Docket: T 1263-93
Toronto, Ontario, October 19th, 2004
Present: The Honourable Mr. Justice von Finckenstein
BETWEEN:
351694 ONTARIO LIMITED and 777761 ONTARIO INC.
Plaintiffs
and
PACCAR OF CANADA LTD. - PACCAR DU CANADA LTEE.,
PACCAR PARTS OF CANADA LTD.
Defendants
REASONS FOR ORDER AND ORDER
[1] Defendants brought a motion asking for dismissal of the action on the basis of res judicata. The factual background for this motion is the following.
Facts
[2] On the 15th of September 1992, the Defendant Paccar of Canada Ltd. ("Paccar") commenced proceedings against the Plaintiffs herein and their principals, Roland and Brent Belzile, ("the Belziles and their dealerships") for fraud, passing off, unlawful interference with economic interests, loss of reputation and punitive damages ("the Ontario Court Action").
[3] Paccar also sought injunctive relief restraining the Belziles and their dealerships from instituting proceedings against their customers and former customers and the end users of Paccar's products.
[4] As set out in the Ontario Court Action Statement of Claim, the Belziles and their dealerships had, at the time, commenced a campaign of small claims litigation and legal proceedings against their customers and former customers, including registering claims pursuant to the Repair and Storage Liens Act, following the termination of the Mid-North dealership and the expiry of the Kenworth of Thunder Bay dealership, in order to embarrass Paccar and extort a monetary payment from Paccar.
[5] The Belziles and their dealerships delivered a Statement of Defence and Counterclaim ("the Belzile Counterclaim") on or about the 24th of September 2002.
[6] The Belzile Counterclaim alleged damages of $750,000 for "wrongful termination" by Paccar and damages of $1,000,000 for "wrongful interference" by Paccar with the "legitimate economic rights" of the Belziles and their Kenworth companies. The counterclaim also claimed punitive damages.
[7] The Belziles and their dealerships subsequently amended their Statement of Defence and Counterclaim on the 26th of March 1993.
[8] In the interim, on May 28, 1993, the Belziles and their dealerships also started in the Federal Court the present resale price maintenance action against Paccar.
[9] Paccar was successful in obtaining the injunction it sought in the Ontario Court action. By Order dated September 15, 1992, the Ontario Court of Justice granted the injunction sought by Paccar for a period of 10 days. It was renewed several times and finally in 1997, the issues in the Ontario Court action were resolved. The injunction obtained by Paccar on an interim basis was continued permanently. The balance of Paccar's claim for damages, and the Belziles' and their dealerships' amended counterclaim were dismissed on consent by judgment of Spence J. of the Ontario Court of Justice dated June 3, 1997.
[10] The resolution of the Ontario Court Action was based on Minutes of Settlement entered into between the Parties dated April 11, 1997. Paragraph 3 of said minutes of settlement provides:
3. In the event that the Federal Court (Trial Division) in the Federal Court action finds or holds that the dealerships described in the pleadings in the Federal Court action (known as Mid-North Kenworth and Kenworth of Thunder Bay), or either of them, were improperly terminated as a result of:
a) alleged breaches of the Competition Act as pleaded by the Plaintiffs in the Federal Court action; and
b) in the further event that the Federal Court (Trial Division) awards damages with respect thereto; and
c) in the further event that any such award by the Federal Court (Trial Division) in favour of the Plaintiffs in the Federal Court action is upheld on appeal,
then Paccar shall pay to 351694 Ontario Limited and 777761 Ontario Inc. the sum of $30, 000.00 in addition to any award made in favour of the said Plaintiffs in the Federal Court action by the Federal Court. Interest on the $30,000.00 sum referred to herein shall run from the date of any award by the Federal Court (Trial Division), at the same rate of interest provided for with respect to any award made in favour of the Plaintiffs in the Federal Court action, and shall be paid in the event that any such award as aforesaid is upheld on appeal.
Issue
[11] The issue in the present motion therefore becomes: Is the settlement in the Ontario action grounds for dismissing the Federal Court action on the basis of res judicata?
Analysis
[12] The doctrine of res judicata has two branches: cause of action estoppel and issue estoppel. Here we are clearly dealing with issue estoppel.
[13] The underlying philosophy for issue estoppel was set out in Danyluk v. Ainsworth Technologies Inc [2001] 2 S.C.R. 460 where Binnie J. stated at para 18:
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.
[14] The preconditions for the application of res judicata and issue estoppel were described by Dickson J. in Angle v. Minister of National Revenue, [1975] 2 S.C.R. 248:
(1) that the same question has been decided;
(2) that the judicial decision which is said to create the estoppel was final; and
(3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.
[15] In this case, it was conceded during argument that the parties to the Ontario action and this action are the same.
[16] There seems to be very little doubt in my mind that the Ontario decision was final. It was a consent judgement based on Minutes of Settlement which resulted in a permanent injunction and in a dismissal of all other claims and counterclaims. Consent judgments that end an action have the same effect for the purposes of the res judicata doctrine as a judgment issued by a court on the completion of a trial or hearing. See Reddy v. Oshawa Flying Club [1992] O.J. No 1337 p.3.
[17] The remaining issue concerns 'the same question to be asked'. The principles, in respect of this issue, were canvassed in Canada v. Chevron Canada Resources Ltd., [1998] F.C.J. No. 1404 in which Noel J.A. stated:
The law on this point [that res judicata bars litigation with respect to undecided but related matters] is summarized by the decision of the Judicial Committee on the Privy Council in Thomas v. Trinidad and Tobago (Attorney General)(1990), 115 N.R. 313 at 316:
The principles applicable to a plea of res judicata are not in doubt and have been considered in detail in the Judgment of the Court of Appeal. It is in the public interest that there should be finality to litigation and that no person should be subjected to action at the instance of the same individual more than once in relation to the same issue. The principle applies not only where the remedy sought and the grounds therefore are the same, it is sought to raise in the second action matters which could have been but were not raised in the first action. The classic statement on the subject is contained in the following passage from the judgment of Wigram, V.C. in Henderson v Henderson (1843), 3 Hare 100, at page 115:
"¼where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time".". (emphasis added)
[18] Or to put it another way, the res judicata rule provides that where a litigant fails to raise an issue in a proceeding in which the litigant could or should have raised it, the litigant is, barring special circumstances, forever barred from raising the issue again.
Conclusion
[19] Applying these principles to this case, I would note:
i) The issue of the Competition Act was never pleaded in the Ontario action.
ii) The Minutes of Settlement contain no admissions. Both parties merely agree to the dismissal of the claim and counterclaim except insofar as they concern subsequent actions between the Belziles and their dealerships against their customers. The interim injunction was also made permanent. None of these matters concern the Competition Act.
iii) The question before the Ontario Court was essentially "Did Paccar have cause for terminating the dealership?". Here the question is "Did Paccar breach the Competition Act when terminating the dealership agreement?" If they had cause for terminating it, this may be a valid defense, however, one only gets to it if a breach has been established.
iv) Clause 3 of the Minutes of Settlement makes it clear that both parties contemplated a further action in this court. While it would have been preferable to draft something along the following "nothing in these minutes of settlement shall prejudice the prosecution of the case before the Federal Court", it is reasonable to assume that such sub text is implicit in Clause 3.
[20] All of the observations of the previous paragraph, in my view, amount to special circumstances within Chevron above.
[21] Accordingly this application is dismissed.
[22] Costs for this motion to follow the cause.
ORDER
THIS COURT ORDERS that this application to be dismissed.
Costs to follow the cause.
"K. von Finckenstein"
J.F.C.
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1263-93
STYLE OF CAUSE: 351694 ONTARIO LIMITED
and 777761 ONTARIO INC.
Plaintiffs
and
PACCAR OF CANADA LTD. - PACCAR DU CANADA LTEE., PACCAR PARTS OF CANADA LTD.
Defendants
PLACE OF HEARING: TORONTO, ONTARIO
DATE OF HEARING: OCTOBER 18, 2004
REASONS FOR ORDER
AND ORDER BY: VON FINCKENSTEIN J.
DATED: OCTOBER 19, 2004
APPEARANCES:
Mr. James Morton
Mr. K. Wayne McCracken
FOR PLAINTIFFS
Mr. Birenbaum
Mr. Colraine
FOR DEFENDANTS
SOLICITORS OF RECORD:
Steinberg Morton Frymer LLP
Toronto, Ontario FOR PLAINTIFFS
Birenbaum, Steinberg, Landau
Savin & Colraine
Toronto, Ontario FOR DEFENDANTS
FEDERAL COURT
Date: 20041019
Docket: T-1263-93
BETWEEN:
351694 ONTARIO LIMITED and
777761 ONTARIO INC.
Plaintiffs
and
PACCAR OF CANADA LTD. - PACCAR DU CANADA LTEE.,
PACCAR PARTS OF CANADA LTD.
Defendants
REASONS FOR ORDER
AND ORDER