Court of Appeal for Ontario
Date: 2018-08-29 Docket: C64434 Judges: Sharpe, Juriansz and Roberts JJ.A.
Parties
Between
Kerry J.D. Winter, Jeffrey Barkin, Paul T. Barkin and Julia Winter, personal representative of Dana C. Winter, deceased
Plaintiffs (Appellants)
and
The Estate of Bernard C. Sherman, deceased, Meyer F. Florence, Apotex Inc. and Joel D. Ulster
Defendants (Respondents)
Counsel
Brad Teplitsky, for the appellants
Katherine Kay and Mark Walli, for the respondents
Hearing and Appeal
Heard: August 15, 2018
On appeal from the judgment of Justice Kenneth G. Hood of the Superior Court of Justice, dated September 15, 2017, with reasons reported at 2017 ONSC 5492.
Reasons for Decision
Overview
[1] The appellants appeal from the dismissal of their action. The motion judge found there was no genuine issue requiring a trial that the late Dr. Sherman owed the appellants an ad hoc fiduciary duty to look after their financial interests. He also dismissed the action on the ground that the action was an abuse of process in that it was an attempt to re-litigate issues determined by the appellants' unsuccessful action against the Royal Trust Company and Royal Trust Corporation of Canada ("Royal Trust"), the trustee of their parents' estates.
Background
[2] These proceedings arise out of a bitter family dispute between the appellants and their first cousin, the late Dr. Sherman. The appellants allege Dr. Sherman made a commitment to look after their financial interests when the appellants were very young children and recently orphaned. Specifically, they contend this ad hoc fiduciary duty arose during the purchase by Dr. Sherman and Joel Ulster of the assets of the family businesses owned by the estates of the appellants' parents ("the Empire Companies"). They plead the respondents breached that duty by dishonouring an option agreement given as part of the consideration for the purchase that would have allowed the appellants to be employed by and acquire 5% of the shares of the Empire Companies. Because of the breach, the appellants claim a 20% interest in Apotex Inc. or the equivalent in damages.
Appellants' Arguments
[3] The appellants submit that the motion judge erred by failing to recognize that the crux of the present action against the respondents was whether Dr. Sherman owed them an ad hoc fiduciary duty and to identify the clear indicia of the fiduciary relationship between them. They say he further erred by concluding that the identical issues had been determined by Perell J. in the proceedings against Royal Trust and were dispositive of the issues in the present action.
Court's Response
[4] We do not accept these submissions.
Analysis of Fiduciary Duty
[5] The motion judge properly considered the criteria for the creation of an ad hoc fiduciary duty as articulated by the Supreme Court in Elder Advocates of Alberta Society v. Alberta, 2011 SCC 24, [2011] 2 S.C.R. 261. Applying those criteria, he carefully analyzed the evidence of the parties' relationship and the communications between Dr. Sherman and Royal Trust in relation to Dr. Sherman's acquisition and subsequent sale of his interest in the Empire Companies. He did not accept the appellants' interpretation of that evidence as giving rise to a fiduciary relationship or duty. Rather, he concluded that Dr. Sherman did not undertake to look after the appellants' interests or ever abandon his own self-interest. As the motion judge succinctly put it:
It was up to Royal Trust to look after the plaintiffs' interests, not Sherman. It is clear from the correspondence, Sherman's evidence, the purchase agreement itself, and the findings made by Justice Perell that there was only so much that Sherman was prepared to do for the plaintiffs if he was to become the buyer of the Empire Companies. Royal Trust knew that. At the end of the day, Sherman was looking after his own interests – not those of the plaintiffs. His obligations to the plaintiffs were clearly set out in the purchase agreement and eventual option agreement. The obligations, such as they were in the contracts, cannot create a fiduciary duty. There was never a point where Sherman relinquished his own self-interest and agreed to act solely on behalf of the plaintiffs: Hodgkinson v. Simms, [1994] 3 S.C.R. 377, at para. 33. To the contrary, Sherman's self-interest was always clear. That self-interest was made known to Royal Trust and found its way into the contracts for the purchase of the Empire Companies.
[6] There is no error in the motion judge's meticulous analysis or findings.
Analysis of Abuse of Process
[7] Further, the appellants too narrowly construe the doctrine of abuse of process. This doctrine is flexible and unencumbered by the specific requirements of res judicata or issue estoppel: Behn v. Moulton Contracting Ltd., 2013 SCC 26, [2013] 2 S.C.R. 227, at para 40; Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2002] 3 S.C.R. 77, at para. 42. Where a precondition for issue estoppel has not been met, such as mutuality of parties, courts have turned to the doctrine of abuse of process to preclude re-litigation of the same issue: C.U.P.E., at para. 37. While the doctrine is similar to issue estoppel in that it can bar litigation of legal and factual issues "that are necessarily bound up with the determination of" an issue in the prior proceeding, abuse of process also applies where issues "could have been determined": Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, at para. 54; Aba-Alkhail v. University of Ottawa, 2013 ONCA 633, 363 D.L.R. (4th) 470, at para. 13; McQuillan v. Native Inter-Tribal Housing Co-Operative Inc., 42 O.R. (3d) 46 (C.A.), at pp. 50-51. As such, the doctrine of abuse of process is broader than res judicata and issue estoppel and applies to bar litigation that, if it proceeded, would "violate such principles as judicial economy, consistency, finality and the integrity of the administration of justice": C.U.P.E., at para. 37.
[8] We agree with the motion judge that the whole evidentiary underpinning of this action is the same as that of the Royal Trust action and that it would be unfair and an abuse of process to allow the appellants to "in effect, re-litigate their case, with a new theory, to see if this one will succeed where previous theories have failed". Moreover, the doctrine of abuse of process applies to prevent re-litigation of previously decided facts: Intact Insurance Company v. Federated Insurance Company of Canada, 2017 ONCA 73, 134 O.R. (3d) 241, at para. 28, leave to appeal refused, [2017] S.C.C.A. No. 98; R. v. Mahalingan, 2008 SCC 63, [2008] 3 S.C.R. 316, at para. 46; C.U.P.E., at para 37. As the motion judge determined, the relief and issues put forward by the appellants in these proceedings "arise from the same relationships and subject matter that have already been dealt with by Perell J. and the Court of Appeal" in the Royal Trust action.
[9] We do not accept the appellants' argument that their present action encompasses more than the interpretation of the option agreement and that the existence of a fiduciary duty overlays any obligations that Dr. Sherman had under that agreement. As the motion judge observed, Perell J. determined that the "limited, qualified, contingent and conditional" option agreement expressed precisely what had been agreed upon by the parties and that Dr. Sherman was not prepared to offer anything further.
[10] As a result, we find no error in the motion judge's determination that the appellants' present action is an abuse of process.
Disposition
[11] Accordingly, the appeal is dismissed.
[12] The respondents are entitled to their costs of $60,000, the amount the parties agreed to be reasonable, including disbursements and all applicable taxes.
Robert J. Sharpe J.A.
R.G. Juriansz J.A.
L.B. Roberts J.A.
Footnote
[1] By notice dated August 8, 2018, the respondents abandoned their costs appeal.
