Executive Summary: Key Legal and Evidentiary Issues

• Application by the Plaintiff to stay a 2013 action alleging fraudulent conveyance, improper billing, and breach of fiduciary duty, pending determination of an alleged 27 October 2021 settlement agreement in a later action.

• Court’s application of the three-part RJR-MacDonald test for a stay of proceedings under s. 97 of the Judicature Act, including the low threshold for a “serious issue to be tried”.

• Finding that there is a serious issue to be tried on the existence and enforceability of the alleged settlement agreement based on evidence of settlement negotiations and Minutes of Settlement.

• Conclusion that the Plaintiff did not prove irreparable harm, given lack of evidence that the land is unique, lack of detailed evidence on quantification of damages, and absence of evidence that the Defendants are impecunious.

• Determination that the balance of convenience favours the Defendants, considering the more than twelve years of ongoing litigation, their inability to develop the properties, and their readiness for trial.

• Dismissal of the stay application, with costs to the Defendants in accordance with Column 3 of the Scale of Costs in the Appendix of Rule 55 of the Rules of the Supreme Court, 1986.

Background and facts of the dispute
The action identified as the 1st Action was commenced by the Plaintiff, 52182 Newfoundland and Labrador Limited, on 22 March 2013 against four Defendants: Michael Power (First Defendant), Power, Boland Chartered Accountants (Second Defendant), 10546 NFLD Limited (Third Defendant), and MFE Holdings Limited (Fourth Defendant). The claims include, among other things, fraudulent conveyance of four parcels of land, improper billing for professional services, and an allegation that the First Defendant breached his fiduciary duty to the Plaintiff. In 2013 and 2014, the Plaintiff filed three lis pendens relating to the disputed property. The litigation is described by the Court as having a “long and torturous procedural history.”
On 27 October 2021, a meeting took place at the offices of the Plaintiff’s lawyer. Present were Michael Power, who is the First Defendant and a director of the Second, Third, and Fourth Defendants, along with legal counsel for all four Defendants. The Plaintiff claims that at this meeting the parties concluded a settlement agreement on all essential terms. Minutes of Settlement setting out the terms of the alleged settlement were transmitted to Defendants’ counsel, but they were not signed by the Defendants.
The Defendants deny that an enforceable settlement agreement was reached. They assert that any essential terms or conditions were subject to future agreement of the parties and that there were potential terms and conditions that were vague and uncertain.
On 25 October 2024, the Defendants applied for an order to vacate the three lis pendens registered by the Plaintiff. On 8 April 2025, the Plaintiff commenced a 2nd Action to enforce the alleged settlement agreement. On 9 June 2025, the Plaintiff applied to stay the 1st Action while the Court determines whether there is an enforceable settlement agreement.

Statutory basis and legal test for a stay of proceedings
The Court’s authority to stay proceedings arises from section 97 of the Judicature Act, R.S.N.L. 1990, c. J-4. That section states that the Court may direct a stay of proceedings pending before it and permits a person, whether or not a party to the proceeding, to apply in a summary way for a stay of the proceedings either generally or where necessary for the purposes of justice, and the Court shall make the order that may be just.
Justice Mellor applied the three-part test set out in RJR-MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311. Under that test, the questions are: (1) whether there is a serious issue to be tried; (2) whether the party requesting the stay will suffer irreparable harm if the stay is not granted; and (3) whether the balance of convenience favours granting relief. The onus is on the applicant to satisfy this test.

Serious issue to be tried
Justice Mellor noted that determining whether there exists a serious issue to be tried requires a preliminary assessment of the merits and that, as stated in RJR-MacDonald, “The threshold is a low one” and the Court need only be satisfied that the application is neither “frivolous nor vexatious.”
In this Application, the Plaintiff argued that determining whether a settlement agreement exists is neither frivolous nor vexatious, relying in particular on the affidavit of John Parsons, which provides evidence that settlement negotiations took place. The Defendants conceded that the case is not vexatious but argued that it is frivolous. They pointed to Mr. Parsons’ affidavit, which indicates that negotiations continued beyond the date when the alleged settlement agreement was reached, and based on that, argued that the 2nd Action cannot succeed.
Justice Mellor adopted the explanation of “frivolous” given by Justice Watson in W. (G.J.), Re, 2003 ABQB 763, where a frivolous argument is described as one that has no realistic prospect of success or no air of reality. He observed that the underlying claim is supported by facts, including evidence that negotiations occurred in an attempt to resolve the litigation. While acknowledging some inconsistencies in Mr. Parsons’ affidavit, he concluded that they do not render the claim non-justiciable or show that there is no reasonable chance of success. Because the Application does not involve a final determination of the case, he found it unnecessary to conduct an extensive examination of the merits. He concluded that there is a serious issue to be tried.

Irreparable harm
On the second branch of the RJR-MacDonald test, Justice Mellor considered whether the Plaintiff would suffer irreparable harm if a stay were not issued. He referred to RJR-MacDonald’s definition of irreparable harm as harm that cannot be quantified in monetary terms or cannot be cured, usually because one party cannot collect damages from the other.
The Plaintiff claimed that it intended to develop the parcels of land and sell them commercially, and that calculating damages for those losses would not be easy. The Court held that the fact there may be challenges in quantification does not equate to irreparable harm and noted that no evidence was submitted explaining the precise nature of the quantification problem or why it is not possible to calculate lost profits on a development. The Court also observed that there is no evidence suggesting that the land in question is unique or irreplaceable.
The Plaintiff further claimed irreparable harm on the basis of concern about collecting against any future judgment. It argued that the companies involved are a numbered company and a holding company and that, other than the land in dispute, the Plaintiff is uncertain what assets exist or whether they are engaged in business.
In support of this argument, the Plaintiff relied on the Nova Scotia Court of Appeal decision in MacPhail v. Desrosiers, 1998 NSCA 5, which affirms that the risk of non-payment in the event of success at trial can constitute irreparable harm and in which there was affidavit evidence concerning the financial state of the respondent.
Justice Mellor noted that no similar evidence exists in this Application. The Affidavit of John Parsons simply states that he is unaware of what, if any, assets the corporate defendants may hold to satisfy any money judgment. The Court found that, in the absence of evidence, it cannot assume the Defendants are impecunious or that it will be impossible for the Plaintiff to enforce a future judgment. Justice Mellor characterized uncertainty about enforcement as a common concern for many litigants and concluded that uncertainty alone does not amount to irreparable harm.
He also referred to RJR-MacDonald, where it was stated that the fact one party may be impecunious does not automatically determine the application in favour of the other party, although it may be a relevant consideration.
Finally, Justice Mellor rejected the Plaintiff’s argument that determining the 1st Action will render the alleged settlement agreement nugatory. He observed that the question of the existence and enforceability of a settlement agreement is separate and distinct from the 1st Action and that the Plaintiff could lose the 1st Action but still succeed in proving an enforceable settlement agreement, in which case it would be entitled to damages for breach of contract.
He concluded that there is nothing suggesting that the land is unique or irreplaceable or that the Defendants are impecunious, and that there is no evidence to ground a finding of irreparable harm.

Balance of convenience
On the third branch of the test, Justice Mellor considered which party would suffer greater harm from the granting or refusal of the stay, sometimes referred to as the “balance of inconvenience,” as described in RJR-MacDonald. He noted that the balance of inconvenience is determined by the factual context and that the list of factors is not closed.
The Plaintiff claimed that it would suffer greater harm if a stay is not issued because it “will be deprived of the bargain that was reached.” It submitted that determining the existence of an enforceable settlement will not require a great commitment of legal resources.
The Defendants argued that they would suffer considerable harm if a stay were issued. They pointed out that the Plaintiff commenced this litigation more than twelve years ago. During this time, they have not been able to develop the properties in dispute. They now fear losing the opportunity to develop the land while interest rates are low and housing demand is high. They also pointed out that they are ready and willing to go to trial and that they have signed a certificate of readiness.
As in the irreparable harm analysis, Justice Mellor did not accept the Plaintiff’s argument that it will be deprived of the benefit of a settlement agreement if the merits of the 1st Action are heard first. He reiterated that the outcome of the 1st Action does not determine the result of the 2nd Action. He held that the balance of convenience favours the Defendants.

Ruling and overall outcome
Justice Mellor concluded that he is not satisfied that a stay should be granted. While there is a serious issue to be tried, the Plaintiff has not demonstrated irreparable harm and has not established that it will be more inconvenienced than the Defendants. The Application for a stay of proceedings is therefore denied.
He also stated that his reasons for denying the stay should not be interpreted as a consideration of whether the two actions should be consolidated under Rule 18.01.
The Court ordered that the Defendants shall have their costs in accordance with Column 3 of the Scale of Costs in the Appendix of Rule 55 of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D.