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April 2018BRITISH COLUMBIA EDITION

INSIDE THIS ISSUE:

Foreign Judgments; Court Order Enforcement Act; Jurisdiction; Ponzi Schemes ~ With Counsel Comments

Torts; Defamation; Damages; Aggravated Damages; Special Costs

Indian Residential Schools Settlement Agreement; Adjudication; Judicial Recourse ~ With Counsel Comments

Family Law; Relocation; Appeal to BC Supreme Court; Fresh Evidence

Abuse of Process; Res judicata; Estoppel; Property Development; Breach of Contract ~ With Counsel Comments

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In 2001 the Respondent, David Dill, advanced loans to three companies incorporated by a Doris Nelson in British Columbia. Nelson is now serving a

prison sentence for fraud in the USA. She received approximately $137 million from various individuals through corporate entities in Canada and the USA, in what appeared to be a Ponzi scheme. The Respondent continued to advance funds to the BC companies until 2008. He received over $1 million in interest and other fees, in addition to receiving his principal back. Between January 2006 and May 2011, the three BC companies were dissolved. On July 21, 2009, Nelson’s company the Little Loan Shoppe (“LLS America”) in the USA sought bankruptcy protection. A notice of bankruptcy was filed in Washington Bankruptcy Court. The Respondent filed a proof of claim, but the debtor named in his claim was LLS America and not the BC companies. The Appellant, Bruce Kriegman, who was the court-appointed trustee of LLS America, rejected the Respondent’s proof of claim. In July 2011, the Appellant filed an “Adversary Complaint” in the bankruptcy proceeding against several defendants including the Respondent. The Complaint alleged that the defendants were transferees

Kriegman v. Dill, 2018 BCCA 86Areas of Law: Foreign Judgments; Court Order Enforcement Act; Jurisdiction; Ponzi Schemes

~Courts should exercise deference to foreign judgments made by courts having jurisdiction, and should apply available common law defences narrowly~

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April 2018


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Kriegman v. Dill, (cont.)

of fraudulent transfers and that they were being paid for inducing others into investing in what they knew or should have known was a Ponzi scheme. The Respondent was represented by an attorney, Mr. Jackson, in the proceedings.

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After more than two years of court proceedings and correspondence, the Washington District Court held that it had jurisdiction over all defendants in the matter, that Washington state law governing the fraudulent transfers applied, that Nelson’s companies had operated a Ponzi scheme and had been insolvent at the time of each of the transfers of funds to them, that her companies had made false and misleading statements to investors, and that payments received from the companies were recoverable from each defendant including the Respondent, subject to the defence of good faith. The Court further found that the Respondent did not appear at or participate in trial or offer any evidence, and so had not met the burden of establishing that he had acted in good faith. Mr. Jackson had accepted substituted service on the Respondent after the District Court required him to either withdraw as counsel within 10 days or accept service of process on behalf of the Respondent. The BC Supreme Court granted a motion for ex parte registration of the judgment in BC. Through new counsel, the Respondent applied to set aside the registration order, stating that he had never been personally served with any originating process, is a Canadian citizen, did not operate a business in the USA, executed all documents in Canada, and sent all funds to Canadian entities. The chambers judge hearing the application to set aside registration found that the Appellant failed to disclose the fact that personal service on the Respondent had not been made. He set aside the ex parte order and declined to grant the registration order de novo on the basis of several defences under the Court Order Enforcement Act; including that the Respondent was under duress from the Bankruptcy Court to accept service, and that the order impacted his right to choose counsel.

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The appeal was allowed. The Court of Appeal found that the Respondent was not forced to choose another attorney, but was rather given a

choice regarding how to proceed. The Court also found that the chambers judge failed to apply the Supreme Court of Canada decisions in Beals v. Saldanha and Chevron Corp. v. Yaiguaje, both of which indicate a deferential approach to foreign judgments made by courts having jurisdiction. Beals also stands for the proposition that the defences available at common law to a defendant in contesting the recognition or enforcement of a foreign judgment are narrow in both application and scope. The Court directed the registration of the judgment against the Respondent.


APPELLATE DECISION

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COUNSEL COMMENTS

Counsel Comments provided by

Ken McEwan, Q.C., and David McEwan, Counsel for the Appellant

“The most important aspect of the Court of Appeal’s

judgment in this case is that the Court stated – firmly, and clearly – that Part II of Court Order Enforcement Act – and specifically the defences to registration of foreign judgments in s. 29(6) - is informed by the principles of private international law that govern the enforcement of foreign judgments as established by the Supreme Court of Canada in Morguard Investments Ltd. v. De Savoye, Beals v. Saldanha, and Chevron Corp. v. Yaiguaje. Statutory defences to the registration of foreign judgments under Part II should not be interpreted in a manner inconsistent with those decisions. This can be further distilled to what I consider the three key

Kriegman v. Dill, 2018 BCCA 86

principles that govern the enforcement of foreign judgments in British Columbia.

The first principle is that comity is a flexible concept and the courts will take a generous and liberal approach to the enforcement of foreign judgments, as most recently

affirmed by the SCC in Chevron v. Yaiguaje. The Court of Appeal’s judgment in the present case is to be read as affirming that the courts of this province should adopt a similar approach when considering whether or not a judgment of a reciprocating court (as established under the regulations to the Court Order Enforcement Act) should be registered as a judgment of this province. As a practical matter, what this means for counsel attempting to set aside the registration of a foreign judgment is that they should be

Ken McEwan, Q.C. David McEwan

April 2018


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COUNSEL COMMENTS


prepared to meet a high bar. Conversely, counsel defending the registered judgment ought to emphasize – from the outset – that generous enforcement advances the objectives of the doctrine of comity, particularly the quest for finality.

The second key principle, which dovetails with the first - is that defenses to the registration of foreign judgments as set out at s. 29(6) of the Act are narrowly construed. A judgment creditor is not entitled to re-litigate the merits of the underlying litigation. The narrow reading to be given the defences to enforcement extends to s. 29(6)(g) of the Act, which provides a bar to registration where the judgment creditor “would have a good defence if an action were brought on the judgment”. The Court of Appeal accepted that s. 29(6)(g) could be read as being broader than the common law defense of denial of natural justice. Nonetheless, s. 29(6)(g) had to be interpreted in a manner consistent with the trilogy of Supreme Court decisions referred to above. The purpose of Part II of the Act is not to “alter the rules of private international law” but rather to provide a more convenient procedure for the recognition and enforcement of foreign judgments. This effectively disposes of any remaining uncertainty in the law of British Columbia that section 29(6)(g) can be used as a staging ground for a collateral attack on the merits of the foreign judgment at issue.

The argument put forth by the respondent – an argument that was accepted in the court below – was that a procedural order granted by the District Court of Eastern Washington had been misinterpreted and led to that court wrongly assuming jurisdiction over certain companies, and eventually, over the respondent. The Court of Appeal was critical of this line of reasoning, and the expansive view of the s. 29(6)(g) defence that was adopted by the court below, noting that a more “non-invasive” and “deferential” approach was appropriate given the narrow scope of the defences established in, inter alia, Chevron.

The third key principle, and the most significant, is that a court considering whether or not to set aside a registration of a foreign judgment under Part II of the Court Order Enforcement Act is engaged in a limited exercise of jurisdiction. The



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COUNSEL COMMENTS


merits have been decided. In this case, the Court of Appeal said it was an error for the chambers judge to undertake a thorough review of the underlying litigation – including a close examination of procedural orders - that gave rise to the judgment debt. The Court of Appeal twice referred to statement made by the Supreme Court in Chevron that: “legitimate judicial acts should be respected and enforced, not sidetracked and ignored.” The Court of Appeal found that in failing to do so the chambers judge had committed a reversible error of law. Counsel would be well advised to tailor their arguments so as to fit this narrow view of jurisdiction.”

April 2018


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The Respondent, Altaf Nazerali, is a prominent Vancouver

businessman. The Appellant, Deep Capture LLC, began publishing articles concerning the Respondent on its website in April 2011. The Appellants Mark Mitchell and Patrick Byrne were the author and editor of the articles, respectively. The Respondent took the position that the articles were defamatory and sued. The articles stated that the Respondent was engaged in criminal activities, had ties to organized crime, and was involved in arms and drug dealing. The Respondent communicated via email and telephone with Mitchell in September 2011. Mitchell said that if the Respondent would act as a source for him, he would remove the Respondent’s name from the website. Mitchell later told Byrne in writing that he intended to put the Respondent “back in the story” after receiving information from him.

Nazerali v. Mitchell, 2018 BCCA 104Areas of Law: Torts; Defamation; Damages; Aggravated Damages; Special Costs

~Except in a case explicitly found to be exceptional, an award of aggravated damages should not exceed the amount awarded as general damages~


The matter went to trial, where the Appellants argued that the words in the articles were not defamatory. They also asserted the defence of justification, maintaining that what they had published was true, and they sought to rely on fair comment and responsible communication as defences. They further raised a constitutional argument, submitting that in order to conform to the Canadian Charter of Rights and Freedoms the defence of justification should require a plaintiff to prove the falsity of the defendant’s statements. The trial judge did not accept the constitutional argument. He noted that as the Appellants did not call any evidence of their own, they were required to prove the truth of their words using the Respondent’s evidence. The Respondent’s credibility was not damaged during a lengthy and aggressive cross-examination. The defence of fair comment was not made




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out, as the judge found the words in question were statements of fact and that the Appellants had conducted themselves with express malice when publishing the articles. The defence of responsible communication was without merit, as no attempt was made to contact the Respondent prior to publication. The Appellants argued that the Respondent had a bad reputation prior to publication of the articles, and so was disentitled to an award of damages. The judge did not accept this argument. The judge ordered $400,000 in general damages, $500,000 in aggravated damages, $250,000 in punitive damages and $55,000 in special damages. He further made a permanent injunction restraining publication on the Internet or elsewhere of any defamatory words concerning the Respondent. The parties made written submissions on costs, and the judge awarded the Respondent special costs.

The appeal was allowed in part. The Appellants appealed on several of the substantive findings in the decision, and on the damages assessment and the

special costs award. The Court of Appeal dismissed most grounds of the appeal in brief reasons. However, the Court did vary the damages award. In so doing, the Court noted that an appellate court will only interfere with a damage award if it is inordinately high or a wholly erroneous estimate of the damage suffered. On the question of punitive damages in defamation cases, the appellate court must ask itself whether the defendant’s conduct was so outrageous that punitive damages were rationally required to act as a punishment or deterrent. The Court found the punitive damages award in this case “on the high side” but not inordinately so. In assessing aggravated damages, the trial judge had considered the Respondent’s humiliation and anxiety since the articles were published.

Nazerali v. Mitchell, (cont.)

APPELLATE DECISION

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Nazerali v. Mitchell, (cont.)

He noted that the Respondent’s health had suffered, and he had trouble sleeping. The Court of Appeal found the $500,000 aggravated damages award inordinately high. The only authority the judge referred to on the question of aggravated damages was Hill v. Church of Scientology of Toronto, which was a jury award subject to a more stringent standard of review. Hill was also an extraordinary case. Except in a case explicitly found to be exceptional, an award of aggravated damages should not exceed the amount awarded as general damages. This principle is borne out in the case law. The Court reduced the aggravated damages award to $200,000. The Court also allowed the appeal in part on the permanent injunction, varying it so that it enjoined the Appellants from publishing on the Internet or elsewhere the words the trial judge had found to be defamatory in his reasons for judgment.

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N.N. v. Canada (Attorney General), 2018 BCCA 105Areas of Law: Indian Residential Schools Settlement Agreement; Adjudication; Judicial Recourse

~The Indian Residential Schools Settlement Agreement contemplates supervisory judicial intervention only where exceptional circumstances are present~

The Appellants, NN and NR, made unsuccessful claims under the Indian Residential Schools Settlement Agreement (“IRSSA”), through

its Independent Assessment Process (“IAP”). They submitted Requests for Direction (“RFD”) in the BC Supreme Court. A judge of that Court dismissed the RFDs. In the NN case, NN’s counsel had applied for the Adjudicator to recuse himself on the grounds of actual or reasonably perceived bias. He alleged that the Adjudicator had subjected NN to improper cross-examination, leading questions, and offensive language. The Adjudicator declined to do so in an interim ruling. He found, in part, that the transcript on which the allegation of bias was based was not accurate. He then dismissed NN’s claim on the basis that NN had failed to prove he was sexually abused in the residential school system. Requests for review and re-review as provided by the IAP were dismissed. The Review Adjudicator noted that the IAP model permits leading questions, and in some cases they are required. In the NR case, the Adjudicator found that the janitor described as having sexually abused NR did not work at the residential school when NR attended. NR’s review of the dismissal of her claim was also dismissed. Prior to her re-review, she asked the Government of Canada to update the research on the janitor. An updated report indicated that it was believed the janitor was at the school from the early 1960s until 1985. This meant he might have worked there at the time NR was at the school. The re-review adjudicator said he had no authority to consider the new evidence. He said that NR could apply to the Supervising Court for direction. The judge dismissed both NN’s and NR’s RFDs on the basis that there were no exceptional circumstances permitting recourse to the Supervising Court. In the case of NN, she said that an allegation of bias does not by itself constitute exceptional circumstances. Rather, there must be some error in the way the Chief Adjudicator handled the allegation on review that amounted to a fundamental breach of the rules of natural justice. In the case of NR, the judge indicated that



April 2018


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N.N. v. Canada (Attorney General), (cont.)

APPELLATE DECISION

NN’s appeal was dismissed, while NR’s was allowed. The Court of Appeal began with the principle that a supervising judge’s interpretation of the

IRSSA is a question of mixed fact and law reviewable only for palpable and overriding error. NN argued that the “exceptional circumstances” test as set out in the Ontario Court of Appeal decision in Fontaine v. Duboff Edwards Haight & Schachter should not replace the law of contract to which parties to the IRSSA are subject. The majority found that it did not, but rather was a cohesive articulation of the parties’ intentions as embodied by the IRSSA. The judge’s interpretation of the contract was subject to the palpable and overriding error standard of review. Comity among the various Supervising Courts across the country is also important. There was no palpable and overriding error in how the Chief Adjudicator handled NN’s allegation of bias. NN also raised a s. 15 Charter argument on appeal. The majority noted that the Court will not generally entertain a Charter argument raised for the first time on appeal and declined to consider it. In her appeal, NR alleged that the judge erred in fact and law when she held that the issue raised did not constitute exceptional circumstances. Although significant deference was owed on appeal, the majority found that the judge erred by misapprehending the new evidence from Canada. Given the reasonable probability the new information would have affected the result, it met the exceptional circumstances test.

she did not view it as reasonably probable that if the additional information about the janitor had been available to the original Adjudicator, the result would have been different. She further found, without referring to any examples, that the Adjudicator had many other concerns about the reliability of NR’s evidence.



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Hunter JA dissented. He would have dismissed both appeals. In his view, exceptional circumstances were limited to circumstances in which the failure of the IAP process was so manifest that judicial recourse was necessary to protect the integrity of the settlement agreement. He gave by way of example a hypothetical situation in which the Chief Adjudicator decided to cancel all re-reviews to save money. He did not consider the existence of new information that would reasonably be expected to change the result of an adjudication an exceptional circumstance.

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COUNSEL COMMENTS


David Wu, Counsel for the Intervenor, the Chief Adjudicator

“N . N. is an appeal from what is known as the “Bundled RFD”, which

in my view is the seminal case for “judicial recourse” RFDs – where claimants look to the courts for additional levels of redress where they are unsuccessful in the IAP internal review processes below. The number of judicial recourse RFDs since Bundled continues to grow resulting in a distinct body of law that the courts have developed in the past couple years. This body of law sits at an interesting and largely unexplored intersection between administrative law, contract law, and class action law.

Bundled endorsed the “Schachter” threshold, which limited judicial interference to IAP adjudication decisions only in rare or extraordinary circumstances. The BCCA now joins the Ontario Court of Appeal in “Spanish” (2017 ONCA 26) and the Manitoba

Court of Appeal in “Reo” (2017 MBCA 54) in affirming the Schachter test.

However, as Mr. Justice Hunter’s dissent shows, while it may be easy to agree on a threshold, it can be much more difficult in giving substance to that threshold and apply it to particular circumstances.

These same issues – the appropriateness of Schachter test and how it should be applied – will be squarely at issue before the Supreme Court of Canada, as leave to appeal was granted in Reo (2018 CanLII 4682 (SCC)). I expect that N.N. will be thoroughly discussed and play a critical role at the hearing – which may occur as early as this Fall. (There is also a chance that N.N. itself will be appealed, and if so, it may become a companion case with Reo at the SCC.)

N.N. v. Canada (Attorney General), 2018 BCCA 105

David Wu



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COUNSEL COMMENTS


N.N. will also likely get play in the upcoming BCCA appeals (there are three) of the “Procedural Fairness RFD” (2018 BCSC 63), which held that procedural fairness is not an applicable ground to re-open IAP cases. While the majority of the Court in N.N. refrained from commenting much on the decision (see para. 66), it appears to me that redressing “unfairness” was a critical justification for reopening N.R.’s case (see para. 93). It will be interesting to see how the BCCA will reconcile these two decisions.

It is curious that now, at the very tail end of the IAP, when 99% of all IAP claims have been resolved (at last count, 37,582 out of 38,098 claims), that we are getting such a substantial body of law about the IAP.”

April 2018


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Kane v. Proffitt, 2018 BCCA 106Areas of Law: Family Law; Relocation; Appeal to BC Supreme Court; Fresh Evidence

~Sections 233 and 234 of the Family Law Act do not authorize the Supreme Court to make an interim order that effectively changes the order under appeal before the appeal is determined~

The Appellant, Paul Kane, and the Respondent, Melanie Proffitt, are the parents of a child born in 2007. The parties separated when the child,

who has special needs, was 18 months old. A 2010 Provincial Court order awarded the parties joint custody and guardianship of the child, with primary care and residence to the Respondent. In May 2014, the Respondent gave the Appellant written notice of her proposed relocation from Vancouver to the Okanagan. Her new partner had secured a job for her there, and her plan was to live with him and his daughter. The new job would provide a significant increase in income for the Respondent. On June 9, 2014, the Appellant filed an application in the Provincial Court for an order prohibiting the Respondent


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Kane v. Proffitt, (cont.)

from relocating the child. During a four-day trial, both parties called evidence regarding the strength of their relationships with the child, as well as the circumstances and supports available in each location for the child. The trial judge expressed concern about the lack of objective medical

evidence regarding the potential impact the relocation might have on the child, as well as whether there would be medical and educational services in place in the new location to meet the child’s needs. The judge further indicated that it would have been helpful if the Respondent’s new

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partner had testified about his relationship with the child, and noted that there had been no independent assessment of the child’s views of the move. The judge concluded that the Respondent had not tendered sufficient evidence to establish that the proposed move would enhance the child’s quality of life in accordance with the objective criteria of good faith listed in the Family Law Act. It was not in the best interests of the child to relocate. The Respondent appealed to the BC Supreme Court. The appeal judge found that the trial judge erred in failing to obtain a views of the child report when he had expressed the view that such a report would have assisted his decision. The judge persuaded the parties that a report should be prepared, and that new evidence should be adduced about events following the conclusion of the evidence in the Provincial Court hearing. Neither party had brought a motion to adduce fresh or new evidence. Such new evidence was then admitted by consent of the parties, without any analysis by the judge regarding its admissibility. At the conclusion of the hearing in December 2015, the judge pronounced an interim order that the child would relocate with his mother to the Okanagan until further order of the court, that


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The appeal was allowed. The Appellant argued that the judge erred in law in admitting new evidence and effectively conducting a trial de novo, in

making an “interim order” authorizing the relocation without making a final determination in the appeal, in setting aside the trial judge’s order without identifying a material error in his analysis, and in failing to make certain considerations required under the Family Law Act. The Appellant further argued that the appeal judge erred in fact when he found that the child was unhappy living with the Appellant. The Court of Appeal found the judge erred in law by creating a new evidentiary record upon which he made his own findings of fact to support making a different decision than the trial judge did, after accepting that the inferences that judge drew were open to him to make and in the absence of any material error. The judge also erred in his application of ss. 233 and 234 of the Family Law Act, as those provisions do not authorize the Supreme Court to make an interim order subject to review, which effectively changes the order under appeal before the appeal is determined.

APPELLATE DECISION

at the conclusion of the school year a supplementary views of the child report would be completed, and that in August 2016 the judge would receive further evidence and submissions, and would then make a final order in the appeal. The parties had not requested an interim order and had no opportunity to make submissions on it. The judge indicated that he had not quashed, stayed or suspended the earlier order, although the two appeared in conflict. The judge made a final order in August 2016 allowing the appeal and setting aside the trial judge’s order. In so doing, he noted that because of the new evidence he was in a better position than the trial judge was to assess the child’s best interests.

April 2018


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Pan Afric Holdings Ltd. v. Athabasca Holdings Ltd., 2018 BCCA 113Areas of Law: Abuse of Process; Res judicata; Estoppel; Property Development; Breach of Contract

~Where cause of action estoppel is pleaded, the focus of the inquiry is on whether the material facts on which the determinations sought in any two actions are the same~

In 1989 the Appellant, Pan Afric Holding Ltd., and the predecessor of the Respondent, Athabasca Holdings Ltd., entered into a contract regarding

the development of adjoining parcels of land in Burnaby. The Respondent purchased the southern parcel from its predecessor in 1991, and was assigned all its rights and obligations under the 1989 agreement. Some phases of development occurred, including the construction of a commercial building on the southern parcel and a hotel owned by Pan Afric on the northern one. The Executive Inn Hotels General Partnership is the other Appellant in this matter. In August 2000, the parties applied jointly to the City of Burnaby to rezone the combined site. The application contemplated re-subdivision and a land exchange between Pan Afric and the Respondent. It also contemplated construction of a 13-storey tower on a portion of the southern parcel that was subject to a height restriction in the 1989 agreement. The parties entered into agreements in 2003 and 2007. The 2007 agreement required the parties to do all things reasonably necessary to achieve rezoning, complete subdivision and a further land swap, obtain development approvals, and wind up the strata on the property. Burnaby tabled the application in July 2010. In February 2013, the Respondent listed its property for sale. In April 2013 the Appellants started an action against the Respondent for breaching the 2007 agreement. They claimed specific performance of the 2007 agreement and a 2011 memorandum of understanding. In November 2014, the Appellants commenced another action. They claimed various torts arising from an assertion that the Respondent failed to assume the obligations of its predecessor under the 1989 agreement. The pleadings in the second action did not refer to the 2007 agreement. The first action was settled in January 2016. The parties agreed to make a new application for redevelopment, materially identical to the earlier application, and to extend the terms of the 2007 agreement to June 21, 2029. A consent order provided that the 2007 agreement remained in force and the other relief claimed was dismissed. Neither the





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Pan Afric Holdings Ltd. v. Athabasca Holdings Ltd., (cont.)

settlement agreement nor the consent order referred to the 1989 agreement or the second action. In March 2017 the Respondent applied to strike the second action on the basis that it was subject to cause of action estoppel, issue estoppel or abuse of process. The chambers judge applied the four criteria of action estoppel. The consent order was a final order, and the parties were the same. The judge rejected the Appellants’ submission that the two actions were separate and distinct because the first action claimed breach of the 2007 agreement while the other one claimed torts arising from the first agreement. He characterised the basic issue in both actions as “the mutual development and use of the lands”. The judge found the fourth criterion satisfied because the Appellants could have amended their claim in the first action before settling it. He concluded that the second action was barred by res judicata.

The appeal was allowed. The Appellants argued that the judge erred in finding that the causes of action in the two actions were the same, by

considering the “basic issue” of the actions rather than the facts giving rise to them. They further argued that the judge failed to consider whether the consent order in the first action necessarily determined the validity of the 1989 agreement and the question of what restrictions applied to the southern parcel of land. They submitted that the judge failed to consider whether it was fair in all the circumstances to bar the second action and relied on inconsistencies between the two contracts that could not be reconciled. The Court of Appeal found that the chambers judge erred in determining the second action was barred by res judicata. His broad characterization of the facts did not reflect the true nature of the material facts and issues in each action, and was not supported by the authorities. The focus of the inquiry is on whether the material facts on which the determinations sought in any two actions are the same. They were not in this case. Further, because he did not view the two actions as separate and distinct, the chambers judge conflated the third and fourth criteria for cause

APPELLATE DECISION

April 2018


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of action estoppel when he found that the cause of action in the second action could and should have been argued in the first. Issue estoppel also did not arise because there was no basis on which to conclude that the issues in the second action regarding the obligations under the 1989 agreement were decided by the settlement agreement and consent order in the first action. Nor were the two agreements inconsistent. It cannot be an abuse of process to allow the Appellants to seek declarations regarding their existing rights under the 1989 agreement.

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COUNSEL COMMENTS


Ken McEwan, Q.C. and Owen James, Counsel for the Appellants

“The Court of Appeal’s recent decision in Pan Afric

Holdings Ltd. v. Athabasca Holdings Ltd. does not forge new ground in the law of cause of action estoppel. It does, however, serve as a reminder that the doctrine will only be applied where the criteria necessary for its application are established.

At issue in Pan Afric was whether the third criterion articulated in Cliffs Over Maple Bay (Re) for cause of action estoppel – that the cause of action and the prior action not be separate and distinct – was made out.

The chambers judge found the actions at issue were not separate and distinct because, although dealing with separate

Pan Afric Holdings Ltd. v. Athabasca Holdings Ltd., 2018 BCCA 113

contracts, they addressed a basic (and common) issue: the development and use

of the same parcel of land.

On appeal, the court held that such an overlap in issue did not determine whether the actions were separate

and distinct. The court clarified that in determining if actions are separate and distinct, the court must look to whether the material facts on which the determinations sought in any two actions are the same. In overturning the chambers judge’s finding that cause of action estoppel applied, the court held that “simply because the Actions both relate to the development and use of the lands does not give rise to cause of action estoppel unless the factual situation that entitles one to a remedy is the same in each Action.”

Ken McEwan, Q.C. Owen James

April 2018


PB

25

COUNSEL COMMENTS


The decision provides welcome guidance. That two causes of action in the broadest sense relate to what is characterized as a common issue should not give rise to cause of action estoppel. Separate and distinct causes of action can often be said to have a generic common issue – separate motor vehicle accidents will have in common that the plaintiff suffered injuries and distinct contractual disputes will often have in common the type of business or transaction underlying those contracts. This type of generic commonality does not meet the test of cause of action estoppel. Such a broad stroke approach in applying the doctrine would work an injustice and result in the doctrine being applied where, like in the underlying case, the criteria from Cliffs are not established.

The chambers judge also found the second action to be an abuse of process, a doctrine that has increasingly become a means of counsel attempting to shore up a res judicata argument. The Court of Appeal’s analysis of that issue turned largely on factual errors made by the chambers judge in reconciling the relief sought in the two actions, and for this reason likely has less precedential value.”



PB

26

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