Motion to Strike for Abuse of Process Issue Estoppel Principles or Res Judicata Principles

IV.  REVIEW OF GENERAL PRINCIPLES

[25]  I will briefly review several legal principles that were referred to by the parties in their written and oral argument to give context to the issues Fasco raises on this appeal.

(1)         Rule 21.01(3)(d)

[26]  Rule 21.01(3)(d) provides:

21.01(3) A defendant may move before a judge to have an action stayed or dismissed on the ground that,

…

(d) the action is frivolous or vexatious or is otherwise an abuse of process of the court

[27]  When a party moves under r. 21.01(3)(d) to strike pleadings on the basis of res judicata or abuse of process, it bears the onus of satisfying the “plain and obvious” test. This test is more commonly applied under r. 21.01(1)(b) to strike out claims that disclose no reasonable cause of action, following the Supreme Court’s decision in Hunt v. T&N plc, 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959. However, this court has affirmed that the same test also applies under r. 21.01(3)(d). In Simone Estate v. Cheifetz (2005), 2005 CanLII 25094 (ON CA), 201 O.A.C. 120 (C.A.), at paras. 24-25, this court noted that on a r. 21 motion to strike pleadings on the basis of issue estoppel and abuse of process, the moving party “bears a heavy onus and must establish that it is ‘plain, obvious and beyond doubt’ that the plea could not succeed”. In Waterloo (City) v. Wolfraim, 2007 ONCA 732, 287 D.L.R. (4th) 65, at para. 3, this court re-iterated that “[a] court should invoke its authority to stay an action for abuse of process only in the clearest of cases”. Similarly, in Salasel v. Cuthbertson, 2015 ONCA 115, 124 O.R. (3d) 401, at para. 8, this court held that “[a] court only invokes its authority under rule 21.01(3)(d) … in the clearest of cases” (emphasis added).^[1]

[28]  Extrinsic evidence is permitted on a motion under r. 21.01(3)(d), and a motion judge may make factual determinations, including with respect to whether the facts in an underlying action were already litigated in earlier proceedings: Aba-Alkhail v. University of Ottawa, 2013 ONCA 633, 311 O.A.C. 89, at paras. 13-14, leave to appeal refused, [2013] S.C.C.A. No. 491. The rule requires a motion judge to take “a hard look at the factual background, and especially the position and conduct of the parties”: Salasel, at para. 9.

[29]  To summarize, Venmar had the onus of proving that it was plain and obvious that Fasco’s defences to Venmar’s claim for contribution and indemnity could not succeed, due to the application of res judicata or abuse of process.

(2)  Res Judicata

[30]  The law recognizes a number of doctrines to prevent the abuse of the decision-making process. One of the doctrines is res judicata. In Danyluk, Binnie J. described the doctrine, at para. 18, as follows:

The law rightly seeks a finality to litigation. To advance that objective, it requires litigants to put their best foot forward to establish the truth of their allegations when first called upon to do so. A litigant, to use the vernacular, is only entitled to one bite at the cherry…. An issue, once decided, should not generally be re-litigated to the benefit of the losing party and the harassment of the winner. A person should only be vexed once in the same cause. Duplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided.

[31]  Res judicata has two main branches: cause of action estoppel and issue estoppel. Cause of action estoppel prohibits a litigant from bringing an action against another party when that same cause of action has been determined in earlier proceedings by a court of competent jurisdiction. Cause of action estoppel also prevents a party from re-litigating a claim that could have been raised in an earlier proceeding.

[32]  Issue estoppel is narrower. It applies to prohibit the re-litigation of an issue that has already been decided in an earlier proceeding, even where the cause of action is different in the two proceedings.

[33]  The overall goal of the doctrine of res judicata, and therefore of both cause of action estoppel and issue estoppel, is judicial finality: Minott v. O’Shanter Development Co. (1999), 1999 CanLII 3686 (ON CA), 42 O.R. (3d) 321 (C.A.), at paras. 16-17; Hoque v. Montreal Trust Co. of Canada, 1997 NSCA 153, 162 N.S.R. (2d) 321, leave to appeal refused, [1997] S.C.C.A. No. 656.

(3)  Abuse of Process

[34]  The re-litigation of issues that have been before the courts in a previous proceeding may create an abuse of process. That is because re-litigation carries serious detrimental effects and should be avoided unless the circumstances dictate that re-litigation is in fact necessary to enhance the credibility and the effectiveness of the adjudicative process as a whole: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 52.

[35]  The law seeks to avoid re-litigation primarily for two reasons: first, to prevent overlap and wasting judicial resources; and second, to avoid the risk of inconsistent findings: C.U.P.E., at para. 51; Donald J. Lange, The Doctrine of Res Judicata in Canada, 4th ed. (Markham: LexisNexis Canada Inc., 2015), at pp. 217-18.

(4)  Residual Discretion

[36]  A court may decline to apply res judicata or abuse of process where its application would work an injustice. This might occur where the first proceeding denied a party a full and fair hearing, even though that party exercised reasonable diligence. Additionally, even if the first proceeding was conducted with scrupulous fairness, it might still be unfair to use the results of the first proceeding to preclude re-litigation of an issue.

[37]  It may be appropriate to exercise discretion to decline to apply the abuse of process doctrine when (1) the first proceeding is tainted by fraud or dishonesty, (2) fresh, new evidence, previously unavailable, conclusively impeaches the original results, or (3) fairness dictates that the original result should not be binding in the new context: Catalyst, at para. 68. The list of relevant factors to this discretion is not closed. The discretionary factors for whether to decline to apply the abuse of process doctrine may also apply in the context of deciding whether to apply the doctrine of res judicata.

Rule 12.02 provides:

(1)  The court may, on motion, strike out or amend all or part of any document that,

(a)  discloses no reasonable cause of action or defence;

(b)  may delay or make it difficult to have a fair trial; or

(c)  is inflammatory, a waste of time, a nuisance or an abuse of the court’s process,

(2)  In connection with an order striking out or amending a document under subrule (1), the court may do one or more of the following:

1.  In the case of a claim, order that the action be stayed or dismissed.

2.  In the case of a defence, strike out the defence and grant judgment.

2.1 In the case of a motion, order that the motion be stayed or dismissed.

3.  Impose such terms as are just.

While the procedure for a motion for summary judgment is not available under the Small Claims Court Rules, a judge can make a decision with the same effect under r. 12.02.  A rule 12.02 motion to dismiss “is a motion that is brought in the spirit of the summary nature of Small Claims Court proceedings and involves an analysis of whether a reasonable cause of action has been disclosed or whether the proceeding should be ended at an early stage because its continuation would be ‘inflammatory’, a ‘waste of time’ or a ‘nuisance’.”   (see Van de Vrande v. Butkowsky, 2010 ONCA 230 at para. 19).

Res Judicata and Abuse of Process

In litigation there is something that is sometimes known as the finality principle.  The Latin phrase is res judicata. The purpose of litigation is to obtain a conclusively binding determination of the rights and obligations of each of the parties respectively. The process would serve little purpose for the parties if any decision reached was open to endless re-argument by the dissatisfied party. Once the Defendant has satisfied the judgment rendered against him or her, he or she should not be at risk of a further claim in respect of the same matter because the complainant subsequently decides that the amount awarded was insufficient in the circumstances. In Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 at para. 18, the Supreme Court of Canada stated:

“The law rightly seeks a finality to litigation.  To advance that objective, it requires litigants to put their best foot forward to establish the truth of their allegations when first called upon to do so.  A litigant, to use the vernacular, is only entitled to one bite at the cherry.  The appellant chose the ESA as her forum.  She lost.  An issue, once decided, should not generally be re-litigated to the benefit of the losing party and the harassment of the winner.  A person should only be vexed once in the same cause.  Duplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided.”

The finality of a court's decision is intended to prevent a misuse of court procedure to avoid bringing the administration of justice into disrepute.  The plea of res judicata generally applies not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment upon, but also to every point that properly belonged to the subject matter of the litigation and which the parties, exercising reasonable diligence, might have brought forward at the time (see Maynard v. Maynard, 1950 CanLII 3 (SCC), [1950] S.C.J. No. 42, [1951] S.C.R. 346 (S.C.C.); Angle v. Canada (Minister of National Revenue), 1974 CanLII 168 (SCC), [1974] S.C.J. No. 95, [1975] 2 S.C.R. 248 at 254-55 (S.C.C.); Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (CanLII), [2001] S.C.J. No. 46 at para. 24, [2001] 2 S.C.R. 460 (S.C.C.)).  The goal of the doctrine of abuse of process has as its goal the protection of the fairness and integrity of the administration of justice by preventing needless multiplicity of proceedings. This doctrine can be applied even where res judicata is not strictly available where allowing the litigation to proceed would violate principles such as “judicial economy, consistency, finality and the integrity of the administration of justice” (See Toronto (City) v. Canadian Union of Public Employees (C.U.P.E.), Local 79, 2003 SCC 63 (CanLII), [2003] S.C.J. No. 64. 120 L.A.C. (4th) 225 (S.C.C.); British Columbia (Workers' Compensation Board) v. Figliola, 2011 SCC 52 (CanLII), [2011] S.C.J. No. 52 paras. 27-33, [2011] 3 S.C.R. 422 (S.C.C.)).