Dubé,
J:—This
is
an
application
under
Rule
401
for
an
order
that
the
defendants
be
granted
leave
to
file
a
conditional
appearance
to
the
fresh
as
amended
statement
of
claim
filed
by
the
plaintiffs
pursuant
to
the
judgment
of
Mahoney,
J
of
August
26,
1980,
for
the
purpose
of
allowing
the
disposition
of
defendants’
appeal
of
that
judgment.
In
their
original
action
plaintiffs
seek
a
declaration
that
a
certificate
of
the
Minister
of
National
Revenue
given
under
subsection
244(4)
of
the
Income
Tax
Act
is
without
proper
factual
foundation
and
without
force
or
effect,
and
a
declaration
that
the
information
which
Donald
D
Banks,
an
officer
of
the
Special
Investigation
Section
of
the
Department,
purported
to
lay
is
barred
in
the
effluxion
of
time
and
that
the
operation
of
subsection
244(4)
of
the
Act
is
therefore
invalid.
The
defendants
applied
to
strike
out
the
statement
of
claim
on
the
grounds
that
this
Court
has
no
jurisdiction
to
grant
the
relief
sought,
that
the
statement
of
claim
discloses
no
reasonable
cause
of
action,
and
that
the
action
is
frivolous
or
vexatious.
My
brother
Mahoney
who
heard
the
application
agreed
that
this
Court
has
no
jurisdiction
vis
à
vis
the
information
and
ordered
the
relevant
paragraph
10(b)
to
be
struck
out,
but
allowed
the
plaintiffs
to
amend
paragraph
10(a)
of
their
statement
of
claim
by
adding
an
expressed
allegation
that
the
certificate
was
made
fraudulently.
He
ordered
that,
if
the
amendment
is
made,
the
statement
of
claim,
except
for
paragraph
10(b),
will
stand.
The
defendants
appealed
that
decision
and
now
move
for
leave
to
file
a
conditional
appearance
to
the
freshly
as
amended
statement
of
claim
to
allow
for
the
disposition
of
the
appeal
before
the
Federal
Court
of
Appeal.
Rule
401,
the
rule
invoked
by
the
defendants,
reads
as
follows:
RULE
401
CONDITIONAL
APPEARANCE
A
defendant
may,
by
leave
of
the
Court,
file
a
conditional
appearance
for
the
purpose
of
objecting
to
(a)
any
irregularity
in
the
commencement
of
the
proceeding;
(b)
the
service
of
the
statement
of
claim
or
declaration,
or
notice
thereof,
on
him;
or
(c)
the
jurisdiction
of
the
Court,
and
an
order
granting
such
leave
shall
make
provision
for
any
stay
of
proceedings
necessary
to
allow
such
objection
to
be
raised
and
disposed
of.
The
defendants
argue
that
since
there
is
a
serious
question
of
jurisdiction
pending,
they
ought
not
to
be
put
to
the
expense
of
a
costly
trial
which
might
turn
out
to
be
merely
an
academic
exercise
if
this
Court
is
declared
to
have
no
jurisdiction
in
the
matter.
Under
Rule
401,
a
defendant
may,
by
leave
of
the
Court,
file
a
conditional
appearance
for
the
purpose
of
objecting
to
the
jurisdiction
of
the
Court
and
an
order
granting
such
leave
shall
make
provisions
for
any
stay
of
proceedings
necessary
to
allow
such
objection
to
be
raised
or
disposed
of.
Counsel
for
plaintiffs,
however,
alleges
that
Rule
401
is
not
the
proper
vehicle
to
obtain
such
a
stay
under
the
present
circumstances.
He
argues
that
normally
a
conditional
appearance
is
filed
in
lieu
of
a
defence
to
allow
defendants
to
challenge
the
jurisdiction
of
the
Court
ratione
personae:
a
conditional
appearance
to
contest
the
jurisdiction
ratione
materiae
is
not
necessary
because
that
question
can
be
resolved
at
any
stage.
That
very
argument
was
made
before
my
colleague
Walsh,
J
in
Canadian
Pacific
Limited
et
al
v
Quebec
North
Shore
Paper
et
al,
[1976]
1
FC
52.
He
answered
as
follows
at
page
55:
Plaintiffs’
counsel
contends
that
a
conditional
appearance
to
contest
the
jurisdiction
of
the
Court
is
only
necessary
when
the
question
to
be
raised
is
whether
the
Court
has
jurisdiction
ratione
presonae
but
that
when
the
question
is
one
of
jurisdiction
ratione
materiae,
this
can
be
raised
at
any
stage
of
the
proceedings
and
will
be
raised
by
the
Court
itself
so
that
the
failure
to
raise
it
by
preliminary
objection
does
not
constitute
a
waiver
of
this
right
or
an
acceptance
of
the
jurisdiction
of
the
Court.
I
have
examined
the
jurisprudence
and
authorities
to
which
counsel
referred
and
in
particular
Johnson:
Conflict
of
Laws,
1973
ed,
vol
3,
page
605;
and
the
case
of
Mulvey
v
The
Barge
“Necsho”
which
supports
this
proposition.
I
can
find
nothing
to
indicate,
however,
that
the
jurisdiction
of
the
Court
ratione
materiae
cannot
or
should
not
be
raised
by
a
motion
such
as
the
present
one
seeking
leave
to
file
a
conditional
appearance
in
order
to
raise
the
question
of
jurisdiction
ratione
materiae
on
a
preliminary
motion.
Defendants
have
chosen
to
raise
this
issue
at
this
stage
of
the
proceedings
as
they
have
the
right
to
do,
even
if
the
failure
to
do
so
might
not
have
prevented
them
from
raising
this
issue
at
a
later
date.
Since
the
matter
is
within
the
discretion
of
the
Court,
the
desirability
and
expediency
of
proceedings
in
this
matter
should
be
the
deciding
factor.
LeDain,
J
of
the
Federal
Court
of
Appeal
also
dealt
with
Rule
401
in
Antares
Shipping
Corporation
v
The
Ship
Capricorn
et
al,
[1976]
2
FC
320.
The
plaintiffs
in
the
instant
case
rely
on
this
extract
from
the
judgment:
Leave
to
file
a
conditional
appearance
is
not
a
matter
of
right.
In
our
opinion,
the
principal
consideration
which
should
govern
the
exercise
of
the
discretion
under
Rule
401
is
whether
the
defendant
has
prima
facie
raised
sufficient
doubt
as
to
the
regularity
of
the
proceedings
or
the
jurisdiction
ratione
personae
of
the
Court
that
justice
requires
he
be
permitted
to
appear
in
such
a
manner
as
to
avoid
any
waiver
of
his
objections.
As
we
read
the
reasons
for
the
order
of
the
Trial
Division,
the
Court
came
to
the
conclusion
that
there
was
not
sufficient
prima
facie
merit
in
the
objections
invoked
by
the
appellant
to
warrant
the
granting
of
leave
to
file
a
conditional
appearance.
We
are
unable
to
find
any
reason
for
interfering
with
this
exercise
of
its
discretion.
At
first
blush
this
would
appear
to
decide
that
Rule
401
in
only
available
to
test
the
jurisdiction
of
the
Court
ratione
personae.
However,
the
learned
judge
goes
on
to
conclude
as
follows:
In
so
far
as
the
objection
to
jurisdiction
ratione
materiae
is
concerned,
such
an
objection
can
be
made
at
any
stage
of
the
proceedings,
and
it
is,
therefore,
not
an
improper
exercise
of
the
discretion
under
Rule
401
to
refuse
leave
to
file
a
conditional
appearance
for
the
purpose
of
making
such
an
objection.
I
conclude
therefore
that
the
defendants
may
avail
themselves
of
Rule
401
to
test
the
jurisdiction
of
the
Court
ratione
materia.
However,
what
the
defendants
really
want
from
this
Court
is
a
stay
of
proceedings,
which
this
Court
may
grant
in
its
discretion
under
section
50
of
the
Federal
Court
Act,
either
on
the
ground
that
the
claim
is
being
proceeded
with
in
another
Court,
or
where
for
any
other
reasons
it
is
in
the
interest
of
justice
that
the
proceedings
be
stayed.
The
power
to
order
a
stay
should
only
be
exercised
sparingly
and
a
stay
will
be
ordered
only
in
the
clearest
cases.
(Vide
Weight
Watchers
Int’l
Inc
v
Weight
Watchers
(Ont)
Ltd
(1972),
25
DLR
(3d)
419).
The
principles
which
must
govern
in
these
matters
are
clearly
stated
in
the
case
of
Empire
Universal
Films
Ltd
et
al
v
Rank
et
al,
[1947]
OR
775
at
779,
as
referred
to
in
the
Weight
Watchers
case
at
426:
(1)
A
mere
balance
of
convenience
is
not
a
sufficient
ground
for
depriving
a
plaintiff
of
the
advantages
of
prosecuting
his
action
in
an
English
Court
if
it
is
otherwise
properly
brought.
The
right
of
access
to
the
King’s
Court
must
not
be
lightly
refused.
(2)
In
order
to
justify
a
stay
two
conditions
must
be
satisfied,
one
positive
and
the
other
negative:
(a)
the
defendant
must
satisfy
the
Court
that
the
continuance
of
the
action
would
work
on
injustice
because
it
would
be
oppressive
or
vexatious
to
him
or
would
be
an
abuse
of
the
process
of
the
Court
in
some
other
way;
and
(b)
the
stay
must
not
cause
an
injustice
to
the
plaintiff.
On
both
the
burden
of
proof
is
on
the
defendant.
The
main
reason
why
defendants
want
a
stay
is
to
bring
a
halt
to
proceedings
which
might
turn
out
to
be
expensive
and
useless
in
view
of
the
possible
decision
of
the
Federal
Court
of
Appeal
that
this
Court
has
no
jurisdiction.
In
my
view,
that
ground
alone
is
not
sufficient
to
deprive
plaintiffs
of
the
advantages
of
advancing
their
action.
The
burden
of
proof
is
on
the
defendants
to
show
that
the
continuance
of
the
action
would
work
an
injustice
on
them,
or
would
be
an
abuse
of
the
process
of
the
Court:
they
have
not
established
that
to
my
satisfaction.
Neither
have
they
shown
that
the
stay
does
not
cause
any
injustice
to
the
plaintiffs.
The
latter
have
every
right
to
see
their
action
progress
towards
a
judicial
solution.
It
could
very
well
be
that,
after
the
defence
has
been
filed,
the
discoveries
completed
and
the
lists
of
documents
exchanged,
the
defendants
ought
to
apply
again
for
a
stay
before
fixing
a
time
for
trial.
At
that
stage
the
Court
of
Appeal
may
have
delivered
its
judgment,
thus
possibly
resolving
the
matter.
If
it
is
decided
that
this
Court
has
no
jurisdiction
ratione
materiae,
the
matter
will
end
there.
If
the
contrary
view
is
upheld,
no
time
will
have
been
lost.
Under
the
circumstances,
the
application
is
denied
with
costs.
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