Court File and Parties

Court File No.: 472/09 Date: 2018-03-06 Superior Court of Justice - Ontario

Re: Michael Klurfeld and Ludmilla Klurfeld, Plaintiffs And: Nova Quest Logistics Inc., Wakefern Food Corporation, Grocery Daton and Markel Insurance Company of Canada, Defendants

Before: Kurz J.

Counsel: Sergio Grillone, Counsel for the Plaintiff S.R. Moore, Counsel for the Defendant, Wakefern Food Corporation

Endorsement

Overview

[1] This is a motion by the Plaintiffs under Rule 59.06(2)(a) of the Rules of Civil Procedure to amend the March 10, 2014 judgment of Fragomeni J. against the Defendant, Grocery Dayton (“GD”) (“the judgment”). The Plaintiffs seek to make the Defendant, Wakefern Food Corporation (“Wakefern”) subject to and liable for the judgment’s terms against GD. This is the second time that they bring such a motion. The first time, their motion was dismissed by Gibson J. and his decision was upheld by the Ontario Court of Appeal. The issue for this court is whether the Plaintiffs are foreclosed from bringing the same motion by the doctrine of res judicata.

[2] The judgment was obtained following an uncontested trial after GD was noted in default. Fragomeni J. ordered GD to pay the Plaintiffs the sum of $980,200. The Plaintiffs seek to make Wakefern liable as a party for the judgment because it and GD “…are the same entity” and because GD is not a legal person. They made the same argument in the previous motion.

[3] The background to this action, which is a personal injury claim arising out a forklift accident that took place on January 22, 2007 in a New Jersey warehouse, is succinctly set out in paragraphs 2-6 of the decision of the Ontario Court of Appeal.[^1] That decision arises from the July 27, 2015 decision of Gibson J. of this court in a motion virtually identical to the one before me.

[4] Gibson J. dismissed the motion to amend the judgment of Fragomeni J. to include Wakefern as a liable party for three reasons:

a. He found the evidence insufficient to find that Wakefern and GD were identical;

b. The fact that the Plaintiffs had earlier discontinued their action against Wakefern was a bar to the relief that they sought; and

c. It would be fundamentally unfair to Wakefern to add it to the judgment without allowing it the opportunity to defend this action on its merits.

[5] The Ontario Court of Appeal unanimously dismissed the Plaintiff’s appeal of the Gibson J. order. In the decision of Miller J.A., the appellate court found that:

a. Gibson J. may not have adverted to all of the evidence in his endorsement but he did not make an overriding error in his review and consideration of that evidence. The court was able to offer this conclusion after its own review of the evidence before Gibson J.

b. With regard to the Plaintiffs’ discontinuance of their action against Wakefern, it was unnecessary to decide whether the discontinuance operated as a bar to the relief sought in light of its first finding. Nonetheless the court, on its own initiative, exercised its discretion to set aside the discontinuance under s. 134(1)(c) of the Courts of Justice Act.[^2] This allowed the reinstatement of the Plaintiff’s action against Wakefern despite the fact that the applicable limitation period had passed.

c. Even though Wakefern adopted a litigation strategy that attracted it no sympathy, that finding is not the end of the court’s consideration. The court accepted that Wakefern’s unsympathetic strategy included its awareness of the default judgment against GD and likely knowledge that GD is a name connected to some aspect of its operations even though GD is not a legal entity. The court also found that Wakefern was “economical” or less than candid with the truth about GD. Nonetheless the court accepted Gibson J.’s finding that it would be unfair to deprive Wakefern of the right to defend this action.

Arguments Regarding Res Judicata

[6] Wakefern has raised a preliminary objection to this motion. It argues that this motion is res judicata: that all of the evidence presently before the court was either already before the court in previous proceedings in this action or could have been had the Plaintiffs exercised due diligence. Wakefern argues that, in the colloquial, the Plaintiffs are taking a second “kick at the can”; effectively rearguing the same motion but hoping for a different result. They argue that I am bound by the Ontario Court of Appeal’s decision and should not consider the Plaintiffs’ motion.

[7] In response, the Plaintiffs claim that this is not exactly the same motion as the one brought before Gibson J., even though the relief sought is identical. They rely on two factors, one procedural and one evidentiary. First they ask me to effectively deal with this motion as part of a different procedure than the one before Gibson J. because at that time Wakefern was not a party to this action. The Plaintiffs had discontinued their claims against it. That discontinuance has since been set aside by the Ontario Court of Appeal, the Plaintiffs have amended their pleadings to include a claim that GD and Wakefern are the same entity, and the latter has filed its defence. In other words, to use another colloquialism, this is a whole new ball game from the Plaintiffs’ perspective.

[8] Second, the Plaintiffs rely on what they assert to be two new and important pieces of evidence that were not before either Gibson J. or the Ontario Court of Appeal. One is a copy of a contract between Wakefern and Twin Oaks Bloc, Inc. That contract sets out the salient facts of the relationship between Wakefern and the company that it contracted with to run the warehouse where the subject accident occurred. The Plaintiffs argue that that contract shows the degree to which Wakefern controlled the warehouse at the time of the accident. This demonstrates, they contend, Wakefern’s responsibility for “…all events, transactions and damages that occurred at [the warehouse located at] 60 Tower Road during the relevant time period.”

[9] The Plaintiffs also refer to what they describe as an admission by Wakefern’s counsel in another motion that GD was a “moniker” for the warehouse. That admission, they contend, is the missing connection between the evidence already placed before the courts and the notion that GD is an alter ego of Wakefern. That new evidence takes this motion beyond the scope of the previous one and obviates the application of the doctrine of res judicata.

Law Regarding Res Judicata

[10] The law regarding the application of the doctrine of res judicata was set out by Laskin J.A., writing for the Ontario Court of Appeal in Bear Island Foundation v. Ontario.[^3] There Laskin J.A. stated:

29 Before dealing with these issues, I will briefly discuss the reach of the principle of res judicata. The principle of res judicata is well-established in our law. It applies to claims by aboriginal peoples against the Crown in the same way as it applies in other cases. Res judicata is a form of estoppel. It means that any action or issue that has been litigated and decided cannot be retried in a subsequent lawsuit between the same parties or their privies. The object of res judicata is judicial finality. Two reasons are commonly put forward for the principle: no person should be sued more than once for the same claim, and our law should not tolerate needless litigation.

30 Two aspects of res judicata are relevant to this appeal. The first aspect, relied on by Ontario, is that res judicata prevents a party from relitigating a claim that was decided or that could have been raised in an earlier proceeding. As our court said in Parna v. G. & S. Properties Ltd.: "The rule of res judicata embraces not only those things which were proven in the earlier action, but those which might have been proven in that action." Cartwright J. invoked this aspect of res judicata in Maynard v. Maynard, in a passage that is particularly germane to this appeal:

Parties are not permitted to begin fresh litigations because of new views they may entertain of the law of the case, or new versions which they present as to what should be a proper apprehension by the Court of the legal result either of the construction of the documents or the weight of certain circumstances.

If this were permitted litigation would have no end, except when legal ingenuity is exhausted. It is a principle of law that this cannot be permitted, and there is abundant authority reiterating that principle ...

31 The second aspect of res judicata relevant to this appeal and relied on by the appellants is that the court retains a discretion to refuse to apply res judicata when to do so would cause unfairness or work an injustice. As Lord Upjohn wrote in Carl Zeiss Stiftung v. Rayner Keeler Ltd. No. 2: "All estoppels are not odious but must be applied so as to work justice and not injustice." Although the principle of res judicata reflects the public interest in the finality of litigation, sometimes an unyielding application of the principle would be unfair to a party who is precluded from relitigating an issue. Judicial discretion is required to achieve practical justice without undermining the object of res judicata.

32 As is apparent from the case law, the courts have always exercised this discretion. For example, the House of Lords has refused to apply issue estoppel (a form of res judicata) in "special circumstances", which include a change in the law or the availability of further relevant material. Lord Keith discussed this special circumstances exception in Arnold v. National Westminster Bank plc:

... there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings. One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result ...

[note: citations omitted]

[11] Further the facts that the original decision was made in the context of an interlocutory proceeding and that that proceeding was in the same case as the one before the court, does not limit the application of the doctrine. As Duff J. stated for the majority of the Supreme Court of Canada in Diamond v Western Realty Co.:[^4]

35 Now to this argument [by the appellant, Diamond, in the appeal] there appears to be one conclusive answer. The point raised by it was decided against Diamond in the judgment given by Mr. Justice Middleton on the appeal from the first report. The claim thus advanced was one he held which the referee, under the terms of the reference, had no jurisdiction to examine. This judgment of the learned judge was a definite decision upon a definite point of law. From that decision no appeal was taken, and it seems to put an end to the controversy.

36 It is true that in a sense the decision was interlocutory; that is to say, the proceeding in which it was given was an interlocutory proceeding; but it was nevertheless a final decision in the sense that in the absence of appeal it became binding upon all parties to it.

37 As Lord Macnaghten said, in Badar Bee v. Habib Merican Noordin: —

In the words of the Digest, lib. xliv, t. 2, s. 7 ”exceptio rei judicatae obstat quotiens eadem quaestio inter easdem personas revocatur.” It is not competent for the court, in the case of the same question arising between the same parties, to review a previous decision not open to appeal. If the decision was wrong, it ought to have been appealed from in due time.

The application of the principle is not affected, it is, perhaps, needless to say, by the circumstance that the first decision is pronounced in course of the same action; Badar Bee v. Habib; Ram Kirpal Shukul v. Mussumat Rup Kuari; Hesseltine v. Nelles; nor is it material that the reasons for judgment, as distinguished from the formal judgment itself, must be examined in order to ascertain the scope of that decision. Hook v. Administrator General of Bengal; Ramachandra Rao v. Ramachandra Rao.

[note: citations omitted]

Test to Provide Further Evidence Under Rule 59.06(2)(a)

[12] Rule 59.06(2)(a) reads as follows:

Setting Aside or Varying

(2) A party who seeks to,

(a) have an order set aside or varied on the ground of fraud or of facts arising or discovered after it was made;

may make a motion in the proceeding for the relief claimed.

[13] For a party moving under R. 59.06(2)(a), the test for the admission of evidence not previously tendered is summarized by Lauwers J.A. in Mehedi v. 2057161 Ontario Inc.[^5] There he stated:

13 The test under rule 59.06(2)(a) to re-open a trial that applies after the judgment or other order has been issued and entered was set out by Doherty J.A., speaking for the court, in Tsaoussis (Litigation Guardian of) v. Baetz (1998), 1998 ONCA 5454, 41 O.R. (3d) 257, [1998] O.J. No. 3516, at paras. 41 and 44. As he noted, the onus is on the moving party to show that all the circumstances "justify making an exception to the fundamental rule that final judgments are exactly that, final." In particular, the moving party must show that the new evidence could not have been put forward by the exercise of reasonable diligence at the original proceedings. The court will go on to evaluate "other factors such as the cogency of the new evidence, any delay in moving to set aside the previous judgment, any difficulty in re-litigating the issues and any prejudice to other parties or persons who may have acted in reliance on the judgment."

[14] This test equally applies to the application of new evidence in the face of a claim of res judicata.[^6]

Analysis

[15] In considering the proposed fresh evidence in the context of the evidence already placed before Gibson J. and the Ontario Court of Appeal I accede to the preliminary objection and dismiss this motion based on the doctrine of res judicata. I do so for the reasons that follow.

[16] First, this motion seeks the same relief that the previous motion sought. No relevant difference arises from the fact that the discontinuance against Wakefern has been set aside. Even with the discontinuance, Wakefern was a party to the motion and appeal. More importantly, the changes to the status of each of the action and Wakefern within it change nothing. The Plaintiffs are asking the court to make Wakefern subject to a judgment that was granted in 2014, well before all of those changes and the motion before Gibson J. In other words, the Plaintiffs are not seeking relief based on those changes. They are not, for example seeking summary judgment based on the causes of action set out in the new set of pleadings. Thus the setting aside of the dismissal, amendment of pleadings and exchange of pleadings are of no moment to the relief being sought today. It is identical to the relief sought before Gibson J.

[17] Second, the elements of new evidence relied upon by the Plaintiffs do not assist them in their argument. I say this for two reasons. To begin, the contract between Wakefern and Twin Oaks Bloc, Inc. was mentioned in the July 8, 2015 affidavit of Wakefern’s vice president, Thomas Roy, which was before Gibson J. It was open to the Plaintiffs to request a copy of that agreement before they argued the motion. In other words it was available to them through the exercise of due diligence, had they chosen to pursue it. Further, nothing in that contract refers to GD at all, let alone a singularity of personality between it and Westfern.

[18] Further, with regard to the alleged admissions, I do not find that they move the metaphorical needle in any measurable way. Those alleged admissions are found in the transcript of a hearing of a motion before Gray J. of this court. Wakefern unsuccessfully moved, following the decision of the Ontario Court of Appeal, to have this action dismissed against it on jurisdictional grounds. It argued that New Jersey, not Ontario is the proper venue for this action. Gray J. dismissed the motion, finding that Wakefern had attorned to this jurisdiction.

[19] During the course of argument, Wakefern’s former counsel twice made reference to GD being a “moniker” for a warehouse where Wakefern takes deliveries. The Plaintiffs claim that this “admission” is new, was not available through the exercise of due diligence and would have changed Gibson J.’s decision. They see it as the keystone that upholds the entire edifice of their attempt to relitigate the motion before Gibson J. With great respect, I do not accept their arguments.

[20] As I see it, there is little in the way of an admission in the alleged admissions of previous counsel. That counsel, Mr. Stamp, very carefully couches his comments to Gray J. about GD as a “moniker”. He does so within the context of clear denials that GD is an alias for Wakefern. Instead he refers to what the Plaintiffs’ own evidence appears to show. His argument was that he could only concede that there is a warehouse where Wakefern has a presence, that it has a “moniker” of GD, that it was not so named by Wakefern, but that GD is not Wakefern’s alter ego. But that is far from an admission that GD is a business style of Wakefern or that it presents itself to the public as GD, let alone that GD it is an alter ego of Wakefern. I note that nowhere in his endorsement does Gray J. find that the moniker comments constitute an admission of any sort on behalf of Wakefern.

[21] Third, I see no reason to exercise my discretion in a manner different than that of Gibson J. and the Ontario Court of Appeal. With only the limited exceptions set out above, I am facing the same motion and the same facts that were before them. In particular with regard to the Ontario Court of Appeal’s decision, Miller J.A. expressed a high degree of skepticism about whether Wakefern had been fully candid with the court or whether its litigation strategy was salutary. Nonetheless he allowed them to have their day in court.

[22] Miller J.A. actually granted relief that balanced the rights of the parties – giving each something in the face of their competing claims to fairness. Not only did he grant Wakefern the right to defend this action on its merits despite their litigation strategy, he granted the Plaintiffs a remedy that was of great value to them. It was one they had not even requested of the court. He set aside the dismissal of the action against Wakefern long after the limitation period had passed. Recall that when the court granted that remedy, there was no existing action by the Plaintiffs against Wakefern.

[23] Those two opposing remedies represented a delicate balancing of the rights and interests of each of the two litigants. Had the court wanted to use the setting aside of the withdrawal of the claim against Wakefern to reopen the door to further litigation under R. 59.06(2)(a) on the issues it had just determined, it would have said so. Rather, the appellate court clearly signaled its desire to have this proceeding determined on its merits, not on procedural fine points. It is unfortunate that almost two years after the Ontario Court of Appeal ruled, the parties are little closer to resolution of this case.

Conclusion

[24] For all of the reasons set out above, I dismiss this motion. If the parties are unable to agree on the costs of this motion, Wakefern may file costs submissions/outline of up to three pages, exclusive of authorities and/or offers to settle and the Plaintiffs may do the same 14 days later.

Kurz J.

Date: March 6, 2018

[^1]: [2016] O.J. No. 2420 (OCA) [^2]: That provision is a basket clause in a provision of the Courts of Justice Act that sets out the powers of a court on appeal. Here it allows such a court to “make any other order or decision that is considered just.” [^3]: 1999 ONCA 9307, [1999] O.J. No. 4290 (OCA) [^4]: 1924 CarswellOnt 116 (SCC) [^5]: 2015 ONSC 1312, 2015 O.J. No. 2178 (OCA) [^6]: See Bear Island Foundation v Ontario, supra, at par. 32