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Orders - Setting Aside - For Fraud

Discontinuance - Setting Aside

Holterman v. Fish (Ont CA, 2017)

The test for setting aside an Order of the court [under RCP Rule 59.06(2(a) for fraud], here a consent Order for discontinuance of an action, was set out by the court:
[17] In determining whether there were exceptional circumstances to set aside the discontinuance, the motion judge applied the Sagaz test, which guides the application of r. 59.06(2)(a) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for setting aside or varying an order due to fraud or facts arising or discovered after the order has been made. In 671122 Ontario Ltd. v. Sagaz Industries Canada Inc., 2001 SCC 59 (CanLII), [2001] 2 S.C.R. 983, the moving party sought to reopen a trial on the basis of fresh evidence. The Supreme Court ruled against the moving party, and cautioned at para. 61 of its decision that the discretion to reopen a trial should be exercised “sparingly and with the greatest care.”

[18] The test from Sagaz is often reduced to two questions: (1) whether the new evidence, if presented at trial, would probably have changed the result, and (2) whether the evidence could have been obtained before trial by the exercise of reasonable diligence. But more is involved. As this Court stated in Mehedi v. 2057161 Ontario Inc., 2015 ONCA 670 (CanLII), at para. 20, the test “includes considerations of finality, the apparent cogency of the evidence, delay, fairness and prejudice.” Appellate courts must also consider the importance of deferring to trial judges, who are “in the best position to decide whether, at the expense of finality, fairness dictates that the trial be reopened”: Sagaz, at para. 60; Mehedi, at para. 21.

[19] In my view, the factors set out in Sagaz provide an appropriate structure for determining whether to set aside a notice of discontinuance, with the caveat that the interest in finality may pose an even greater obstacle to setting aside a consent discontinuance than reopening a trial. An important aspect of a discontinuance on consent is that the parties, after considering their positions, made a joint decision to end the litigation. Although there may be exceptional circumstances where departure from such a decision will be justified, courts should not allow “significant and considered measures” to terminate litigation to be “lightly undone”: Yancey v. Neis, 1999 ABCA 272 (CanLII), 250 A.R. 19, at para. 25; Philipos v. Canada (Attorney General), 2016 FCA 79 (CanLII), 483 N.R. 328, at paras. 17-20.


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