Documentation

COMPETITION TRIBUNAL

IN THE MATTER OF the Competition Act, R.S.C. 1985, c. C-34, as amended; IN THE MATTER OF an application by the Commissioner of Competition pursuant to section 79 of the Competition Act;

AND IN THE MATTER OF certain rules, policies and agreements relating to the residential multiple listing service of the Toronto Real Estate Board

BETWEEN: COMMISSIONER OF COMPETITION Applicant

AND THE TORONTO REAL ESTATE BOARD Respondent

AND

THE CANADIAN REAL ESTATE ASSOCIATION and REALTYSELLERS REAL ESTATE INC. Intervenors

MEMORANDUM OF FACT AND LAW OF THE TORONTO REAL ESTATE BOARD

AFFLECK GREENE McMURTRY LLP 365 Bay Street, Suite 200 Toronto, Ontario MSH 2Vl Donald S. Affleck, Q.C. LSUC # 10420B David N. Vaillancourt LSUC # 569691 Fiona Campbell LSUC # 60383V Tel: (416) 360-2800 Fax: (416) 360-5960

Counsel for The Toronto Real Estate Board

CT-2011-003

To: John F. Rook Q.C. Andrew D. Little Emrys Davis Bennett Jones LLP One First Canadian Place Suite 3400, P.O. Box 130 Toronto, Ontario M5X 1A4

Counsel for the Applicant And To: Sandra A. Forbes James Dinning Davies, Ward Phillips & Vineberg LLP 155 Wellington Street West Toronto, ON M5V 3J7 Reception: 40th Floor

Counsel for the Intervenor The Canadian Real Estate Association And To: The Registrar Competition Tribunal Thomas D' Arey McGee Building 90 Sparks Street, Suite 600 Ottawa, Ontario KIP 5B4

- 1 -PART I-OVERVIEW: I. This is a motion by The Toronto Real Estate Board ("TREB") seeking a stay or adjournment of the Competition Tribunal's Scheduling Orders of April 7, 2014 and April 23, 2014. TREB seeks to stay or adjourn the reconsideration hearing in this matter, currently scheduled to run for up to 9 days commencing October 14, 2014, pending the resolution of proceedings in this matter before the Supreme Court of Canada. 2. It is unclear when the Supreme Court will render its decision on leave to appeal. A decision on leave might not be rendered for some time, possibly not until the eve of the reconsideration hearing, or after the date the reconsideration hearing is scheduled to commence. 3. The reconsideration hearing will surely not proceed in the event that leave to appeal is granted. If leave is granted, then any time that had been spent preparing for the reconsideration hearing will be wasted. Such waste includes not only the time and significant uncompensible cost oflegal counsel, but also the time and resources of the Tribunal. 4. In the event leave is denied, the Tribunal has advised that it has time available for the reconsideration hearing in early 2015. A delay from October 14, 2014 to early 2015 is a modest delay. The Commissioner of Competition ("Commissioner") would suffer no prejudice from such delay. 5. There is simply no need to devote the resources of counsel, the parties, and the Tribunal to prepare for a reconsideration hearing that might ultimately prove to be unnecessary.

- 2 -PART II -FACTS 6. The Commissioner commenced this Application against TREB in May 2011 seeking a remedy from the Tribunal pursuant to section 79 of the Competition Act. 7. The Commissioner's Application was argued over six weeks in the fall of 2012. The Tribunal dismissed the Commissioner's Application by way of its Reasons for Order and Order dated April 15, 2013. Reasons for Order and Order of the Competition Tribunal dated April 15 , 2013, Exhibit A to the Affidavit of Linda Alexiou, sworn May 23, 2014; TREB's Motion Record at Tab 2A.

8. The Commissioner appealed the Tribunal's decision to the Federal Court of Appeal. The Federal Court of Appeal allowed the Commissioner's appeal by its Reasons for Judgment and Judgment dated February 3, 2014. The Federal Court of Appeal ordered this matter back to the Tribunal for reconsideration on the merits. Reasons for Judgment and Judgment of the Federal Court of Appeal dated February 3, 2014, Exhibit B to the Affidavit of Linda Alexiou, sworn May 23 , 2014; TREB's Motion Record at Tab2B.

9. On February 26, 2014, Madam Justice Simpson convened a case conference to address, in a preliminary manner, the logistics of the reconsideration hearing. During that call, Justice Simpson advised that the Tribunal was considering holding two weeks for the reconsideration hearing, commencing October 14, 2014. Transcript of Case Conference held February 26, 2014, Exhibit C to the Affidavit of Linda Alexiou, sworn May 23, 2014; TREB's Motion Record at Tab 2C.

I 0. On March 31, 2014, TREB filed its application for leave to appeal the Federal Court of Appeal's decision to the Supreme Court of Canada. The Commissioner filed his response on April 28, 2014, and TREB filed its reply on May 5, 2014.

- 3 -Case print-out from the Supreme Court of Canada website, Exhibit F to the Affidavit of Linda Alexiou, sworn May 23 , 2014; TREB 's Motion Record at Tab 2F.

11. In its leave application, TREB has raised two issues of national and public importance to be considered by the Supreme Court: (a) Given the inconsistent rulings of the Federal Court of Appeal in Commissioner of Competition v. Canada Pipe Company Ltd, and the TREB case, what is the appropriate test for identifying a "practice of anti-competitive acts" for the purposes of paragraph 79( 1) (b) of the Competition Act? (b) Must a firm compete in the relevant market in order for that firm to control that market for the purposes of paragraph 79(1)(a) of the Competition Act? TREB 's Notice of Application for Leave to Appeal, Exhibit D to the Affidavit of Linda Alexiou, sworn May 23, 2014; TREB's Motion Record at Tab 20.

12. A further case conference for the reconsideration hearing was held before Justice Simpson on April 1, 2014, the day after TREB had filed its application for leave to appeal to the Supreme Court. Further to that case conference, Justice Simpson issued two Scheduling Orders. The first, dated April 7, 2014 established October 14, 2014 as the start date for the reconsideration hearing. The second, dated April 23, 2014, set out in detail the schedule regarding the procedures associated with the reconsideration hearing. Scheduling Order of Justice Simpson dated April 7, 2014, Exhibit G to the Affidavit of Linda Alexiou, sworn May 23, 2014; TREB's Motion Record at Tab 2G.

Scheduling Order of Justice Simpson dated April 23, 2014, Exhibit H to the Affidavit of Linda Alexiou, sworn May 23, 2014; TREB's Motion Record at Tab 2H.

13 . If the reconsideration hearing is not stayed or adjourned, TREB will be required to commence preparation for that hearing by the middle of June 2014 at the latest. Preparation will have to be commenced this far in advance on account of the requirement to update

- 4 ­evidence for the reconsideration hearing, including the update of TREB's expeti evidence. TREB's expert will have to obtain TREB's updated fact evidence with sufficient time to review and consider that evidence in updating his own expert evidence. Affidavit of Linda Alexiou, sworn May 23, 2014 at para. 9; TREB's Motion Record at Tab 2. 14. As part of the updating process, TREB' s counsel will have to review thousands of pages of transcript evidence, witness statements, expert reports, and documentary evidence, and hundreds of pages of argument. Affidavit of Linda Alexiou, sworn May 23, 2014 at para. 10; TREB's Motion Record at Tab 2. 15. It is unknown when the Supreme Court will render its leave decision. All leave materials have been before the Court since May 5, 2014, although the application has yet to be assigned to a leave panel. Case print-out from the Supreme Court of Canada website, Exhibit F to the Affidavit of Linda Alexiou, sworn May 23, 2014; TREB's Motion Record at Tab 2F.

PART III - LAW AND ARGUMENT

A. The Tribunal's Jurisdiction 16. The Tribunal has the jurisdiction to grant a stay or adjournment of the reconsideration hearing. 17. The Federal Court of Appeal returned this matter back to the Tribunal for reconsideration, but did not impose any deadline by which the reconsideration had to be held. Matters of scheduling were left to the discretion of the Tribunal.

- 5 -18. The reconsideration hearing was scheduled further to a case management conference held under the Competition Tribunal Rules. Pursuant to the Competition Tribunal Rules, the Tribunal has the jurisdiction to vary or change a case management Order. Competition Tribunal Rules, SOR/2008-141 , s. 139. B. The ongoing Supreme Court proceedings are a compelling reason to adjourn or stay the reconsideration hearing

19. The reconsideration hearing should be stayed or adjourned pending the resolution of this matter before the Supreme Court of Canada. (i) The test: a compelling reason to stay or adjourn 20. In order to succeed on this motion, the Competition Tribunal Rules require TREB to demonstrate that there is a compelling reason to stay or adjourn the reconsideration hearing. Competition Tribunal Rules, SOR/2008-141, s. 139. 21. In Mylan Pharmaceuticals, the Federal Court of Appeal explained the principles that apply when it decides not to exercise its jurisdiction over a matter until some later time. The Court held that broad discretionary considerations come to bear in making such a decision, and whether to grant such a remedy all depends on the factual circumstances presented to the Court. The test may be harder to meet in circumstances where a long period of delay is requested or where the requested delay will cause harsh effects upon a party or the public. Mylan Pharmaceuticals ULC v. AstraZeneca Canada, Inc, [2011] FCJ No. 1607 (FCA) at para. 5.

22. In Mylan Pharmaceuticals, the Court considered and rejected the argument that the Comi must apply the RJR MacDonald test when it declines to exercise its jurisdiction until some later time. In so doing, the Com1 considered and rejected the approach taken by the

- 6 -Tribunal in D & B Companies of Canada Ltd. v. Canada (Director of Investigation and Research), [1994] C.C.T.D. No. 17 wherein the Tribunal applied the RJR MacDonald test in considering whether to grant a stay of proceedings before it. Mylan Pharmaceuticals ULC v. AstraZeneca Canada, Inc, [2011] FCJ No. 1607 (FCA) at paras. 7-14.

D & B Companies ofC anada Ltd. v. Canada (Director ofI nvestigation and Research), [1994] C.C.T.D. No. 17.

23. The approach taken in D & B has been overtaken by the Court of Appeal's decision in Mylan Pharmaceuticals. Furthermore, the version of the Competition Tribunal Rules that was in force at the time D & B was decided is different than the version that is in place today. There was no equivalent provision to section 139 of the Competition Tribunal Rules in the predecessor Competition Tribunal Rules - the section that expressly permits the Tribunal to vary a case management Order if presented with a compelling reason to do so. Competition Tribunal Rules, SOR/2008-141, s. 139. Competition Tribunal Rules, SOR/94/290. 24. The Tribunal enjoys a broad discretion to determine, based on the circumstances of this case, whether an adjournment or stay is appropriate and whether, in the words of the Competition Tribunal Rules, TREB has demonstrated a compelling reason to warrant such a stay or adjournment. (ii) Relevant factors in considering the exercise of the Tribunal's discretion 25. As a general proposition, when a matter is on appeal which may affect the course of a trial, the trial ought to be stayed until the appeal is resolved unless there are "very special reasons to do otherwise." Atlas Construction Inc. v. Brownstones, [ 1996] O.J. No. 703 (Gen Div) at paras. 5-7.

- 7 -Spence v. Olivetti, [I 993] O.J. No. 2843 (Gen Div) at para. 37. Tinkham Real Estate Ltd. v. Future Group Realty Ltd., [2007] N.S.J . No. 233 (S.C.) at para . 18.

26. One of the justifications for the foregoing principle is that the parties may waste time and money preparing for proceedings that may turn out to be unnecessary. As stated by Haley J. in Spence v. Olivetti: "[a]ny proceedings now may well turn out to be worthless and a waste of time for both the parties and the court. No one can afford the cost of useless litigation." Spence v. Olivetti, [I 993] O.J. No. 2843 (Gen Div) at para. 36. Tinkham Real Estate Ltd. v. Future Group Realty Ltd., [2007] N.S.J. No. 233 (S.C.) at para. 24.

27. The foregoing principle is consistent with the approach taken by the Federal Court of Appeal in determining whether to suspend or delay a pending appeal. In Coote v. Lawyers ' Professional Indemnity Company, Stratas J.A. held that: Additional principles guide this Court in the exercise of its plenary jurisdiction to manage and regulate proceedings. As long as no party is unfairly prejudiced and it is in the interests of justice - vital considerations always to be kept front of mind ­this Court should exercise its discretion against the wasteful use of judicial resources. The public purse and the taxpayers who fund it deserve respect. As well, cases are interconnected: one case sits alongside hundreds of other needy cases. Devoting resources to one case for no good reason deprives the others for no good reason.

Coote v. Lawyers ' Professional Indemnity Company, [2013] FCJ No 792 (FCA) at para. 13 . 28. The issue of a stay pending an appeal to the Supreme Court of Canada was considered by the Ontario Superior Court of Justice in Unifund Assurance Co. v. Insurance Corp. of British Columbia. In that case, a proceeding was commenced in Ontario to seek the appointment of an arbitrator pursuant to the Ontario Insurance Act. The judge at the first instance stayed the proceeding on the basis of forum non conveniens. The Court of Appeal

- 8 ­for Ontario overturned this decision, and ordered the matter back to the Superior Court of Justice to have an arbitrator appointed. The losing party at the Court of Appeal applied for leave to appeal to the Supreme Court and leave was granted. The successful party at the Court of Appeal sought to appoint an arbitrator further to the Court of Appeal's reasons. The losing party at the Court of Appeal sought a stay of the proceeding before the Ontario Superior Court of Justice pending the resolution of the appeal before the Supreme Court. Unifund Assurance Co. v. Insurance Corp. of British Columbia, [2002] O.J. No. 139 (SCJ) at paras. 9-16.

29. Power J. granted the motion for a stay. One of the reasons he granted the stay was that if the Supreme Court ruled in favour of the appellant, there would probably be no arbitration in Ontario. He held that "[u]seless costs and expenditure of time and effort should be avoided if possible." Power J. also noted that there was no prejudice to the respondent if the stay was granted, there would be prejudice to the appellant if the stay was denied, the appellant had an arguable case in front of the Supreme Court, and the matter was not an urgent matter. Unifund Assurance Co. v. Insurance Corp. of British Columbia, [2002] O.J. No. 139 (SCJ) at paras. 34.

30. The prospect of wasted resources factor heavily into the analysis when judges weigh whether to grant a stay or adjournment of proceedings while an appeal is pending. (iii) A stay or adjournment is warranted given the ongoing proceedings before the Supreme Court of Canada

31. Proceeding with the reconsideration hearing will entail a significant expenditure of resources- judicial resources by way of the case management role of Madam Justice Simpson and of the new panel in preparing for and presiding over the reconsideration hearing, legal

- 9 ­costs incurred by counsel, costs incurred by the experts, and time spent by representatives of the parties. 32. There are three possible outcomes before the Supreme Court. Leave could be granted and the Tribunal's initial decision could be restored; leave could be granted and TREB's appeal could fail, or leave to appeal could be denied. 33. If the Tribunal's initial decision is restored by the Supreme Court, then any time spent preparing for a rehearing will be costs thrown away - the matter will be at an end. It is questionable whether TREB would have any recourse to seek its costs thrown away under such circumstances. If the Supreme Court restores the Tribunal's Order, it is unclear whether the Tribunal would retain jurisdiction over the matter so as to be able to grant an award of costs thrown away for an unnecessary reconsideration hearing. In any event, the scale of costs available to TREB would be far below the significant actual out-of-pocket costs incurred. 34. If the Supreme Court grants leave and dismisses TREB's appeal, a further reconsideration hearing will have to be scheduled before the Tribunal, likely in late 2015 or into 2016. TREB will then have to redo its work updating the evidence at that time. While time spent preparing for an aborted 2014 reconsideration hearing may not be completely thrown away, the first step of any preparation will be going back to the record and reviewing the significant volume of evidence. Time spent to this end in 2014 will be thrown away, because the same review will have to occur in advance of a future reconsideration hearing in late 2015 or 2016. Even if TREB receives an award of costs thrown away in such a scenario,

- I 0 ­the scale of such an award would be far below the actual out-of-pocket costs incurred by TREB. 35. From a practical perspective, work has to commence in short order for counsel to prepare for a fall 2014 reconsideration hearing. This is reflected in the timetable set in the April 23, 2014 Scheduling Order. Preparation for the reconsideration hearing will come at a substantial cost - likely in the hundreds of thousands of dollars for TREB alone. 36. It seems unfathomable that the reconsideration hearing will proceed in the event that leave to appeal is granted to TREB. In that case, it will be "tools down" on receipt of a leave decision. However, there is no guarantee of a prompt leave decision. The summer months are approaching, and the Supreme Court is short its full complement of judges. It is not outside the realm of possibility that TREB will receive a leave decision on the eve of the reconsideration hearing, or after the scheduled commencement date of the reconsideration hearing. If the leave decision is not rendered prior to the outset of the reconsideration hearing, the Tribunal will be placed in a very difficult position. 37. Once preparation starts in the middle of June 2014, the amount of costs potentially thrown away will grow with each passing day, as will the amount of potentially wasted judicial resources. This is precisely the type of mischief that was sought to be avoided in the judicial authorities above, including Power J. 's decision to grant a stay pending the Unifund matter being resolved by the Supreme Court. The parties should not be made to prepare for a reconsideration hearing that may turn out to be completely unnecessary. 38. The Commissioner is concerned about this matter proceeding in an expeditious manner. The "worst case scenario" for the Commissioner is that the reconsideration hearing

- 11 ­is stayed or adjourned, and leave to appeal is denied shortly thereafter. In other words, if we had only soldiered on preparing throughout the summer, the matter could have proceeded to a rehearing in October 2014 after all. 39. It is TREB 's understanding that the Tribunal currently has dates available in early 2015. The delay from October 2014 to early 2015 is slight, particularly considering what lies on the other side of the balance - the very real possibility that a significant amount of legal and expert cost and judicial time will be wasted if the Supreme Court of Canada ultimately grants TREB leave to appeal. 40. The Tribunal should stay or adjourn the reconsideration hearing for the following compelling reasons: (a) The reconsideration hearing may turn out to be completely unnecessary depending on the disposition of this matter by the Supreme Court; (b) there is a high risk of wasted costs and expenditure of time if a stay or adjournment is not granted; ( c) TREB will suffer prejudice because wasted costs will be largely (if not totally) uncompensible; ( d) if a stay or adjournment is not granted, there is a high risk of wasted judicial resources; ( e) there is no prejudice to the Commissioner if a stay or adjournment is granted; (f) there is no urgency in holding the reconsideration hearing;

- 12 -(g) the delay caused by a stay or adjournment (in the event that leave is denied) would be modest; (h) a stay of proceedings would be appropriate in any event if leave to appeal is granted; (i) TREB has put forward a strong case for leave to appeal; and G) the balance of convenience favours granting a stay or adjournment. PARTIV-ORDERSOUGHT 41. TREB requests an Order staying or dismissing the reconsideration hearing. 42. TREB requests its costs of this motion. ALL OF WHICH IS RESPECTFULLY SUBMITTED, this 23rd day of May, 2014.

AFFLECK GREENE McMURTRY LLP 365 Bay Street, Suite 200 Toronto, Ontario M5H 2Vl

Donald S. Affleck, Q.C. LSUC # 10420B David N. Vaillancourt LSUC # 569691 Fiona Campbell LSUC # 60383V Tel: (416) 360-2800 Fax: (416) 360-5960

Counsel for The Toronto Real Estate Board

- 13 -LIST OF AUTHORITIES AND REGULATIONS CASES Mylan Pharmaceuticals ULC v. AstraZeneca Canada, Inc, [2011] FCJ No. 1607 (FCA) D & B Companies of Canada Ltd. v. Canada (Director ofI nvestigation and Research), [1994] C.C.T.D. No. 17 Atlas Construction Inc. v. Brownstones, [1996] O.J. No. 703 (Gen Div)

Spence v. Olivetti, [1993] O.J. No. 2843 (Gen Div) Tinkham Real Estate Ltd. v. Future Group Realty Ltd., [2007] N.S.J. No. 233 (S.C.) Coote v. Lawyers ' Professional Indemnity Company, [2013] FCJ No 792 (FCA) Unifund Assurance Co. v. Insurance Corp. ofB ritish Columbia, [2002] O.J. No. 139 (SCJ)

REGULATIONS Competition Tribunal Rules, SOR/2008-141 Competition Tribunal Rules, SOR/941290

CT-2011-003 COMPETITION TRIBUNAL THE COMMISSIONER OF COMPETITION Applicant - and-

THE TORONTO REAL ESTATE BOARD Respondent - and-

THE CANADIAN REAL ESTATE ASSOCIATION AND REALTYSELERS REAL ESTATE INC. Intervenors

MEMORANDUM OF FACT AND LAW AFFLECK GREENE McMURTRY LLP 365 Bay Street, Suite 200 Toronto, Ontario M5H 2Vl

Donald S. Affleck, Q.C. LSUC # 10420B David N. Vaillancourt LSUC # 569691 Fiona Campbell LSUC # 60383V Tel: (416) 360-2800 Fax: ( 416) 360-5960

Counsel for The Toronto Real Estate Board