Top 5 Civil Appeals From The Court Of Appeal Last Month (June 2011)

Article by Peter W. Kryworuk with the assistance of Yola Ventresca

Wolfe v. Pickar, 2011 ONCA 347 (per Goudge J.A., Gillese and Watt JJ.A. concurring) Pepe v. State Farm Mutual Automobile Insurance Company, 2011 ONCA 341 (per Doherty J.A., Moldaver and Feldman JJ. A. concurring) Mason v. Chem-Trend Limited Partnership, 2011 ONCA 344 (per Feldman J.A., Doherty and Moldaver JJ.A. concurring) Krawchuk v. Sherbak, 2011 ONCA 352 (per Epstein J.A., Rosenberg and Cronk, JJ.A concurring) Barrington v. The Institute of Chartered Accountants of Ontario, 2011 ONCA 409 (per Karakatsanis J.A., Winkler C.J.O. and Lang J.A. concurring) 1. Wolfe v. Pickar, 2011 ONCA 347 (per Goudge J.A., Gillese and Watt JJ.A. concurring)

This case involved an appeal from a decision refusing to stay the plaintiffs' action in Ontario on res judicata, or alternatively, jurisdictional and forum non conveniens grounds.

The respondent, Dr. Wolfe, developed a low dose hormone replacement therapy through research and studies conducted at the University of Western Ontario in London, Ontario. Dr. Wolfe disclosed the confidential research regarding the low dose hormone replacement therapy to the appellants, Wyeth and Dr. Pickar. Dr. Wolfe asserted that the appellants had wrongfully misused this information to develop a commercial product based on the low dose hormone replacement therapy. Dr. Wolfe further asserted that the appellants used this information to file patent applications in a number of countries, including Canada. The appellants took the position that the low dose hormone replacement therapy had been developed by Dr. Pickar at Wyeth's research facilities in Pennsylvania.

An action was commenced in Ontario for, among other things, damages for breach of confidence, breach of contract and breach of fiduciary duty. The appellants brought a motion seeking to stay the Ontario action on jurisdictional and/or forum non conveniens grounds. Wyeth also commenced an action for declaratory judgment in Pennsylvania. In that action, Wyeth sought a declaration from the Pennsylvania court that any claim that Dr. Wolfe might have based on breach of contract, misuse of confidential information or breach of fiduciary duty was barred by the Pennsylvania statute of limitations. Wyeth also sought a declaration on the merits that it had not committed any of these wrongs.

The Pennsylvania court issued its reasons on August 28, 2008. The Pennsylvania court granted in full the order requested by Dr. Wolfe, namely, that had Dr. Wolfe attempted to assert his actions in Pennsylvania, those actions would be barred by the Pennsylvania statute of limitations. The Pennsylvania court allowed Wyeth's motion insofar as Wyeth requested that the Pennsylvania court declare that Dr. Wolfe's claims were barred by the Pennsylvania statute of limitations. The Pennsylvania court denied Wyeth's motion in all other respects; in particular, it declined to decide the merits of Dr. Wolfe's claims.

Following the issuance of the Pennsylvania decision, the appellants amended their notice of motion to include relief on res judicata/abuse of process grounds. The jurisdictional relief became an alternate ground of relief.

The motion judge declined to apply the doctrine of res judicata and issue estoppel. He found that the issue decided in the Pennsylvania court was not the same as the issue before him. In the alternative, he held that he would exercise his discretion not to apply that doctrine because it was open to the appellants to advance their limitation defence at trial. The motion judge also went on to find that the Ontario court could properly accept jurisdiction over the action because the real and substantial connection test was met. He also found that Ontario was a convenient forum for the action.

On appeal, the appellants argued that in adjudicating the action brought by the respondents, the Ontario court must find that their claims were time-barred by the Pennsylvania statute of limitations because of the August 28, 2008 order of the Pennsylvania court. Further, the appellants argued that the Ontario court must recognize and apply that order, in which case, the respondents' action must be dismissed as time barred.

In determining whether the doctrine of issue estoppel applied, the Court of Appeal set out the framework established by the Supreme Court of Canada in Danyluk v. Ainsworth, [2001] 2 S.C.R. 460: (1) the same question has been decided; (2) the judicial decision which is said to create the estoppel was final; and, (3) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised.

The Court of Appeal noted that the first requirement in the Danyluk framework was the focus here. The Court of Appeal held that the same question had not been decided. The August 28, 2008, order determined only that the claims would be time-barred if Dr. Wolfe were to assert them in a Pennsylvania court. The Court of Appeal held that the order did not direct that in adjudicating the respondents' claims, the Ontario court should apply Pennsylvania law to find the claims barred by the Pennsylvania statute of limitations. Moreover, the Court of Appeal held that the Pennsylvania order said nothing about the choice of law the Ontario court should apply in adjudicating the claims. Nor was there any reasoning on that issue. Accordingly, the Court of Appeal held that the choice of law question was not a question distinctly put in issue and directly determined by the Pennsylvania court.

Significantly, the Court of Appeal further held that it would not serve the ends of justice to give the Pennsylvania order the effect contended for by the appellants. The Court of Appeal noted that to do so in the circumstances would at least give the appearance of sanctioning forum shopping.

Turning to the jurisdictional question, the Court of Appeal held that the appellants had attorned to the jurisdiction of the Ontario courts by amending their notice of motion to seek relief on res judicata as well as jurisdictional grounds. The Court of Appeal noted that the appellants did not come before the motion judge under duress. Rather, they voluntarily engaged the jurisdiction of the Ontario court by seeking to have the court apply the doctrine of issue estoppel, and as a consequence, permanently stay the Ontario action. Citing with approval the decision of the British Columbia Court of Appeal in Mid-Ohio Imported Car Co. v. Tri K Investments Ltd, 1995 CanLII 2084, the Court Appeal affirmed that when a party to an action appears in court and goes beyond challenging the jurisdiction of the court based on jurisdiction simpliciter and forum non conveniens, the party will be regarded as...