Freedman et al. v. Reemark Sterling I Limited et al. [Indexed as: Freedman v. Reemark Sterling I Ltd.]

62 O.R. (3d) 743

[2003] O.J. No. 7

2003 17029

Docket No. C37971

Court of Appeal for Ontario

Catzman, Goudge and Simmons JJ.A.

January 8, 2003

Actions -- Bars -- Res judicata -- Issue estoppel -- Cause of action estoppel -- Abuse of process -- In defences to crossclaims, one defendant alleging that co-defendant bound by determination of liability made by Court of Appeal in prior proceedings -- Co-defendant countering with allegation that crossclaim was barred by cause of action estoppel -- Abuse of process to re-litigate issue determined by Court of Appeal in prior action -- Determination of issue by Court of Appeal as binding as determination by trial judge -- Cause of action estoppel not established -- Defendant's crossclaim being a separate cause of action that did not have to be advanced in first action.

In 1987, Mutual Trust Company ("Mutual") signed an agreement, the "Take-out Commitment" (the "TOC"), with Reemark Sterling I Limited ("Reemark") to provide financing for the purchasers of a 300-unit residential condominium being constructed by Reemark. On the strength of the TOC, Reemark obtained construction financing from Bank of America Canada (the "Bank"). As part of the security for the construction loan, the TOC was assigned to the Bank. In 1992, Mutual failed to pay the moneys owing under the TOC or under an Amended Take-out Committment (the "ATOC"). In 1992, after the Bank's mortgage went into default, it appointed a receiver manager to sell the condominium, and it also sued Mutual for damages. After Reemark sought to enjoin the sale of the condominium, the Bank and Reemark signed Minutes of Settlement in which the Bank was entitled to pursue its claim for damages against Mutual and Reemark was entitled to sue Mutual for damages in excess of the damages suffered by the Bank. In 1998, the Bank obtained judgment against Mutual. On appeal, the judgment was affirmed for reasons that differed, in part, from the reasons of the trial judge. The Court of Appeal affirmed that Mutual had breached the TOC and the ATOC but rejected the submission that as between Reemark and Mutual, Mutual might have been entitled to refuse to advance under the TOC or ATOC because of Reemark's conduct.

While the action involving Mutual Trust, Reemark and the Bank was proceeding, the plaintiffs in the immediate action sued Reemark and Mutual Trust, and its successor Clarica Trust Company ("Clarica"), for losses arising from the failure to complete agreements of purchase and sale. In the immediate action, Reemark and Clarica filed defences to the main action and asserted crossclaims, one against the other. In October 2001, after the Court of Appeal's judgment in the other action, Reemark amended its crossclaim against Clarica, claiming that Clarica was bound by the Court of Appeal's decision and could not allege that Mutual was entitled to refuse to advance under the TOC or ATOC because of Reemark's conduct. Clarica responded with an amended pleading that Reemark's claim against Clarica was barred by cause of action estoppel or abuse of process in that this claim ought to have been litigated in the Bank's action.

Both parties moved for judgment under Rule 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. The motions judge found that based on issue estoppel or abuse of process, Clarica was bound by the decision of the Court of Appeal, but that cause of action estoppel did not preclude Reemark's claim against Clarica. Clarica appealed. [page744]

Held, the appeal should be dismissed.

The motions judge did not err in holding that Reemark's claim against Clarica was not barred by cause of action estoppel or as an abuse of process. Clarica was incorrect in its submission that Reemark and the Bank shared a single cause of action in which a judgment had already been obtained by the Bank. Reemark and the Bank had independent causes of action. The provisions of the assignment of the TOC determined this issue. It was a tripartite agreement under which Mutual's independent promises created separate and distinct rights of action in favour of each of Reemark and the Bank arising from Mutual's failure to advance funds. More fundamental was the question whether Reemark's claim "should have been" determined in the Bank's action. This question should be answered in the negative for three reasons. First, Reemark's claim was a distinct claim and it was not an abuse of process for it to litigate that claim in a second action. Second, in the first action, the Bank advanced the position that it was a lender for value without notice, and thus the Bank was not wholly identified with Reemark's position; thus, it may not have been possible for Reemark and the Bank to be co-plaintiffs. Third, Mutual had the same opportunity as Reemark to seek joinder of the proceedings as Reemark and must bear the consequences of choosing not to do so.

Based on the principles of abuse of process, the motions judge did not err in declaring that Clarica was liable to Reemark for breach of the TOC and the ATOC. Although in the first action, the determination that Mutual had breached the agreements as against Reemark had been made by the Court of Appeal and not by the trial judge, the determination was a fundamental part of the Court's decision. Where the Court of Appeal determines an issue, its determination is as final and binding as a determination made at trial. It would be an abuse of process to re-litigate this issue. Knowing the tactical considerations, Mutual chose not to request an order joining the proceedings. When the Bank in the first action failed to call any Reemark witnesses, Mutual opted to ask that an adverse inference be drawn rather than call the witnesses. In doing so, Mutual made a tactical decision. It lost. That does not give it the right to claim now that it suffered a procedural disadvantage. It would be an abuse of process to permit Clarica to re-litigate a position that was advanced and failed.

APPEAL from an order made on a motion under Rule 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194. [page745]

Cases referred to Angle v. Minister of National Revenue, 1974 168 (SCC), [1975] 2 S.C.R. 248; Bomac Construction Ltd. v. Stevenson (1986), 1986 3573 (SK CA), 48 Sask. R. 62, [1986] 5 W.W.R. 21 (C.A.); Bullen (Re) (1971), 1971 1029 (BC SC), 21 D.L.R. (3d) 628 (B.C.S.C.); Hoque v. Montreal Trust Co. (1997), 1997 NSCA 153, 162 N.S.R. (2d) 321, 485 A.P.R. 321 (C.A.) [Leave to appeal to S.C.C. refused (1998), 167 N.S.R. (2d) 400n, 502 A.P.R. 400n, 227 N.R. 288n] Rules and regulations referred to Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 21 Authorities referred to Sopinka, J., S.N. Lederman, and A.W. Bryant, The Law of Evidence in Canada, 2nd ed. (Toronto: Butterworths, 1999) Turner, A., and G. Spencer Bower, The Doctrine of Res Judicata, 2nd ed. (London: Butterworths, 1996)

Kirk Stevens, for appellant Clarica Trust Company. Frank J.C. Newbould, Q.C., and Aaron A. Blumenfeld, for respondent Reemark Sterling I Limited.

The judgment of the court was delivered by

[1] SIMMONS J.A.: -- In the early 1990s, Mutual Trust Company failed to advance on a commitment to provide individual unit purchase-money financing for a 300-unit residential condominium built by Reemark Sterling I Limited. Mutual's financing was intended to replace a construction loan from Bank of America Canada (the "Bank"). In a prior action, the Bank sued Mutual successfully, and on appeal, this court specifically rejected Mutual's defence that it was Reemark's fault that Mutual failed to advance.

[2] In this action, some of the original unit purchasers are suing Reemark and Mutual's successor, Clarica Trust Company, for losses arising from the failure to complete their agreements of purchase and sale. Reemark and Clarica are cross- claiming against each other. Each blames the other for the failure to advance.

[3] The issues on this appeal relate to the proper application of the doctrines of cause of action estoppel, issue estoppel and abuse of process. The motion judge found that Reemark is not barred from claiming against Clarica by cause of action estoppel. However, he determined that Clarica is barred by issue estoppel and abuse of process from disputing its liability to Reemark. Clarica appeals against his decision.

[4] For the reasons that follow, I would dismiss the appeal.

Background

[5] In the late 1980s, Reemark decided to build a 300-unit residential condominium. In order to obtain construction financing, it was necessary that Reemark first obtain a financing commitment from a lender willing to provide individual unit financing once the project was completed. On November 12, 1987, Mutual provided Reemark with a "Take-out Commitment" (the "TOC") for that purpose. Under the TOC, the proceeds of Mutual's unit mortgages were to be paid to Reemark in a single advance of $36.5 million so that Reemark could pay off its construction loan and transfer clear title to the unit purchasers.

[6] On the strength of the TOC, Reemark obtained a $33 million construction loan from the Bank. On December 16, 1988, Reemark gave the Bank a general security agreement and a general assignment of book debts as security for that loan. In addition, [page746] Reemark, Mutual and the Bank signed an "Assignment of the Take-out Commitment" (the "TOC Assignment") in favour of the Bank.

[7] While the condominium project was under construction, real estate values declined dramatically. When the project was completed, Mutual failed to pay the moneys owing under the TOC. Although the parties negotiated amendments to the TOC in an Amended Take-out Commitment (the "ATOC") signed December 18, 1991, Mutual's obligation to pay continued under the ATOC as well, and its failure to perform left Reemark's construction loan from the Bank unpaid.

[8] On May 12, 1992, the Bank appointed a receiver-manager of the condominium project. Subsequently, on June 2, 1992, the Bank sued Mutual, claiming specific performance of the TOC as assigned and amended and, in the alternative, damages.

[9] When the receiver-manager attempted to sell the condominium project, Reemark applied for an order preventing the sale. In minutes of settlement (the "Minutes of Settlement") signed by Reemark, the Bank and the receiver- manager on March 3, 1993, the parties agreed as follows:

(i) litigation between Reemark and the Bank would stop;

(ii) Reemark would not attempt to prevent the sale of the condominium project;

(iii) once the condominium was sold, the Bank would terminate the receiver-manager's appointment;

(iv) the Bank would be entitled to pursue its claim for any damages it suffered in its action against Mutual; and

(v) Reemark would be entitled to sue Mutual without interference by the receiver-manager for any damages that Reemark may have suffered as a result of Mutual's actions so long as its action was "only for any damages in excess of the damages suffered by the Bank".

[10] On May 20, 1993, the receiver-manager sold the condominium project and applied the proceeds of sale to the Bank's outstanding construction loan. On July 16, 1993, the Bank abandoned its claim for specific performance against Mutual and amended the quantum of damages that it claimed.

[11] On June 23, 1995, several individual unit purchasers commenced this action claiming damages for breach of their agreements of purchase and sale. [page747]

[12] On October 30, 1995, Mutual filed a defence to this action and cross-claimed against Reemark for damages as well as for any sums that it was required to pay to the plaintiffs. In particular, Mutual claimed that misconduct by Reemark relieved it from any obligation to advance the unit financing.

[13] On November 17, 1995, Reemark filed a defence to this action, a defence to Mutual's cross-claim, and a cross-claim against Mutual for lost profits on the condominium project as well as for any sums that it was required to pay to the plaintiffs.

[14] On April 14, 1998, the Bank obtained judgment in its action against Mutual. Although Mutual pleaded that it was discharged from performance of the TOC and the ATOC by Reemark's misconduct, the trial judge found that the Bank was a lender for value without notice and that "while [Mutual] may have been able to rely on breaches of [a separate agreement] to fend off any Reemark claim", it could not do so vis-à-vis the Bank.

[15] Mutual appealed, contending that the trial judge erred in finding that the Bank was a lender for value without notice and in failing to hold that the Bank was bound by the equities between Mutual and Reemark. On March 10, 2000, this court affirmed the trial judgment as to liability and damages. Significantly, this court rejected the submissions underlying the position that Mutual "may have had the right to refuse to perform at the instance of Reemark", and concluded that it was unnecessary to determine whether the Bank was a lender for value without notice or subject to the equities between Reemark and Mutual. This court affirmed the trial judge's findings that it was Mutual that breached the TOC and the ATOC. [See Note 1 at end of document]

[16] On October 25, 2001, Reemark amended its cross-claim against Clarica, claiming that Clarica is bound by this court's decision in the Bank action rejecting Mutual's claims that it was Reemark that breached the TOC and the ATOC. Clarica responded with a pleading that Reemark's claim against Clarica is barred by cause of action estoppel or abuse of process.

[17] Both parties moved under Rule 21 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, for an order corresponding to their amended pleading. On February 6, 2002, the motion judge found that Clarica is bound by the decision of this court that it was [page748] Mutual and not Reemark that breached the TOC and the ATOC based on issue estoppel. He also held that it would constitute an abuse of process to permit Clarica to re- litigate that issue. Although the motion judge found that Reemark and the Bank are privies, he determined that they have separate causes of action, and that cause of action estoppel does not bar Reemark's claim.

Grounds of Appeal

[18] Clarica raises two grounds of appeal:

(i) the motion judge erred in failing to hold that Reemark's cross-claim against Clarica is barred by cause of action estoppel or abuse of process; and

(ii) in the alternative, the motion judge erred in declaring that Clarica is liable to Reemark for breach of the TOC and the ATOC based on issue estoppel or abuse of process.

Analysis

1. Did the motion judge err in failing to hold that Reemark's cross-claim against Clarica is barred by cause of action estoppel or abuse of process?

[19] Clarica's submission that Reemark's cross-claim is barred by cause of action estoppel can be expressed in two ways.

[20] Simply put, Clarica submits, based on the security documents and the Bank's status as an assignee of Reemark, that Reemark and the Bank share a single cause of action for damages arising from Clarica's alleged breaches of the TOC and the ATOC, and that, because the Bank has now obtained a judgment for its damages, cause of action estoppel precludes Reemark from suing Mutual a second time for additional damages arising from the same cause.

[21] Expressed more technically, Clarica contends that there are three elements of cause of action estoppel, that only the third element is seriously in issue in this case, and that six factors support the conclusion that the third element has been met.

[22] The three elements that Clarica claims comprise cause of action estoppel are as follows:

(i) a final decision of a court of competent jurisdiction in a prior action;

(ii) the subject matter of the subsequent proceeding must be the same as the subject matter of the prior proceeding (the "identity of subject matter requirement"); and [page749]

(iii) the parties in the subsequent litigation must have been parties to, or in privity with, the parties to the prior proceeding (the "mutuality requirement").

[23] The six factors Clarica relies on as supporting the conclusion that Reemark should be considered a privy of the Bank relate to the Bank's status as an assignee of Reemark, Clarica's assertion that Reemark and the Bank share a single cause of action, and the extent of co-operation between Reemark and the Bank in the Bank action.

[24] In the alternative, Clarica claims that Reemark and the Bank agreed deliberately to split their cause of action as part of a common strategy to insulate Reemark witnesses from cross- examination. It submits that it would be an abuse of process to permit Reemark to advance its claim now, when Reemark chose not to join in the Bank's proceeding in order to obtain a tactical advantage.

[25] Reemark responds that cause of action estoppel does not apply because the Bank and Reemark have independent causes of action.

[26] I accept Reemark's submission that Reemark and the Bank have independent causes of action. However, that in itself, does not negative Clarica's claim that cause of action estoppel applies. Clarica relied on its submission that Reemark and the Bank share a single cause of action to support its claim that Reemark and the Bank are privies. However, Reemark, too, asserts that it is a privy of the Bank. Accordingly, it is necessary to consider whether Reemark's response negatives Clarica's claim of cause of action estoppel in some other way.

[27] In my view, the conclusion that Reemark and the Bank have independent causes of action relates more fundamentally to the second element of cause of action estoppel, namely whether Reemark's claim is one that should have been determined in the Bank action.

[28] I conclude that Reemark was not obliged to litigate its claim in the Bank action, and that the second element of cause of action estoppel has not therefore, been satisfied.

(a) Do Reemark and the Bank share a single cause of action?

[29] Clarica contends that the Bank's cause of action against Clarica arises from its status as Reemark's assignee, and that the Bank not only asserted Reemark's cause of action, it claimed some of Reemark's remedies. [page750]

[30] I disagree. The provisions of the TOC Assignment determine this issue. The highlighted portions of para. 1(d) set out below make it clear the TOC Assignment was more than a simple assignment. Rather, it is a tripartite agreement in which Reemark irrevocably directs Mutual to pay the entire proceeds of the TOC to the Bank and in which Mutual agrees to do so. In my view, Mutual's independent promise creates separate and distinct rights of action in favour of each of Reemark and the Bank for payment of the entire proceeds of the TOC as well as for damages for failing to perform.

[31] The relevant portions of the TOC Assignment are as follows:

1. (d) [Reemark] hereby irrevocably directs and authorizes [Mutual] to advance all proceeds of the Takeout Financing to the Bank and [Mutual] hereby agrees to advance all such proceeds to the Bank until receipt of written notice from the Bank to the contrary;

(e) immediately upon receipt of written notice from the Bank that it is entitled to enforce its remedies against [Reemark] pursuant to the Loan Agreement, [Mutual] will, upon the terms of the Commitment, from the date of such notice deal with the Bank or any receiver or receiver-manager appointed by the Bank as if the Bank or any such receiver or receiver-manager had been originally named in the Takeout Commitment in the place of [Reemark];

(f) [Reemark] and [Mutual] agree that unless and until notice under subparagraph (e) is given by the Bank, the Bank shall not be in any way liable to [Mutual] under the Commitment or hereunder and the Borrower [Reemark] shall be entitled and be obligated to continue to perform all of its obligations on its part contained in the Takeout Commitment.

(Emphasis added)

[32] It is common ground that, at least prior to the Bank's statement of claim, the notice of default referred to in paras. 1(e) and (f) was never given. Although Reemark may have been disentitled from commencing an action when the receiver-manager was appointed, Clarica does not dispute Reemark's claim that it regained that right under the Minutes of Settlement. In my view, it is irrelevant that the Bank may have been claiming a remedy it acquired through Reemark when it sued Mutual for specific performance of the TOC under the TOC Assignment. Once the condominium project was sold, the Bank deleted the claim for specific performance and amended its claim for damages to correspond with the amount outstanding on its construction loan to Reemark. Reemark and the Bank did not split a single cause of action when they signed the Minutes of Settlement. Rather, they restored the status quo. [page751]

(b) Has the second element of cause of action estoppel been satisfied?

[33] The essence of Clarica's position is that Reemark's claim should have [been] decided in the Bank action. In my view, that submission relates fundamentally to the second element of cause of action estoppel.

[34] For ease of reference, I will repeat Clarica's statement of the second element of cause of action estoppel:

The subject matter of the subsequent proceeding must be the same as the subject matter of the prior proceeding (the "identity of subject matter requirement")[.]

[35] To support its summary of the elements of cause of action estoppel, Clarica relies on a statement of the general rule of the "constituent elements of estoppel by res judicata" in The Law of Evidence in Canada, [See Note 2 at end of document] at p. 1070. In a discussion about the second element of cause of action estoppel at pp. 1078-82, the authors note that "it is necessary to bear in mind that an adjudication on a particular set of facts does not raise an estoppel with respect to every cause of action which is subsequently based on the same facts, but only those claims which properly belonged to the first proceedings."

[36] The authors also cite Cromwell J.A.'s conclusion in Hoque v. Montreal Trust Co., [See Note 3 at end of document] at p. 1079:

. . . while there are some very broad statements that all matters that could have been raised are barred under the principle of cause of action estoppel, none of the cases actually demonstrates this broad principle. In each case, the issue was whether the party should have raised the point now asserted in the second action.

(Emphasis in the original)

[37] Finally, the authors note that Cromwell J.A. went on in Hoque, at para. 64, to list a variety of factors that may be considered in determining whether a matter should have been raised in earlier litigation. Those factors are set out below. The factors that are applicable to this case are highlighted:

That turns on a number of considerations, including whether the new allegations are inconsistent with matters actually decided in the earlier case, whether it relates to the same or a distinct cause of action, whether there is [page752] an attempt to rely on new facts which could have been discovered with reasonable diligence in the earlier case, whether the second action is simply an attempt to impose a new legal conception on the same facts or whether the present action constitutes an abuse of process.

[38] Having decided that Reemark's claim relates to a distinct cause of action, the remaining applicable factor from the Hoque list is whether the present action constitutes an abuse of process.

[39] As noted in para. 24, Clarica's alternative position to its submission that Reemark's cross-claim is barred by cause of action estoppel is that the cross-claim is an abuse of process. Clarica asserts that Reemark and the Bank agreed deliberately to split their cause of action as part of a common litigation strategy to insulate Reemark witnesses from cross-examination and that Reemark should be precluded from benefiting from that strategy.

[40] I have rejected Clarica's claim that Reemark and the Bank split a single cause of action. However, assuming, for the purposes of this appeal, that the allegation of a common litigation strategy is true, I reject Clarica's submission that Reemark's cross-claim is an abuse of process for three reasons.

[41] First, the conclusion that the TOC Assignment created a free-standing cause of action in favour of the Bank is a strong factor militating against applying abuse of process. This case is not an attempt by the holders of a single cause of action to collect different heads of damages or an effort to impose a new legal concept on the same facts by using the label of a different cause of action. Rather, it is a case where two plaintiffs are each entitled to an independent cause of action.

[42] Although the Bank may have asserted a remedy that it acquired through Reemark while the receivership was in place, it abandoned that claim after the Minutes of Settlement were signed. Reemark, itself, never joined in the Bank's proceeding. Assuming that Reemark co-operated with the Bank to the extent Clarica claims, Clarica may well have been entitled to claim that Reemark was bound by the result in the Bank proceeding had it gone the other way: see Bomac Construction Ltd. v. Stevenson, 1986 3573 (SK CA), [1986] 5 W.W.R. 21, 48 Sask. R. 62 (C.A.) at p. 28 W.W.R. However, where Reemark and the Bank each hold a separate cause of action, in my view, it is not an abuse of process to permit Reemark to separately advance its claim.

[43] Second, although in the first action the Bank adopted the position that it was Mutual and not Reemark that breached the TOC and the ATOC, it also advanced a defence that it was a lender for value without notice. Its position was not therefore wholly identified with Reemark's, and it may not have been possible for Reemark and the Bank to be co-plaintiffs. [page753]

[44] Third, Mutual had the same opportunity to seek joinder of the proceedings as Reemark. This is not a case where Mutual was taken by surprise through a second proceeding launched after the first action concluded. In fact, Mutual filed its cross-claim raising the issue of who was the wrongdoer before Reemark raised the issue in its pleading. Although I agree that Mutual was not obliged to seek joinder, in my view, it must bear the consequences of choosing not to do so.

[45] I would not give effect to this ground of appeal.

2. Did the motion judge err in declaring that Clarica is liable to Reemark for breach of the TOC and the ATOC based on issue estoppel or abuse of process?

(a) Issue estoppel

[46] Dealing first with issue estoppel, Clarica submits that the motion judge made three errors: (1) he failed to identify the fourth element of issue estoppel; (2) he failed to find that the fourth element of issue estoppel is not satisfied in this case; and (3) he failed to exercise his discretion not to apply issue estoppel.

[47] Clarica claims that the fourth element of issue estoppel is that the determination relied on was fundamental to the decision in the prior proceeding. I accept that that is a correct statement of one of the requirements of issue estoppel: Angle v. Minister of National Revenue, 1974 168 (SCC), [1975] 2 S.C.R. 248 at pp. 254-56. However, it is unnecessary that I determine whether it is a separate element, or whether it forms part of the three elements identified by the motion judge.

[48] Stated as four elements, the requirements of issue estoppel are as follows:

(i) the same question has been decided in a previous judicial proceeding;

(ii) the judicial decision that is said to create the estoppel is final;

(iii) the parties to the prior proceeding or their privies are the same parties as the parties to the proceeding in which the estoppel is raised; and

(iv) the determination of the issue giving rise to the estoppel was fundamental to the decision arrived at in the prior proceeding.

[49] Clarica submits that the fourth element of issue estoppel is not satisfied because it was this court, rather than the trial [page754] judge, that determined that Mutual does not have a valid defence to Reemark's right to enforce the TOC. It claims that, because the trial judge did not determine the issue, Reemark's conduct escaped full scrutiny, and that the result could well be different if the matter is litigated as between Clarica and Reemark.

[50] I reject Clarica's submission. Mutual raised this defence both at trial and on appeal in the prior action. The determination made by this court was a conclusion of law. It was fundamental to the decision on appeal and therefore fundamental to the final decision in the Bank proceeding. Where the Court of Appeal determines an issue, its determination is as final and binding as a determination made at trial.

[51] Clarica's final submission relates as much to abuse of process as it does to issue estoppel. I prefer to deal with it under that heading rather than determining whether all of the elements of issue estoppel exist. The third element of issue estoppel requires a finding concerning whether Reemark and the Bank are privies. Both parties claim that Reemark and the Bank are privies, but they do so for reasons that are fundamentally different. I have already rejected the basis of Clarica's submission on the issue. Rather than risk extending the boundaries of privity inappropriately because the issue has not been joined, I think it preferable to dispose of this appeal based on abuse of process.

(b) Abuse of process

[52] Clarica submits that, in choosing not to join in the Bank action, Reemark pursued a common litigation strategy with the Bank to insulate its witnesses from cross-examination. It says that Reemark was a "wait and see" plaintiff that chose to minimize its risk, and at the same time help the Bank to fight the battle on another front. Clarica claims that a different result may well ensue if it is permitted to re-litigate the issue in a forum where Reemark must submit to discovery and expose its witnesses to cross-examination at trial. It claims that the equities favour re-litigation and also demonstrate that re-litigation would not amount to an abuse of process.

[53] I reject this submission. Knowing the tactical considerations, Mutual chose to advance the defence in the Bank action, both at trial and before this court, that it was Reemark, not Mutual, that breached the agreements. As already noted, Mutual had the same opportunity as Reemark to request an order joining these proceedings. It has advanced no explanation for failing to do so. When the Bank failed to call any Reemark witnesses at the trial of the first action, Mutual opted to ask that an adverse [page755] inference be drawn rather than call the witnesses itself and, if necessary, request the right to cross-examine. In doing so, Mutual made a tactical decision. It lost. That does not give it the right to claim now that it suffered a procedural disadvantage.

[54] I find no merit in Clarica's submission that the possibility of a different result somehow turns the equities in its favour. One of the reasons for restraining duplicative litigation is to avoid inconsistent results. In my view, if satisfied that Reemark was a "wait and see" plaintiff, the proper approach would be to hold that it was an abuse of process for Reemark to re-litigate an issue that was decided against it: see Bomac Construction Ltd. v. Stevenson. It appears that Mutual was a "wait and see" defendant to the same extent that Reemark was a "wait and see" plaintiff, if not more so.

[55] Here, Mutual advanced a position at trial in a prior proceeding, knowing that it was advancing the same position in this proceeding, and knowing the procedural hurdles it faced in the first proceeding if it did not request an order for joinder. It has not explained its failure to do so. I agree with the motion judge's conclusion that it would constitute an abuse of process to permit Clarica to re-litigate a position that it has already advanced and lost.

Disposition

[56] I would dismiss this appeal and permit Reemark to file brief written submissions concerning costs within seven days, and permit Clarica to respond within seven days thereafter.

Order accordingly.

Notes

Note 1: An appeal from this court's judgment to the Supreme Court of Canada was allowed on April 26, 2002 (see 2002 SCC 43, [2002] S.C.J. No. 44 (Quicklaw), however, that appeal related exclusively to the Bank's claim for compound interest.

Note 2: J. Sopinka, S. Lederman, and A.W. Bryant, 2nd ed. (Toronto: Butterworths, 1999), citing Re Bullen (1971), 1971 1029 (BC SC), 21 D.L.R. (3d) 628 (B.C.S.C.) at p. 631, quoting G. Spencer Bower and A. Turner, The Doctrine of Res Judicata, 2nd ed. (London: Butterworths, 1996) at pp. 18-19.

Note 3: (1997), 1997 NSCA 153, 162 N.S.R. (2d) 321, 485 A.P.R. 321 (C.A.).