Ontario Court Of Appeal Summaries (April 29 – May 3, 2019)

Good evening.

There were five substantive civil decisions released by the Court of Appeal for Ontario this week.

The most notable was The Catalyst Capital Group Inc. v. VimpelCom Ltd. In perhaps the final installment of the litigation stemming from Catalyst's attempted purchase of Wind Mobile in 2014, the Court found that Justice Hainey did not err in striking the claims on a pleadings motion on the basis of issue estoppel and abuse of process. Related issues had already been determined by Justice Neubould in a prior action in The Catalyst Capital Group Inc. v Moyse, 2016 ONSC 5271, from which an appeal had been dismissed in 2018 ONCA 283.

In Amyotrophic Lateral Sclerosis Society of Essex County v. Windsor (City), the Court determined that the deemed undertaking does not shield from disclosure to the defendants that names of class members who opted out of the class.

In Canadian National Railway Company v. Crosslink Bridge Corp., the Court upheld the dismissal, by way of summary judgment, of a negligence claim against a real estate lawyer regarding the purchase of land that was subject to an MOE order.

In 2089322 Ontario Corporation v. Des Roches, the Court allowed an appeal to permit a party to challenge the authenticity of a document in a contractual dispute.

Finally and unfortunately for all of us, in Howard v. Attorney General of Canada, the Court determined that those of us who live in Canada are subject to federal and provincial laws, and therefore we had no choice but to file and pay taxes earlier this week.

Have a nice weekend.

John Polyzogopoulos Blaney McMurtry LLP 416.593.2953 Email CIVIL DECISIONS

The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354

[Tulloch, Benotto and Huscroft JJ.A.]

Counsel:

J. E. Callaghan, B. Na, M. Karabus, and D. C. Moore, for the appellant

O. Pasparakis and D. Urquhart, for the respondent VimpelCom Ltd.

J. D.G. Douglas, C. R. Sainsbury, and G. Splawski, for the respondent Globalive Capital Inc.

D. S. Murdoch, for the respondent UBS Securities Canada Inc.

M. Barrack, K. Patel, and D. Szirmak, for the respondents Tennenbaum Capital Partners LLC, 64NM Holdings GP LLC, 64NM Holdings LP and LG Capital Investors LLC

L. Lung, for the respondent Serruya Private Equity Inc.

G. R. Hall, for the respondent Novus Wireless Communications Inc.

Keywords: Torts, Inducing Breach of Contract, Breach of Confidence, Breach of Contract, Civil Procedure, Striking Pleadings, Abuse of Process, Issue Estoppel, Cause of Action Estoppel, Collateral Attack, Standard of Review, Business Corporations Act, R.S.O. 1990, c. B.16 s. 182, Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, Angle v. M.N.R., [1975] 2 S.C.R. 248, Stuart v. Bank of Montreal (1909), 41 S.C.R. 516, LaFarge v. B.C. Lightweight Aggregate, [1983] 1 S.C.R. 452, Cadbury Schweppes Inc. v. FBI Foods Ltd., [1999] 1 S.C.R. 142, Grandview v. Doering, [1976] 2 S.C.R. 621, Hoque v. Montreal Trust Co. of Canada, 1997 NSCA 153, Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, Greenwood Shopping Plaza Ltd. v. Beattie, [1980] 2 S.C.R. 228, The Catalyst Capital Group Inc. v. Moyse, 2018 ONCA 283

FACTS:

Wind was owned by VimpelCom Ltd. ("VimpelCom") and Globalive Capital Inc. ("Globalive"). Catalyst began negotiating with VimpelCom to purchase that interest. The respondent UBS Securities Canada Inc. ("UBS") advised VimpelCom in these negotiations. Two agreements were reached: Catalyst and VimpelCom negotiated 1) a Confidentiality Agreement providing that the existence and content of their negotiations were confidential, and 2) an Exclusivity Agreement pursuant to which VimpelCom could negotiate only with Catalyst and could not solicit other bids. The negotiations between Catalyst and VimpelCom proved unsuccessful. The exclusivity period under the Exclusivity Agreement expired on August 18, 2014. After the exclusivity period expired, a group of purchasers (the "Consortium"), which included West Face Capital Inc. ("West Face") successfully purchased VimpelCom's interest in Wind.

Brandon Moyse ("Moyse"), a junior analyst at Catalyst, left Catalyst and began working for West Face during the course of Catalyst's negotiations with VimpelCom. He resigned from Catalyst after the signing of the Confidentiality Agreement but before the conclusion of the Exclusivity Agreement. Catalyst commenced an action against Moyse and West Face (the "Moyse Action") to enforce the non-competition clause in Moyse's employment contract with Catalyst prior to the failure of Catalyst's bid to acquire Wind. Following the Consortium's purchase of VimpelCom's interest in Wind, Catalyst broadened the scope of the Moyse Action. It amended its statement of claim to allege that Moyse had communicated confidential information to West Face about Catalyst's acquisition strategy with respect to Wind. Catalyst alleged that West Face used the confidential information it received from Moyse to successfully acquire Wind from VimpelCom. The amendments included a claim for a constructive trust over West Face's interest in Wind.

Catalyst then opposed a plan of arrangement under s. 182 of the Business Corporations Act, R.S.O. 1990, c. B.16 relating to the Consortium's subsequent agreement to sell Wind to Shaw because it would release the constructive trust claim. In his decision on the plan of arrangement, Newbould J. made several adverse findings against Catalyst. Following the revelation of Catalyst's intention to bring a claim for inducing breach of contract, counsel for West Face explicitly invited Catalyst to amend its pleadings in the Moyse Action to include such a claim if Catalyst in fact intended to pursue it. Catalyst declined to do so. Five days before the trial in the Moyse Action was to begin, Catalyst issued its statement of claim against West Face and the other respondents to the current action (the "Current Action") alleging breach of contract, breach of confidence, conspiracy, and inducing breach of contract.

At the trial of the Moyse Action, Newbould J. found that Catalyst had failed to make out each of the three elements of the breach of confidence claim, that it was Catalyst's failure to agree to a break fee requested by VimpelCom that caused negotiations to cease, and there was no chance Catalyst could have closed the deal. The Court of Appeal dismissed Catalyst's appeal in reasons reported at 2018 ONCA 283. The respondents in the Current Action then moved to dismiss Catalyst's claims. The motion judge released comprehensive reasons dismissing Catalyst's claim on the basis of issue estoppel, cause of action estoppel, and abuse of process, and struck Catalyst's claim of breach of contract against Globalive and UBS without leave to amend. Catalyst appealed.

ISSUES:

(1) Did the motion judge err in dismissing the Current Action on the ground of issue estoppel?

(

1. Did the motion judge err because Newbould J.'s findings in the Moyse Action were obiter and collateral to his decision?

   (b) Did the motion judge err because Newbould J.'s findings were merely overlapping facts and were incidental to Catalyst's claims in the Current Action?

   (c) Did the motion judge err because Catalyst might have been entitled to a remedy without any inconsistent findings?

   (d) Did the motion judge err because the exercise of residual discretion favoured not applying issue estoppel?

   (2) Did the motion judge err in dismissing the Current Action on the ground of cause of action estoppel?

   (3) Did the motion judge err in dismissing the Current Action as an abuse of process?

   (4) Did the motion judge err in striking Catalyst's pleadings of breach of contract against UBS and Globalive without leave to amend?

   HOLDING:

   Appeal dismissed.

   REASONING:

   As a preliminary matter, the Court noted that it owed deference to the motion judge's application of the tests for issue estoppel per Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, at para. 27. This same standard of review applied to the application of the tests for cause of action estoppel and abuse of process.

   (1) No. The Court rejected Catalyst's argument that the motion judge erred in applying issue estoppel. Firstly, the Court reviewed the requirements outlined in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, at para. 25. The first requirement, that the same questions had been decided, was the only one seriously contested on appeal. The Court stated that different causes of action may have one or more material facts in common. Issue estoppel prevents re-litigation of the material facts that the cause of action in the prior action embraces: Danyluk, at para. 54. However, the question out of which the estoppel arises must be "fundamental to the decision arrived at" in the prior proceedings: Angle v. M.N.R., [1975] 2 S.C.R. 248, at p. 255. Accordingly, the question must be "necessarily bound up" with the determination of the issue in the prior proceeding for issue estoppel to apply: Danyluk, at paras. 24, 54.

   (

1. No. The Court dismissed Catalyst's argument that Newbould J's findings were obiter. Catalyst argued that the central issue in the Moyse Action was whether Moyse passed confidential information to West Face, and since Newbould J. found that Moyse had not, his other findings were collateral. The Court rejected this argument, finding that Catalyst's submission was premised on the erroneous assumption that the only fundamental issue in the Moyse Action was whether Moyse passed confidential information to West Face. The Court stated that Canadian courts have consistently rejected the argument that a judicial finding is merely dictum or collateral because there was another sufficient basis for the judge's decision. In Stuart v. Bank of Montreal (1909), 41 S.C.R. 516, the Supreme Court rejected the argument that a judicial finding that is "a distinct and sufficient ground for its decision [is] a mere dictum because there is another ground upon...