Harder v. InCor Holdings Limited

2023 BCSC 2279 Harder v. InCor Holdings Limited

IN THE SUPREME COURT OF BRITISH COLUMBIA Citation: Harder v. InCor Holdings Limited, 2023 BCSC 2279 Date: 20231222 Docket: S237204 Registry: Vancouver Between: Lorne Harder, Springhill Investments Ltd. and Harder Investments Ltd. Plaintiffs And InCor Holdings Limited, George Molyviatis, Jocelyn Bennett, Pangaea Resources Limited, InCor Energy Minerals Limited, InCor LeadFX Limited Partnership, LeadFX Inc., InCor Holdings PLC and InCor Services Limited Defendants Before: The Honourable Mr. Justice Milman Oral Reasons for Judgment Counsel for the Plaintiffs: P.J. Sullivan S.R. Shuchat Counsel for the Defendants, InCor Holdings Limited, George Molyviatis, Jocelyn Bennett and Pangaea Resources Limited: D.R. Shouldice Place and Dates of Hearing: Vancouver, B.C. November 24 and December 20, 2023 Place and Date of Judgment: Vancouver, B.C. December 22, 2023 [1] On November 14, 2023, I delivered oral reasons for judgment granting, in part, the plaintiffs' application for interlocutory relief in the nature of a Mareva injunction. Those oral reasons were subsequently released in writing and are now indexed as 2023 BCSC 2021, but have not yet been published on the court's website. [2] Before me now are two defence applications arising from that decision. [3] First, the defendants who are affected by that order (the "Injunction Defendants") have brought an application seeking a direction

that my order includes a term that the confidentiality provisions contained in paras. 1 and 2 of the earlier order made by Murray J. on October 27, 2023 are to remain in effect going forward. [4] Second, on November 21, 2023, the Injunction Defendants other than InCor Holdings Limited (the "Appellants"), filed a notice of appeal seeking leave to appeal from my decision. The Appellants now seek a partial stay of my order, pending the appeal. In particular, they seek an interim stay of the requirement that I imposed upon them to provide the plaintiffs with a list of their worldwide assets. [5] I will deal first with the confidentiality provisions in the order of Murray J. [6] The parties were before Murray J. for the hearing of the main injunction application. At the request of the Injunction Defendants, the hearing was adjourned by consent on various terms. Two of those terms, set out in paras. 1 and 2 of the order of Murray J., call for the order of Murray J. itself to remain confidential and under seal until the hearing of the injunction application, further agreement between the parties or a further order of the court. In addition, the second of those paragraphs precluded the order and the information contained in it from being disclosed by counsel for either side to anyone other than their clients or to third parties when counsel considers it necessary and appropriate to

make such disclosure for the purpose of the litigation, in which case the third parties were to sign an undertaking to maintain the confidentiality of those items. [7] Although those paragraphs state on their face that they were to expire when the injunction application came to be heard, the Injunction Defendants submit that I specifically signalled my intention to extend the lifetime of those terms in para. 72 of my decision. There, I stated that my intention was to leave the order of Murray J. in place for the time being. It follows, they say, that my oral reasons for judgment of November 14, 2023 are covered by the same confidentiality terms and therefore ought not to be published. [8] The plaintiffs disagree. They submit that my intention in para. 72 was to preserve only the freezing terms of the order of Murray J., namely paras. 3 and 4. The remaining paras, are, they say, already spent or expired by their own terms. [9] I agree with the plaintiffs that the context for my comments in para. 72 was the need to preserve the freezing provisions of the order of Murray J. for the present time, because I considered it premature to replace them with the narrower freezing order I had just described in para.

70. The freezing provisions in the Murray J. order, unlike the confidentiality terms, did not automatically expire when the main application came to be heard. It follows that the terms of the order of Murray J., other than paras. 3 and 4, are no longer in effect and nothing in my decision of November 14, 2023 had the effect of reinstating them. [10] In any event, the effect of the relief that the Injunction Defendants are seeking on this application is to preserve confidentiality in the order of Murray J. alone, not anything else. Such an order would not restrict the publication of my oral reasons for judgment, except insofar as they refer to the order of Murray J. I have been given no logically coherent reason to edit out those references from the published version of my November 14, 2023 reasons for judgment, and indeed, that does not appear to be what the Injunction Defendants are really seeking on this application. [11] Rather, they appear to be seeking a more general form of sealing order. It is therefore problematic that I have not been given any legal or evidentiary basis for sealing any part of the court file. Decisions of the court are presumed to be public unless a sealing order is sought and obtained, upon satisfying the test set out in cases such as Sherman Estate v. Donovan, 2021 SCC 25 and NHK Spring Co., Ltd. v. Cheung, 2023 BCCA 230. There is no application for

such an order before me, let alone evidence sufficient to justify such an order. [12] It follows that my oral reasons for judgment delivered on November 14, 2023 will be published in the ordinary way. [13] I turn next to the application for a stay. [14] The parties agree that this court may properly stay its own orders pending an appeal. They also agree on the legal test to be applied on an application for a stay in these circumstances, which is as described by DeWitt-Van Oosten J.A. in 0790482 B.C. Ltd. v. KBK No. 11 Ventures Ltd., 2022 BCCA 261. That test requires the applicant to show that: a) There is a serious question to be resolved in the appeal; b) The applicant would suffer irreparable harm without a stay; and c) The balance of convenience favours a stay. [15] The plaintiffs argue that the stay application fails at each of those branches of the test. [16] Beginning with the merits of the appeal, the Appellants are seeking leave to appeal on the basis that I had found that a strong prima facie case was made out only as against the defendant InCor Holdings Limited, but not the Appellants, and therefore that none of the relief that I granted was properly granted as against them. With this application, they seek to stay only that part of my order that requires them to list their assets. [17] I cannot say that that proposed ground of appeal is frivolous or bound to fail.

Given the low threshold that the Appellants are required to meet at this first branch of the test for a stay, I accept that it is satisfied. [18] I therefore turn next to the requirement to show irreparable harm. [19] It has been held that clear proof of irreparable harm is not necessarily required: see British Columbia (Attorney General) v. Wale (1986), 9 B.C.L.R. (2d) 333, 1986 CanLII 171 (C.A.), aff'd [1991] 1 S.C.R.

62. The burden on the applicant is merely to show a meaningful risk of irreparable harm. On the other hand, it has also been held that "there must be a foundation, beyond mere speculation, that irreparable harm will result": see Vancouver Aquarium Marine Science Centre v. Charbonneau, 2017 BCCA 395. [20] Here, I accept the Appellants' submission that if they are required to deliver a list of assets to the plaintiffs, this is not a step that can be undone if they succeed on their appeal. The real controversy between the parties in that regard is whether requiring them to take that step has been shown to be genuinely harmful to them or others. [21] The Appellants' purported evidence of irreparable harm is to be found in Affidavit #3 of Jocelyn Bennett, where she has deposed that: Each of the Applicants hold assets on behalf of others on a confidential basis, including for third parties unrelated to this action. Those parties have placed significant trust and confidence in the Applicants to maintain the confidential information relating to their assets. If the Applicants disclose their worldwide assets, including assets held in trust for third parties, we will breach the trust and confidence those third parties place placed in the Applicants. The nature of that confidence and trust is that once broken, it cannot be repaired. Breaching that trust and confidence of those parties

will have irreparable consequences for the Applicants' business and commercial interests, including causing harm to the reputations of myself and Mr. Molyviatus. [22] I agree with the plaintiffs that this paragraph is vague, speculative and self-serving. It is not clear who these third parties are, whether they are at arm's-length to the Appellants or not, or what terms govern the alleged obligations of confidentiality that the Appellants are said to owe them. Nor is it immediately apparent how ordering disclosure of a list of assets to the plaintiffs in this action, when the plaintiffs would be receiving that list on terms that require them to keep it confidential, could reasonably be expected to undermine the confidence that these unidentified third parties may have reposed in the Appellants. [23] Nevertheless, I am prepared to infer from the circumstances that there may be some risk of harm to the Appellants insofar as, in the absence of a stay, they are required by my order to disclose confidential information that they would not otherwise be required to disclose, at least not at this early stage of the litigation. [24] On that basis, I have concluded, not without some hesitation, that the second branch of the test is made out. However, the frailties in the Appellants' evidence of irreparable harm continue to be a factor to be considered in the context of the third branch

of the test, involving the balance of convenience, to which I turn next. [25] At this stage, the court must weigh the prejudice to the plaintiffs if a stay is granted against that risk of irreparable harm if it is refused. In order to assess the risk to the plaintiffs that a stay would pose, it is helpful to recall the reason for my order requiring the Injunction Defendants to list their assets. My explanation for making that order is to be found in paras. 73-75 of my decision. There, I expressed the concern that the assets of InCor Holdings Limited or Pangaea Resources Limited, including the proceeds from the disposition of the Besra Gold Inc. shares, may have been diverted for extraneous purposes. I go on to state that if there has been such a diversion, then the remaining assets in those companies may, as a result, now be insufficient to accomplish the purpose of the freezing order I had found to be appropriate, as set out in para. 70. [26] Viewed in that context, the purpose of the order requiring the listing of assets is to allow the parties, particularly the Injunction Defendants, to return to court to narrow the freezing terms of Murray J.'s order in light of the information disclosed in their asset lists. If a stay is granted, then there will be no listing of assets pending the outcome of the appeal, and therefore no narrowing of the freezing order currently in

place. [27] Pending the outcome of the appeal, the Appellants remain bound by the more expansive freezing terms contained in the order of Murray J. I appreciate that the plaintiffs are concerned about the risk of assets continuing to be moved beyond their reach despite that order. Lending weight to that concern, I have found reason to doubt the credibility of the Injunction Defendants' statements as to the existence and location of the funds that may be available to satisfy their obligations to the plaintiffs. However, it appears that the Appellants have been notifying the plaintiffs of all movements in the frozen accounts to date. They have complied with the obligation imposed on them by Murray J.'s order to notify their brokers of the restrictions contained in that order. If the Appellants were intent on dissipating their assets in response to this action, they have been in a position to do so for some time now. I see no realistic risk that the granting of the limited form of stay that is sought on this application will exacerbate the risk of further dissipation of assets while the appeal is underway. [28] If the appeal fails, then the Appellants' obligation to disclose their assets will come back into effect, in which case any improper disposition that may have occurred in the interim will be revealed at that time. I have therefore concluded that the risk to the plaintiffs

if the proposed stay is granted does not rise to a level sufficient to outweigh even the limited risk of irreparable harm to the Appellants that I have identified as arising if it is refused. [29] For those reasons, I have concluded that the balance of convenience favours the granting of the limited form of stay that is sought. [30] Having found that all three of the elements of the applicable test are satisfied here, I am granting the Appellants' application for a stay on the terms sought. "Milman J."