Date: 20040507
Docket: T-757-02
Citation No.: 2004 FC 675
BETWEEN:
ALWAYS TRAVEL INC. and
HIGHBOURNE ENTERPRISES INC. and
CANADIAN STANDARD TRAVEL AGENT REGISTRY (CSTAR)
Plaintiffs
- and -
AIR CANADA, AMERICAN AIRLINES INC.,
UNITED AIRLINES INC., DELTA AIRLINES INC.,
CONTINENTAL AIRLINES INC., NORTHWEST AIRLINES INC.,
and INTERNATIONAL AIR TRANSPORT ASSOCIATION (IATA)
Defendants
(Delivered from the Bench in Ottawa, Ontario
on May 6, 2004)
[1] There are two motions before me. The first is by the plaintiffs seeking to lift the stay which this Court had imposed upon the present proposed class action in the first instance by its order of May 30 last year and then again by a further order of December 10.
[2] The second motion is by the five defendants who are not under the protection either of the CCAA in Canada or of Chapter 11 of the US Bankruptcy Code in the United States, statutes which govern the other two defendants being respectively Air Canada and United Airlines.
[3] Dealing first with the plaintiffs' motion, on each of the two occasions when I have previously dealt with this matter, I have, I think, made it tolerably clear that it was my view that while this Court was issuing a stay in aid of the Ontario Court of Justice in the latter's administration of the CCAA and foreign bankruptcy proceedings, it was also my view that the proper Court to determine whether and when that stay should be lifted was the Ontario Court of Justice, since that Court was in a better position to know exactly what effect these proceedings and their continuation might have upon the administration of the two insolvent companies. More specifically, it was my view that the proper person to make those decisions, if they were to be made, was Farley J. who is the judge charged with that file in the Ontario Superior Court.
[4] Following both of those orders, made on May 30 and on December 10 last year, the plaintiffs, responding to the indication that I had made, made applications to Farley J. for a lift of the stay and those applications were refused. There was a brief period when there was no stay between about October 1st and December 10 because Farley J. had ordered that the Air Canada and United Airlines defendants should file material in response to the motion for certification, but nothing more.
[5] In the last application made to Farley J. earlier this year, he was invited to lift the stay by the present plaintiffs. He declined that invitation and in his endorsement supporting his order, he gives very full and cogent reasons as to why he has come to that conclusion. My reasons for dismissing the plaintiffs' motion today is very simply that, in my view, they are in the wrong Court, before the wrong judge. I have made it absolutely clear that, it would take quite exceptional circumstances for me to seek in some way to interfere with the administration of the Companies' Creditors Arrangement Act, R.S. 1985, c. C-36, and with Farley J.'s very active involvement in that administration. It is my opinion that the present motion by the plaintiffs, which if I calculate it correctly, is their fifth attempt in one Court or another to lift the stay, is vexatious and an abuse of process. It is also, in my view, an attempt at a collateral attack upon the orders made by Farley J. on exactly the same questions as those he dealt with when he dismissed the applications to lift the stay. And it is for that reason that I have concluded that the application should be dismissed.
[6] I turn now to the second motion before me which is made by the non-CCAA defendants, five airlines who are alleged to be co-conspirators with the insolvent defendants Air Canada and United Airlines. They have moved me to stay the proceedings as against them. I am going to reject that motion on the very simple grounds that the moving parties have not met and that they cannot on the evidence before me meet the classic three part test laid down by the Supreme Court of Canada in Manitoba (Attorney General) v. Metropolitan Stores (MTS) Ltd, [1987] 1 S.C.R. 110 and RJR MacDonald Inc. v. The Attorney General of Canada, [1994] 1 S.C.R.. 311. Just looking very briefly at the three elements of that test, first I find it impossible to say that the defendants who are seeking the stay have a reasonable cause of action or a reasonably arguable case. They have not, at their own request, even pleaded to the action and, though the threshold is low, I simply do not know how a Court could make a judicial appreciation of the reasonableness or otherwise of their cause in the absence of a plea on their part. Secondly, I do not think that there is evidence of irreparable harm. The only harm that is suggested is a rather contingent harm which might take place in the event that the action were to go forward and at some point the two insolvent defendants were to be somehow left behind and not be picked up along the way. That is wholly a contingency, the material before me indicates that both insolvencies are moving forward in an absolutely regular way and with some speed. I believe there are target dates set for early in the fall of this year for the Air Canada insolvency to be concluded and perhaps somewhat later for United Airlines, but whether those targets are met or not, it seems to me that the irreparable harm which the moving defendants would have to establish is simply not there.
[7] Finally, with respect to the balance of convenience, it seems to me that the balance clearly favours the plaintiffs. The defendants are asking that I should barr the plaintiffs from continuing with their action and I can see no possible basis upon which I should do that. Now, let me say, as I said in argument, that I think the plaintiffs are going to have some difficulty in continuing with their action. They are in a procedurally very complicated situation, some of which is not of their own making but that being said, it is for them to make their decision as to how they want to proceed and bearing in mind that this is a managed case and that I am the case manager and that anything that the plaintiffs seek to do from now forward is going to require my sanction. I do not think there is any serious danger of either irreparable harm or serious damage being done to these five defendants.
[8] I think those reasons are sufficient to justify my not ordering the stay that the non-CCAA defendants have requested.
Later
[9] On the question of costs, I am quite satisfied that the motion by the plaintiffs is one that ought not to have been brought. It is also, as I have said in my reasons, a motion which I consider to be frivolous and vexatious. I think it is appropriate to make an order for costs in the special circumstances notwithstanding the general no costs rule contained in Rule 299.41(1).
| 299.41 (1) No costs - Subject to subsections (2) and (3), no costs may be awarded to any party to a motion for certification of an action as a class action, to a class action or to an appeal arising from a class action at any stage of the motion, class action or appeal.
(2) Exception - Costs may be awarded against a party referred to in subsection (1) at any time if
(a) the conduct of the party tended to unnecessarily lengthen the duration of the proceeding;
(b) any step in the proceeding by the party was improper, vexatious or unnecessary or was taken through negligence, mistake or excessive caution; or
(c) there are exceptional circumstances that make it unjust to deprive the successful party of costs.
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299.41 (1) Sans dépens - Sous réserve des paragraphes (2) et (3), aucuns dépens ne sont adjugés aux parties à une requête en autorisation d'une action comme recours collectif, à un recours collectif ou à un appel découlant d'un recours collectif, à quelque étape de l'instance que ce soit.
(2) Exception - Les dépens peuvent, à tout moment, être adjugés contre une partie visée au paragraphe (1) dans les cas suivants:
(a) sa conduite a eu pour effet de prolonger inutilement la durée de l'instance;
(b) une mesure prise par elle au cours de l'instance était inappropriée, vexatoire ou inutile ou a été entreprise de manière négligente, par erreur ou avec trop de circonspection;
(c) des circonstances exceptionnelles font en sorte qu'il serait injuste d'en priver la partie qui a eu gain de cause.
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[10] While I do not think those costs should be on a full solicitor and client basis, I think it is proper, given the volume of material that has been filed and the amount of time that has been spent on this matter and also the fact that this is the third time the plaintiffs have brought this matter before me, and the fifth time before one Court or another, I think an order for costs payable forthwith and in any event of the cause in the amount of $10,000 to each of the defendants Air Canada and United Airlines would be appropriate.
[11] Turning to the motion by the non-CCAA defendants, while I find that their motion was unfounded, I do not think it was either frivolous or vexatious and while I have no hesitation in having dismissed it, I do not think that the criteria laid down in Rule 299.41(1) (above) which are a prerequisite to my making an order for costs have been met. Accordingly, there will be no order for costs on that motion.
Judge
Ottawa, Ontario
May 7, 2004
FEDERAL COURT
NAMES OF SOLICITORS AND SOLICITORS ON THE RECORD
COURT FILE NO.: T-757-02
STYLE OF CAUSE: ALWAYS TRAVEL INC. ET AL v. AIR CANADA ET AL
DATE OF HEARING: May 6, 2004
PLACE OF HEARING: Ottawa, Ontario
REASONS FOR ORDER OF THE HONOURABLE JUSTICE HUGESSEN
DATED: May 7, 2004
APPEARANCES:
John Legge, William Sharpe FOR PLAINTIFFS
Tad McLeod FOR DEFENDANT Continental Airlines Inc.
Katherine Kay, Nicholas McHaffie FOR DEFENDANT Air Canada
Michael Penny, Ticho Manson FOR DEFENDANT United Airlines Inc.
Louis Brousseau FOR DEFENDANT American Airlines
Mathew Milne-Smith FOR DEFENDANT Delta Airlines
Monique Jilesen Counsel to Air Canada monitor of CCAA
David Kent FOR DEFENDANT Northwest Airlines
Stanley Wong FOR DEFENDANT International Air Transport Association
SOLICITORS ON THE RECORD:
Legge and Legge FOR PLAINTIFFS
Ogilvy Renault
Ottawa, Ontario FOR DEFENDANT Continental Airlines Inc.
McCarthy Tétrault
Montréal, Québec FOR DEFENDANT American Airlines Inc.
Stikeman Elliott
Toronto, Ontario FOR DEFENDANT Air Canada
Torys
Toronto, Ontario FOR DEFENDANT United Airlines Inc.
Davies Ward Phillips & Vineberg
Toronto, Ontario FOR DEFENDANT Delta Airlines Inc.
Lenczner Slaght Royce Smith Griffin LLP
Toronto, Ontario FOR Air Canada monitor of CCAA
McMillan Binch
Toronto, Ontario FOR DEFENDANT Northwest Airlines
Davis & Company FOR DEFENDANT International Air Transport Association