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Estoppel - Issue Estoppel II

. Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company)

In Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company) (Ont CA, 2021) the Court of Appeal applied the test for issue estoppel:
[18] She relied on the test from the Supreme Court of Canada’s decision in Danyluk v. Ainsworth Technologies Inc, 2001 SCC 44, [2001] 2 S.C.R. 460, which includes three preconditions for the application of issue estoppel. The motion judge stated:
The preconditions are: (1) that the same question has been decided; (2) that the judicial decision which is said to create estoppel was final - that has been conceded here and is not an issue and; (3) that the parties to the judicial decision or their privies were the same persons as to the parties to the proceedings in which the estoppel was raised.
....

[59] The “same question” test was described by Goudge J.A. in Heynen v. Frito Lay Canada Ltd. (1999), 1999 CanLII 1386 (ON CA), 45 O.R. (3d) 776 (C.A.), at para. 20, as follows:
Although at a high level of generalization, two proceedings might seem to address the same question, this requirement of issue estoppel is met only if on careful analysis of the relevant facts and applicable law the answer to the specific question in the earlier proceeding can be said to determine the issue in the subsequent proceeding.
. GIAO Consultants Ltd. v. 7779534 Canada Inc.

In GIAO Consultants Ltd. v. 7779534 Canada Inc. (Ont CA, 2020) the Court of Appeal considered an issue estoppel where a motion judge made fact-findings only to determine a van Breda forum non conveniens issue:
[12] Second, the appellants contend that the motion judge erred by making findings relating to the merits of the claim in the underlying action and that these findings will improperly flow through and bind the trial judge: Young v. Tyco International of Canada Ltd., 2008 ONCA 31 (CanLII), 2008 ONCA, at para. 31.

[13] We are not persuaded by this submission. Once again, the motion judge’s findings were made within the context of applying the Van Breda factors. These findings will not flow through and be determinative of the issues at trial; rather, they are based only upon the evidence available at the time of the motion for the purpose of assessing the presumptive connecting factors relating to the issue of jurisdiction. The motion judge was required to make some findings for the purpose of providing a decision on the motion and was permitted to rely on the respondent’s evidence for this purpose: Young, at paras. 33-34; Van Breda, at para 72.
. Phillion v. Ontario (Attorney General)

In Phillion v. Ontario (Attorney General) (Ont CA, 2014) the Court of Appeal considered a civil action emanating from an old murder conviction that, after an extended incarceration was sent to itself on a Reference. That Reference resulted in an Order for a new trial due to non-disclosure of evidence to the defence. After the Crown decided not to proceed with the new trial, the defendant sued in a range of torts, including "conspiracy, fraudulent and negligent misrepresentation, malicious prosecution, negligence and misfeasance in public office." Concerns of issue estoppel and abuse of process arose within the civil action. On the issue of issue estoppel the court found that the issues before it previously in the Reference were distinct from those of the tort action and as such found no issue estoppel emanating from the Reference:
[39] I now turn to the second error the motion judge made in concluding that it would be an abuse of process for the appellant to pursue a civil action for wrongdoing against the state authorities. She came to this conclusion based on her view that all of the issues had already been determined by the Court of Appeal on the reference. In particular, the motion judge emphasized that the court found no wrongdoing on the part of the authorities.

[40] However, that finding was made only for the purpose of deciding whether the newly discovered evidence could be admitted on appeal based on trial unfairness. The court did not consider whether the respondents breached any common law duty of care or whether they owed any such duty to the appellant.

[41] Most importantly, the Court of Appeal admitted the evidence on other grounds and then ordered a new trial. The court placed no restrictions on the conduct of that trial or on the issues that could be raised. Clearly, had the trial proceeded, the defence would have raised the alibi and the fact that Detective McCombie had concluded in 1968 that the appellant was not the murderer. The Crown would have led the evidence of how the alibi was discredited. It would have been open to the jury to accept, reject or have a reasonable doubt about the key issue that the Court of Appeal could not decide: whether the Trenton alibi had been discredited. If the jury did not believe that the alibi had been discredited by Detective McCombie, then the finding by the Court of Appeal that there was no duty on the Crown to disclose would itself be implicitly discredited.

[42] Without seeking to set out a general rule applicable to all references, the nature of the reference in this particular case was such that the findings of the court could not have been intended to bind a future hearing if a new trial was ordered.

[43] It follows that the same conclusion applies with respect to a civil action. It is also consistent with the fairness analysis recently adopted by the Supreme Court of Canada in Penner v. Niagara (Regional Police Services Board), 2013 SCC 19 (CanLII), 2013 SCC 19, [2013] 2 S.C.R. 125.

[44] In that case, Cromwell and Karakatsanis JJ. discuss two ways in which the operation of the doctrine of issue estoppel can be unfair to a party. The first is when the original proceeding was unfair. The second occurs when it is unfair to use the results of a prior proceeding to bar a subsequent proceeding. They note that fairness in this context is a much more nuanced inquiry. As an example, injustice can arise when “there is a significant difference between the purposes, process or stakes involved in the two proceedings”: Penner, at para. 42. In my view, a similar analysis applies here in the related context of abuse of process: see also the discussion in C.U.P.E., at para. 53.

[45] The reference was a unique proceeding initiated by the Minister of Justice for the purpose of inquiring into a possible wrongful conviction. Mr. Phillion had the onus of proof to either show trial unfairness or meet the Palmer test in order to have the newly discovered evidence admitted. However, to do that, he did not need to prove anything about the police or Crown motive or intent behind their failure to disclose. His focus was on satisfying the court that his conviction had to be set aside.

[46] The motion judge acknowledged that at the reference, Mr. Phillion did not impugn the integrity of Mr. Lindsay or Detective McCombie, but she stated that the court would nevertheless have had to find improper conduct on their part in order to agree with Mr. Phillion that they should have disclosed the 1968 McCombie Report. She reasoned that the court implicitly found that the respondents did not act out of malice. Therefore, she held that although the appellant did not raise that issue on the reference, because of the court’s implicit finding, he is now precluded from raising their intent in a subsequent civil action.

[47] Contrary to the motion judge’s finding, in my view, the specific purpose of the reference and the questions it addressed indicate that the stakes, purpose and process were entirely different from this civil action. It would therefore be unfair to preclude the appellant from bringing a civil action on the basis that he is bound by an implicit finding made on the reference that there was no malice.

[48] Finally, and in any event, the findings made on the reference with respect to the conduct of the Crown and police did not consider any issues of negligence or a common law duty of care, as alleged in the statement of claim.

Conclusion on Abuse of Process

[49] In my view, the order dismissing the action as an abuse of process must be set aside. Such orders are only to be granted in the clearest cases and only when allowing the action to proceed would bring the administration of justice into disrepute. The motion judge erred in law in concluding that this was a case of relitigation and that it justified the application of the doctrine of abuse of process.
On the issue of abuse of process, which arose due to the re-litigation of potentially common issues in both the Reference and the tort action, the court stated:
[29] The leading case on the doctrine of abuse of process is the Supreme Court of Canada’s decision in Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63 (CanLII), 2003 SCC 63, [2003] 3 S.C.R. 77. Arbour J. explained, at paras. 35-37, that this doctrine represents the inherent and residual discretion to “prevent an abuse of the court’s process” when other doctrines such as issue estoppel may not be available. At para. 35, she adopted the words of McLachlin J. (as she then was) in R. v. Scott, 1990 CanLII 27 (SCC), [1990] 3 S.C.R. 979, at p. 1007, as follows:
[A]buse of process may be established where: (1) the proceedings are oppressive or vexatious; and, (2) violate the fundamental principles of justice underlying the community’s sense of fair play and decency. The concepts of oppressiveness and vexatiousness underline the interest of the accused in a fair trial. But the doctrine evokes as well the public interest in a fair and just trial process and the proper administration of justice.
[30] As it relates to this case, the doctrine has been applied to prevent relitigation when the requirements of issue estoppel cannot be met (as is the case here, because the parties to the two proceedings are not the same), but when “allowing the litigation to proceed would nonetheless violate such principles as judicial economy, consistency, finality and the integrity of the administration of justice”: C.U.P.E., at para. 37. The court emphasized that the focus of the doctrine of abuse of process is less on the parties and more on “the integrity of judicial decision making as a branch of the administration of justice”: C.U.P.E., at para. 43.

[31] In R. v. Mahalingan, 2008 SCC 63 (CanLII), 2008 SCC 63, [2008] 3 S.C.R. 316, at para. 42, McLachlin C.J. expressed the view that the doctrine of abuse of process is vague and variable, pointing out that the Supreme Court has said that “successful reliance on the doctrine will be extremely rare”. Importantly for this appeal, she stated further, at para 42, that:
To date, the doctrine has not been much used to protect against relitigation, and indeed there is authority for the proposition that relitigation, without more, simply does not reach the threshold required for a finding of abuse of process. [Citation omitted.]
[32] With respect to the motion judge, in finding that abuse of process should be applied in this case, in my view she fell into error in two respects. First, she failed to analyze the nature and purpose of the reference, including the specific question the court was asked to answer, in comparison with the issues raised in the civil claims. In that context, she erred in concluding that the issue whether the Trenton alibi had been discredited was a roadblock to the civil claim, and in taking an overly broad view of the findings of fact that she believed were made by the Court of Appeal on the reference.

[33] Second, in holding that on the reference the court made findings of fact that could not be revisited, she did not consider the effect of the remedy that the reference court ordered, which was a new criminal trial. At the new trial, all issues would have been open for decision by a jury, including, most importantly, whether the Trenton alibi had been discredited.

[34] Dealing with the first error, the statement of claim is broadly drafted. It seeks compensation in tort for the appellant’s conviction because information about an alibi was withheld from the defence. The court on the reference found that if the jury had been told about the Trenton alibi and about Detective McCombie’s evidence of how he discredited it, including the fact that the documentation and the car radio he took from Trenton had been lost by the time of the trial, they may have had a reasonable doubt about the appellant’s guilt.

[35] Accepting that at the time, the Crown did not have a positive obligation to disclose a discredited alibi, the police and Crown could arguably still be found liable to the appellant in tort. For example, had the detective not given misleading answers at the preliminary hearing about the extent of his investigation – answers that the Crown did not correct – the defence may well have learned about his 1968 report and his assertion that he later changed his view. Defence counsel would then have been able to explore the issue with the jury. As Moldaver J.A. stated, that information would have been “gold” in defence counsel’s hands.
. Plate v. Atlas Copco Canada Inc.

In Plate v. Atlas Copco Canada Inc. (Ont CA, 2019) the Court of Appeal held that findings made on a criminal sentencing hearing did not constitute issue estoppel for the purposes of tort merits:
(i) Punko

[44] As I have noted, the focus of the appellant’s argument is para. 11 of Punko:
Where a fact is necessary for the purpose of determining the appropriate sentence but is not express or implied in the jury’s verdict, the sentencing judge must make his or her own finding (s. 724(2)(b) Cr. C.). However, such a finding does not constitute a judicial determination on the merits of the case; rather, it constitutes a judicial determination only for the purpose of sentencing. [Emphasis added.]
[45] In order to understand what the court was saying in para. 11, it is important to understand the context of the case.

[46] In Punko, the Supreme Court considered the application of the doctrine of issue estoppel in the context of a multi-issue criminal jury trial. A prolonged investigation of the Hells Angels by the RCMP identified a number of possible criminal offences. Some of those offences were within the jurisdiction of the provincial Crown; others were within the jurisdiction of the federal Crown.

[47] The provincial offences proceeded to trial first. Four accused were tried on a number of offences, including offences allegedly committed for the benefit of, at the direction of, or in association with a criminal organization (i.e. the Hells Angels). The four accused were found guilty of a number of offences, but acquitted on all the criminal organization counts.

[48] Meanwhile, federal prosecutors charged two of the four accused with various drug-related offences and, on some of the counts, it was again alleged that they had done so for the benefit of, at the direction of, or in association with a criminal organization (i.e. the Hells Angels). The two accused argued that the Crown was estopped from leading evidence that the Hells Angels was a criminal organization, because the issue had been decided by the jury in the provincial prosecution. In making this argument, the accused referred to certain findings made by the sentencing judge in the provincial proceedings.

[49] Criminal issue estoppel is a narrow doctrine. It precludes the Crown from re-litigating those facts that were decided in favor of the accused at the earlier trial: Punko, at para. 7; citing R. v. Mahalingan, 2008 SCC 63 (CanLII), [2008] 3 S.C.R. 316, at paras. 22, 31, 33. The resolution of an issue in favor of the accused must be a “necessary inference from the trial judge’s findings or from the fact of the acquittal”: Punko, at para. 7; Mahalingan, at para. 52. Where the prior proceeding was before a jury, the finding in favor of the accused must be logically necessary to the jury’s verdict of acquittal: Punko, at para. 8; Mahalingan, at para. 53.

[50] Against this backdrop, Deschamps J. held that although s. 724(2)(b) of the Criminal Code permits a judge imposing sentence after a jury trial to “find any other relevant fact that was disclosed by evidence at the trial to be proven, or hear evidence presented by either party with respect to the fact”, such findings cannot be relied on in support of issue estoppel: Punko, at para. 19. Since the merits of the case in a jury trial “pertain to the issues the jurors can take into consideration in reaching a verdict” and issue estoppel applies “only where the unanimity of the jury on an issue can be discerned through reasoning based on logical necessity”, a finding under s. 724(2)(b) cannot ground issue estoppel: Punko, at para. 11. Deschamps J.’s statement, at para. 11, that a finding made under s. 724(2)(b) “does not constitute a judicial determination on the merits” (emphasis in original) but rather a “judicial determination only for the purpose of sentencing” must be understood in this context.

[51] Understanding para. 11 in context, Punko does not preclude the respondent from seeking to rely on findings made under s. 724(2)(b) in the context of this civil action: a finding under s. 724(2)(b) – while not a finding “on the merits” or relating to the accused’s criminal liability – is still a judicial finding.

[52] Punko also underlines the point that findings made in sentencing proceedings must be understood in context – and, in particular, in light of the statutory scheme that governs such findings. That point is consistent with Malik, to which I now turn.

(ii) Malik

[53] In Malik, the Supreme Court followed the lead of this court[6] and put to rest the so-called rule in Hollington v. F. Hewthorn & Co., [1943] 1 K.B. 587 (C.A.), which held that prior judicial findings or judgments were hearsay or opinion evidence and thus inadmissible in a subsequent judicial proceeding. Writing for the court, Binnie J. described, at para. 7, the general circumstances in which a prior judicial finding will be admissible in subsequent civil proceedings:
[A] judgment in a prior civil or criminal case is admissible (if considered relevant by the chambers judge) as evidence in subsequent interlocutory proceedings as proof of its findings and conclusions, provided the parties are the same or were themselves participants in the prior proceedings on similar or related issues. It will be for that judge to assess its weight. The prejudiced party or parties will have an opportunity to lead evidence to contradict it or lessen its weight (unless precluded from doing so by the doctrines of res judicata, issue estoppel or abuse of process).
[54] Although Malik considered the admissibility of a prior judgment in a subsequent interlocutory proceeding, its reasoning is not restricted to interlocutory proceedings: R. v. Jesse, 2012 SCC 21 (CanLII), [2012] 1 S.C.R. 716, at paras. 43-44. Malik has been applied in the context of final determinations on the merits in subsequent civil proceedings: see e.g. MacRury v. Keybase, 2017 NSCA 8 (CanLII), 411 D.L.R. (4th) 255; National Bank Financial Ltd v. Barthe Estate, 2015 NSCA 47 (CanLII), 359 N.S.R. (2d) 258; I.K.K. v. M.P., 2018 ONSC 2743 (CanLII), 8 R.F.L. (8th) 367; Deposit Insurance Corp. of Ontario v. Malette, 2014 ONSC 2845 (CanLII); and Kay v. Caverson, 2011 ONSC 4528 (CanLII), 5 C.L.R. (4th) 17, aff’d 2013 ONCA 220 (CanLII), 19 C.L.R. (4th) 213.

[55] In Binnie J.’s view, a “prior judicial decision between the same or related parties or participants on the same or related issues” is not “merely another controversy over hearsay or opinion evidence”: Malik, at para. 52. Rather, the “court’s earlier decision [is] a judicial pronouncement after the contending parties [have] been heard” having a “substantial effect on their legal rights”: Malik, at para. 52. In this vein, “the admissibility of prior civil or criminal judgments in subsequent civil proceedings, and the effect to be given to them, must be seen in the context of the need to promote efficiency in litigation and reduce its overall costs to the parties”: Malik, at para. 37. The rule in Hollington gave rise to unnecessary inefficiencies, and any resulting unfairness in admitting prior judicial findings into evidence could be addressed on a case-by-case basis: Malik, at para. 52.

[56] In this case, the motion judge identified the issues in the prior criminal proceedings as including “whether [the appellant] was guilty of the fraud charged and, once he was found guilty … what relevant aggravating and mitigating circumstances were present”: at para. 24. In the motion judge’s view, the findings of the sentencing judge were admissible in the summary judgment proceedings. He explained his reasoning, at paras. 30-31:
The fraudulent scheme pleaded in the statement of claim is the same fraudulent scheme described by [the sentencing judge] in the Decision on Sentencing. The fiduciary duty of [the appellant] toward the [respondent] pleaded in the statement of claim arises out of the same relationship as the fiduciary duty about which [the sentencing judge] made findings of fact. There is very clearly a large overlap of issues between the civil and criminal proceedings even if all the issues in the one were not present in the other and vice versa.

[The appellant] was of course a party to both proceedings and was, as I have indicated, vitally concerned in the criminal proceedings. While [the respondent] was not a party to the criminal proceedings per se, [the respondent] was the victim of the crime being tried.
[57] I agree that the sentencing judge’s findings, including those made under s. 724(2)(b) of the Criminal Code, were admissible on the summary judgment motion.

[58] The sentencing judge’s findings were relevant to the issues raised on the summary judgment motion. The appellant (as the criminal accused) and the respondent (as the complainant) were “parties” or “participants” in the prior criminal proceedings, which raised similar or related issues. Malik directs that lack of identity of issue goes to weight, not admissibility: at para. 43. At the sentencing proceedings, the extent of the appellant’s breach of trust was a relevant consideration, pursuant to s. 718.2(a)(iii) of the Criminal Code. It is in relation to this factor that the sentencing judge found the appellant to have breached a fiduciary duty to the respondent. Thus, the fact that the issues in the criminal proceedings were not identical to those in the civil proceeding did not operate as a bar to admissibility of the sentencing judge’s findings relative to the respondent’s breach of fiduciary duty.


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