only after hearing and judgment of Mr G.’ Motion to Dismiss the Mareva Injunction. [ 6 ] The petitioners argue that evidence obtained from their representatives in the course of the examinations would be inadmissible at the hearing on the Motion to Dismiss the Mareva Injunction and that gathering that evidence would potentially undermine the Mareva proceedings.

In particular, evidence from the examinations cannot be used, they say, to supplement, complete or “bonify” the proof that was presented at the time of the Ms C.’s initial ex parte Mareva application. On that basis, they submit that the examinations should not be held now.

They say the examinations would serve no useful purpose at this time and could properly be held after the hearing of the Motion to Dismiss the Mareva application. *** [ 7 ] The Judge decided that the examinations could proceed immediately, before the hearing on the Motion to Dismiss the Mareva Injunction. [ 8 ] He held that the petitioners, as mises en cause in the action for separation as to bed and board, are parties to the proceedings and, as such, are subject to pre-trial examinations pursuant to

article 221 C.C.P. Alternatively, even if the petitioners were considered to be third parties in the family law proceedings, there are serious and valid reasons justifying the proposed examinations of their representatives. [ 9 ] The judge rejected the petitioners’ principal argument that the examinations could not be held prior to the hearing on the Motion to Dismiss the Mareva Injunction. On this point, the judge wrote, in particular:

[20] The principles of law and the authorities cited in support of their contentions regarding the jurisdiction of the Court to review and, if deemed appropriate, rescind a Mareva Injunction previously issued are, in principle, not disputed.

However, they do not, in and of themselves, prevent the conduct of the Examinations at this time. [21] Whether the additional evidence obtained in the course of the proposed Examinations may or may not be referred to by Plaintiff in contestation of Defendant’s Motion to Dismiss the Mareva Injunction is a matter of law to be raised and ruled upon at the appropriate time if or when she may seek refer to and adduce it in evidence. [22] It would be premature and inappropriate, at this time, to rule on the admissibility of any such proof yet to be obtained.

Such determination, if indeed it becomes appropriate and required, could be made at the appropriate time in the context of the hearing on the Motion to Dismiss the Mareva Injunction. [ 10 ] He thus authorized the immediate examination of the petitioners’ representatives, subject the rights of the parties to raise objections based on privilege or professional secrecy. *** [ 11 ] At the hearing on their motions for leave to appeal, the petitioners repeated their willingness to undergo the pre-trial examinations, subject to privilege, but only after the hearing and final judgment on the Motion to Dismiss the Mareva Injunction. [ 12 ] The petitioners principal argument is that the judge erred, in fact and in law, on the question of the timing of the examinations in granting the request to examine their representatives prior to the hearing and final judgment on the Motion to Dismiss the Mareva Injunction.

Noting that the respondent had a duty of full and frank disclosure of material facts at the time she made her application for the Mareva injunction, the petitioners renew their argument that the sole reason she now seeks to examine PFK and Richter is to complete or supplement her grounds disclosed in support of the Mareva application.

For the petitioners, this is contrary to the law relating to Mareva injunctions and, accordingly, the examinations should not be held until after the final judgment on the Motion to Dismiss. [ 13 ] In addition, the judge is said to have erred in law in considering the petitioners to be parties to the dispute for the purposes of

article 221 C.C.P. He is also said to have erred in his alternative finding that even if the petitioners are third parties, there is no substantial or valid reason justifying the examinations at this time. In either case, the judge was not entitled to authorize the examinations of the petitioners’ representatives. [ 14 ] Finally, the petitioners submit that the judge erred in exercising his discretion to authorize the examinations under

article 221 C.C.P. His decision is said to have failed to respect both the rule of proportionality in

article 18 C.C.P. and the principle that parties should confine themselves to what is necessary to resolve their dispute as set out in

article 19, para. 2 C.C.P. *** [ 15 ] Leave is sought pursuant to

article 31, para. 2 C.C.P. The petitioners argue that the judgment rendered in the course of the proceedings for separation from bed and board “determines part of the dispute or causes irremediable prejudice to a party / décide en

partie du litige ou cause un préjudice irrémédiable à une partie”. Leave is further required, they say, because it is in the best interests of justice that the judgment be corrected on appeal. [ 16 ] The respondent argued that the petitioners have not satisfied the requirements of

article 31, para. 2 C.C.P., principally in that the judgment decided no part of the dispute and did not cause irremediable prejudice to any of the parties. She added that the judgment bearing simply on the dates of pre-trial examinations might best be characterized as a “case management measure relating to the conduct of the proceeding / mesure de gestion relative au déroulement de l’instance” within the meaning of

article 32 C.C.P. In the event that the judgment is characterized as a case management measure, leave should also be denied. In principle, recalls the respondent, case management judgments of this sort are not subject to appeal, except in circumstances in which then ruling appears to be unreasonable in light of the guiding principles of procedure. For the respondent, the judgment is not “unreasonable” within the meaning of

article 32 C.C.P. *** [ 17 ] Leave should be denied. [ 18 ] The petitioners have not convinced me that the judgment is susceptible of appeal under

article 31, para. 2 C.C.P. insofar as that provision is applicable to the motion for leave. I would add that the judgment would not be susceptible of appeal should

article 32 C.C.P. be considered applicable here. [ 19 ] In respect of

article 31, I agree with the respondent: the judgment does not decide part of the dispute and does not cause a party “irremediable prejudice” as that term is relevant here. In any event, granting leave would not serve the best interest of justice (art. 9 C.C.P.), nor would doing so be consonant with my duty to ensure that the principle of proportionality be respected at this stage of the proceedings (art. 18 C.C.P.). [ 20 ] My conclusions rest on the following observations. [ 21 ] In my view, the threshold requirement of

article 31, para. 2 C.C.P. has not been met. Holding the examinations prior to the Motion to Dismiss the Mareva Injunction decides nothing, in itself, of the matter in dispute. And contrary to the petitioners’ argument, it does not cause “irremediable prejudice” to any party, within the meaning of

article 31 when one considers the careful reasons given by the judge. [ 22 ] It may be recalled that the judge made clear that the examinations will proceed subject to objections based on attorney-client privilege and professional secrecy. The petitioners do not raise this as a bar to holding the examinations after the Motion to Dismiss the

Mareva Injuction and it is no more a bar to holding them immediately. [ 23 ] Holding the examinations is a source of inconvenience and expense to the petitioners. This is not the source of an irremediable prejudice to them as they themselves acknowledge by agreeing to proceed with the examinations after the Motion to Dismiss the Mareva Injunction.

In addition, and as noted above, Masse J. included in her ex parte Mareva order an acknowledgment of an undertaking made by Ms C. that expenses would be repaid by her if the Mareva proved to be unwarranted. [ 24 ] As their main argument in support of leave, the petitioners argue that immediate examinations would cause irremediable prejudice by wrongly allowing respondent C. to use the information gathered by examination to supplement her case for freezing the assets spoken to in the ex parte order. [ 25 ] The petitioners have not convinced me that holding the examinations prior to the Motion to Dismiss the Mareva injunction would cause the irremediable prejudice to which

article 31 C.C.P. alludes. [ 26 ] The judge was aware of the petitioners’ concern that the examinations might generate evidence that could be misused to buttress the Mareva application. In paragraph [21], cited above, he observed that the admissibility of evidence is a matter of law to be decided at the hearing on the Motion to Dismiss the Mareva Injunction. Indeed the judge seized of that motion will be called upon to decide whether evidence from various sources may or may not be admissible to support or challenge the initial Mareva application.

He or she will be able, as Silcoff J. noted, to exclude evidence gathered on the examinations where that evidence falls afoul of the law relating to Mareva injunctions. The petitioners have not shown that the immediate examinations amount to an attempt to circumvent the rules applicable to Mareva Injunctions in a manner the judge did not anticipate.

If that did turn out to be the case, the judge seized of the Motion to Dismiss could stop that effort, as Silcoff J. observed in paragraph [21] of his reasons. [ 27 ] The fact that the judge seized of the Motion to Dismiss the Mareva Injunction would be exposed to “prohibited” evidence, exclude it as inadmissible, then decide on the validity of the Mareva application, is of course not a source of prejudice to a party.

Judges are regularly called upon to decide questions of admissibility of evidence in civil and criminal matters and, when they decide to exclude it, are no less in a position to rule on the merits of the case in an even-handed manner. [ 28 ] In this sense, holding the examinations before the Motion to Dismiss the Mareva injunction does not inherently undermine that proceeding. As the authorities cited on Mareva injunctions and his this comment in paragraph [21] indicate, the judge understood this plainly and exercised his discretion – most cautiously, it might be noted – to authorize the examinations immediately.

The petitioners have not convinced me that the law on Mareva injunctions prevented the judge from authorizing the examinations as he did. [ 29 ] Counsel for PFK cited Cinar Corporation v. Weinberg , [1] in which Denis J. of the Superior Court dismissed a motion to examine a party on an affidavit prior to a Mareva proceeding as an attempt to “ bonifier ” an ex parte Mareva application. I respectfully disagree with counsel that Denis J.’s decision stands for a principle that would prohibit holding the proposed examinations immediately in our case.

The nature of the examination in Cinar [2] – on an affidavit ordered by the judge granting the ex parte Mareva order – was different than the one contemplated here where the examinations serve a legitimate and independent purpose in connection with the principal action for separation for bed and board. [ 30 ] There is thus no “irremediable prejudice” caused to a party as a result by the judgment a quo .

Given the powers of the judge who will preside the Mareva hearing, there is no prejudice to that proceeding as that idea is relevant to granting leave. [3] I am hard pressed to see any irremediable prejudice whatsoever, even if defined more expansively, that a party would face as a result of the judgment.

The hypothetical risk raised by the petitioners – that information relevant to the Mareva proceedings would emerge from the examinations that not be declared inadmissible at the hearing on the Motion to Dismiss and thereby preclude a fair treatment of that motion – has not been substantiated. [ 31 ] Lastly, it is not enough for the petitioners to argue, as they did before me, that there is no good reason not to delay the examinations until after the Motion to Dismiss the Mareva Injunction.

In the exercise of his discretionary powers to decide what was best in order to ensure the orderly progress of the proceedings, the judge decided otherwise. In the absence of irremediable prejudice, that choice deserves deference on appeal. [ 32 ] The petitioners’ arguments that their status, be that as “mises en cause” or third parties, does not permit them to be called for examination are not convincing. The judge was careful to provide alternative justifications for calling the petitioners under

article 221 C.C.P. Even if PFK and Richter are not mentioned in the conclusions of the motion to institute proceedings in separation from bed and board, they are mentioned in the allegations and the judge was entitled to conclude that PFK and Richter might have useful information for the principal action, not subject to privilege, that defendant G. might not have or be able to explain fully himself.

At the very least, the judge’s subsidiary finding that there are serious and valid reasons justifying the pre-trial examinations (para. [17]) appears to me to be unimpeachable. [ 33 ] Is granting leave in the best interest of justice? [ 34 ] Mindful of the importance of the disclosure of assets by both parties to the principal action (a factor that counsel to PFK readily acknowledged as key in family disputes such as this one), the judge held that whatever inconvenience immediate examinations presented, holding them now would be appropriate as long as privilege and professional secrecy was protected.

It is fair to surmise that he had in mind, as case management judge, the various delays that proceeding otherwise would entail. Again, the judge was entitled to conclude that holding off on examinations could well be the source of an avoidable delay. The judge exercised his discretion here and I fail to see how granting leave in the circumstances would serve the best interest of justice or be in keeping with considerations of proportionality. [ 35 ] Should leave be granted under

article 32 C.C.P.? [ 36 ] If the judgment is properly characterized as a case management measure – a point not urged by the petitioners – I still would not grant leave.

[ 37 ] Respondent on this motion for leave, Ms C. recalls that the judge was acting as case management judge when he rendered the judgment a quo . Her counsel argues that as a judgment was rendered in the course of proceedings relating to the constitution of evidence before trial, the motion for leave should be governed by

article 32 C.C.P. Counsel cited Google Canada Corporation v. Elkoby , [4] decided by my colleague Bich J.A. in chambers, as persuasive authority. [ 38 ] It is certainly true that, in the event that the judgment of Silcoff J. were to be considered to be a case management measure, it would not be subject to appeal unless the petitioners showed that it appeared to be unreasonable in light of the guiding principles of procedure. I consider the reasons given by Bich J.A. to be compelling on the facts of the Google case. [ 39 ] I need not however decide whether

article 31 or 32 C.C.P. applies to the judgment a quo to dispose of the motion for leave. Suffice to say that if

article 32 did apply, the petitioners have not made a prima facie demonstration that it is “unreasonable” in the sense spoken to by the legislature. Certainly, the judge might have chosen to delay the examinations until after the Motion to Dismiss the Mareva Injunction was settled.

To decide otherwise, given the interest of proceeding with the family law dispute with due dispatch and given the safeguards the judge put in place, was not however unreasonable in light of the principle of proportionality (art. 18), or the principle that parties must be careful to confine the case to what is necessary to resolve the dispute (art. 19), or indeed any other of the guiding principles of procedure.

The deference owed on appeal to decisions relating to the proper conduct of proceedings is, as Bich J.A. and others have said, “vast” in scope and only in exceptional circumstances would leave be granted with a view to disturbing the exercise of that discretion. No injustice or other significant reasons encourage me to think that, if

article 32 did apply here, leave should be granted. FOR THE FOREGOING REASONS , the undersigned: [ 40 ] DISMISSES petitioner Richter Advisory Group Inc.’s motion for leave, with legal costs in favour of the respondent; [ 41 ] DISMISSES petitioner Phillips Friedman Kotler’s motion for leave, with legal costs in favour of the respondent. NICHOLAS KASIRER, J.A.