The Court was asked to resolve various issues in a class action. A subset of the Defendants applied to dismiss the Action against them, or in the alternative, to strike or permanently stay the Amended Statement of Clam, on the basis that the Action was an abuse of process (the “Applicant Defendants”). Another subset of the Defendants entered into Pierringer Agreements with the Plaintiffs (the “Settling Defendants”) and the Plaintiffs applied to have the settlement agreements approved.

The Court dismissed the Action against the Applicant Defendants and declined to approve the Pierringer Agreements.

A preliminary issue arose as to the sequence in which the Court should decide the Applications. Associate Chief Justice Nixon looked to Rules 1.4(1) and 1.4(2)(d) to hold that the Court has inherent jurisdiction and power to control its process and procedure. Rule 1.4(1) allows the Court to govern the practice and procedure in all matters before it, while Rule 1.4(2)(d) lets the Court determine how or if the Rules apply to the Court’s practice or procedure. Notably, there is no Rule stating that applications must be heard in the sequence they were filed.

Accordingly, Nixon A.C.J. elected to decide the abuse of process Application first. If the Action was an abuse of process, there would be no need to approve the settlement agreements.

The Court determined that the Action was an abuse of process against the Applicant Defendants. Several years beforehand, some of the Defendants, referred to as Seair, were involved in bankruptcy proceedings. The Applicant Defendants were involved in Seair’s bankruptcy proceedings as counsel, bankruptcy trustee, or an investment banking firm. The Plaintiffs were shareholders and unsecured creditors of Seair and had note of the bankruptcy proceedings. Some Plaintiffs actively participated in the bankruptcy proceedings. A joint proposal was eventually made under section 50 the Bankruptcy and Insolvency Act (the “BIA Order”) and approved by the Court. The BIA Order extinguished the Plaintiffs’ rights as shareholders and unsecured creditors of Seair. Therefore, the Action advanced against the Applicant Defendants was a collateral attack on the BIA Order and an abuse of process. The Plaintiffs were attempting to re-litigate findings made in the context of the bankruptcy proceedings and were guilty of laches and acquiescence for failing to pursue their remedies before the BIA Order was pronounced.

In declining to approve the Pierringer Agreements between the Plaintiffs and the Settling Defendants, the Court noted that the Plaintiffs had a duty to immediately disclose the existence of the settlement agreements to non-settling Defendants and the Court. They had not done so and their failure to disclose amounted to abuse of process. The relationships between the Plaintiffs, the Settling Defendants, and the non-settling Defendants can be clarified only after disclosure and the granting of Court approval.