City of Yorkton Prospective Appellant (Plaintiff) v. Mi-Sask Industries Ltd., Royal, 2020 SKCA 109

Court of Appeal for Saskatchewan Docket: CACV3670 Citation: Yorkton (City) v Mi-Sask Industries Ltd. , 2020 SKCA 109 Date: 2020-09-08 Between: City of Yorkton Prospective Appellant (Plaintiff) And Mi-Sask Industries Ltd., Royal Group, Inc., EMCO Corporation, Associated Engineering (SASK) Ltd. Prospective Respondents (Defendants) Before: Schwann J.A. (in Chambers) Disposition: Application granted in part On application from: 2020 SKQB 183 , Yorkton Application heard: August 6, 2020 Counsel: Lauren Wihak and Angela Stolz for the Appellant Conrad Hadubiak, Q.C., and Allison Graham for the Respondent Schwann J.A. I.

Introduction [ 1 ] The City of Yorkton [City] seeks leave to appeal a decision made by a Court of Queen’s Bench judge who refused to grant a preservation order against Mi-Sask Industries Ltd. [Mi-Sask] pursuant to s. 5 of The Enforcement of Money Judgments Act , SS 2010, c E- 9.22 [ EMJA ]: Yorkton (City) v Mi-Sask Industries Ltd. , 2020 SKQB 183 [ Chambers Decision ]. [ 2 ] If leave is granted, the City also applies for two forms of interim relief: the first is in the nature of an order preventing Mi- Sask from disbursing funds pending the adjudication of its appeal and, the second, is an order directing Mi-Sask to return funds disbursed following issuance of the Chambers Decision . [ 3 ] For the following reasons, I conclude that leave to appeal should be granted and an interim stay imposed.

The City’s application for the immediate return of money disbursed by Mi-Sask is refused. II. Background [ 4 ] The City has been mired in long-standing litigation against Mi-Sask and several other defendants with regard to the supply and installation of plastic piping for a portion of its sewer infrastructure, a project that was completed in March of 2010. The City had contracted with Mi-Sask to install the pipe.

It alleges several significant failures in the installed pipe occurred causing it to split and then leak in November of 2010. [ 5 ] The City commenced an action against Mi-Sask and various other defendants in May of 2012. Its claim against Mi-Sask is grounded in breach of contract and negligence. The City seeks in excess of $8 million for costs associated with the testing, removal and repair and/or the replacement of the defective pipe. A four-week trial is scheduled for March and April of 2021. [ 6 ] In the lead up to the trial, the City applied to the case management judge for a preservation order.

The backdrop that precipitated the City’s application is as follows. Mi-Sask is a family-run sewer and water construction business that has operated in Saskatchewan for many years. For various reasons, the principals behind Mi-Sask wish to retire and to that end took steps to wind down their business. Those steps included a complete dispersal auction of its equipment in April of 2020.

That sale netted proceeds of roughly $940,000 from which Mi-Sask paid (a) $350,000 to retire its mortgage, (b) $237,374 to Ted Miazga and Cythia Kitella (Mi-Sask directors) to enable them to pay out the mortgages that had been registered against their homes as security for repayment of funds they personally borrowed to finance Mi-Sask, and (

c) approximately $100,000 for wages and other miscellaneous expenses. Roughly $327,900 from the sale proceeds remained at the time of the Chambers application.

That action prompted the City to bring an application for a preservation order over Mi-Sask’s land and other exigible assets or the sale proceeds therefrom on the basis that any eventual judgment would be wholly unenforceable as against Mi-Sask, absent such an order. [ 7 ] Prior to the application being heard, Mi-Sask also sold its land and building, netting in excess of $1.2 million. [ 8 ] In the period between the Chambers hearing (June 11, 2020) and the release of the Chambers Decision (June 26, 2020), Mi- Sask was bound by the terms of an interim order restricting the use of its funds.

In accordance with the terms of that order, Mi-Sask used the remaining funds to pay such things as wages, credit card debt, and source payroll deductions. After the Chambers Decision was rendered, but before the expiration of the 15-day period to apply for leave to appeal, Mi-Sask repaid amounts owing to its three shareholders (Leading Enterprises Inc., DRT Holdings Ltd. and Tamarack Holdings Corp.) for money advanced to Mi-Sask by way of shareholder loans.

Mi-Sask also made payment to various creditors, including utilities, wages, general expenses, taxes (property, payroll deductions and PST), insurance and legal fees. As of July 30, 2020, the balance remaining in Mi-Sask’s hands was $952,360.89. [ 9 ] Ms. Kitella swore an affidavit in response to the City’s application for leave that touches on the corporate intentions of Mi-

Sask with regard to the remaining funds: 5. It was always intended that once Mi-Sask sold its assets and paid its creditors, including the Holding Companies in respect to the Shareholder Loans, that the remaining money would be set aside for the lawsuit in the event judgment was rendered against Mi-Sask. This remains Mi-Sask’s intention to date. 6. Mi-Sask will continue to preserve all monies for the lawsuit that are not required for payment of (

a) any amounts owing to federal, provincial or municipal authorities for any taxes, withholding, remittances, or other charges; (

b) ongoing business expenses such as utility expenses, insurance, payroll, bank and financial charges and any other expenses of this nature; (

c) all professional fees, disbursements, and other costs relating to the winding up of Mi-Sask; and (

d) legal fees and disbursements incurred in responding to the City of Yorkton’s proposed appeal of the Chambers Decision . Apart from fees in the nature of those above, Mi-Sask has no further creditors and anticipates incurring no other fees. [ 10 ] The City’s application for a preservation order turned on the issue of whether enforcement of the prospective judgment would be partially or wholly ineffective if such an order was not granted by reason of Mi-Sask’s disposition of its property.

In addressing the inherent tension in s. 5 between the interests of a defendant on the one hand (not to be unduly fettered in dealing with its property) and a plaintiff on the other (not to go empty-handed at the end of a successful action), the Chambers judge pondered this question: “How can a plaintiff, unfamiliar with a defendant’s financial wherewithal to pay an unknown quantum of judgment, prove that the defendant’s impugned dealing with its property is likely to make judgment enforcement ‘partially or totally ineffective’”? (at para 14).

The Chambers judge recognized the evidentiary conundrum this presents. [ 11 ] In spite of this inherent tension, and the fact that the required information is more often than not in the hands of a defendant, the Chambers judge adopted the ratio in Saskatchewan Crop Insurance Corporation v Avramenko , 2014 SKQB 96 , 436 Sask R 179 [ Avramenko ], by holding that “the appropriate standard of proof required the plaintiff to establish a prima facie case that its judgment enforcement would be partially ineffective as a result of the defendant’s dealings with its property” ( Chambers Decision at para 15) [ 12 ] In the course of arguing for an exception to the scope of a preservation order under s. 5(5)(b)(iii) (i.e., to pay the expenses of defending the action), Mr.

Miazga, a Mi-Sask director, stated that the company had insurance coverage but that its policy did not cover all professional fees and disbursements associated with defending against the City’s action. The Chambers judge queried why the City had not adduced evidence to determine the extent of Mi-Sask’s coverage. As far as the Chambers judge was concerned, the existence of insurance was clearly relevant to the central issue, i.e., whether the enforcement of a successful action is likely to be partially or totally ineffective if Mi-Sask’s remaining funds were not subject to a preservation order.

As he framed it, “not knowing the terms of that insurance, [left] this critical question unanswered” (at para 19). [ 13 ] In the end, even though the Chambers judge recognized the challenge associated with garnering evidence in the hands of a defendant and, at that, the propriety of adducing evidence about insurance coverage in particular, he concluded that the City had failed to discharge the onus of establishing a prima facie case before the burden shifted to Mi-Sask to prove an exception.

The Chambers judge dismissed the City’s application: [20] Although the City has accepted the onus of proving that its judgment enforcement measures will be thwarted in the absence of a preservation order, it has not discharged this onus. As Justice Mills stated in Avramenko and as the City has expressly acknowledged, the onus of proving that judgment enforcement will be partially or wholly ineffective lies with the plaintiff, regardless that such evidence may be challenging to bring before the court. But this proof is the essential starting point for the court.

Then, if satisfied that a preservation order is prima facie justified, the onus must necessarily switch to the defendant to prove one or all of the conditions in s. 5(5)(b)(i),(ii) or (iii). III. Leave to appeal A. The proposed grounds of appeal [ 14 ] The City’s proposed notice of appeal identifies three potential grounds. First, the City argues that the Chambers judge erred in law “ in his determination of the onus of proof required by s. 5(5) (

b) of the EMJA , and the nature and the quality of the evidence required to satisfy that burden” (prospective appellant’s memorandum of law at para 39(a)). Second, and closely related to the first ground, the City contends that the Chambers judge erred in law, or alternatively in mixed fact and law, “in determining that the City had an obligation to prove that Mi-Sask did not have sufficient insurance funds to cover the claim against it” (at para 39(b)).

Third, the City argues the Chambers judge erred in not granting a preservation order against Mi-Sask due to an error in identifying the applicable legal principles. B. The test for leave [ 15 ] The City’s application for leave to appeal is grounded in s. 112 of the EMJA . The analytical framework applied on leave applications is that set out in Rothmans, Benson & Hedges Inc. v Saskatchewan , 2002 SKCA 119 , 227 Sask R 121 [ Rothmans ].

That is, an applicant must establish that the prospective appeal is “of sufficient merit to warrant the attention of the Court of Appeal” and “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” (emphasis in original, at para 6). [ 16 ] As Cameron J.A. noted in Rothmans , the merit criterion examines whether the proposed appeal is “prima facie frivolous or vexatious” or “prima facie destined to fail”, bearing in mind the standard of review that would apply were leave to be granted and the appeal to proceed: see also Poffenroth Agri Ltd. v Brown , 2020 SKCA 68 at para 47 .

Additional considerations under the merit prong of the test include whether the appeal would “unduly delay the proceedings” or “add unduly or disproportionately to the cost of the proceedings” ( Rothmans at para 6 ). At this stage of the analysis, an appellate Chambers judge is not asked to definitively decide the merits issue.

[ 17 ] The merit criterion is not a high bar: see Verdient Foods Inc. v United Food and Commercial Workers, Local 1400 , 2019 SKCA 137 at para 15 . [ 18 ] The second prong of the inquiry – the importance of the proposed appeal – asks whether the issues raised by the proposed appeal are of sufficient importance to the proceedings before the court, the field of practice or the state of the law, or the administration of justice generally to warrant determination by the Court of Appeal.

This prong of the test is gauged by a consideration of a series of questions ( Rothmans at para 6 ): • 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? [ 19 ] The onus is on the applicant to demonstrate that the factors set out in Rothmans “weigh decisively in favour of leave being granted” ( Bennett Jones LLP v Frank and Ellen Remai Foundation Inc. , 2016 SKCA 136 at para 13 , 98 CPC (7th) 27, quoting Rothmans at para 6 ).

C. Leave to appeal is granted [ 20 ] The Chambers Decision and the proposed appeal concern s. 5(5) of the EMJA : Preservation order 5

(5) The court may grant a preservation order if the court is satisfied that: (

a) the action would, if successful, result in: (

i) a judgment in favour of the plaintiff; or (ii) an order described in subclause (1)(a)(ii); (

b) if the preservation order is not granted, the enforcement of a judgment or order against the defendant or transferee is likely to be partially or totally ineffective as a result of the disposition of, damage to, dissipation of, destruction of, concealment of or any dealing with property , other than disposition for the purposes of: (

i) meeting reasonable living expenses of the defendant and dependants of the defendant; (ii) carrying on the business of the defendant in the ordinary course; or (iii) acquiring income to pay the expenses of defending or responding to the action; and (

c) the action will be prosecuted without delay, other than delay caused by the defendant or transferee. (Emphasis added) [ 21 ] The aspect of s. 5(5) of the EMJA that was in contention before the Chambers judge was whether enforcement of the City’s judgment against Mi-Sask (if granted) was likely to be partially or totally ineffective as a result of the disposition of its property if the preservation order was not granted. Not insignificantly, the City agreed that it bore the evidentiary burden of establishing a prima facie case in relation to that issue.

To that end, the City filed affidavit evidence, much of which outlined the actions that had been taken by Mi- Sask to wind down its business (see the Chambers Decision at para 8). [ 22 ] However, as mentioned above, in the course of attempting to carve out an exception to the preservation order (to fund Mi- Sask’s expenses defending the City’s action as per s. 5(5) (b)(iii)), the spectre of insurance came up. It was within this context that the City had argued the exception could not be sustained because Mi-Sask had not provided evidence of the specifics and extent of its insurance coverage.

The Chambers judge latched on to this issue: [18] Because the City accepts the onus of proving that enforcing its judgment may be partially or wholly ineffective, and because the City realizes that Mi-Sask has insurance to cover the claim against it, the court questions why the City has not adduced evidence to determine the extent of Mi-Sask’s insurance coverage . For example, the City has not sought to cross-examine Mr.

Miazga to establish the extent of insurance coverage if Mi-Sask is found liable, either the limit of insurance or the amount of any deductible. (Emphasis added) [ 23 ] Although the Chambers judge recognized that it is generally inappropriate to raise the existence of insurance coverage in litigation, he nonetheless found it relevant to the broader issue of whether a preservation order should be granted.

As far as he was concerned, since the City had knowledge of Mi-Sask’s insurance coverage, yet failed to take measures to explore its terms (such as by cross-examining the affiant), the critical question was left unanswered. In the end, and without commenting on the evidence that had been adduced by the City, the Chambers judge concluded he was hamstrung in determining the merits of the City’s application “given the dearth of evidence” (at para 21).

The City’s application was therefore denied. [ 24 ] The relevance of insurance (if relevant at all), the City argues, goes to the exemption issue, i.e., whether funds were necessary to pay Mi-Sask’s expenses in defending the action. This was a burden that fell on Mi-Sask, and one that the Chambers judge seemed to

acknowledge at paragraph 20 of his reasons.

However, as the City argues, the Chambers judge not only found the existence of insurance relevant to the burden borne by an applicant for a preservation order, but he placed the burden of establishing or uncovering the specifics of that evidence on the shoulders of the City, even though such information was within the possession and control of Mi-Sask. [ 25 ] Mi-Sask counters this argument by suggesting the law with respect to the onus borne by an applicant for a preservation order is settled and that, since the City accepted that position, it cannot resile from it on appeal.

However, the thrust of the City’s argument is not that the Chambers judge erred in relation to who bore the burden generally or even that the onus is to establish a prima facie case. The City accepted that legal principle in the court below.

Rather, the City argues the Chambers judge erred in interpreting the nature of the evidence that was required to satisfy that burden and that the existence of insurance coverage was relevant to the issue at all. [ 26 ] The nature of the evidence required to establish a prima facie case and, more specifically, the relevance of insurance coverage to the broader question of whether the judgment would be partially or wholly unsatisfied, has not been settled by the existing case law.

In very general terms in Avramenko , Mills J. concluded that applicants for a preservation order must establish a prima facie case given the extraordinary nature of the remedy, and in Ronald C.C. Cuming and Donald H. Layh, The Saskatchewan Enforcement of Money Judgments Act: Commentary and Analysis (Regina: Office of the Queen’s Printer, 2012) at 63, the authors note that s. 5(5) (

b) requires “evidence sufficient to convince the court that the order is required” (at para 5[13]).

There are no appellate decisions to date that have passed upon the onus issue nor refined what it might mean in the context of insurance. [ 27 ] The proposed appeal also raises the issue of whether an applicant needs to take affirmative steps to probe the extent of a defendant’s insurance coverage: Must an applicant, as the Chambers judge suggests, cross-examine a defendant on their affidavit or take other steps to unearth evidence in the possession and control of the defendant? or Does this requirement undermine the effectiveness of the preservation remedy, make the process costly or unnecessarily delay proceedings?

These issues, among others, have not been explored in previous decisions arising from EMJA applications. [ 28 ] By way of the proposed third ground of appeal, the City asserts the Chambers judge erred in his application of s. 5 by not granting a preservation order. In my view, this ground engages the deferential standard of review associated with discretionary decisions.

In spite of the deferential approach mandated for decisions of this nature, and as the City pointed out in oral argument, the Chambers judge simply dismissed its application seemingly on the insurance issue without examining the balance of the evidence the City had placed before the court.

While a Chambers judge is not required to respond to each and every argument or comment on each piece of evidence, it would be a reversible error for a judge to have exercised discretion in disregard of a material fact: see Rimmer v Adshead , 2002 SKCA 12 , [2002] 4 WWR 119. [ 29 ] On the whole, it cannot be said that the proposed appeal is destined to fail. Mi-Sask argues the City put its insurance and the extent of coverage into issue, but this ignores the finding made by the Chambers judge that the issue had been raised by Mi-Sask in the context of the exemption issue.

In any event, it does not settle the issue of whether the Chambers judge was correct in insisting that a prima facie case – in the context of the matter before him – requires the City to provide proof that Mi-Sask’s insurance would not cover the City’s claim in order for a preservation order to be granted. [ 30 ] Further, there is no suggestion this appeal would, in any way, delay the underlying litigation and, in any event, as an expedited appeal, it can be heard without undue delay. [ 31 ] For its part, Mi-Sask forcefully argues that leave should not be granted because the appeal has been rendered largely moot, given repayment of the shareholder loans following release of the Chambers Decision .

Therefore, as the argument goes, little is gained by a preservation order since there is a substantially diminished pot of money to preserve. [ 32 ] What Mi-Sask seems to overlook with its mootness argument is that it orchestrated the depletion of funds by choosing to pay out the shareholders loans immediately after the Chambers Decision was rendered. As a matter of fairness, Mi-Sask should not be allowed to benefit from a mootness argument that arises through its own, intentional actions. In any event, even though some of the funds were paid to satisfy shareholder loans, roughly $920,000 remains.

The issue is not moot. [ 33 ] Turning to the second branch of the Rothmans test, I am satisfied the proposed appeal is of sufficient importance. The City convincingly makes the case that the Chambers Decision – if allowed to stand – may be interpreted as requiring applicants to take significant, costly and time-consuming steps to dig into a defendant’s financial situation: information all within the possession and control of the defending party. Moreover, the proposed appeal raises an unsettled point of law.

Previous jurisprudence does little to clarify the correctness of the Chambers judge’s decision that requires the City to adduce evidence about Mi-Sask’s insurance coverage in order to discharge its onus under s. 5(5) (

b) of the EMJA . The limited amount of s. 5(5) case law ensures that the issues raised in the proposed appeal have a wider resonance and transcend the particular in their implications. [ 34 ] For the reasons expressed above, the City has satisfied me that the Rothmans factors weigh decisively in favour of leave being granted. IV. Stay Ordered [ 35 ] The City seeks an order preventing Mi-Sask from disbursing any further funds, pending the adjudication of its appeal.

In support of its argument, the City relies on s. 20(1) of The Court of Appeal Act , 2000, SS 2000, c C-42.1 , and Rule 15(1) of The Court of Appeal Rules. Those provisions read as follows: [ The Court of Appeal Act, 2000 ] Judge in chambers 20

(1) A single judge sitting in chambers may hear and dispose of an application or motion that is incidental to an appeal or matter pending in the court and that does not involve the decision of the appeal on the merits.

[The Court of Appeal Rules] Stay 15(1) Unless otherwise ordered by the judge appealed from or by a judge, the service and filing of a notice of appeal does not stay theexecution of a judgment or an order awarding mandamus, an injunction, alimony, or maintenance for a spouse, child or dependant adult.Unless otherwise ordered by a judge, the service and filing of a notice of appeal stays the execution of any other judgment or orderpending the disposition of the appeal. (Forms 5a and 5b) [36] In oral argument, the City rescinded from its earlier position with respect to Rule 15(1).

Since Rule 15(1) is concerned withstaying the execution of a judgment or order, that rule has no application if the judgment or order under appeal leaves nothing to beexecuted: see, for example, Mayrand v Mayrand (1982), (SK CA), 20 Sask R 263 at paras 4–5, or Orr v Bzowey, 2005SKCA 86 at para 5, 262 Sask R 310. [37] If the requested relief is to be granted, jurisdiction must be grounded in s. 20(1) of The Court of Appeal Act, 2000.

There isextensive authority to the effect that, in very general terms, s. 20(1) provides an appellate judge sitting in Chambers with “a broad power”:see Mann v KPMG Inc., 2001 SKCA 24 at para 14, 203 Sask R 267 [Mann]; Stevenson Estate v Bank of Montreal, 2009 SKCA 11 atpara 11, 320 Sask R 168 [Stevenson Estate]; Phillips Legal Professional Corporation v Vo, 2016 SKCA 50 at para 2, 476 Sask R 269(citing Mann at para 14); and Haug v Dorchester Institution, 2016 SKCA 55 at para 3, [2016] 10 WWR 484 [Haug]. [38] As well, there is authority for the proposition that a single judge in Chambers has the power under s. 20(1) – and possibly underthe inherent jurisdiction of the Court – to make an order preserving the status quo and preventing the frustration of an appeal: Beare vKirby Enterprises Inc., 2013 SKCA 44 at para 6, 414 Sask R 66 [Beare]; Morin v Matheson, 2017 SKCA 80 at para 6; and Knight ArcherInsurance Ltd. v Dressler, 2019 SKCA 24 at para 10. [39] Nonetheless, the power conferred by s. 20(1) is limited in two, related respects.

The application or motion before the Chambersjudge must be incidental to the pending appeal. The incidental nature of the relief was interpreted in Stevenson Estate, citing Strata Plan1229 v Trivantor Investments International Ltd. (1996), (BC CA), 24 BCLR (3d) 292 (CA), as allowing only “an orderthat has a minor or subordinate role in relation to the outcome of the appeal proper” (Stevenson Estate at para 10). The second limitation isthat the order cannot decide the case on its merits.

What a Chambers judge cannot do, therefore, is “make an order that effectively puts anend to an appeal or that addresses in a final way a matter properly left to the panel who will hear the appeal” (Haug at para 3). [40] Whether a judge should exercise discretion to preserve the status quo and prevent the frustration of an appeal is a fact-specificundertaking: see Veolia Water Technologies, Inc. v K+S Potash Canada General Partnership, 2018 SKCA 61 at para 12, 28 CPC (8th)322 [Veolia].

This Court’s decisions in Beare and Carman Loraas v Bruce Loraas (15 May 2018) Regina, CACV3244 (Sask CA)[Loraas], illustrate the limitations to the exercise of the power conferred by s. 20(1). In Beare, relief was denied because the remedy wasgreater than the issue raised on appeal and, if granted, would have rendered the appeal moot. A stay order in Loraas would have caused asingle judge in Chambers to effectively decide the appeal. [41] Turning to the within matter, I am satisfied that the relief requested by the City is not greater than that at issue in the appeal andis incidental to the appeal.

Moreover, the relief can be granted without requiring me to reach any conclusion about the issues raised in thenotice of appeal. As an interim measure, I am satisfied that it would not put an end to the appeal. [42] The issue, therefore, is whether I should exercise my discretion to grant an order preserving the status quo. The test forinjunctive relief – set out in Manitoba (Attorney General) v Metropolitan Stores Ltd., (SCC), [1987] 1 SCR 110, and RJRMacDonald v Canada (Attorney General), (SCC), [1994] 1 SCR 311 [RJR MacDonald] – requires the City todemonstrate that (

a) the proposed appeal raises a serious question to be determined, (

b) without an injunction the City will experienceirreparable harm, and (

c) the balance of convenience weighs in favour of granting the injunction. [43] On the first branch of the RJR MacDonald test, an applicant must demonstrate that the appeal raises a serious question to bedetermined. This threshold was described in Veolia as “generally a low threshold” (at para 16) that must be “crossed” (at para 17) and, inMosaic Potash Esterhazy Limited Partnership v Potash Corporation of Saskatchewan Inc., 2011 SKCA 120 at para 113, 341 DLR (4th)407, as one that is not frivolous or vexatious.

This prong of the RJR MacDonald test has been canvassed in my discussion on leave andwill not re-visited. Suffice it to say, the City has satisfied me that its grounds of appeal pass the relatively low threshold for enjoining Mi-Sask. [44] The City has also demonstrated that it will experience irreparable harm. There is a risk that without injunctive relief, the City’sability to recover a damage award from Mi-Sask will be further circumscribed or negated entirely.

Citing Veolia in support, Mi-Saskargues that the possibility of a moot appeal “does not, on its own, conclusively establish irreparable harm” (prospective respondent’smemorandum of law at para 52). However, while it is correct to state that mootness is only one factor in the analysis of irreparable harm,Mi-Sask’s reliance on Veolia is misplaced.

In Veolia, Ottenbreit J.A. clearly states that mootness may be enough, on its own and in certaincircumstances, to prove irreparable harm: [17] … With respect to the factor of irreparable harm, there is a high likelihood the appeal will effectively become moot if the relief is notgranted. However, to be clear, I am not saying that the prospect of the appeal becoming moot will in all circumstances be conclusive.

It isone factor that is relevant to one part of the test … . (Emphasis added) [45] In the circumstances of this application, the City’s argument about mootness rises above the bare assertion that Mi-Sask claimsit to be. Mi-Sask is in the process of winding up its business with no ongoing operations and no revenue stream.

Further, the reduction ofthe assets between the time of the Chambers Decision and the application for leave lends credence to the City’s concern that it will not beable to recover damages in the event the trial judgment goes against Mi-Sask. [46] Finally, the balance of convenience favours the City. The City’s ability to recover from Mi-Sask may continue to contract

without judicial constraint, pending the determination of this appeal. Mi-Sask argues that the City’s desired injunction will “paralyze [it] entirely”, leaving it unable “to pay creditors, outstanding taxes, withholdings, remittances, or charges, ongoing business expenses, professional fees, disbursements and other costs relating to its winding up, or legal fees in relation to this appeal” (prospective respondent’s memorandum of law at para 53). However, that position does not accord with paragraph 6 of Ms.

Kitella’s affidavit, where she deposed to the company’s needs pending appeal, concluding that “Mi-Sask has no further creditors and anticipates incurring no other fees”. In my view, those needs – whatever they may be – can be accommodated by the terms of an appropriate order. Judicial direction will provide the flexibility needed by Mi-Sask to cover those sorts of costs and not leave it in a state of paralysis.

Furthermore, the City seeks an expedited appeal, reducing any inconvenience that may be suffered by Mi-Sask. [ 47 ] Accordingly, there will be an order restraining Mi-Sask from disbursing any of its funds except as follows: (

a) to pay the outstanding balance owing to any creditor that holds or held a security interest in any of the assets sold; (

b) to pay any and all amounts owing to federal, provincial or municipal authorities for any taxes, withholdings, remittances or other charges; (

c) to pay the outstanding balance of any amount owing to any creditor of Mi-Sask Industries Ltd. as of May 11, 2020; (

d) to pay Mi-Sask Industries Ltd.’s ongoing business expenses, including but not limited to salaries, benefits and other remuneration for its employees, bank and financial charges, utility expenses, insurance and any other expenses incurred in the ordinary course; (

e) to pay all professional fees, disbursements and other costs relating to the ongoing operation of Mi-Sask Industries Ltd. or its winding up; and (

f) to pay the legal fees and disbursements incurred by Mi-Sask Industries Ltd. in responding to the City’s appeal. [ 48 ] This order shall stay in effect until the time of the appeal hearing. It will be up to the panel hearing the appeal to determine if the order should be extended or amended. V.

No Return of Funds Disbursed to Date [ 49 ] The second aspect to the City’s application for interim relief entails a request for an order directing that funds distributed by Mi-Sask between the date of the Chambers Decision and the expiration of the appeal period be returned to it and be preserved until such time as the appeal is determined. The fundamental problem with the requested relief is that, in practical terms, it is aimed at the recipient of those funds such as utility providers, unsecured creditors, the Receiver General and the Minister of Finance, to name a few.

These are all third parties to the application and the proposed appeal. None were named or served in the court below or in this Court. [ 50 ] In oral argument, the City narrowed its focus to the return of funds paid to satisfy the shareholder loans. However, even this approach does little to overcome the fundamental flaw identified above. According to the affidavit of Ms. Kitella, the shareholders whose loans were paid were Leading Enterprises Inc., DRT Holdings Ltd., and Tamarack Holdings Corp.

These are distinct legal entities from Mi-Sask and none were served with the within application. [ 51 ] Quite apart from the issue of notice is the question of jurisdiction. While s. 20 of The Court of Appeal Act, 2000 , clothes a single judge of this Court sitting in Chambers with broad authority, that power is not unlimited. As discussed above, an order made under s. 20 must be incidental to the appeal, but cannot have the effect of deciding the appeal on its merits.

A matter is said to be incidental if it has no great impact on the substance of the appeal: see Stevenson Estate at para 10 . [ 52 ] As to the first of these limitations, I find the requested relief is not incidental to this appeal. I say this because the Queen’s Bench Chambers judge was neither asked nor did he make an order concerning the return of any previously disbursed funds. Quite correctly, the City has not identified this as an error on the part of the Chambers judge or a ground of appeal for the simple reason that these actions were taken after the Chambers Decision was rendered.

Therefore, it stands to reason that this specific form of relief exceeds the scope of the proposed appeal and thus can hardly be classified as incidental to it. As discussed above, a similar form of relief was sought in Beare in somewhat analogous circumstances. Without deciding whether a judge in Chambers is empowered to grant such relief under the inherent jurisdiction of this Court, Caldwell J.A. denied the application because it sought “to obtain more in the way of relief” ( Beare at para 7 ) than did the appeal. [ 53 ] Nor does the proposed relief operate to preserve the status quo.

The status quo in respect of Mi-Sask’s funds was – by the time of the City’s application for leave to appeal was heard – in an amount less than the shareholder loans.

Moreover, even if I accept that the specific form of the requested relief is permitted by s. 20(1) or the inherent jurisdiction of this Court, an order directing repayment is in the nature of a mandatory injunction that either directs Mi-Sask (and effectively third parties) to take a positive course of action to restore a status quo that existed at the time the Chambers Decision was rendered. [ 54 ] In R v Canadian Broadcasting Corporation , 2018 SCC 5 at para 18 , [2018] 1 SCR 196, Brown J. outlined the high burden imposed on applicants who seek such relief at the first stage of the RJR MacDonald test: [18] In sum, to obtain a mandatory interlocutory injunction, an applicant must meet a modified RJR-MacDonald test, which proceeds as follows:

(1) The applicant must demonstrate a strong prima facie case that it will succeed at trial. This entails showing a strong likelihood on the law and the evidence presented that, at trial, the applicant will be ultimately successful in proving the allegations set out in the originating notice … .

(Emphasis in original) Mandatory injunctions are “also (generally speaking) difficult to justify at the interlocutory stage” ( RJR MacDonald at para 15 ) and this difficulty is compounded when the proposed mandatory injunction involves third parties rather than just the defendant to an action. [ 55 ] While I find the proposed appeal raises a serious question to be determined, I cannot say with confidence that the City passes the higher threshold required for the issuance of a mandatory injunction. [ 56 ] For the reasons given, the second part of the relief requested by the City must be denied. VI.

Costs [ 57 ] This is an expedited appeal that should be scheduled for hearing to the earliest possible date. Therefore, once the City files its appeal book and factum, the Registrar shall, in consultation with the parties,

schedule this appeal to the first available hearing date. [ 58 ] The costs of this application are reserved to the panel hearing the appeal. “Schwann J.A.” Schwann J.A.