The Divisional Court (ONSC) recently dealt with this issue in Amphenol Canada Corp. v. Sundaram (2020). There the plaintiff had obtained an ex parte Mareva injunction against all of the defendants in a civil fraud matter, effectively freezing their assets. The plaintiff then sought a continuation of the injunction and was successful. One of the defendants appealed the extension to the ONCA, despite a warning from the plaintiff that the appeal should go to the Divisional Court, as it was from an interlocutory order. As a result, the appeal was quashed by the ONCA and the period to file an appeal with the Divisional Court had expired. The defendants sought an extension.

The test that applies on a motion to extend the time to seek an appeal to the Divisional Court following an interlocutory order was established in The Catalyst Capital Group Inc. v. Moyse (“Catalyst”).

In considering the granting of an extension of time, the court considers four factors.  The overarching consideration is the justice of the case.

Those factors are:

• whether the moving party formed an intention to appeal within the relevant period;
• the length of the delay and the explanation for it;
• prejudice to the responding party; and
• the merits of the appeal.

Interlocutory Orders

An interlocutory order is an order which does not determine the real matter in dispute between the parties but which only determines some collateral matter. An order may be final in the sense that it determines the very question raised by the application nevertheless it is interlocutory within the meaning of the Judicature Act if the merits of the case remain to be determined. This test has long been in place following the Ontario Court of Appeals’ (ONCA) decision in Hendrikson v. Kallio (1932).

The Threshold in Such Motions

Extensions of the time in which to seek leave to appeal are routinely granted given that all courts prefer to decide matters on their merits rather than on technical obstacles. However, each case must be decided on its facts, circumstances and the balancing required by the test established in Catalyst above.

There needs to be some evidence put forward that establishes the intention to appeal and the timing of that intention. Obviously the closer to the applicable deadline the better.

Length of Delay and Explanation

The delay in filing must be explained. One common problem is the prospective appellant first seeking to appeal to the wrong court, as in the case at hand. In a case where the prospective appellant has been warned that they are pursuing an appeal in the wrong court, as in the case at hand, their motion will be quashed by the ONCA.

Seeking leave to appeal from the ONSC will add a significant delay to a case that has already dragged on for too long. In addition, the decision to grant and extend the injunction was based on the fact that the plaintiff had established a solid case of fraud on the merits. Given all of this, the defendants are unlikely to be successful in extending the time to appeal the injunction decision.

Prejudice in Matters of Fraud

The defendant’s ability to pay damages is very much a part of any interlocutory injunction calculus. If damages are an adequate remedy and the defendants are in a position to pay, then an injunction will generally not be issued, no matter the merits. However, when the allegations relate to a fraud being perpetrated, the assumption is that the defendant cannot reasonably be expected to be able to pay damages. This risk is evidence of prejudice and the response from the moving party should be to provide evidence of the ability to pay or the posting of security.

At Milosevic & Associates, our team of Toronto corporate commercial lawyers regularly represent clients in complex commercial litigation matters ranging from straightforward contract and partnership disputes to complex multi-party commercial claims including dealing with claims of loss from real estate transactions. Over the years, our team of exceptional litigators has seen it all and has successfully fought for our clients’ rights. Our impressive track record speaks for itself.  Call us at 416-916-1387 or contact us online to schedule a consultation.