United States of America v. Friedland

United States of America v. Friedland Collection Decisions of the Court of Appeal Date 1998-09-23 Docket numbers M23102 Judges Carthy, James Joseph Subject Civil Decision Content Date: 19980923 Docket: M23102(C30309) COURT OF APPEAL FOR ONTARIO RE: United States of America v. Robert Martin Friedland and Robert Martin Friedland v. United States of American, David L. Dain, Peter R. Mounsey and Nancy A. Mangone BEFORE: Carthy J.A. (In Chambers) COUNSEL: Brian Crane, Q.C. for the appellant Alan J. Lenczner for the respondent HEARD: September 18, 1998 ENDORSEMENT [1] In this proceeding, the United States of America (U.S.A.) obtained a Mareva injunction tying up substantial assets of the defendant. That injunction was set aside because of serious misrepresentations and non-disclosures by the U.S.A. This entitled the defendant to damages arising from the injunction and the U.S.A. is prepared to deal with all issues directed to the assessment of those damages without claim of immunity. [2] The issue now before this court arises from the counterclaim of the defendant which goes beyond claiming damages arising from the injunction. It claims additionally common law relief for abuse of process, libel and breach of duty of disclosure; further it adds lawyers, functionaries of the U.S.A., as defendants by counterclaim for these common law torts. [3] All defendants by counterclaim moved before Lederman J. for an order that they had sovereign immunity from these claims. This motion was dismissed and the defendants to the counterclaim have appealed to this court. It is not contended that the appeal does not present legitimate issues for consideration. [4] The motion before me is to relieve the defendants by counterclaim from the requirement to file a statement of defence to the counterclaim pending the appeal. [5] The argument proceeded on the assumption that this was a motion to lift a stay under rule 63.01(5). It is not. Lederman J. simply dismissed the motion seeking immunity. There is no order affecting the pleadings or other proceedings in the action. What is really sought is an interim order under s.134(2) of the Courts of Justice Act "that is considered just to prevent prejudice to a party pending the appeal". [6] In some circumstances, there may be no difference between the principles applying under Rule 63 and s.134(2), but here it is my view that I must give some deference to the rules applying to procedure in the General Division. I am not being asked to stay execution of a final judgment of that court; rather, I am asked to impose an order upon its rules and procedures. This difference dictates that I should be more cautious in intervening than if the proceedings were now in the full carriage of this court. [7] What prejudice is there to the appellants pending this appeal which would be overcome by suspending the rules of procedure? [8] The plaintiffs by counterclaim have undertaken that they will not assert that the filing of a defence is a step in the action which would affect the claim of immunity. That can be taken as an absolute that the court will recognize. [9] The appellants argue that if they establish on appeal that they are entitled to indemnity that the prior filing of a statement of defence would represent an affront to the comity between the two countries, and a compromise of the integrity of the immunity provisions. [10] I do not see this as prejudice which justifies an order under s.134(2) of the Courts of Justice Act. [11] The disposition of the issues arising from the undertaking will probably require a pleading from the U.S.A. and full discovery. As I read the counterclaim it is hard to see where the claims for common law tortious conduct extend beyond the issues arising from the undertaking, except perhaps the claims for libel. It must be kept in mind that the U.S.A. does not object to proceeding forward on the issues arising from the undertaking. [12] In my opinion, the statement of defence on the undertaking issue, if isolated, would be so little different from that on the combined issues, that a claim of prejudice is strained and unconvincing. [13] The argument of the motion was directed to discovery as well as the statement of defence. The motion, itself did not refer to discovery procedures. I do not want to encourage another motion, but do not feel that I have sufficient knowledge of "prejudice" that might arise from discovery. How much wider are the inquiries concerning the tort claims than those concerning the undertakings? What prejudice arises from responding to these inquiries? [14] The respondent may be busy enough pursuing non- controversial inquiries pending this appeal procedure that controversy can be avoided. If a further motion is necessary, I can only speak for myself in saying that there should be a clear demonstration of prejudice to warrant interference. This assumes that the respondent extends its agreement not to contest waiver of immunity on account of submission to discovery. [15] The appellant also seeks to file separate factums for the U.S.A. and the functionaries and to exceed the 30 page limit. I heard nothing to convince me that two factums were necessary. However, I make no order in this respect. The appellants should apply to the court once the factums are prepared. [16] The appellants indicated they had spoken to the Registrar and gained assurance of a March date for the hearing of the appeal if I set a programme for perfection. I set the perfection date at November 1, 1998. [17] The motion is dismissed, subject to the provisions as to conduct of the appeal. [18] Costs to the respondent in the cause on the appeal.