Docket: CACV2561 Laurel O’Connor Proposed Appellant (Defendant) - v. -, 2014 SKCA 90

THE COURT OF APPEAL FOR SASKATCHEWAN Citation: 2014 SKCA 90 Date: 2014-08-25 Between: Docket: CACV2561 Laurel O’Connor Proposed Appellant (Defendant) - and - John Garden Proposed Respondent (Plaintiff) Before: Whitmore J.A. in Chambers Counsel: Karen Prisciak, Q.C. for the proposed appellant Andrea Rohrke, for the proposed respondent Application: From: 2014 SKQB 183 Heard: August 13, 2014 Disposition: Leave to appeal dismissed Written Reasons: August 25, 2014

By: The Honourable Mr. Justice Whitmore Whitmore J.A. I. Introduction [ 1 ] Laurel O’Connor, the proposed appellant, seeks leave to appeal the decision of the Chamber judge dismissing her application to vacate a notice of pending litigation registered against certain of her properties. II. Background [ 2 ] Mr. Garden, the proposed respondent, was a shareholder in two corporations. Ms. O’Connor was a consultant for both corporations and her husband, one of the defendants, was a director, shareholder, and C.E.O. of both corporations. Mr. Garden claims that the defendants, including Ms.

O’Connor, breached their fiduciary duty to him as a shareholder and commenced an oppression action against the defendants. [ 3 ] Mr. Garden’s statement of claim alleges that Ms. O’Connor received funds that are the property of the corporations and that any property acquired with these funds is the property of the corporations. Mr. Garden claims that two pieces of property owned by Ms. O’Connor were acquired using the corporation’s funds. [ 4 ] He registered a notice of pending litigation against those properties on June 5, 2012 and commenced the action shortly thereafter. [ 5 ] Ms.

O’Connor filed a statement of defence on August 17, 2012 and applied to vacate the notice of pending litigation. The Chamber judge dismissed her application and she now appeals the Chamber judge’s order. III. Analysis [ 6 ] The test for leave was set out by this Court in Rothmans, Benson and Hedges Inc. v. Saskatchewan , 2002 SKCA 119 at para. 6 , 227 Sask.

R. 121: First : Is the proposed appeal of sufficient merit to warrant the attention of the Court of Appeal? • Is it prima facie frivolous or vexations? • Is it prima facie destined to fail in any event, having regard to the nature of the issue and the scope of the right of appeal, for instance, or the nature of the adjudicative framework, such as that pertaining to the exercise of discretionary power? • Is it apt to unduly delay the proceedings or be overcome by them and rendered moot? • Is it apt to add unduly or disproportionately to the cost of the proceedings?

Second : Is the proposed appeal of sufficient importance to the proceedings before the court, or to the field of practice or the state of the law, or to the administration of justice generally, to warrant determination by the Court of Appeal? • does the decision bear heavily and potentially prejudicially upon the course or outcome of the particular proceedings? • does it raise a new or controversial or unusual issue of practice? • does it raise a new or uncertain or unsettled point of law? • does it transcend the particular in its implications? [emphasis in original] I will address the two parts of the Rothmans test in turn. [ 7 ] It is important to note that the matter under appeal is a discretionary order of the Chamber judge.

In Tsatsi v. Merchant , 2013 SKCA 73 , 417 Sask. R. 120, Ottenbreit J.A. held that where the proposed appellant seeks leave to appeal a discretionary order of a Chamber judge the standard of review is relevant to determining the merit of the proposed appeal. More specifically, the standard of review applicable to the proposed appeal should be considered when deciding whether the proposed appeal is prima facie destined to fail ( see Harding v. Harding , 2013 SKCA 71 , 417 Sask. R. 111 ). Therefore to satisfy the first state of the Rothmans test, Ms.

O’Connor must establish that her proposed appeal is not prima facie destined to fail in light of the applicable standard of review. [ 8 ] The standard of review of a discretionary decision made by a Chamber judge, as articulated in G.L. v. Canada (Attorney General) , 2004 SKCA 137 , 254 Sask. R. 286 ), is that of deference: [17] … Only if the chambers judge abused his discretion by acting on some wrong principle, by disregarding some material matter of

fact, or by failing to act judicially, is the Court of Appeal at liberty to interfere. Either that or the result must be so plainly wrong as toinvite intervention on that basis: Rimmer v. Adshead, 2002 SKCA 12 , [2002] 4 W.W.R. 119; 217 Sask. R. 94; 265 W.A.C. 94(C.A.). [9] Ms. O’Connor’s argument focuses on the Chamber judge’s failure to provide a full analysis of how a fiduciary relationshipcould arise between Ms. O’Connor and Mr. Garden. [10] This Court has held in Fisher v.

Campbell Custom Homes Ltd., 2007 SKCA 109 that the Chamber judge should not undertake asubstantive analysis of whether or not a fiduciary duty is owed; instead, the Chamber judge should assess whether, on the facts aspleaded in the statement of claim, the plaintiff’s action discloses an interest in the land.

If the plaintiff alleges a breach of an allegedfiduciary duty as a result of the defendant misappropriating funds and claims a constructive trust in any property acquired with those ill-gotten gains, the plaintiff is entitled to register a notice of pending litigation because the plaintiff has claimed an interest in land.Whether there actually was a fiduciary duty owed to the plaintiff or whether there was a breach of that fiduciary duty are mattersproperly to be determined at the trial. [11] The Chamber judge was alive to Gerwing J.A.’s decision in Fisher and applied it to the facts as pleaded.

Not only does theChamber judge’s reasoning appear not to be prima facie “plainly wrong,” his reasoning appears to be entirely consistent with GerwingJ.A.’s decision in Fisher on essentially the same point. Ms. O’Connor’s proposed appeal, therefore, in my view, is prima facie destinedto fail. [12] Ms. O’Connor submits the Fisher decision is distinguishable on the basis that there was a relationship between the parties inFisher, while in the instant case there is no relationship upon which a fiduciary duty can be based. Mr. Garden is a shareholder of thetwo corporations and Ms.

O’Connor is merely an employee of those corporations. [13] Leaving aside the fact that Ms. O’Connor was the spouse of the C.E.O. and director of the two corporations, I disagree that Fisheris distinguishable on the basis claimed by Ms. O’Connor. Although Fisher may not have the identical facts as the instant case, as theChamber judge said, the parameters are strikingly similar. The Chamber judge considered the matter on the facts as pleaded.

He wasaware that the proposed respondents claim was not iron clad and stated that there is the possibility the proposed respondent may not besuccessful at trial. [14] In addition, granting leave to appeal would also unduly delay and unduly add to the cost of the proceedings. There are seven otherdefendants to the underlying action, each of whom is unaffected by the notice of pending litigation.

Hearing the appeal on the notice ofpending litigation would further delay the trial to hear the action against those remaining defendants. [15] Further, and more importantly, should this Court grant leave to appeal its ultimate decision will not have any effect on thedisposition of the underlying proceeding. The notice of pending litigation is collateral to the oppression action, and determining whetherthe notice of pending litigation can remain or should be vacated will not bear upon the ultimate issue of whether Ms. O’Connor and theremaining defendants acted oppressively towards to Mr. Garden.

Thus, the proposed appeal does not satisfy the first branch of the test inRothmans. [16] Neither is the proposed appeal of sufficient importance to warrant the intervention of this Court. The appeal, if successful, wouldnot dispose of the litigation. This Court has held that where a successful result would likely dispose of the litigation, leave to appeal maybe granted (see Clements v. Preece, 2014 SKCA 64; R.J.G. v. Canada (Attorney Genera), 2002 SKCA 132, [2002] 28 C.P.C. (5th) 287).Here, vacating the notice will not have any effect on whether or not Ms.

O’Connor and the other defendants acted oppressively bybreaching an alleged fiduciary duty owed to Mr. Garden. [17] Finally, the proposed appeal does not raise a new, controversial, or unusual point of practice or a new or uncertain point of law.Fisher concisely holds that a certificate of lis pendens will be vacated only where it is clear that a plaintiff’s claim cannot give him or herany right in the land in question. The law is therefore clear. Whether the claimant actually has an interest is not at issue in determiningwhether a certificate of pending litigation should be vacated.

The issue is whether in the circumstances as pleaded the plaintiff has aninterest in the land. [18] The Chamber judge did not conduct a full analysis to determine that a fiduciary duty is owed by Ms. O’Connor to Mr. Garden.The Chamber judge is not required to do so. The investigation is to be limited to the facts as pleaded and substantive determinations arenot to be made.

The Chamber judge would have erred had he engaged in a thorough analysis of an alleged fiduciary duty at this stage,which is properly a matter for trial. [19] The Chamber judge instead addressed whether a constructive trust is an available remedy for a breach of fiduciary duty andfound, based on Lac Minerals Ltd. v. International Corona Resources, (SCC), [1989] 2 S.C.R. 574, that a constructivetrust is available for a breach of fiduciary duty. IV. Conclusion [20] As the applicant has failed to meet the either part of the test set out in Rothmans, the application for leave to appeal isdismissed.

Costs shall be in the cause. DATED at the City of Regina, in the Province of Saskatchewan, this 25th day of August, 2014. “Whitmore J.A.” Whitmore J.A.