CITATION: Toronto Dominion Bank v. Preston Springs Gardens Inc., 2007 ONCA 145

DATE: 20070306

DOCKET: C45181

COURT OF APPEAL FOR ONTARIO

RE:

THE TORONTO DOMINION BANK (Plaintiff) and

PRESTON SPRINGS GARDENS INC., BENCHMARK EQUITY CORPORATION, PETER B. MOFFAT, MELVYN A. DANCY AND DONDEB INC. (Defendants (Appellants))

and BDO DUNWOODY LIMITED (Proposed Defendant to the Counterclaim (Respondent))

BEFORE:

GOUDGE, GILLESE AND LANG JJ.A.

COUNSEL:

Thomas J. Corbett

for the appellants

Evert Van Woudenberg and James R. G. Cook

for the responding party BDO Dunwoody Limited

HEARD & RELEASED ORALLY:

February 26, 2007

On appeal from the judgment of Justice Geoffrey B. Morawetz of the Superior Court of Justice dated March 17, 2006.

E N D O R S E M E N T

[1] The appellants raise two arguments in their main appeal.

[2] First, they argue that neither all the facts nor the legal characterization that they seek to put on them in their proposed action have been litigated before, and that the motion judge erred in finding otherwise.

[3] We disagree. The appellants acknowledge that essentially all the facts concerning the Receiver’s conduct have been known throughout, with the exception of the details that now may be available from the Receiver’s notes of a meeting on May 7, and a possible further cross-examination on those notes. However from the beginning, the Receiver disclosed the meeting and who was present. It would have been possible to obtain the notes through cross-examination in the prior proceedings but the appellants chose not to do so. Moreover, it is hard to see what value would be added to the appellant’s proposed allegations by those notes. Thus, with this minor exception all the facts have been previously scrutinized by the court and the Receiver’s conduct has been found entirely proper.

[4] As to the proposed legal characterization of those facts, counsel told us that the allegations of negligence and breach of fiduciary duty have not been made in previous proceedings. A perusal of the facta filed by counsel in those proceedings makes it obvious that that representation is not so. The very allegations were indeed made in those terms, and, like the facts, have been scrutinized in previous proceedings.

[5] Two judges have expressly found that, given the facts and in spite of the arguments of the Receiver’s negligence and breach of fiduciary duty, the Receiver was throughout seeking to deal with the property prudently and fairly, and in a commercially reasonable manner. The appellants’ arguments were obviously rejected. The same facts and arguments were put before a third judge in opposing the order approving the sale, and while he gave no reasons, that judge also clearly rejected them because he granted the order.

[6] The appellants have therefore litigated the same facts and arguments to final disposition against the Receiver not once but three times. We agree with the motion judge that since the appellants, having previously chosen to put in issue before three courts the facts, and the arguments that the Receiver breached its duty of care and its fiduciary obligation, and having had those issues determined against them to the point of finality, issue estoppel dictates that they not be permitted to try a fourth time. At the very least it would be an abuse of process to permit them to do so.

[7] In light of this conclusion, we need not deal with the appellants’ second argument, namely that if issue estoppel does not apply, the motion judge erred in the test he applied to determine whether leave to commence the proposed action should be granted.

[8] Finally, the appellants also seek leave to appeal the costs order below. We see no reason to interfere with the discretion of the motion judge to award costs on a substantial indemnity scale. While the allegations made against the Receiver do not extend to fraud, they are allegations of a serious dereliction of duty by the Receiver. Particularly in light of the fact that the appellants have sought unsuccessfully to raise these allegations again, and again, we see no error in the scale ordered.

[9] The appeal must be therefore dismissed.

[10] The appeal is dismissed with costs in the amount of $15,000.00 inclusive of disbursements and G.S.T.

"S.T. Goudge J.A."

"E.E. Gillese J.A."

"S.E. Lang J.A."