Ryan v. Laidlaw Transportation Ltd. et al.

[Indexed as: Ryan v. Laidlaw Transportation Ltd.]

19 O.R. (3d) 547

[1994] O.J. No. 1883

Action No. C18409

 Court of Appeal for Ontario,

Austin J.A.

September 1, 1994

Judgments and orders -- Stay of execution -- Judgment lifted -- Defendant in successful wrongful dismissal action appealing -- Execution of judgment automatically stayed under rule 63.01(1) -- Plaintiff's financial circumstances desperate -- Defendant's chances of success on appeal not overwhelming -- Plaintiff's motion under rule 63.01(5) for order lifting stay of judgment allowed -- Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 63.01.

R successfully sued LT Ltd. for damages for wrongful dismissal. The major issues at trial were whether LT Ltd. was R's employer for wrongful dismissal purposes and, if so, whether the law of Texas or Ontario applied. The trial judge found that LT Ltd. was R's employer and that Ontario law applied. He also found that R was entitled to 15 months' notice. LT Ltd. appealed and R cross-appealed, asking that the notice period be increased to three years. The judgment was stayed under rule 63.01(1) of the Rules of Civil Procedure, which imposes a stay automatically upon any final order for the payment of money in the event of an appeal.

R received no money from LT Ltd. after being fired in 1985. The commencement of the action was delayed until 1988 because of R's financial limitations. R's only source of income was a disability pension in the amount of $749 per month. His medical condition required medication at a cost of $500 per month, which he could not afford. He required dental work which would cost $10,000, but he had no insurance coverage and could not afford it. His rent was $850 per month. He had exhausted his savings.

R moved under rule 63.01(5) for an order lifting the stay of execution of the judgment.

Held, the motion should be granted.

Motions under rule 63.01(5) should be restricted to cases of demonstrable and unusual hardship to the respondent, and where a reasonable measure of protection can be afforded to the appellant. In most cases, the merits of the appeal will have a bearing on these factors.

R's financial circumstances were clearly desperate. A causal connection between the plaintiff's plight and the defendant's conduct does not have to exist in order for a stay to be lifted. On the record, such a connection appeared to exist in this case whether it was required or not.

LT Ltd.'s chances of success on either major issue on appeal, namely, who was R's employer and which law applied, were not overwhelming.

The stay of execution of the judgment should be lifted so as to permit recovery of the sum of $10,000 for the dental work and of $2,750 per month (R's estimated monthly expenses of $3,500 less the disability pension) commencing September 1, 1994.

Mortimer v. Cameron, Ont. C.A., January 13, 1993; Stein v.

Sandwich West (Township) (1994), 16 O.R. (3d) 321 (C.A.), consd

Rules and regulations referred to

Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 63.01

MOTION under rule 63.01(5) of the Rules of Civil Procedure for an order lifting a stay of judgment.

Raymond G. Colautti, for moving party (respondent).

Myron W. Shulgan, Q.C., for responding party (appellant), Laidlaw Transportation Ltd.

AUSTIN J.A.: -- This is a motion under rule 63.01(5) for an order lifting a stay of judgment. Rule 63.01(1) imposes the stay automatically upon any final order for the payment of money, in the event of an appeal. Rule 63.01(5) reads as follows:

63.01(5) A judge of the court to which the appeal is taken may order, on such terms as are just, that the stay provided by subrule (1), (3) or (4) does not apply.

This motion examines the meaning and extent of the words "on such terms as are just".

Facts

Ryan was 31 years old when he went to work for Superior Sanitation Services Ltd. of Kitchener, Ontario, in 1973. Superior became Laidlaw Waste Systems Ltd. From 1982 to 1985 he worked in the United States under the title of Vice-President of Laidlaw Waste Systems Inc., a U.S. subsidiary of Laidlaw Industries Inc., a Delaware corporation related to Laidlaw Transportation Limited. In 1985 he was fired in circumstances which, under Ontario law, would constitute wrongful dismissal.

In 1988 he brought this action for damages for wrongful dismissal. It was tried over a period of three weeks in December 1993. The major issues were whether either defendant was Ryan's employer for wrongful dismissal purposes, and if so whether the law of Ontario or Texas applied. It was common ground that in the event Texas law applied, Ryan had no cause of action.

Abbey J. released lengthy reasons on March 15, 1994. He found that Transportation was the employer and that Ontario law applied. He also found that Ryan was entitled to 15 months' notice and expenses of $12,919.28 U.S. and $246.59 Canadian. Other claims, including medical expenses and stock options, were awarded to Ryan, but the specific amounts were left to be determined by the Master at Windsor.

Transportation filed a notice of appeal on April 19, 1994. Ryan cross-appealed, asking that the period of notice be increased from 15 months to three years, that he be awarded reimbursement for expenses disallowed by the trial judge, and that punitive damages be awarded.

The formal judgment has not been taken out, nor have prejudgment interest and costs been determined, nor the reference held. No objection to this motion on any of these grounds was raised by Transportation.

Ryan was fired in August 1985 and has received nothing from Transportation since. He was unable to sell his home in Texas for some time and unable to get other employment in part because of a five-year non-competition clause in his agreement with Transportation. The commencement of this action was delayed until 1988 because of Ryan's financial limitations.

He is married and has a 19-year-old son who lives at home. Ryan's only source of income is a disability pension, payable by Canada Pension, in the amount of $749 per month. The disability arose from the removal of his colon some years ago. The payments began in 1989. The condition requires medication at a cost of $500 per month, but he can no longer afford it. His health is poor. For his height he should weigh between 165 and 170 pounds. His actual weight is 140 pounds.

He requires dental work which would cost $10,000, but he has no insurance coverage and cannot afford it. He saw a psychiatrist a few years ago for reasons arising from his dismissal, but had to discontinue this treatment because of the cost. According to his affidavit, he has incurred disbursements of approximately $18,000 as a result of this action. His rent is $850 per month. He has used up his savings and recently borrowed $5,000 from his father. In brief, Ryan's financial circumstances are desperate.

What is asked on this motion is a lifting of the stay to the extent of 15 months' salary, plus the expenses of $12,919.28 U.S. and $246.58 Canadian, set out above. The salary, including bonus, was said to be $80,000 annually. No objection to this figure was taken by counsel for Transportation. It appears from the reasons that the $80,000 is in U.S. dollars and that the equivalent in Canadian funds would be approximately $108,000.

Law

Mortimer v. Cameron (January 13, 1993, unreported) was also a motion under this rule, then numbered 63.01(3). At p. 2 of his reasons, Carthy J.A. said:

As an initial observation I express the view that motions under this rule should be restricted to cases of demonstrable and unusual hardship to the respondent, and where a reasonable measure of protection can be afforded to the appellants. The reason for the first standard is that the rule provides for a stay of money judgments and should be applied in all but unusual circumstances. The reason for the second standard is to protect appellants against payments which they may not eventually be obligated to make, thus putting them to the uncertainties of recovery. In most cases the merits of the appeal will have a bearing on these factors.

I agree entirely with those views. I wish to add only that it must be noted that these motions have become more frequent. This may be related to the increase in the time it takes to have an appeal disposed of. If this is so, then the reality of delay must be recognized in the interpretation and application of the rule.

In Mortimer the plaintiff had been rendered a paraplegic. He secured a judgment for approximately $5.4 million. While both liability and quantum were appealed, it was clear that whoever was found liable and in whatever amount, there was substantial insurance coverage. The stay was lifted to the extent of a lump sum payment of $300,000 to purchase and renovate a home for Mortimer, plus $8,000 per month towards his living costs and financial difficulties. At the same time, terms were imposed which would secure the interests of the paying parties.

In Stein v. Sandwich West (Township) (1994), 16 O.R. (3d) 321 (C.A.), an injured hockey player was awarded damages in excess of $9 million against the defendant arena. A motion under this rule sought $130,500 for equipment and home alterations, plus $10,000 a month for full-time attendant care. Liability and quantum were again in issue and the defendant's position was that on the appeal the action would be dismissed. What was different about that case was that there was no way that the defendant could be secured in the event of dismissal and the moneys would in large part be expended by the time the appeal was heard. As to this, Carthy J.A. said at pp. 322-23:

There is no question that in all of the recent cases under rule 63.01(3) of the Rules of Civil Procedure the court has sought to assure that the appellants have security against success on the appeal. This is, of course, to avoid rendering the appeal moot. However, there is nothing in the wording of rule 63.01(3) to prevent the exercise of the court's discretion under any circumstances, including where risk is imposed on the appellants. I put it this way in Mortimer v. Cameron at p. 6:

I have reviewed the recent cases in this court including Digiammatteo v. Leblanc (1989), 71 O.R. (2d) 130 (C.A.); Bannon Estate v. Wisotzki (1990), 1 O.R. (3d) 142 (C.A.); Peper v. Peper (1990), 1 O.R. (3d) 145 (C.A.); and Oswell v. Oswell (1991), 2 O.R. (3d) 145 (C.A.), together with the earlier case references referred to in each. The present case is very different from any of these, which gives meaning to the repeated statement that the court must be flexible and treat each case on its facts. This gives further force to my opening comments indicating that each 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.

If I make an order in this case there will be a risk to the appellants and the only measure of that risk lies in an assessment of the merits of the appeal on liability. It is not necessary to find the appeal frivolous if I can be satisfied that on the basis of what is presented to me, at this stage of the proceedings, the chances of success are so modest that they are overwhelmed by the hardship to the applicants, at this stage of the proceedings.

(Emphasis in original)

Carthy J.A. went on to assess the merits of the appeal and to conclude at p. 323h:

For present purposes, I am left with no alternative to the conclusion that if the liability appeal was argued today on the existing record it would not succeed. Therefore, in today's terms the applicants' needs far outweigh the risk to the appellants.

Carthy J.A. went on to lift the stay to the extent necessary to provide for payment of $95,500 for equipment plus $10,000 per month. He also made provision for the right to recover those amounts from the plaintiffs in the event the action was dismissed.

While the circumstances and amounts in the case before the court are entirely different from those in Mortimer or Stein, or from any case referred to by counsel, there can be no doubt that Ryan is in dire financial condition.

At this point it should be noted that counsel for Transportation argued that Stein is authority for the proposition that in order to be entitled to a stay under rule 63.01(5), there must be a causal connection between the plaintiff's plight and the defendant's conduct; in other words, that the defendant must have caused or contributed to the plaintiff's condition, and that there is no such connection or nexus.

In response, counsel for Ryan argued that nothing in Stein supports that proposition and that in any event the fact that Ryan was fired without cause and was abandoned in Texas by his employer, lay at the very foundation of his present condition.

For my part, even if I could find support for the proposition in Stein, which I cannot, there is nothing in rule 63.01 to suggest any requirement for a causal connection. On the record before the court, there appears to be such a connection whether required or not.

Analysis

The plaintiff having a legitimate claim, the next step is to examine the merits of the appeal. In this regard, counsel for Transportation limited his argument to the two major issues at trial, namely, who was Ryan's employer and which law applied, Ontario or Texas.

As to employer, it must be stated at the outset that this inquiry was anything but straightforward. The reasons for judgment are 47 pages in length and most of them deal with this question. Ryan's first contact was with Superior Sanitation. At some stage, Superior became part of the Laidlaw or DeGroote group. That group had three main businesses, waste disposal, trucking and passenger bussing. Between 1973 and 1981, Ryan was moved around Ontario in various capacities and between 1982 and 1985 he was in the United States. The corporate structure evolved throughout the entire 12-year period and Ryan appears to have held a variety of positions in various corporations at one time or another, and for one purpose or another.

Amongst other matters before the trial judge was a Laidlaw Transportation Limited Form 10-K for the fiscal year ended August 31, 1988, as filed with the U.S. Securities and Exchange Commission, and a non-competition agreement, dated May 1, 1984, between Ryan and Laidlaw Transportation Limited. The latter includes the following:

1. (a) The expression "Laidlaw", wherever the same is used in this agreement shall include Laidlaw Transportation Limited and any subsidiary or affiliate from time to time of Laidlaw Transportation Limited;

From the wealth of evidence on the subject of employer, the trial judge concluded as follows:

I am of the view, that, from at least 1981, Laidlaw Transportation Limited was an employer of the plaintiff. The evidence in this case compels that inference.

Ryan, even before his eventual move to Texas in November 1982, had transcended his role as merely an employee of the operating company Laidlaw Waste Systems Ltd. He was viewed by the parent company Laidlaw Transportation Limited as a key person in its plan to expand its waste management services in the United States. Laidlaw Industries Inc., a holding company, was formed by the parent to separate its waste management operations from the other aspects of its business and the plaintiff, said to be a vice-president of that company, was moved to the United States at the direction of the parent to take responsibility for the newly acquired and expanded waste management facilities of the Laidlaw group. To borrow the words of Laycroft J., in Bagby v. Gustavson [(1980), 24 A.R. 181 (Alta. C.A.)], the plaintiff, from at least 1981, served the group as a whole and in particular the expansion interests of Laidlaw Transportation Limited.

It is true that one or other of the operating companies, although not necessarily the one for which the plaintiff worked at the time, paid the plaintiff's salary. There is evidence in the form of memos and letters from DeGroote, sometimes as President of Laidlaw Transportation Limited and other times as Chairman of the Board of Laidlaw Industries Inc., which satisfy me that he reviewed the performance of the various subsidiary companies and held their presidents and others, including Ryan, accountable for the profitability of the operations which they controlled. On the other hand, there is no piece of paper on which DeGroote could be said to have directed the plaintiff as to the manner in which he was to carry out his duties.

Nevertheless, the evidence as a whole compels the conclusion that Laidlaw Transportation Limited was an employer of the plaintiff at the time of his dismissal. It was behind the transfer of the plaintiff to Texas in 1982 when the plaintiff was described as the vice-president of the holding company which it had established to have charge of its North American waste management operations. It entered into contractual relationships with the plaintiff in which it recognized the plaintiff as a key employee in its waste management sector and its president became directly involved in the plaintiff's termination in 1985. It would be unrealistic, having regard to all of the evidence in this case, to consider that Ryan was solely an employee of Laidlaw Waste Systems Inc., the operating U.S. company.

In his argument, counsel for Transportation did not quarrel with the evidence upon which the trial judge relied, but rather argued that having regard to that evidence, and other evidence, the trial judge should have come to a different conclusion. That other evidence was before the trial judge and according to Ryan's counsel the same argument was made to the trial judge. I accept that statement.

Although counsel did not have the benefit of the trial transcript on the argument of this motion, they did have the trial judge's reasons. They also took the opportunity to file some of the exhibits at trial, as well as affidavits as to the circumstances. In addition, both sides filed factums and the question, who was the employer in 1985, was argued at considerable length, particularly by counsel for Transportation. After a careful analysis of the material and argument before me, I conclude that Laidlaw's chances of success on appeal on that ground are not overwhelming.

As to the governing law, counsel for Transportation conceded that the trial judge had set out the proper test, namely, "the system of law with which the employment relationship has its closest and most real connection". Again, there was a good deal of evidence on the subject. Perhaps the most significant item was cl. 7 of the non-competition agreement. It reads as follows:

7. This agreement shall be governed by the laws of the Province of Ontario, Canada, and all parties hereto hereby attorn to the jurisdiction of the courts of that Province.

Counsel for Transportation argued that a proper application of the test would result in a finding in favour of the law of Texas. It seems to me, however, that once the trial judge concluded that Transportation was the employer, the choice of Ontario law became most likely, if not inevitable. Accordingly, I conclude that Transportation's chances of success on this ground are not such as to rule out the possibility of Ryan succeeding on a motion under rule 63.01(5).

As employer and choice of law were the only two grounds argued, and as their merit, individually and collectively, is not sufficient to lead to the dismissal of this motion, consideration must be given to the amount claimed, namely, $135,000 ($108,000 ;db 12 x 15) plus expenses of $12,919.28 U.S. and $246.58 Canadian. This is the full amount of the judgment as determined to date. Remaining to be decided upon are more expenses, stock options, prejudgment interests and costs. Although prejudgment interest could amount to a very sizeable sum, no consideration should be given to it as it has not yet been dealt with by the trial judge.

As to need, the material is general rather than specific. There is no house to be bought as in Mortimer, nor equipment to be bought as in Stein. But Ryan's needs are no less pressing, in fact they are more so. He must live from day to day and he clearly lacks the financial means to do so. With one exception, it is not large capital items which are required, but funds with which to meet daily, weekly and monthly expenses. In his affidavit, Ryan estimated his family's monthly expenses, not including food, clothing, and gas for the car, and entertainment, at $1,500. Estimating as best I can, if those items are added in, together with the medication for his colitis, the monthly total would be approximately $3,500. The one exception is dental work at an estimated cost of $10,000.

In all of the circumstances, an order will issue for the lifting of the stay of execution of the judgment so as to permit recovery of the sum of $10,000 for the dental work and of $2,750 per month ($3,500 less $749), commencing September 1, 1994. The $10,000 is to be paid to the plaintiff's solicitors to be held in trust and to be disbursed by them solely for the dental work referred to in para. 12 of Ryan's affidavit, sworn August 4, 1994. Subject to agreement between counsel, the monthly payments are also to be paid to the plaintiff's solicitors and paid out by them, without deduction, to the plaintiff for the living expenses of himself, his wife and his son. All amounts so paid out are for the account of the plaintiff and may be recovered from him, together with interest at the post-judgment rate, in the event the appeal of Transportation is successful to the extent of requiring such repayment.

This order is to be without prejudice to the right of either party to reapply in the event of any material change in circumstances.

The plaintiff is entitled to the costs of this motion. If counsel are unable to agree upon the amount, I am prepared to fix the costs on receipt of submissions in that regard by letter.

Motion granted.