20 December 2018By Brendan Monahan
When will a court lift the automatic stay imposed under the Rules of Civil Procedure when a final or interlocutory order for the payment of money is appealed? The Ontario Court of Appeal recently considered this question in Popa v. Popa, 2018 ONCA 972. In this case, the Court granted an order lifting the stay, finding that the responding parties were “utterly untrustworthy” and that there was a serious risk that funds would be siphoned off if the stay was not lifted.
Background: The motion arose after the moving parties, led by Lucia Popa, sought an Ontario order recognizing and enforcing a judgment of the Jefferson Circuit Court of the Kentucky Court of Justice against the responding parties, led by Daniel Popa. The application judge, Chiappetta J., found that the Kentucky judgment should be recognized and enforced in Ontario, and so ordered on October 12, 2018. The responding parties appealed Chiappetta J.’s order to the Ontario Court of Appeal.
Pursuant to Rule 63.01 of the Rules of Civil Procedure, the delivery of the notice of appeal automatically stayed Chiappetta J.’s order until the disposition of the appeal. The moving parties moved before a single judge of the Court of Appeal for an order lifting the stay.
The Court of Appeal Lifted the Stay: The Court of Appeal outlined the test for lifting the stay, which involves a consideration of three factors: (i) the financial hardship to the moving parties if the stay is not lifted; (ii) the ability of the moving parties to repay any amounts they receive as a result of the lifting of the stay or their ability to provide security for the amount; and (iii) the merits of the appeal.
The Court found that all three factors militated towards lifting the stay in this case. The Court emphasized that the evidence in the Kentucky litigation, which was referred to by Chiappetta J., indicated that the responding parties had perpetrated a fraud on the moving parties. Furthermore, on cross-examination in the Kentucky litigation, Mr. Popa admitted to dissipating funds in order to frustrate the moving parties’ attempts to collect on the judgment. The Court put it this way:
I am satisfied based on the evidence that the responding parties are utterly untrustworthy. If the stay is not lifted there is a serious risk that the funds in question will be siphoned off and the interests of the moving parties will be defeated. As to the ability of the moving parties to repay any amounts they receive, the moving parties proposed that third parties affected by the order be obliged to hold funds covered by the order until further order of this court.1
On the third factor (the merits of the appeal), the Court found that the appeal was “plausible but weak in light of the evidence.” The Court therefore granted an order lifting the stay.
The Takeaway: The automatic stay imposed by Rule 63.01 undoubtedly serves a useful purpose, especially when there is a real possibility that an order may be overturned on appeal. However, litigants may try to take advantage of this provision by launching an appeal that they know is unlikely to succeed, in order to delay or frustrate the enforcement of an order. In this case, the Court’s observations about the responding parties’ fraudulent activities and the weakness of the appeal suggest that the appeal may have been brought for tactical reasons (though it should be noted that the appeal remains to be decided on the merits). The Popa decision indicates that our courts will lift the automatic stay in circumstances where it appears that a litigant has launched an appeal merely to shield itself from execution.
1Popa v. Popa, 2018 ONCA 972 at para. 8.