SUPERIOR COURT OF JUSTICE - ONTARIO

(DIVISIONAL COURT)

CITATION: Trainor v. Canada (Customs and Revenue Agency), 2012 ONSC 3450

DIVISIONAL COURT FILE NO.: 12-DC-1796

DATE: 2012/06/12

RE: RICHARD N. TRAINOR v. CANADA CUSTOMS AND REVENUE AGENCY

BEFORE: Pierce R.S.J., Swinton and Tucker JJ.

COUNSEL: Michael S. Hebert, for the Plaintiff/Respondent Alexandre Kaufman, for the Defendant/Appellant

HEARD at Ottawa: June 11, 2012

ENDORSEMENT

[1] The appellant, the Canada Customs and Revenue Agency, appeals an order of Kealey J. dated June 14, 2011, with leave granted by Tranmer J. The motions judge set aside a consent order of Ratushny J. dated March 8, 2007, dismissing the respondent’s action for lack of jurisdiction.

[2] The respondent brought his motion to set aside pursuant to Rule 59.06(2)(a) of the Rules of Civil Procedure, which allows a party to seek to set aside an order “… on the ground of fraud or of facts arising or discovered after it was made”.

[3] The motions judge set aside the order because there had been a change in the law since the consent judgment. At the time of the consent order, the Federal Court of Appeal decision in Grenier v. Canada (2005), 2005 FCA 348, 262 D.L.R. (4th) 337 held that the Superior Court of Justice did not have jurisdiction over the subject matter of the respondent’s action for damages; rather, he was first required to seek a prerogative remedy in the Federal Court before seeking damages. Subsequently, in TeleZone Inc. v. Canada (Attorney General), 2008 ONCA 892, 94 O.R. (3d) 19, the Ontario Court of Appeal held that s. 18 of the Federal Courts Act, R.S.C. 1985, c. F‑7 does not limit the jurisdiction of the Superior Court to deal with a damage claim against a federal agency. This decision was upheld by the Supreme Court of Canada (2010 SCC 62, [2010] 3 S.C.R. 585).

[4] The motions judge did not mention Rule 59.06(2)(a) in his reasons. Instead, he relied on the doctrine of issue estoppel and held that there were exceptional circumstances that led him to set aside the earlier order, even though the elements of issue estoppel were satisfied.

[5] In our view, the motions judge erred in law in failing to apply Rule 59.06(2)(a). That rule allows an order to be set aside if new facts arise or are discovered after an order is made. It does not apply when there has been a change in the jurisprudence since the order, as a change in the jurisprudence is not a change in facts (Jhajj v. Canada (Minister of Employment and Immigration), [1995] 2 F.C. 369 (T.D.) at paras. 31‑40; Metro Can Construction Ltd. v. Canada (2001), 2001 FCA 227, 203 D.L.R. (4th) 741 (F.C.A.) at para. 4; Taylor (Re), (1998), 4 C.B.R. (4th) 139 (B.C.S.C.)).

[6] See, as well, the endorsement of the Ontario Court of Appeal, when it determined that it did not have jurisdiction to hear the present appeal, because the appeal did not concern a final order (2011 ONCA 794). At para. 3, the Court stated,

While we agree that a change in jurisprudence is not a new fact for the purposes of Rule 59.06, and while both parties agree that Rule 59.06 is the gate through which the respondent/plaintiff must pass in order to reopen the action, it is the nature of the motion and the order made, not the reasons, which govern whether this matter is interlocutory or final.

[7] Although the respondent sought to invoke the inherent jurisdiction of the court, the original motion was brought under Rule 59.06(2)(a). The respondent cannot avoid the effect of the rule by invoking the inherent jurisdiction of the court. The purpose of the rule is to promote finality in litigation and to restrict reopening to the circumstances set out in the rule.

[8] The respondent argues that the order of Ratushny J. was on consent and, therefore, res judicata does not apply, because the issues in dispute have not been adjudicated. We disagree. As the Ontario Court of Appeal stated in Monarch Construction Ltd. v. Buildevco Ltd. (1988), 26 C.P.C. (2d) 164, “A consent judgment is final and binding and can only be amended when it does not express the real intention of the parties or where there is fraud.” There is no evidence here that either of those exceptions apply.

[9] The motions judge also erred in applying the doctrine of issue estoppel, as that doctrine applies to litigation of an issue in a subsequent proceeding between the parties when the issue has already been litigated by the parties and determined in a different cause of action. Here, the respondent was seeking to re-open the action settled by the earlier order. Issue estoppel does not arise on the facts of this case. Rather, the respondent’s application is barred by cause of action estoppel, and there is no discretion to set aside an order where the elements of cause of action estoppel have been met, as they were here (Arnold and others v. National Westminister Bank plc, [1991] 3 All E.R. 41 (H.L.)).

[10] For these reasons, the appeal is allowed, and the order of the motions judge is set aside. The motion to re-open the action is dismissed.

[11] The parties have agreed on costs. Accordingly, we order $10,000 to the appellant for the motion before the motions judge and $5,000 to the appellant for the appeal.

Pierce R.S.J.

Swinton J.

Tucker J.

DATE: June 12, 2012