Court File and Parties

COURT FILE NO.: 939/17SR DATE: 2019-03-29

ONTARIO

SUPERIOR COURT OF JUSTICE

B E T W E E N:

VELOCITY STANDARDBREDS LLC Antony Niksich, Counsel for the Plaintiff Plaintiff

- and -

DESMOND TACKOOR (also known as DES TACKOOR) and DES TACKOOR RACING INC. Kristjan Surko, Counsel for the Defendants Defendants

Heard: September 27, 2018

RULING ON MOTION

LACK J.

1The defendants have brought a motion for an order dismissing this action under the provisions of rule 21.01(1)(a) and rule 21.01(3)(d) of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194, as amended, as barred by the application of the principles of res judicata, collateral attack and/or abuse of process.

The Background

2The plaintiff Velocity Standardbreds LLC (“Velocity”) carries on business as an owner of standardbred racehorses. Velocity is situated in Ohio, U.S.A. Velocity’s horses race in Ontario.

3The defendant Desmond Tackoor (“Tackoor”) is a standardbred racehorse trainer who is licensed by the Ontario Racing Commission. He carries on his standardbred racehorse training business through his company, the defendant Des Tackoor Racing Inc. (“Tackoor Racing”).

4This action concerns four racehorses owned by Velocity. They are Velocity Raquel, Velocity Reign, Velocity Lana and Sly Velocity. During approximately December 2014 to March 2015, the four horses were in the care of Tackoor, who was engaged by Velocity to provide training services.

5Velocity’s claims in this action arise from alleged misconduct of Tackoor. Velocity claims damages in the amount of $100,000 for negligence and breach of contract.

6Velocity alleges that Tackoor, or someone under his supervision, acted negligently by injecting a needle into the carotid artery of Velocity Raquel, which resulted in serious permanent injury to the horse and ended her ability to compete in racing. Velocity’s claim respecting Velocity Raquel is the largest in the action. Velocity is suing for the value of Velocity Raquel as a competitor.

7Velocity alleges that Tackoor and Tackoor Racing were not authorized by Velocity to perform veterinary services on the horses in their care and administering injections was outside the training services which Tackoor Racing was contracted to provide.

8As well, Velocity alleges that Tackoor and Tackoor Racing failed to provide adequate and appropriate care for Velocity Reign, Velocity Lana and Sly Velocity, resulting in those horses experiencing serious health problems, as a consequence of which they were temporarily unable to race. Velocity is suing for damages arising from that temporary loss and incidental damages.

9At Velocity’s request, the Ontario Racing Commission conducted an investigation into substances administered by Tackoor to Velocity’s horses, and issued a report.

10Velocity refused to pay Tackoor Racing’s invoices because of alleged misconduct. So, Tackoor Racing commenced a Small Claims Court action in Oshawa against Velocity for payment on October 29, 2015. Velocity was served with the Small Claims Court claim by substituted service. The personal defendant in the present action Tackmoor was not a party to the Small Claims Court action. Tackoor Racing obtained default judgment against Velocity in the Small Claims Court. When the Small Claims Court proceeding or judgment came to the attention of Velocity is unknown. In any event, Velocity paid the judgment, to restore its standing with Standardbred Canada. If it had not done so, it would not have been allowed to race in Ontario. Velocity purported to pay the default judgment “without admission of liability”.

Issues

11The issues on this motion are:

(a) Does the Small Claims Court judgment bar this action in the Ontario Superior Court by operation of the principle of res judicata? (b) Is this action barred by the application of the principle of collateral attack? (c) Is this action barred as an abuse of process?

Res Judicata

12Res Judicata is a general principle that a judgment between parties to litigation is conclusive on the issues actually brought before the Court and upon any issues which the parties, exercising reasonable diligence, should have brought forward on that occasion. [1] The doctrine takes two forms: cause of action estoppel and issue estoppel. Cause of action estoppel prevents the same cause of action from being re-litigated. As well, it bars claims which properly belonged to the subject matter of previous litigation. Issue estoppel prevents parties from re-litigating issues that have previously been determined. Default judgments may give rise to both forms of estoppel. Both forms of estoppel may bar claims as well as defences. For either form of estoppel to apply, there are three elements that must co-exist: (i) the same issue had to have been decided in the previous proceeding; (ii) the judicial decision in the previous proceeding had to have been final and (iii) the parties to the previous proceeding and the present proceeding must be the same.

The Position of the Moving Party Tackoor and Tackoor Racing

13The defendants, Tackoor and Tackoor Racing’s position is that the three constituent elements of res judicata arise on the plaintiff Velocity’s claim in the present action.

14Respecting the first element - same issue - Tackoor submits that the facts and issues in both proceedings are the same. Since default judgment against Velocity arose for a debt for the provision of horse training services, the implication is that the services were not provided in breach of contract or negligently. If they had been, those allegations would have been defences to the Small Claims Court action. Moreover, Velocity had knowledge of all the material facts necessary to defend the action before the Small Claims Court action was commenced.

15Respecting the second element - finality - Tackoor submits that the judgment in the Small Claims Court action was final. Substituted service is irrelevant. Velocity never moved to set the judgment aside. It did not appeal it. It paid the judgment. Velocity cannot prevent the application of the doctrine of res judicata by paying the judgment on a “without prejudice” basis.

16Respecting the third element - parties - Tackoor submits that the parties to the Small Claims Court action and the current proceeding are identical.

The Position of the Plaintiff Velocity

17The position of Velocity is that its claim is not barred by the principle of res judicata. Its claim is for an amount outside the jurisdiction of the Small Claims Court. To advance that claim in the context of the Small Claims Court proceeding, Velocity would have had to commence a separate action in Superior Court and then sought to consolidate the two actions under s.107 of the Courts of Justice Act, R.S.O. 1990, c. C.43. That section provides in clause 107(1)(d) that a proceeding in Small Claims Court shall not be transferred to Superior Court without the consent of the plaintiff in the Small Claims Court proceeding. Consequently, s.107 of the Court of Justice Act has the effect of barring the application of res judicata to Velocity’s claim regardless of whether Velocity’s current action and Tackoor Racing’s Small Claims Court action involve common parties, common issues of fact and common issues of law.

18Velocity’s position is that its claims in the current proceeding are separate and distinct from Tackoor Racing’s Small Claims Court action which concerned unpaid invoices. The current claims stand on their own and are not inconsistent with the default judgment for outstanding invoices. The defendant’s position that lack of negligence is implicit in the default judgment is not sufficient for estoppel to arise.

19Velocity’s position is that the parties are not identical in the two proceedings. Tackmoor personally was not a party to the Small Claims Court action. However, he is being sued in the present action in his personal capacity for negligence.

Analysis

20In Vista Sudbury Hotel Inc. v. Double T Earth Moving Ltd., [2] Gordon J. commented at paragraphs 13 and 14 on the existence of “coincident actions in the Small Claims Court and Superior Court of Justice” in relation to res judicata:

Section 107 [of the Courts of Justice Act] clearly contemplates coincident actions in the Small Claims Court and the Superior Court of Justice that may involve common parties, common issues of fact and common issues of law. The section clearly contemplates the existence in these two courts of separate actions involving claims for relief arising out of the same transactions or occurrences. It would be fair to assume that the drafters of the legislation were also aware of section 138 which seeks to avoid multiplicity of actions. Notwithstanding, the legislation prohibits the requested order unless the plaintiff in the Small Claims Court action consents.

One might reasonably conclude that policy considerations concerning the right of a Small Claims Court plaintiff to get his or her matter heard expeditiously and inexpensively in the Small Claims Court was thought to override concerns about res judicata, potentially conflicting findings and multiplicity of proceedings.

21I respectfully agree with Gordon J.’s comments. I find that s. 107 of the Courts of Justice Act has the effect of barring the application of res judicata to Velocity’s action in the present circumstances.

22I also find that the parties to the present action are not the same parties who were involved in the Small Claims Court action. Tackoor, in his personal capacity, was not a plaintiff in the Small Claims Court action, but he is one in the Superior Court action where negligence is alleged against him.

23The issues were also different. The Small Claims Court action involved invoices for services rendered for seven horses. The Superior Court action alleges negligence and breach of contract in relation to four horses. Neither question arose in the Small Claims Court action. The Supreme Court of Canada in Angle v. Canada (Minister of National Revenue) [3] wrote in applying the issue estoppel element of res judicata, “the question out of which the estoppel is said to arise must have been fundamental to the decision arrived at in the earlier proceeding” and that “it will not suffice if the question arose collaterally or incidentally in the earlier proceedings or is one which must be inferred by argument from the judgment.” That is the case here. The defendants contend that it is implicit in the judgment that there was neither breach of contract nor negligence, but neither question was adjudicated in the Small Claims Court proceeding.

Conclusion

24For those reasons, I conclude that the Small Claims Court judgment does not bar this action in the Ontario Superior Court by operation of the principle of res judicata.

Collateral Attack

25Collateral attack is the principle that dictates that a judicial order pronounced by a court of competent jurisdiction should not be brought into question in subsequent proceedings except those provided by law for the express purpose of attacking it.

26The defendants’ position is that the Superior Court action should be barred because it is a collateral attack on the default judgment of the Small Claims Court, a judgment which the plaintiff could have moved to set aside or appeal, but did not.

27I agree with the position of the plaintiff that Velocity’s claims are not inconsistent with and do not bring into question the default judgment obtained by Tackoor in the Small Claims Court for payment of invoices. In pith and substance, Velocity’s claims in the Superior Court relate to negligence. The claim is not a collateral attack on the Small Claims Court judgment, which was simply for a liquidated amount, as claimed.

Abuse of Process

28The primary focus of abuse of process is to prevent a party from using the courts for an improper purpose. In Toronto (City) v. C.U.P.E. Local 79 [4], Justice Arbour held that it is improper for a party to attempt to circumvent a judicial finding “by the impermissible route of relitigation in a different forum.”

29The defendants contend that this is the third legal proceeding between the same parties addressing the same issues, the first being the complaint to the Ontario Racing Commission and the second being the Small Claims Court action.

30The Ontario Racing Commission is not a court. For reasons that I have given, I find that the Superior Court action is the first legal proceeding to address the issues in this action. The current action is not an abuse of process.

Conclusion

31For these reasons, the defendants’ motion is dismissed.

Costs

32There is no reason why costs should not follow the event. The defendants shall pay the plaintiff its costs on the motion, on a partial indemnity basis, fixed at $6,000, all inclusive, which is within the narrow range of what both counsel told me at the hearing would be an appropriate amount to be awarded to the successful party.

Justice M. L. Lack, S.C.J.

Released: March 29, 2019

Footnotes

[1] Nicholas v. Toronto-Dominion Bank, 2016 ONSC 3824 at para. 103. [2] (2001) O.J. No. 2695 (Ont. SCJ) [3] (1975), 2 SCR 248 [4] 2003 SCC 63, [2003] 3 SCR 77