|
Appeal - Stay Pending Appeal - Money Order [R63.01(5)]. The Innkeepers S.R.L. v. Enthusiast Gaming Holdings Inc.
In The Innkeepers S.R.L. v. Enthusiast Gaming Holdings Inc. (Ont CA, 2025) the Ontario Court of Appeal granted a motion to lift the automatic stay [under R63.01(1,5)] that resulted when an appeal of an interlocutory payment order was made:III. TEST FOR LIFTING A STAY
[14] Rule 63.01(5) of the Rules of Civil Procedure allows a judge of the Court of Appeal to lift an automatic stay of an order for the payment of money triggered by r. 63.01(1) on “such terms as are just”. It is clear from our caselaw that lifting an automatic stay is intended to be an exceptional and discretionary remedy, based on the circumstances of the case and the interests of justice: see SFC Litigation Trust v. Chan, 2018 ONCA 710, at para. 9; Mortimer v. Cameron, [1993] O.J. No. 4169, at para. 2; and Waxman v. Waxman, 2002 CanLII 45101 (Ont. C.A.), at para. 9. As Weiler J.A. said in Kagal v. Tessler, 2003 CarswellOnt 6830 (C.A.), at para. 3, “[i]n determining whether and on what terms it would be just to lift the stay the court has adopted a flexible approach consistent with a consideration of the circumstances of the particular case.”
[15] In deciding whether to lift the automatic stay, motion judges typically consider three factors:(a) The financial hardship of the respondent if the stay is not lifted;
(b) The ability of the respondent to repay or provide security for the amount paid; and
(c) The merits of the appeal.
See SA Horeca Financial Services v. Light, 2014 ONCA 811, 123 O.R. (3d) 542, at para. 13; Lang-Newlands v. Newlands, 2025 ONCA 328, at para. 24. [16] A review of our court’s caselaw illuminates that these three factors are really aimed at balancing two principal concerns: (i) any demonstrable and unusual hardship that will be suffered by the respondent if the stay is not lifted pending appeal; and (ii) the risk that if the appellant is ultimately successful in their appeal, they will be unable to collect the funds that they have already advanced to the respondent. See Mortimer, at para. 2; Ryan v. Laidlaw Transportation Ltd. (1994), 1994 CanLII 616 (ON CA), 19 O.R. (3d) 547 (C.A.), at pp. 549-50; Siwick v. Dagmar Resorts Ltd. (1996), 1996 CanLII 407 (ON CA), 95 O.A.C. 188 (C.A.), at pp. 191-93; Waxman, at para. 9; and SFC, at paras. 10-12.
[17] Whether the respondent will suffer demonstrable and unusual hardship maps directly onto factor (a). The risk that a successful appellant will bear the loss if they cannot recover damages reversed on appeal is captured by both factors (b) and (c). That risk may be mitigated by evidence of the financial means of the respondent or the terms of an order which provides some form of security over the payment until the appeal is determined on its merits. A preliminary assessment of the merits of the appeal can assist a motion judge in assessing the risk of non-recovery where the respondent cannot assure the court that the appellant’s funds will otherwise be protected; a meritorious appeal will heighten that risk while a frivolous one lessens it. See Siwick, at pp. 192-93; SFC, at para. 11. As Carthy J.A. said in Mortimer, at para. 11, “[e]ach case must be examined on its facts to see if the respondent presents unusual hardship and if risk to the appellants can be eliminated or, if existent, can be balanced against the hardship to the respondent.”
IV. APPLICATION OF THE TEST
A. Financial Hardship
[18] The respondent [SS: the moving party] must demonstrate some degree of financial hardship in order to justify displacing the default rule that an order for payment is stayed pending appeal. While this burden is typically met by demonstrating that the respondent is experiencing immediate financial need (e.g., a personal injury plaintiff requiring money for medical expenses), it may also be met if the respondent can show that the stay heightens the uncertainty of payment by the appellant after the appeal is concluded: Peoples Trust Company v. PSP Services Inc., 2025 ONCA 524, at para. 18; Lang-Newlands, at paras. 28, 31. This latter type of hardship is normally recognized in cases where there is a risk the appellant may dissipate their assets to frustrate recovery: SFC, at para. 12; Waxman, at para. 13; Popa v. Popa, 2018 ONCA 972, at para. 8; and Hall-Chem Inc. v. Vulcan Packaging Inc. (1994), 1994 CanLII 580 (ON CA), 72 O.A.C. 303 (C.A.) at pp. 307-08.
....
B. Ability to Repay or Provide Security
[22] The purpose of the second factor is to assess the risk to the appellant if they are made to pay the judgment now, and the order is ultimately reversed on appeal. This is especially relevant where money paid to the respondent could be dissipated by the time the appeal judgment is rendered. Where the respondent can assure the court that they will be able to repay the appellant if the judgemnt below is overturned on appeal, or an order can be crafted that assures the same result, this factor may favour granting the stay: Peoples Trust Company, at para. 19; Gardiner Miller Arnold LLP v. Kymbo International Inc., 2006 CarswellOnt 9436 (C.A.), at para. 8. “Undoubtedly, a motions court judge would feel more comfortable lifting a stay if satisfied that the appellant was reasonably protected against the possibility of a successful appeal”: Siwick, at p. 192.
....
C. Merits of the Appeal
[25] The merits of the underlying appeal are relevant insofar as they may help inform the degree of uncertainty in the appellant’s recovery if the stay is lifted and the appellant is successful on appeal. It is not necessary to find that the appeal is frivolous to lift a stay: Peper v. Peper (1990), 1990 CanLII 6951 (ON CA), 1 O.R. (3d) 145, at p. 151; see e.g., Lang-Newlands, at para. 34. Even when an appeal on its face has merit, an order lifting the stay may be justified in the circumstances of the case: Siwick, at p. 193.
[26] Also relevant to the merit assessment is whether the appellant takes issue with its liability to the respondent, or merely the quantum of damages. Where the context of the case shows that the appellant will have to pay some amount of money to the respondent, but the question is just “how much”, even a meritorious appeal may not weigh against lifting the stay: Hrvoic v. Hrvoic, 2023 ONCA 288, at paras. 8, 16-17; Peoples Trust Company, at para. 14; and Kagal, at para. 3; see generally, Leblanc v. Digiammatteo (1989), 1989 CanLII 4076 (ON CA), 71 O.R. (2d) 130 (C.A.). This is because where at least some liability is admitted, the concern the appellant will be unable to collect against the respondent is attenuated, because less money is at issue. “If the appeal is against damages only, frequently the respondent is almost certain to recover some amount regardless of the outcome of the appeal. In these situations an order lifting a stay is easier to justify”: Siwick, at p. 193.
....
D. Final Balancing
[32] Given the risk that enforcement delay presents to the ability of the Vendors to collect any portion of the Earn-Out Payment that they are owed and the ability to secure the interests of the Purchaser against potential loss caused by lifting the stay, it is in the interests of justice to lift the stay in this case.
[33] The stay of proceedings is designed to preserve the status quo in advance of an appeal. However, in this case leaving the stay in place would do the opposite: based on Myers J.’s factual findings, keeping the stay in place could effectively render the appeal moot. The stay could perpetuate the very outcome the Myers J. was attempting to prevent. In these unique circumstances, where there is no demonstrable prejudice to the appellant in respect of recovery following this appeal, but where the stay itself could effectively decide the appeal, it is easier to justify the exceptional remedy of lifting the automatic stay. . Peoples Trust Company v. PSP Services Inc.
In Peoples Trust Company v. PSP Services Inc. (Ont CA, 2025) the Ontario Court of Appeal granted a motion, here seeking to partially lift an automatic stay of a money order [under R63.01(1) and (5)]:B. Test for Lifting an Automatic Stay
[11] Under r. 63.01(5) of the Rules of Civil Procedure, a party may bring a motion to a judge of this court to lift an automatic stay, which order may be granted on “such terms as are just.” The decision to lift a stay is discretionary: Hrvoic v. Hrvoic, 2023 ONCA 288, at para. 10.
[12] As set out by Lauwers J.A. in Antunes v. Limen Structures Ltd., 2016 ONCA 61, at para. 13, where a party seeks to lift an automatic stay, the court will consider contextual factors: the grounds of appeal; the parties’ position at trial; what has happened since the trial; the general circumstances of the case, including the trial judge’s reasons; and the probable delay between trial and appeal that cannot be controlled by the parties.
[13] The test for lifting a stay is set out in SA Horeca Financial Services v. Light, 2014 ONCA 811, 123 O.R. (3d) 542, at para. 13, and requires consideration of three principal factors:a. the financial hardship to the respondent if the stay is not lifted;
b. the ability of the respondent to repay or provide security for the amount paid; and
c. the merits of the appeal. [14] As noted, the context of the appeal is important. For example, if an appellant will still have to pay the respondent even if successful on appeal, the court may be more inclined to partially life the stay: see Hrvoic, at para. 17.
|
