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CIVIL PROCEDURE - Estoppel by record (res judicata) - Issue estoppel

Friday, September 06, 2019 @ 6:33 AM  

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Motion by the defendant law firm for summary judgment to dismiss two actions against it. The plaintiffs in both actions alleged the defendant was negligent in its representation of them in a civil fraud trial by failing to raise the rule in Foss v. Harbottle as a defence. They raised no other allegations of negligence against the defendant. The plaintiffs were found liable in the fraud action in 2014. The Court of Appeal upheld the findings of liability against the plaintiffs and rejected the argument that the rule in Foss v. Harbottle applied to the facts of the fraud action. The Supreme Court of Canada dismissed the plaintiffs’ application for leave to appeal a decision dismissing their second motion for reconsideration.

HELD: Motion allowed. The plaintiffs’ claims were barred by the doctrine of issue estoppel. The finding by the Court of Appeal in the fraud action that the rule in Foss v. Harbottle was not applicable created an estoppel against the plaintiffs from raising the issue in their claims against the defendant. There was sufficient privity for the doctrine of issue estoppel to apply. The plaintiffs could not amend their claims as the limitation period to add new claims had clearly expired. The plaintiffs’ claims were discoverable by the time they were found liable in 2014.

Shtaif v. Stevensons LLP, [2019] O.J. No. 3875, Ontario Superior Court of Justice, J.M. Copeland J., July 22, 2019. Digest No. TLD-September22019011