DATE: 2004-11-02

DOCKET: C39705, C40440

COURT OF APPEAL FOR ONTARIO

RE: JOSEPHINE DANYLKIW (Plaintiff/Appellant) – and – GEORGE DANYLKIW (Defendant/Respondent)

BEFORE: MOLDAVER, SHARPE JJ.A. and KILLEEN J. (Ad hoc)

COUNSEL: Daphne Johnston For the appellant

D. Smith For the respondent

HEARD: October 18, 2004

On appeal from the judgment of Justice Sarah E. Pepall of the Superior Court of Justice dated February 10, 2003, with supplementary reasons issued July 3, 2003.

E N D O R S E M E N T

[1] The central issue before us is whether, having made a finding of fraud, the trial judge erred in refusing to set aside the 1996 settlement. The appellant seeks to set aside the 1996 settlement in order to enable her to litigate the claims in her 1993 action and for spousal support and equalization. The appellant submits that there was no legal or equitable basis to justify the trial judge’s refusal to grant rescission. We are unable to accept the appellant’s submission.

[2] In her reasons for judgment, reported at (2003), 37 R.F.L. (5th) 43, with supplementary reasons reported at (2003), 42 R.F.L. (5th) 40, the trial judge did not elaborate on why she was refusing to set aside the agreement, apart from the fact that there would be no purpose in doing so, given that the appellant had failed to establish any loss arising from the respondent’s fraud. The trial judge gave full reasons to justify her decision in response to the appellant’s subsequent motion for further relief. We see no error in those reasons.

[3] First, as the trial judge observed, it would be very difficult, in view of all that has transpired, to restore the parties to the position they were in, prior to the 1996 agreement. That constitutes a legally recognized reason for refusing rescission. The appellant would have to repay certain payments made by the respondent and any order of rescission would have to take into account the fact that the appellant made a substantial recovery from her former solicitors on account of the same claims she wishes to reassert against the respondent. It was within the trial judge’s discretion to conclude that the difficulty of unravelling all of these issues was a reason to refuse rescission.

[4] Second, we agree with the trial judge that the principles of res judicata and issue estoppel provide a legitimate juristic reason to justify the refusal of the equitable remedy of rescission in the circumstances of this case. If the appellant wished to litigate additional issues, it was incumbent upon her to bring them forward so that all of her claims against the respondent could be dealt with at once. We recognize that the appellant’s claim for additional child support arose in response to the respondent’s motion to have child support reduced. However, the issues were complex and Rivard J. directed the trial of an issue. That trial certainly could have been expanded to embrace all of the appellant’s claims. The appellant’s strategy of asserting a succession of claims in a series of actions or proceedings is simply not permitted in law. As the trial judge correctly stated at paragraph 9 of her supplementary reasons, “cause of action estoppel extends to bar litigation of any claim a plaintiff could have or should have raised against the defendant arising from events that were the subject of an earlier claim”. In view of the protracted nature of the proceedings between these parties, application of this legal principle is particularly significant in the circumstances of this case. In effect, the appellant sought rescission in order to achieve a procedural tactic that is not simply permitted in law. It was within the trial judge’s discretion to refuse the order on that ground and we see no reason to interfere with the exercise of that discretion.

[5] We did not call upon the respondent to answer the appellant’s submissions relating to the quantification of child support, interest or costs as, in our view, those grounds of appeal are without merit. We are not persuaded that there is any basis upon which we could interfere with the trial judge’s costs award and we dismiss the application for leave to appeal costs.

[6] Accordingly, the appeal is dismissed. The respondent is entitled to costs of the appeal. However, as the respondent’s factum was not delivered until the morning of the appeal, we limit those costs to $7500, inclusive of GST and disbursements.

“M.J. Moldaver J.A.”

“Robert J. Sharpe J.A.”

“G.P. Killeen J. (Ad hoc)”