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

Thursday, May 20, 2021 @ 6:17 AM  


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Appeal by the plaintiffs, Qin and Cenith Air, from an order striking their claim against the defendants, the Ontario Securities Commission (OSC) and other individuals. In 2015, the OSC froze the assets of the appellants and related companies and commenced enforcement proceedings. A judge ordered continuation of the freeze order. In 2016, a panel of the OSC dismissed the allegations and directed that the freeze order be lifted. Two years later, the appellants commenced litigation against the OSC and three employees seeking damages for malicious prosecution. The respondents moved to strike the claim on the basis that the judicial continuation of the freeze order prior to dismissal of the allegations estopped the appellants from proving the respondents acted without reasonable and probable cause. The motion judge agreed and struck the claim with leave to amend to plead facts that were not before the judge who continued the freeze order. The plaintiffs appealed.

HELD: Appeal allowed. The issue determined on the motion to continue the freeze order was not the same issue to be determined in the appellants’ claim that the respondents lacked reasonable and probable cause to initiate proceedings against them. The existence of a serious issue to be tried for the purpose of continuing the freeze order was a lesser standard than a prima facie case and qualitatively different from the standard of reasonable and probable cause. The serious issue to be tried standard did not require consideration of the merits. Nothing determined by the judge who continued the freeze order precluded the appellants from arguing the OSC lacked reasonable and probable cause for the proceedings against them. The order striking the claim was set aside and the matter was remitted to the Superior Court.

Qin v. Ontario (Securities Commission), [2021] O.J. No. 1355, Ontario Court of Appeal, D.H. Doherty, S.E. Pepall and J.A. Thorburn JJ.A., March 18, 2021. Digest No. TLD-May172021008