Court File and Parties
Court File No.: CV-20-82770 Motion Heard: April 20, 2021 Superior Court of Justice – Ontario
Re: Michela Telatin, Plaintiff And: Firas Shoumali, Defendant
Before: Master Kaufman
Counsel: James Anderson, Counsel for the Plaintiff Christine Kucey, Counsel for the Defendant
REASONS FOR DECISION
[1] Mr. Shoumali moves for summary judgment to dismiss Ms. Telatin’s claim in its entirety on the grounds that it is barred by cause of action estoppel, or, in the alternative, issue estoppel. He also argues that the action is an abuse of process.
[2] Mr. Shoumali and Ms. Telatin were involved in family litigation that resulted in a seven-day trial before Justice Summers. During that trial, Ms. Telatin argued that Mr. Shoumali should not be awarded spousal support because he had retained approximately $190,000 that she had transferred to him during their relationship (the “unreturned money”). After hearing evidence on this issue, Justice Summers determined that Ms. Telatin did not meet her burden of proving that Mr. Shoumali owed her any money and she awarded Mr. Shoumali spousal support. A week later, Ms. Telatin brought forth this action to recover the unreturned money.
[3] This motion raises the following issue: does the defendant’s plea of res judicata raise a genuine issue requiring a trial? The answer to this question turns on whether (1) this action raises an issue that was determined on a final basis in the family law proceeding (issue estoppel) or; (2) this action raises a cause of action that ought to have been determined in the family proceedings (cause of action estoppel). If the answer to these questions is yes, the Court must consider if it should apply the doctrine of res judicata as a matter of discretion. The last issue in this motion is whether this action constitutes an abuse of process. I turn to these issues below, however I will first address the test for summary judgment.
The test for summary judgment
[4] The Court must grant summary judgment if it is satisfied that there is no genuine issue requiring a trial with respect to a claim or defence. There is no genuine issue requiring a trial when a fair and just determination on the merits can be reached without a trial. This will be the case where the process allows the judge to make the necessary findings of fact, allows the judge to apply the law to the facts, and the summary judgment process is a proportionate, more expeditious and less expensive means to achieve a just result.[^1]
[5] The parties agree that it is appropriate to determine the merits of Mr. Shoumali’s defences of res judicata and/or abuse of process by way of motion for summary judgment. The parties submitted all the material required for the Court to make this determination: the pleadings in the family court proceedings, the relevant trial transcripts, Justice Summers’ reasons for judgment and decision on costs, and the pleadings in the civil action. The Court is satisfied that the matters raised in this motion are amenable to be decided fairly, expeditiously and proportionally by way of summary judgment.
The doctrine of res judicata
[6] The doctrine of res judicata has been described as a fundamental principle of our justice system and as being at the heart of the administration of justice.[^2] It is concerned with harm that comes with the relitigation of claims or issues that have already been, or should have been, addressed in prior litigation.[^3] It prevents duplicative litigation, contradictory findings, undue costs and saves judicial resources. It is also founded in public policy and recognizes that the law not only seeks substantive justice but also to bring an end to controversies.[^4] Finality in litigation is a matter of fairness and justice and parties should not, as a general rule, be vexed twice by the same cause.[^5]
[7] Res judicata has two branches: cause of action estoppel and issue estoppel. Cause of action estoppel is broader than issue estoppel. Issue estoppel prevents the re-litigation of issues that were actually litigated, whereas cause of action estoppel may preclude the litigation of matters that were never raised but ought to have been.[^6]
ISSUE 1 – Does issue estoppel apply?
[8] Three preconditions must be met for issue estoppel to be successfully invoked: (1) the issue must be the same as the one decided in the prior decision; (2) the prior judicial decision must have been final; and (3) the parties to both proceedings must be the same, or their privies.[^7]
[9] The plaintiff concedes that the second and third preconditions are met. The Court must therefore determine if this action raises an issue that was litigated in the family proceedings.
The prior family proceedings
[10] The parties met in Africa in 2010 while they were both pursuing careers in international aid. They started dating and had a daughter, Angelica, in 2014. The parties moved to Canada in 2015 but relocated to Belgrade, Serbia in 2018 because Ms. Telatin was offered employment there. They separated on September 23, 2018, three months later.
[11] Ms. Telatin returned to Canada with Angelica on October 23, 2018 for medical appointments. On October 29, 2018, Mr. Shoumali served her with an application for custody of Angelica and a notice of motion for interim custody. Master Fortier determined the motion to be urgent and the motion was heard on November 14, 2018. Justice Shelston granted temporary custody of Angelica to Ms. Telatin, placed the matter on the May 2019 trial sittings and ordered the parties to schedule a joint case/settlement conference before him in February 2019.
[12] The parties attended a settlement conference on February 27, 2019. At that time, Justice Shelston set a timetable which required Mr. Shoumali to file his amended application by March 18, 2019 and Ms. Telatin to file her amended answer and claim by April 5, 2019. The trial was set for May 22, 2019, for 7 days.
[13] On March 14, 2019, Mr. Shoumali amended his application to include a claim for child and spousal support. Ms. Telatin filed her amended answer on April 3, 2019. She did not make a claim for the repayment of the unreturned money.
The unreturned money was put in issue in the family proceeding
[14] At trial, Mr. Shoumali was cross-examined at length about the sums of money Ms. Telatin had transferred to him, the use to which the money was put, and the amounts that had been repaid. Mr. Shoumali was asked if he should have to pay any of the money back. Mr. Shoumali responded that he personally incurred many expenses on behalf of the family. Counsel for Mr. Shoumali then objected to this line of questioning because Ms. Telatin had not advanced a claim for the repayment of money. Mr. Shoumali’s objection was upheld and Ms. Telatin’s counsel withdrew her question.
[15] Ms. Telatin’s counsel raised the question of transfers once more when examining Ms. Telatin in chief. Counsel for Mr. Shoumali renewed her objection, because it appeared to relate to a claim for the unreturned money and that issue had been the subject of a prior ruling. Counsel for Ms. Telatin confirmed that she was not advancing a claim for payment of the unreturned funds. However, she argued that Mr. Shoumali’s receipt of significant sums of money was directly relevant to his claim for spousal support. Counsel for Ms. Telatin argued that the Court should know “what happened with [the parties’] money and how fair it would be in terms of thinking about spousal support in that context.”
[16] Justice Summers ruled that this line of questioning was relevant to the issue of Mr. Shoumali’s claim for spousal support:
THE COURT: I’m going to allow it, Ms. Cooligan. I consider it relevant to the issue of spousal support your client is seeking. There’s – what I understand Ms. Sharp is saying is evidence that there has been a transfer already.
The Court: It may not have been a transfer for that purpose, but…
MS. COOLIGAN: Okay,
THE COURT: … the funds were left.
[17] The transfers of money between the parties consumed a significant part of the family trial, as evidenced by the over 100 pages of trial transcripts filed in this motion and relating to this issue. Ms. Telatin gave extensive evidence about the amounts of money she transferred to Mr. Shoumali in various currencies and the amounts she received from him. She testified that, according to her calculations, Mr. Shoumali owed her the equivalent of approximately $190,000. Ms. Telatin was also cross-examined extensively about whether the transfers were gifts or loans, the reasons for the transfers, whether the money was used to cover the parties’ living expenses during their period of unemployment, and whether Mr. Shoumali should receive any credits for the familial expenses he personally incurred.
[18] In her decision, Justice Summers declined to consider Mr. Shoumali’s indebtedness as a basis to dismiss or reduce his claim for spousal support. Justice Summers held that the evidence presented at trial was insufficient for her to determine whether Mr. Shoumali does or does not owe money to her. What I know is that certain funds were transferred to Mr. Shoumali and certain amounts were returned. However, I cannot determine what other transactions may have occurred while Mr. Shoumali held the funds, when the GBP or CHF were exchanged for CAN dollars, the applicable exchange rates, the extent to which those funds were mingled with Mr. Shoumali’s funds, if at all, any interest earned and if any funds were used to cover expenses. In that regard, I am mindful that each party had significant periods of unemployment after they moved to Canada. Therefore, I find it reasonable to assume that, to some extend, they relied on savings to meet the needs of the family, especially during their first year in Canada.
[19] Justice Summers awarded Mr. Shoumali time limited spousal support, which commenced November 1, 2018 and ended June 30, 2021.
The “same question” requirement is met
[20] Ms. Telatin argues that the “same question” requirement is not met here. Relying on Angle v. M.N.R., she argues that issue estoppel only precludes the litigation of issues that were “fundamental” to the decision arrived at in the prior proceedings. In Angle, the Supreme Court held that the Exchequer Court’s finding — that a corporation conferred a taxable benefit on a taxpayer — was not incompatible with, and made no reference to, the taxpayer’s alleged indebtedness to the corporation. The Crown was therefore not estopped by the doctrine of res judicata from putting the appellant’s indebtedness in issue in subsequent proceedings.
[21] I am not persuaded by Ms. Telatin’s submission. Any right, question, or fact distinctly put in issue and directly determined by a Court of competent jurisdiction as a ground of recovery, or as an answer to a claim set up, cannot be retried in a subsequent suit between the same parties or their privies, even where it is an issue in a different cause of action.[^8] Ms. Telatin directly raised Mr. Shoumali’s indebtedness either as an answer to his spousal support claim or alternatively as a means of asserting a set-off. Justice Summers, in her separate costs endorsement, wrote:
[Ms. Telatin] acknowledged that Mr. Shoumali had returned a large portion of the monies before they separated but contented that he still had a significant sum in his possession. She asked the Court to determine that amount and consider it in relation to any spousal support that may be ordered. (emphasis added).
[22] As mentioned above, the question of whether Mr. Shoumali owed Ms. Telatin any money occupied a significant part of the trial. The transfers Ms. Telatin relies on in this action are the very same ones that Justice Summers considered. Justice Summers determined that Ms. Telatin did not meet her burden of proof, and that issue was therefore determined against her.
[23] Issue estoppel extends to issues of fact, mixed fact and law that are necessarily bound up with the determination made in the prior proceeding.[^9] Here, the decision to award Mr. Shoumali spousal support is necessarily “bound up” with Justice Summers’ determination that Ms. Telatin did not prove that Mr. Shoumali owed her money on a balance of probabilities. Had Justice Summers determined that Mr. Shoumali had kept $190,000 of her money without justification, the same award would not have been made.
[24] Accordingly, the requirements of issue estoppel are met. I now turn to the requirement of cause of action estoppel.
ISSUE 2 – Does cause of action estoppel apply?
[25] Mr. Shoumali does not assert that the causes of action raised in this action have been determined in the family proceedings. Ms. Telatin made it clear that she was not claiming the return of money in the family proceedings. However, cause of action estoppel also applies to “every point which properly belonged to the subject litigation and which the parties exercising reasonable diligence might have brought forward at that time”.[^10] In Hoque v. Montreal Trust of Canada, Justice Cromwell held that cause of action estoppel should be applied flexibly and subsumes “the issues that the parties had the opportunity to raise and, in all the circumstances, should have raised” [emphasis added].[^11]
[26] Ms. Telatin argues that cause of action estoppel does not apply for two reasons. First, she could not raise the unreturned money in the family proceedings without first obtaining leave. Second, such a claim did not belong in the family proceedings.
Jurisdictional impediments to bringing claim for return of money
[27] Family proceedings before the Family Court are limited to the subject matters listed in the Schedule referred to in s. 21.8 of the Courts of Justice Act, R.S.O. 1990, c. C.43. A judge may, however, hear and determine a “related matter” that is not referred to in that schedule. Section. 21.9 of the Courts of Justice Act provides as follows:
21.9 Where a proceeding referred to in the Schedule to section 21.8 is commenced in the Family Court and is combined with a related matter that is in the judge’s jurisdiction but is not referred to in the Schedule, the court may, with leave of the judge, hear and determine the combined matters. [^12]
[28] Ms. Telatin argues that she could not have brought a claim for the unreturned money without leave because such a claim is not referenced in the schedule to s. 21.8 of the Courts of Justice Act. She contends that leave may not have been granted, especially where the parties are unmarried and there were no property claims being advanced.
[29] I am not persuaded that the claim for the unreturned money required leave. Ms. Telatin claims that she gave Mr. Shoumali money she transferred to him during their relationship. Proceedings for “a monetary award as compensation for unjust enrichment between persons who have cohabitated” are included in the Schedule to s. 21.8. The doctrine of unjust enrichment is inherently flexible and provides a basis to address claims for the distribution of assets on the breakdown of a domestic relationship. The doctrine seeks to restore to the plaintiff a benefit which justice does not permit the defendant to retain. It is successfully invoked if a plaintiff can establish an enrichment of the defendant by the plaintiff, a corresponding deprivation of the plaintiff, and the absence of a juristic reason for the enrichment.[^13] In my view, the doctrine of unjust enrichment could have been invoked.
[30] But, even if leave was required, Ms. Telatin had the opportunity to seek leave and chose not to. This Court has applied res judicata to bar civil claims that could have been combined with family law proceedings. In Huisman v. Black, for example, the husband brought a claim for defamation (which is not listed in the Schedule to s. 21.8) against his former wife. The Court concluded that the defamation claim was barred through cause of action estoppel because that claim could have been combined with the Family Court proceedings.[^14] Justice Perrell reached the same conclusion in Lee v. Lee,[^15] where the husband commenced a tort action against the wife and a doctor for causing him to be involuntarily apprehended and taken for a psychiatric assessment. In both cases, the tort actions were commenced after the family proceedings were settled. The Court in Huisman recognized that leave was required to adjudicate the tort claim, but the leave requirement did not bar the application of res judicata. In both Huisman and Lee, this Court dismissed the plaintiffs’ civil actions because they knew the basis for their claims during the family proceedings, and those claims arose out of the marital relationship. The Court found that the claims ought to have been advanced in the family proceedings.
[31] Ms. Telatin’s civil claim should similarly be barred by cause of action estoppel if her claim for the return of money ought to have been brought in the family proceedings. Ms. Telatin argues that it ought not to have. She made the conscious decision to keep the family proceedings’ focus on Angelica’s best interests and did not want to muddy the waters with this claim. Moreover, she contends that the matter proceeded to trial in an expedited manner and that she did not have a full picture about “what was left unreturned” until a few days prior to the commencement of trial.
[32] I am not convinced by these submissions. While the family proceedings only concerned parenting time and decision making initially, their subject matter was subsequently expanded to include a claim for spousal support. The parties were given a deadline by which to amend their respective claims. Ms. Telatin’s wish to keep the focus of the family proceedings on Angelica must be considered in relation to the fundamental values res judicata promotes: the finality of court proceedings and the prevention of duplicative litigation, contradictory findings, undue costs and wasted judicial resources. In any event, the family proceedings also included financial matters. It is difficult for Ms. Telatin to argue that her claim for the unreturned money did not belong in the family proceedings when she presented the evidence and argument on that issue as an answer to Mr. Shoumali’s claim for spousal support.
[33] I am also convinced that Ms. Telatin’s claim arose out the parties’ family relationship. She confirmed that the moneys transferred were not loans. She transferred large sums to Mr. Shoumali for three reasons: the potential consequences of the pending Brexit referendum in England; the change in taxation rules for Canadian residents owning Swiss bank accounts; and her ineligibility to have her own foreign currency account in Canada. She transferred the bulk of these sums because she was settling in Canada with Mr. Shoumali and they intended to purchase real property. She concedes that Mr. Shoumali returned approximately $545,000 dollars. Mr. Shoumali argued that he incurred costs for the family’s benefit and that the money Ms. Telatin claims from him was used to meet the family’s expenses during the parties’ periods of unemployment. Justice Summers accepted that it was reasonable to assume as much. I conclude that Ms. Telatin’s claim is essentially for the fair re-distribution of assets upon the breakdown of the relationship. It arises out of the family relationship and properly belonged in the family proceedings.
[34] Moreover, Ms. Telatin knew the precise basis for her claim at trial. She confirmed that, by her calculation, Mr. Shoumali owed her approximately $190,000 and that her calculations were contained in a document. While the family proceeding proceeded quickly, there would have been more than sufficient time from when she was served with the application in October 2018 to calculate the amount owed and make her own claim before the April 5, 2019 deadline imposed by Justice Shelston to amend her claim. The evidence upon which the claim is based consists of Ms. Telatin’s own bank records and there is no evidence that these could not have been obtained with the exercise of reasonable diligence.
ISSUE 3 – Should the Court refuse to apply res judicata as a matter of discretion?
[35] Where the requirements of res judicata are met, the court must consider whether to apply the doctrine as a matter of discretion.[^16] Ms. Telatin urges the Court to exercise its discretion and decline to apply it. She relies on the fact that the purpose of the family proceeding was to determine Angelica’s residence, that the matter proceeded quickly to trial, that the application of res judicata would cause her an injustice, and that she clearly stated in the family proceedings that she would decide whether to pursue the issue of the unreturned money at a later time.
[36] The breadth of a court’s discretion depends on whether the prior decision originates from an administrative tribunal, or from a court. In Danyluk, the Supreme Court held that where the defence of res judicata is raised in the context of prior court proceedings, as is the case here, the discretion must be very limited in its application.
[37] I recognize that applying the doctrine bars Ms. Telatin from pursuing a claim for a significant amount of money. However, I decline to exercise my discretion to relieve against the operation of res judicata for three reasons. First, there is a strong societal interest that parties to a family proceeding present all their claims for adjudication at the same time. In Huisman, this court emphasized the importance of finality in family law proceedings:
It seems to me that it would be contrary to societal interests and contrary to public policy to allow one spouse to claim damages against the other for conduct suffered during their marital relationship following the final disposition of all claims which were or ought to have been presented to the court for resolution upon the breakdown of the marriage. Other than for changed circumstance relating to custody of children and spousal and child support, when the parties come to a settlement or a court issues a final order, each party should be free to get on with his or her life, free from any further claims based on misconduct during the marriage. Claims for damages for abuse suffered during the marriage is a developing area in the law, and if such claims exist, they should be adjudicated upon as part of a final determination of all claims between the parties. A divorced or long-time separated spouse should not have to re-litigate a historical claim for damages for alleged misconduct during the marital relationship after that relationship has been terminated and all recognized claims at law finally resolved.
[38] Secondly, Ms. Telatin directly raised the issue of the unreturned funds as an answer to Mr. Shoumali’s claim for spousal support. Justice Summers allowed Ms. Telatin to raise the issue but determined that she did not meet her burden of proof. Mr. Shoumali risked having his claim for spousal support dismissed, and he would have been bound by Justice Summers’ determination if it had gone the other way. It would be unfair to allow Ms. Telatin to raise this issue once more and allow her “a second kick at the can”.
[39] Thirdly, allowing this action to proceed would result in duplicative and potentially inconsistent court proceedings. This action is grounded on the same evidence that was presented in the family proceedings. That evidence consumed a substantial portion of the family trial. There is a societal interest in minimizing the costs of ongoing litigation and sparing scarce judicial resources.[^17]
[40] It is not necessary to determine if Ms. Telatin’s claim constitutes an abuse of process given my conclusions above.
DISPOSITION
[41] Mr. Shoumali’s motion for summary judgment is granted. If the parties cannot resolve the issue of costs, they may seek further directions on costs submissions from my office within the next 30 days.
Master Kaufman
Date: July 30, 2021
[^1]: Hryniak v. Mauldin, 2014 SCC 7, [2014] 1 S.C.R. 87, at para. 49. [^2]: R. v. Mahaligan, 2008 SCC 63, [2008] 3 S.C.R. 316, at para. 108. [^3]: Mahaligan para. 106. [^4]: Holmstead and Watson: Ontario Civil Procedure (Toronto: Carswell), Commentary on Rule 21, R.21§17. [^5]: Mahaligan at para. 106. [^6]: Holmstead and Watson, Commentary on Rule 21, R.21§17. [^7]: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 SCR 460, at para 25, citing Angle v. Ministry of National Revenue, 1974 168 (SCC), [1975] 2 S.C.R. 248. [^8]: McIntosh v. Parent, 1924 401, [1924] 4 DLR 420, at 422. [^9]: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, at para 54. [^10]: Henderson v. Henderson, (1843) 3 Hare 100, (Ct. of Chancery), p. 319. [^11]: Hoque v. Montreal Trust Co. of Canada, 1997 NSCA 153, [1997] N.S.J. No. 430 at para. 37. [^12]: Courts of Justice Act, R.S.O. 1990 s. C43, s. 21.9 [^13]: Kerr v. Barranow, 2011 SCC 10, [2011] S.C.R. 269, at para 31-32 and 58. [^14]: Huisman v. Black, 2000 22734, [2000] O.J. No. 3243 (Ont. Sup. Ct.), at paras. 16-18. [^15]: Lee v. Lee, 2010 ONSC 4524. [^16]: Danyluk, at para. 33. [^17]: Watson v. Watson, 2020 ONSC 6791 at para. 21.