2018 QCCA 2059, 2018 QCCA 2059

Monroi inc. c. O’Connor 2018 QCCA 2059 COURT OF APPEAL CANADA PROVINCE OF QUEBEC REGISTRY OF MONTREAL No: 500-09-027913-185 (500-11-029529-068) MINUTES OF THE HEARING DATE: November 30, 2018 THE HONOURABLE STEPHEN W. HAMILTON , J.C.A. PETITIONERS COUNSEL MonRoi inc. 9114-8965 Quebec inc. Mtre RICHARD FRIEDMAN Mtre RAMAN BERWARI (Bell Rudick Friedman) Brana Giancristofaro-Malobabic PRESENT AND SELF-REPRESENTED RESPONDENT COUNSEL Daniel F. O’Connor Mtre Luc Séguin (Fonds d'assurance responsabilité professionnelle) IMPLEADED PARTY 4278020 Canada inc. Absent and not represented

DESCRIPTION: Application of the petitioners MonRoi Inc. and 9114-8965 Québec inc. to suspend the provision execution. (Art. 660 and 661 C.C.P. ) Application of the petitioner Brana Giancristofaro-Malobabic to suspend the provisional execution. (Art. 660 C.C.P. ) Application of the petitioners MonRoi Inc., 9114-8965 Québec inc. and Brana Giancristofaro-Malobabic to file supplementary statement of grounds of appeal. (Art. 356 C.C.P. ) Clerk: Lory Beauregard Courtroom: RC-18 HEARING Following the hearing of November 27, 2018 and the announcement that the judgment will be delivered today on the minutes: BY THE JUDGE : Judgment – see page 3. (

s) Lory Beauregard, clerk BY THE JUDGE

JUDGMENT [ 1 ] The Petitioners ask me to suspend the execution of the judgment rendered against them by the Superior Court, District of Montreal (Honourable Michel A.

Pinsonnault) on September 21, 2018, during the appeal. * * * [ 2 ] The judgment in first instance is 285 pages long and was rendered after a 38 day trial, which took place more than 11 years after the institution of the proceedings. [ 3 ] The judgment maintains in part the Respondent’s oppression remedy: • The judgment declares the actions of the Petitioners to be oppressive and unfairly prejudicial to the Respondent, fraudulent and an abuse of procedure; • The monetary conclusions order the Petitioners to pay solidarily to the Respondent $150,000 as compensation for shares that were never issued to him, $100,000 as moral damages, and $100,000 as damages for abuse of procedure, with interest from 2006 or 2007; • The judgment dismisses the Petitioners’ cross-demand; and • The judgment orders the provisional execution of the judgment notwithstanding appeal. [ 4 ] The Respondent has commenced execution of the judgment and has seized assets belonging to the Petitioners including the patent which is alleged to be the key asset of the Petitioners. [ 5 ] The Petitioners filed a notice of appeal on November 8, 2018 and two applications to suspend the provisional execution of the judgment on November 21, 2018.

The Petitioners also filed an application to file a supplementary statement of grounds of appeal. Those are the three motions in principle that are before me. [ 6 ] Meanwhile, the Respondent filed on November 26, 2018 a motion to dismiss the appeal which is presentable on January 21, 2019. In addition to alleging that the appeal has no reasonable chance of success, the Respondent argues that the Petitioners required leave to appeal pursuant to

Article 30, par. 2(3) of the Code of Civil Procedure , because the defence and cross-demand were dismissed as abusive. [ 7 ] In response to that motion, the Petitioners filed at the hearing on November 27, 2018 a de bene esse motion for leave to appeal after the expiry of the time limit.

That motion must be presented to the Court and not to a judge, so the Petitioners made it presentable on January 21, 2019, at the same time as the motion to dismiss. [ 8 ] The issue with respect to the need for leave to appeal raises an issue as to my jurisdiction: if leave to appeal is required and has not yet been obtained, then Petitioners argue that I do not have jurisdiction to suspend provisional execution but I have jurisdiction to issue a safeguard order. [1] [ 9 ] The Petitioners therefore made a verbal motion at the hearing asking me to postpone the hearing of the motions to suspend provisional execution until January 21, 2019, at the same time as the other motions, and to issue a safeguard order suspending provisional execution until January 21, 2019. * * * [ 10 ] The first issue is my jurisdiction to issue a safeguard order.

Article 379 C.C.P. provides : 379. In any case before the Court of Appeal , an appellate judge may issue a safeguard order or authorize the correction, within the time and subject to the conditions the judge determines, of any irregularity in the appeal proceeding, provided the notice of appeal has been duly filed and notified. [Emphasis added] [ 11 ] In the present matter, there is a notice of appeal, which may or may not be valid, and a motion for leave to appeal, which will be heard on January 21, 2019.

The Respondent argues that there is no “case before the Court of Appeal” without a valid notice of appeal or a motion for leave to appeal which has been granted. [ 12 ] In my view, the expression “any case before the Court of Appeal” is broad and includes a matter where a motion for leave to appeal has been filed but has not yet been granted. [2] [ 13 ] The second issue is whether I should exercise the discretion to issue a safeguard order in the circumstances of the present case. [ 14 ] I am being asked essentially to suspend provisional execution on a temporary basis by means of a safeguard order. [ 15 ] The conditions for the issuance of a safeguard order are urgency, appearance of right, serious or irreparable injury and balance of convenience. [ 16 ] There is urgency in the present matter.

The Respondent has commenced execution proceedings and has seized assets belonging

to the Petitioners. If the safeguard order is not issued, the Respondent can cause the seized assets to be sold. Moreover, the Petitioners have acted with diligence and are not responsible for this urgency. [ 17 ] The appearance of right condition requires me to examine the likelihood of the Petitioners’ obtaining an order suspending provisional execution once they have leave to appeal. [ 18 ] A judgment is provisionally executed as of right in certain instances set out in

Article 660 C.C.P. In all other matters,

Article 661 C.C.P. allows the judge to order provisional execution “[i]f bringing an appeal is likely to cause serious or irreparable prejudice to one of the parties”. In either event, a judge of the Court of Appeal may stay provisional execution. [ 19 ] The conditions for the suspension of provisional execution of a judgment are (1) apparent weakness in the judgment, (2) risk of serious prejudice if the provisional execution proceeds, and (3) the balance of convenience must favour the party seeking the suspension.

These last two conditions overlap with the conditions for the safeguard order. [ 20 ] The apparent weakness can be a weakness on the merits of the judgment or in the order for provisional execution itself. [3] Moreover, the jurisprudence allows for the suspension of provisional execution even in the absence of apparent weakness in the judgment if the prejudice is so serious that it risks neutralizing the right of appeal. [4] [ 21 ] In the present matter, it is not necessary for me to determine whether there are apparent weaknesses in the judgment as a whole, because (1) there are apparent weaknesses in the judgment with respect to provisional execution, and (2) the alleged prejudice is sufficiently serious. [5] [ 22 ] The trial judge ordered provisional execution on the following basis: [1253] O’Connor has requested that the Court orders that the present judgment be executory notwithstanding appeal. [1254] Given Malobabic’s bad faith throughout the present legal proceedings and her propensity to abuse the judicial process and the judicial resources, such a request appears to be totally justified under the present circumstances. [ 23 ] Article 660(10) C.C.P. provides for provisional execution as of right if the judgment “adjudicates on an abuse of procedure”.

The judgment in first instance declares the actions of the Petitioners since the institution of the action as an abuse of procedure and awards $100,000 damages for the abuse of procedure. However, the provisional execution as of right under Article 660(10) C.C.P. may be limited to the $100,000 damages awarded for the abuse of procedure and not the other monetary conclusions. [ 24 ] If Article 660(10) C.C.P. does not apply or applies only to part of the judgment, then there is an absence of reasons for ordering provisional execution for the remaining parts of the judgment.

This is an apparent weakness in the judgment. [ 25 ] Further, the reason for ordering provisional execution under

Article 661 C.C.P. is that the respondent is likely to suffer serious or irreparable prejudice if execution of the judgment is suspended as a result of the appeal.

Although monetary condemnations are generally not the subject of provisional execution, it is open to a respondent to demonstrate an immediate need for funds such that he will suffer serious or irreparable prejudice if execution of the judgment is suspended as a result of the appeal. [6] There is no mention in the judgment that any such proof was made. [ 26 ] On the other hand, the Petitioners allege that they will suffer serious and irreparable prejudice if the Respondent is allowed to execute the judgment.

The Respondent has seized the assets of the Petitioners, including the patent which is alleged to be the key asset of the Petitioners. If those assets are sold, the Petitioners could suffer an irreparable prejudice. [7] The Petitioners allege that provisional execution will likely lead to a complete shutdown of the Petitioners’ business. [ 27 ] Moreover, the fact that the Respondent has seized these assets gives him some level of security for his claim.

As a result, the balance of convenience lies in favour of the suspension of provisional execution. [ 28 ] As a result of the foregoing, I am satisfied that the Petitioners have a possible or even probable right to a suspension of the provisional execution. [ 29 ] The other factors for the safeguard order are whether the Petitioners risk serious or irreparable injury if the safeguard order is not issued and whether the balance of convenience favours the issuance of the safeguard order.

The analysis is similar to the analysis of those factors in the context of the appearance of right to the suspension of provisional execution, except that the safeguard order covers only the period from now until January 21, 2019, and the balance of convenience in the short term more clearly favours the Petitioners. * * * [ 30 ] For all of these reasons, I will issue a safeguard order effective until January 21, 2019, that will leave the seizures in place but will prevent the Respondent from taking any further steps in execution of the judgment dated September 21, 2018. [ 31 ] The motions to suspend provisional execution will be postponed to January 21, 2019, to be heard by the formation that will hear the motion to dismiss the appeal and the de bene esse motion for leave to appeal after the expiry of the time limit. [ 32 ] Finally, the motion under

Article 356 C.C.P. to authorize the Petitioners to file a supplementary statement of grounds of appeal will be granted, in order to ensure that the formation has a complete file on January 21, 2019. I will allow an additional 5 pages, to be served and filed by December 14, 2018. They can serve a joint document or they can divide the 5 pages amongst themselves. FOR THESE REASONS, THE UNDERSIGNED : [ 33 ] GRANTS the Petitioners’ verbal motion for a safeguard order;

[ 34 ] SUSPENDS provisional execution of the judgment rendered by the Honourable Michel A.

Pinsonnault on September 21, 2018, until January 21, 2019 at 4:30 p.m.; [ 35 ] LEAVES IN PLACE the seizures executed by the Respondent prior to the date of this judgment; [ 36 ] DEFERS the motions to suspend provisional execution to the formation that will hear the motion to dismiss the appeal and the de bene esse motion for leave to appeal after the expiry of the time limit on January 21, 2019; [ 37 ] AUTHORIZES the Petitioners to serve and file one or more supplementary statements of grounds of appeal (maximum 5 pages in total) before December 14, 2018 at 4:30 pm; [ 38 ] AUTHORIZES the Respondent to serve and file an amended motion to dismiss the appeal before January 7, 2019 at 4:30 p.m.; [ 39 ] THE WHOLE, with costs to follow.

STEPHEN W. HAMILTON , J.C.A.