Court of Appeal Decision of the Week

Fly By: An Overview of Stay Pending Appeal

Case: Dash 224, LLC v. Vector Aerospace Engine Services, 2015 PECA 12 (CanLII)

Keywords: Prince Edward Island Rules of Civil Procedure; Stay Pending Appeal; RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 (SCC); Aircraft & Aviation; National Police of Columbia

Synopsis:

Dash 224, LLC (Dash) sought an Order pursuant to Rule 63.01(2) of the Prince Edward Island Rules of Civil Procedure staying a lower court decision pending hearing and disposition of its appeal. This application is the latest in an ongoing contest to determine ownership of two aircraft engines, both of which were sent to PEI for overhaul in 2013. The combatants: Dash (a Florida based company) and the National Police of Columbia (NPC). 

How’d they get to PEI? The engines are part of an aircraft that was (and may still be, pending final resolution of this matter) owned by Regional One Inc (R1) – the parent Floridian company to Dash, who originally entered into a lease agreement with Aerovais de Aviacon Regional Aires S.A. (Aires), a Columbian airline company presently called by another name, LAN Colombia.

On April 25, 2010, the aircraft (powered by the engines in dispute and while on lease to Aires) entered Columbian airspace non-compliant with customs regulations. The aircraft was therefore seized by the National Tax and Customs Administration in Columbia and forfeited to the government of Columbia. R1 (the lessor of the aircraft) filed an appeal on June 21, 2010, but by September 30, 2011 the appeal was denied and the aircraft itself donated to the National Police of Columbia (NPC).

On or about April 5, 2013, R1 sold off its interest in the aircraft and engines to Dash (recently incorporated and wholly owned by R1). Meanwhile, the NPC sent both engines to Vector Aerospace Engine Services-Atlantic Inc. in PEI with a return date of May 27, 2013.

On May 24, 2013 Dash made an ex parte application to the Supreme Court of PEI for an interim preservation order – to keep the engines where they are. The order was granted and subsequently extended. On August 9, 2013 Dash amended this application so as to include a declaration of ownership in the engines (pursuant to the laws of Columbia) and an order that the engines be returned.

NPC replied by filing a motion to dismiss the application altogether on grounds of jurisdiction, forum non conveniens, and abuse of process. That motion was granted, and Dash immediately applied to stay the effect of the decision pending appeal.

Applying the test in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 (SCC), the Prince Edward Island Court of Appeal granted Dash’s application on condition that Dash post an irrevocable letter of credit. In the event Dash fails to do so, the stay will lapse.

Importance:

Section 19 of the Judicature Act, S.P.E.I. 2009, Cap. J.2-1, allows the Court of Appeal to stay any proceedings on such terms as the court considers just. This section operates in tandem with Rule 63 of the Rules of Civil Procedure – which says a notice of appeal per se does not operate to stay the order or decision appealed from.

A stay pending appeal is generally not granted unless there are exceptional circumstances warranting it. The reason: one often starts from the presumption the trial judge got it right. Moreover, one expects that successful litigants are entitled to the fruits of their effort.

To effect a stay, and exercise its ability to do so on ‘such terms as are just’, the Court of Appeal followed the decision of Jenkins J. in Morrisey v. Morrisey, 2015 PECA 10 (In Chambers) and applied the three-part test found in RJR-MacDonald:

First Stage: Serious Question

The Applicant must demonstrate a serious question to be tried. Evaluation by the Court of Appeal at this stage involves the use ‘common sense’ and an extremely limited review of the case on its merits.

For Mitchell J. of the Court of Appeal, Dash met the test – listing seven grounds of appeal and submitting that there is case law (going in both directions) on a number of the issues identified. The Court of Appeal framed Dash’s burden at the first stage of the test as follows: has the applicant provided sufficient evidence from which the Court could conclude the matter is arguable?

Second Stage: Irreparable Harm

At the second stage of the analysis, the Applicant must demonstrate that irreparable harm will result in the event relief is not granted. Note that ‘irreparable’ refers to the nature of the harm – not its magnitude. In other words, the issue is whether or not granting the stay will cause harm that cannot later be fixed should the applicant succeed on an appeal of the underlying decision.

At this stage, Dash had an obvious point to make: if the stay wasn’t granted, the engines could be removed from PEI – possibly never to be seen again. The Court concluded “if the stay is not granted, Dash’s appeal will, in all likelihood, be academic”. As such, Dash met the test of irreparable harm.

Third Stage: Balance of Convenience

At the third and final stage of the analysis, the Court conducts an assessment of the balance of convenience to the parties (focusing on the Respondent) – an aspect of the analysis that is framed in a deliberately open and flexible manner by the Supreme Court of Canada.

Here, the Court of Appeal concluded that NPC’s concerns could be ‘easily remedied’ by 1) extending Dash’s bond to ensure its availability at the end of litigation (should NPC prove successful); and 2) expediting the appeal itself so that NPC would get its engines back as soon as possible (again, should they win on appeal). With these measures in place, the Court determined that the balance of convenience favoured Dash.

The only other thing of note is the learned justices elected not to refer to the 1996 book Injunctions (a civil litigation practice guide, Carswell) by Eugene Meehan of Lang Michener (as it then was) and John Currie of the University of Ottawa (Vice Dean, as he now is). Heck, not sure I’d refer it to myself – got a spare copy at home I use to combat insomnia – I don’t think I’ve ever got past page 3. If you also suffer from insomnia, here’s a hyperlink to order the book – you can send your copy to me to autograph, as long as I don’t fall asleep first  Click Here.

Counsel for the Applicant/Appellant: Steven Forbes for Pamela J. Williams, Q.C. (Cox & Palmer, Charlottetown)

Counsel for the Respondent, National Police of Columbia: Jonathan Coady (Stewart McKelvey, Charlottetown)

Counsel for the Respondent, Vector Aerospace Engine Services-Atlantic Inc.: Matthew MacFarlane (Key Murray Law, Summerside PEI)

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Posted: Wednesday, September 23, 2015