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

Friday, November 01, 2019 @ 6:20 AM  

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Appeal by the defendant Meyn Canada from summary judgment dismissing its third-party claim against the respondent Weishaupt Corp. as statute barred. The plaintiff sued the appellant for damages resulting from a 2004 fire at its poultry processing plant in an Alberta action commenced in 2004 and an Ontario action commenced in 2006. An issue respecting forum conveniens arose in the Alberta action. That issue was decided in 2008 and the Alberta action was dismissed. The appellant did not plead in the Ontario action until the forum issue was decided. In 2008, just over two years and eight months after the Ontario claim was served on it, the appellant issued third party claims in the Ontario action against Allied Boiler and the respondent. In 2010, the third-party claim against Allied was dismissed for failure to bring the claim within two years from the discovery of the claim. The appellant did not oppose the motion. The Allied motion judge decided that the two-year limitation period in s. 18 of the Limitations Act was not subject to the discoverability criteria in s. 5. In 2017, the respondent moved to have the third-party claim against it dismissed as statute barred. The motion judge dismissed the claim based on issue estoppel. He held the appellant was precluded by the doctrine of issue estoppel or abuse of process from relitigating the same question that had been decided earlier in the Allied motion. The motion judge based his conclusion that issue estoppel applied on the fact that the respondent was a party to the third-party action against Allied and Weishaupt, even though it was not a party to the Allied motion to strike the claims against Allied.

HELD: Appeal dismissed. The motion judge erred in applying the doctrine of issue estoppel or abuse of process, but the third-party claim was out of time based on discoverability. The motion judge erred in finding that because the respondent was a party to the proceeding in which the Allied motion was brought, the respondent would be affected by the Allied motion judge’s decision and therefore issue estoppel applied. The respondent was not, however, a party to the Allied motion. It was also unfair to the appellant to bind it to a decision from another motion that it chose not to dispute, brought by another party. The motion judge erred in the exercise of his discretion by applying the doctrine of abuse of process because by the time the motion was argued, the law with respect to s. 5 and s. 18 of the Limitations Act had changed since the Allied motion in 2010. It was unfair to the appellant to essentially penalize it for not participating in the Allied motion. Because the law with respect to s. 18 and s. 5 of the Limitations Act was unsettled when the Allied motion was heard, the appellant was entitled to argue that discoverability principles should be applied. It was not legally appropriate for the appellant to wait for the forum dispute to be resolved before commencing its third-party claim. While risk of attornment was a potentially legitimate concern for the appellant, that concern did not affect the discoverability of its third-party claim and the need to take the steps necessary to preserve the claim within the limitation period. To allow parties to wait, at their discretion, for other court or arbitral proceedings to conclude, where the result could obviate the need to bring a claim that they knew existed, was inconsistent with the purpose of the Limitations Act. The day the appellant was served with the statement of claim, it knew it had a third-party claim against the respondent.

Lilydale Cooperative Ltd. v. Meyn Canada Inc., [2019] O.J. No. 4902, Ontario Court of Appeal, K.N. Feldman, L.B. Roberts and J.M. Fairburn JJ.A., September 30, 2019. Digest No. TLD-October282019013