COURT OF APPEAL FOR ONTARIO

CITATION: Salasel v.
    Cuthbertson, 2015 ONCA 115

DATE: 20150220

DOCKET: C58982

Hoy A.C.J.O., van Rensburg and Brown JJ.A.

BETWEEN

Parichehr Salasel, in her own capacity and as
    substitute decision maker and litigation guardian for Hassan Rasouli, Mojgan
    Rasouli and Mehran Rasouli

Appellants

and

Dr. Brian Cuthbertson, Dr. Gordon Rubenfeld and
    Dr. Richard Swartz

Respondents

J. Gardner Hodder, for the appellants

Erica J. Baron and Andrew McCutcheon, for the
    respondents

Heard: January 22, 2015

On appeal from the judgment of Justice Edward Morgan of
    the Superior Court of Justice, dated May 20, 2014, reported at 2014 ONSC 3071.

Brown J.A.:

I.

OVERVIEW

[1]

The appellants, Parichehr Salasel, in her own capacity and as substitute
    decision-maker and litigation guardian for her husband, Hassan Rasouli, and
    their children, Mojgan Rasouli and Mehran Rasouli, appeal from the Judgment of
    Justice Edward Morgan dated May 20, 2014, in which he dismissed their action
    against the respondent physicians pursuant to Rule 21.01(3)(d) of the
Rules
    of Civil Procedure
.

[2]

In October, 2010, Mr. Rasouli suffered debilitating complications
    following surgery at Sunnybrook Hospital (the Hospital).  He was kept alive
    by mechanical ventilation.  The respondents, Dr. Brian Cuthbertson, Dr. Gordon
    Rubenfeld and Dr. Richard Swartz, were Mr. Rasoulis treating physicians.  They
    recommended the withdrawal of mechanical ventilation from Mr. Rasouli.  His
    family opposed that decision.

[3]

As a result of that disagreement, two applications were commenced in the
    Superior Court of Justice  one by the Rasouli family and one by the physicians
     over the issue of whether the physicians required the consent of Ms. Salasel,
    her husbands substitute decision-maker, or the approval of the Consent and
    Capacity Board (CCB), to withdraw the life-sustaining measures from Mr.
    Rasouli.  Those cases proceeded through this court to the Supreme Court of
    Canada which, in its October, 2013 decision, held that the physicians were
    required to seek Ms. Salasels consent to the withdrawal of the life-sustaining
    measures, failing which there had to be a ruling by the CCB:
Rasouli v.
    Sunnybrook Health Sciences Centre
, 2011 ONSC 1500, 105 O.R. (3d) 761;
Rasouli
    v. Sunnybrook Health Sciences Centre
, 2011 ONCA 482, 281 O.A.C. 183; and
Cuthbertson
    v. Rasouli
, 2013 SCC 53, [2013] 3 S.C.R. 341.  I will refer to those
    proceedings as the Prior Proceedings.

[4]

The Supreme Court of Canada heard the appeal in the Prior Proceedings in
    December, 2012.  On January 21, 2013, the appellants commenced this action.  In
    it Mr. Rasouli seeks $1 million in special damages and $1 million in general,
    aggravated and punitive damages for intimidation, assault, negligence, abuse of
    process, breach of contract and breach of fiduciary duty.  The Statement of
    Claim specifies that the special damages sought consist of the approximately
    $500,000 in legal fees spent to keep Hassan alive.  The other appellants seek
    damages of $250,000 each under s. 61 of the
Family Law Act
, R.S.O.
    1990, c. F.3, and for the intentional infliction of mental suffering.

[5]

The respondent physicians brought a motion under Rule 21.01(3)(d) of the
Rules of Civil Procedure
to stay or dismiss the action on two
    grounds.  First, the respondents argued that to the extent the action sought
    the recovery of legal fees incurred in the Prior Proceedings, it was barred by
    the doctrine of issue estoppel because it sought to re-litigate cost awards
    made in the Prior Proceedings.  Second, the respondents contended that the
    balance of the claims were frivolous, vexatious or an abuse of process in that
    they were barred by the doctrine of absolute privilege.  The motion judge
    accepted the respondents submissions, found that the appellants claims were
    barred by the doctrines of issue estoppel and absolute privilege, and dismissed
    the action.

[6]

For the reasons set out below, I would dismiss the appellants appeal
    from the Judgment of the motion judge.

II.

ISSUES ON APPEAL

[7]

The appellants raise the following issues on their appeal:

(i)

The motion judge erred in finding that the doctrine of issue estoppel
    applied to prevent them from claiming, as special damages in this action, the difference
    between the actual legal fees they had incurred and the costs they were awarded
    in the Prior Proceedings; and,

(ii)

The motion judge erred in finding that a January 24, 2011, letter from
    counsel for the respondent physicians to counsel for Mr. Rasouli was written on
    an occasion of absolute privilege.

III.

THE TEST UNDER RULE 21.01(3)(d)

[8]

Rule 21.01(3)(d) of the
Rules of Civil Procedure
permits a
    defendant to move to stay or dismiss an action on the ground that the action
    is frivolous or vexatious or is otherwise an abuse of the process of the
    court.  Any action for which there is clearly no merit may qualify for
    classification as frivolous, vexatious or an abuse of process, with a common
    example being the situation where a plaintiff seeks to re-litigate a cause
    which has already been decided by a court of competent jurisdiction.  A court
    only invokes its authority under rule 21.01(3)(d) or pursuant to its inherent
    jurisdiction to dismiss or stay an action in the clearest of cases:
Currie
    v. Halton Regional Police Services Board
(2003), 233 D.L.R. (4th) 657 (Ont.
    C.A.), at paras. 17 and 18.

[9]

The motion judge was alive to those requirements, observing, at para.
    20, that the rule required a hard look at the factual background, and
    especially the position and conduct of the parties.

IV.

FIRST ISSUE: DID THE MOTION JUDGE ERR IN DISMISSING THE APPELLANTS
    CLAIM FOR LEGAL FEES AS SPECIAL DAMAGES ON THE BASIS OF ISSUE ESTOPPEL?

(a)

The appellants claim for special damages and the decision of the motion
    judge

[10]

The
    determination of the Prior Proceedings in the Superior Court of Justice
    resulted in Himel J. making a consent cost award under which the respondent
    physicians paid Mr. Rasouli costs of $40,000.  The Court of Appeal ordered the
    respondents to pay costs of $25,000.  The Supreme Court of Canada made no award
    of costs, holding that the matter was one of public interest.  The respondents
    paid the cost awards.  In this action Mr. Rasouli seeks to recover, as special
    damages, his extra costs, consisting of the difference between the amount of
    the legal fees actually incurred in the Prior Proceedings and the amount
    awarded to him in the courts cost awards.  The motion judge held that the
    doctrine of issue estoppel prevented the appellants from re-litigating their
    entitlement to any legal costs of the Prior Proceedings under the guise of a
    damages claim.

[11]

To
    invoke issue estoppel, a party must meet three pre-conditions: (i) the issue in
    the proceeding must be the same as the one decided in the prior decision; (ii)
    the prior judicial decision must have been final; and, (iii) the parties to
    both proceedings must be the same or their privies:
Toronto (City) v.
    C.U.P.E., Local 79
, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 23.  The
    appellants acknowledge that the decision of the Supreme Court of Canada in the
    Prior Proceedings was a final one, and they accept that for purposes of their
    claim for legal fees as damages that the parties in the Prior Proceedings and
    the present action were the same or privies.

[12]

The
    appellants submit that the motion judge erred in concluding that the issue
    regarding legal fees raised in this action is the same as that decided in the
    Prior Proceedings.  In his reasons, the motion judge described the argument
    advanced by the appellants on this point as follows:

[26] Counsel for the Plaintiffs submits that one of the
    important ingredients of issue estoppel is missing here in that the subject
    matter of the two proceedings is not truly the same. He contends that costs are
    tangential to the proceedings, and so therefore the prior proceeding and this
    proceeding do not raise the same issue. Citing the Court of Appeals judgment
    in
Somers v Fournier
(2002), 60 OR (3d) 225, at para 19, he states
    that costs of litigation are incidental to the determination of the rights of
    the parties. They are not part of the
lis
between litigants.

After reviewing and comparing the issues raised in the
    Prior Proceedings and the present action, the motion judge rejected the
    appellants argument, holding:

[27] An award of costs may not be the very subject matter of
    the litigation, but it is not incidental in the sense that the prior court did
    not specifically turn its mind to the issue. The costs awarded to Mr. Rasouli
    by Himel J. and by the Court of Appeal, and the denial of costs by the Supreme
    Court of Canada, are certainly not in the category identified by Dickson J. (as
    he then was) in
Angle v Minister of National Revenue
, [1975] 2 SCR
    248, at 255, of a conclusion which must be inferred by argument from the
    judgment. Rather, the costs rulings form part of the conclusions that were
    necessarilydetermined in the earlier proceedings:
Danyluk v Ainsworth
    Technologies Inc.
, [2001] 2 SCR 460, at para 24.

(b)

Analysis

[13]

The
    appellants contend that in reaching his conclusion the motion judge committed
    four errors.

[14]

First,
    they argue that they were not able to raise the issue of damages in the nature
    of legal fees in the Prior Proceedings because they could not assert a claim
    for damages in an application.  Consequently, the appellants submit, they
    should be permitted to assert in this action the claim for monetary relief they
    could not advance in the application.  There is no merit in that submission: it
    was open to the appellants to request in the Prior Proceedings larger cost
    awards than those which were made by the courts.

[15]

Second,
    the appellants point to several cases which, they contend, stand for the
    proposition that a party can recover its costs of a prior action as damages in
    a subsequent action.  The motion judge referred to one of the cases in his
    reasons,
Weinstein v. A. E. LePage (Ontario) Ltd.
(1984), 47 O.R. (2d)
    126 (C.A.).  In that case, the purchaser of land under an agreement of purchase
    and sale sued the vendor for specific performance, but failed.  The vendor then
    sued his listing agent for breach of contract, arguing that the agents breach
    had prompted the purchaser to sue and during the pendency of the lawsuit the
    vendor had lost the opportunity to sell the land to another person.  Although
    the vendor had not claimed the costs of defending the first action in the
    subsequent one against the listing agent, this court ventured the view that the
    costs of defending the first action could be recoverable as damages in the
    second.  As the motion judge correctly pointed out in his reasons, issue
    estoppel did not arise in
Weinstein
as the parties were different.

[16]

The
    appellants argue that the motion judge erred in failing to consider and apply
    the other cases to which they had referred.  Two of the cases resembled
Weinstein
in that the parties to the two proceedings were different:

(i)

in
Crispin & Co. v. Evans, Coleman & Evans Ltd.
(1922),
    68 D.L.R. 623 (B.C.S.C.), affd [1923] 3 D.L.R. 1190 (B.C.C.A.), a purchaser of
    salmon was able to recover from its non-performing vendor the costs it had
    incurred of defending an arbitration brought by its counter-party on the
    re-sale contract; and,

(ii)

in a negligence case,
Mailhot v. Savoie
, 2004 NBCA 17, 268
    N.B.R. (2d) 348, a client was able to recover against his solicitor the legal
    fees he had spent in prosecuting an action against a purchaser of lands to whom
    certain lots had been conveyed as a result of a mistake made by the solicitor
    in the transfer deed.

The other four cases differed materially from the
    present case in their facts:

(i)

in
Mondel Transport Inc. v. Afram Lines Ltd.
, [1990] 3 F.C. 684
    (F.C.T.D.), while the Federal Court awarded the plaintiff, as damages, the
    legal costs it had incurred in a foreign jurisdiction to secure the release of
    cargo, there was no suggestion in the decision that the foreign court had dealt
    with any request for legal costs by the plaintiff;

(ii)

in
Harris v. GlaxoSmithKline Inc.
, 2010 ONCA 872, 106 O.R. (3d)
    661, leave to appeal to S.C.C. refused, [2011] S.C.C.A. No. 85, the plaintiff
    had advanced a claim for abuse of process.  Although this court observed that
    proof of some measure of special damage was one of the constituent elements in
    the tort of abuse of process, in
Harris
the special damages sought by
    the plaintiff were not legal costs, but a supra-competitive price the
    plaintiff paid for a drug over a period of time;

(iii)

in
West v. Cotton
, 1993 CarswellBC 2026 (B.C.S.C.), the trial
    judge in a personal injury action decided to fix the costs of that action
    notwithstanding the plaintiffs request that he postpone the determination of
    those costs until it was ascertained whether the plaintiff would recover its
    full legal costs of the action in related proceedings, one of which was against
    a party to the action.  In
obiter
at para. 13 of his reasons, the
    trial judge suggested that making a cost order in the personal injury action
    should not prejudice the plaintiffs ability to argue for recovery of his
    actual legal costs as damages in the related proceeding provided that there is
    no duplication of the issues raised and decided.  The appellants did not file
    before us any case which reported whether the plaintiff was awarded its actual
    legal costs of the personal injury action in either related proceeding; and,

(iv)

in
Berry v. British Transport Commission
, [1962] 1 Q.B. 306,
    the English Court of Appeal repeated the principle that in an action for
    malicious prosecution the plaintiff can claim damages for the costs she
    incurred in defending the criminal prosecution against her.  In his concurring
    reasons, Devlin L.J., voiced a desire to see a reform of the law concerning
    civil costs.  Until such a reform took place, he re-iterated, at pp. 319 and 323
    of his reasons, the need to maintain the general principle that the right to
    costs must always be considered as finally settled in the court which
    determined the issues to which that right to costs was accessory.

In sum, none of the cases put forward by the appellants
    stand for the proposition that a party in a first proceeding against another
    could recover, in a second proceeding against the same person, the extra
    legal costs it was not awarded in the first proceeding.

[17]

Third,
    the appellants submit that the motion judge failed to apply the principles of
    issue estoppel set out in the decision of the Supreme Court of Canada in
Danyluk
    v. Ainsworth Technologies Inc.
, 2001 SCC 44, [2001] 2 S.C.R. 460, where,
    at para. 24, the court stated, in part:

The question out of which the estoppel is said to arise must
    have been fundamental to the decision arrived at in the earlier proceeding.
    In other words, as discussed below, the estoppel extends to the material facts
    and the conclusions of law or of mixed fact and law (the questions) that were
    necessarily (even if not explicitly) determined in the earlier proceedings.

[18]

The
    appellants argue that the cost awards in the Prior Proceedings were not
    fundamental to the injunctive relief granted to Mr. Rasouli and therefore it is
    open to them to bring an action to recover legal costs as damages.  In my view,
    the appellants position is incorrect and, instead, the following portions of
    the motion judges reasons accurately state the law on this point:

[27] An award of costs may not be the very subject matter of
    the litigation, but it is not incidental in the sense that the prior court did
    not specifically turn its mind to the issue  [T]he costs rulings form part of
    the conclusions that were necessarilydetermined in the earlier proceedings:
Danyluk
    v Ainsworth Technologies Inc.
, [2001] 2 SCR 460, at para 24.

[30] I agree with the authors of
Clerk and Lindsell on
    Torts
(20th ed.), 28-130, where they state definitively that, [a]
    successful claimant cannot bring a fresh action against the defendant in order
    to recover as damages his extra costs, that is, the difference between the
    costs which the defendant was ordered to pay and the costs actually incurred.
    Courts across Canada have come to similar conclusions: See
Humble v
    Vancouver Municipal & Regional Employees Union
, 1989 CarswellBC 1299,
    at paras 86, 92, affd [1991] BCJ No 2995 (BCCA). This issue was addressed
    squarely by the Manitoba Court of Queens Bench in
P&G Cleaners Ltd. v
    Johnson
, [1996] MJ No 566 (Man QB), at para 17, which concluded that issue
    estoppel applies:

On the previous proceedings related to dispensing with Mr.
    Johnsons consent, the issue arose as to whether he was entitled to solicitor
    and client costs of those proceedings based on the wording of Clause 5(a)
    above. I held that he was not entitled to solicitor and client costs. That is
    the precise issue which the respondent is seeking to re-litigate in these
    proceedings and is res judicata.

[19]

On
    this issue the appellants reliance on the decision of this court in
Somers
    v. Fournier
(2002), 60 O.R. (3d) 225 (C.A.) is mis-placed.
Somers
considered whether the costs of a proceeding in Ontario should be characterized
    as a substantive or procedural matter for purposes of choice of law under private
    international law.  It was in that very different context that this court
    stated, at para. 19: costs of litigation are incidental to the determination
    of the rights of the parties.  They are not part of the
lis
between
    litigants.
Somers
did not deal with the consequences of a prior,
    final determination of entitlement to legal costs on a subsequent proceeding.

[20]

Finally,
    the appellants submit that the motion judge erred by failing to consider
    whether he should exercise his residual discretion not to apply the doctrine of
    issue estoppel to the appellants claim for extra costs.  As recalled by the
    Supreme Court of Canada in
Penner v. Niagara Regional Police Services Board
,
    2013 SCC 19, [2013] 2 S.C.R. 125, at para. 35, even where the pre-conditions
    for issue estoppel are established, courts retain the discretion not to apply
    issue estoppel to ensure that no injustice results.  Applying issue estoppel
    may work an injustice if the prior proceedings were unfair to a party or, even
    where they were not, if significant differences existed in the purpose, process
    and stakes of the two proceedings.  The discussion in
Penner
took
    place in the context of whether any such significant differences existed
    between prior administrative proceedings and subsequent civil court proceedings
    such that it would work an injustice to apply the result of the former to the
    latter.

[21]

The
    appellants argue that the purposes of the Prior Proceedings and this action
    diverge significantly.  With respect, they do not on the issue of costs.  Both
    proceedings were commenced in the same adjudicative body, the Superior Court of
    Justice.  Expectations concerning how parties in such court proceedings can
    recover costs are well-established: claims for cost awards must be made in the
    proceeding in which the costs were incurred.  In the present action, the
    appellants seek to recover extra costs they could have claimed in the Prior
    Proceedings.  In those circumstances, no basis would exist to exercise a
    residual discretion not to apply issue estoppel.

[22]

For
    these reasons, I see no error in the conclusion of the motion judge that issue
    estoppel applied to bar the appellants claim in this action for the recovery
    of extra costs incurred in the Prior Proceedings or in his dismissal of the
    appellants claim for their extra costs as special damages under Rule 21.01(3)(d)
    because it was frivolous, vexatious or otherwise an abuse of the process of the
    court.

V.

SECOND ISSUE: DID THE MOTION JUDGE ERR IN DISMISSING THE REST OF THE
    APPELLANTS CLAIMS ON THE GROUND THAT THEY WERE BARRED BY ABSOLUTE PRIVILEGE?

(a)

The remaining claims of the appellants and the decision of the
    motion judge

[23]

The
    motion judge dismissed the balance of the appellants claims on the basis that
    the event upon which those claims rested  a January 24, 2011 letter written by
    Mr. Harry Underwood, counsel for the respondent physicians, to counsel for Ms.
    Salasel (the Underwood Letter)  was protected from suit by absolute
    privilege.  The appellants submit that it was far from clear or obvious that
    the Underwood Letter was written on an occasion of absolute privilege and the
    motion judge erred in not allowing their claims based on that letter to proceed
    to trial.

[24]

The
    Underwood Letter stated:

Dear Mr. Schibel:

Re:       Hassan Rasouli

This will confirm our telephone
    conversation today.

The critical care physicians at
    Sunnybrook, for some of whom we act, have determined that they will not
    continue to offer extraordinary care (mechanical ventilation) to Mr. Rasouli.
    We understand that the Rasouli family, for whom you act, does not accept this
    decision and intends to bring an application for an injunction to require the
    continuation of the treatment pending an application to the Consent and
    Capacity Board. The doctors are prepared to defer the implementation of their
    decision provided that you proceed, immediately, to obtain an urgent
    appointment for a one day hearing of the intended application. That matter has
    been left in your hands and I await word from you as to the available date or
    dates.

I also confirm that I advised you
    that the doctors are very willing to facilitate an independent examination of
    Mr. Rasouli by a neurologist should the family so desire.

Finally, I am enclosing for your
    information the note made by Dr. Jon Ween, the Sunnybrook staff neurologist who
    recently performed a neurological assessment of Mr. Rasouli so as to provide a
    second neurological opinion.

Yours very truly,

McCarthy Tétrault LLP

Per: Harry Underwood

[25]

In
    their Statement of Claim and Factum the appellants characterized the Underwood
    Letter as a threat to kill Mr. Rasouli upon which they based their claims for
    intimidation, assault, negligence, abuse of process, breach of contract, breach
    of fiduciary duty and intentional infliction of mental suffering.  The
    centrality of the Underwood Letter to the remaining claims of the appellants
    was noted by the motion judge in his reasons:

[34] Counsel for the Plaintiffs concedes that had the doctors
    simply brought their own court application for a declaration that they have
    authority to withdraw treatment, without having their lawyer send a letter to
    that effect, there would be no threatening or otherwise tortious conduct. The
    entire claim turns on the fact that their lawyer first wrote a letter.

[26]

The
    motion judge concluded that the Underwood Letter was protected by absolute
    immunity because it was intimately connected to a judicial proceeding  the
    Prior Proceedings  the institution of which was being seriously considered by
    the respondents.  He held that in those circumstances it was an abuse of
    process to bring this action in violation of the doctrine of absolute immunity.

(b)

The circumstances in which the Underwood Letter was written

[27]

Before
    considering the grounds of appeal advanced by the appellants on this issue, a
    review of the chronology of major events is required in order to place the
    Underwood Letter in context.

[28]

Mr.
    Rasouli underwent his surgery at the Hospital on October 7, 2010.  Ten days
    later he slipped into an unconscious state.  His doctors diagnosed him with
    post-operative meningitis.  A series of meetings ensued between the Rasouli
    family and the treating physicians.  Towards the end of November the physicians
    informed the family that they wished to withdraw Mr. Rasouli from the
    life-support offered by a mechanical ventilator.  The family objected.
    Discussions about treatment continued.

[29]

On
    January 10, 2011, the physicians told the family they would begin to withdraw
    Mr. Rasouli from life support that evening.  That prompted Ms. Salasel to meet
    the next day, January 11, with counsel, Mr. Schible of the Hodder Barristers
    firm.

[30]

Following
    that meeting, Mr. Schible sent an email to Ms. Daphne Jarvis, counsel for the
    Hospital, advising of his retainer by Ms. Salasel and stating, in part:

I shared with them [hospital
    staff] my view that the best course is to have a hearing before the Ontario
    Consent & Capacity Board over the Hospitals proposed treatment plan that
    includes: (1) a direction that Mr. Rasouli be taken off a breathing machine;
    and (2) a direction that if/when Mr. Rasouli has difficulty breathing, he not
    be provided with a breathing machine.

Ms. Parichehr, as the next of kin
    in charge of personal care decisions under the Substitute Decisions Act, disagrees
    with the treatment plan above.

The Board is a specialized
    adjudicator for these types of cases and can probably hear us more quickly than
    the Ontario Superior Court.

The only way that the Hospital
    can, in good faith, subject its proposed treatment plan to the Superior Courts
    review is by undertaking to not implement same until the application is heard
    and a decision is rendered (perhaps after many months of being on reserve).
    Thus, all parties have an interest in a relatively faster and less expensive
    proceeding before the Board.

I confirm my understanding  that
    the Hospital will not implement the proposed treatment plan  until you and I
    have figured out a course of action.

[31]

Ms.
    Jarvis responded by stating the Hospitals position that the decision to
    withdraw mechanical ventilation did not constitute a treatment decision
    requiring the consent of Ms. Salasel, but that counsel would be available to
    engage in further discussions.   Following the exchange of a few further
    emails, Mr. Schible emailed Ms. Jarvis on January 13, 2011, stating:

I confirm our conversation around
    2:40 pm today.  I confirm that I had received instructions to bring an
    application in Superior Court seeking an interim order, pending a determination
    on the merits, which determination, we would say, should be made by the CCB. As
    I told you, that could certainly be done tomorrow or on Monday.  However, I
    thought I would report to you my instructions above, and give you an
    opportunity to agree that this should not be necessary.  It will only mean
    additional costs and in fact delay.

I confirm that you said that you
    will get back to me and that, in the meantime, the Hospital will not change Mr.
    Rasoulis current treatment (i.e., he will remain on the breathing machine).

So the situation is this: If your
    response is positive, we can start planning the presentation of our case for
    the CCB (and it should be clear that the Hospital will/should maintain the
    status quo, pending the decision of the CCB). If your response is negative, I
    will forthwith issue the application above (and the Hospital will/should
    maintain the status quo, pending the decision of the Superior Court).

[32]

That
    elicited the following response from Ms. Jarvis later the same day:

Im also confirming that with you
    having advised that you have instructions to commence a legal proceeding as
    youve described, the patients critical care physicians who you would be
    attempting to enjoin are in the process of consulting legal counsel independent
    from the Hospital. Physicians counsel is Harry Underwood of McCarthys, to
    whom Im copying this email.

I have made Harry Underwood aware
    of the position you are taking, and he will be meeting with his clients and
    taking instructions as soon as he is able, and they will also be taking his
    advice with respect to the preservation of the status quo, however, Im sure
    based on my discussions with him that no steps will be taken until one of us
    gets back to you with respect to your proposal and youve had a reasonable
    opportunity to follow through on your instructions.

[33]

Eleven
    days later, on January 24, Mr. Schible received the Underwood Letter.
    According to the appellants Statement of Claim:

By email dated January 26, 2011,
    the defendants, again through their lawyers, took the position that they were
    entitled to proceed, in any event, and advised that they would do so, unless
    the Superior Court restrained them by February 25, 2011.

The next day, on January 27, 2011, Mr. Rasouli, by his
    litigation guardian and substitute decision-maker, Ms. Salasel, commenced an
    application against the Hospital, Dr. Cuthbertson and Dr. Rubenfeld, seeking to
    restrain them from implementing their proposed changes to his treatment plan.
    In their Statement of Claim the appellants pleaded that they brought the
    application as a result of these threats by the defendants.

[34]

Several
    days later, on February 4, 2011, Drs. Cuthbertson and Rubenfeld commenced a
    separate application against Mr. Rasouli and Ms. Salasel seeking declarations
    that as the attending physicians for Mr. Rasouli, they could lawfully withdraw
    or withhold life-sustaining treatment from him without the consent of the
    patients substitute decision-maker.  In their Statement of Claim the
    appellants described the physicians proceeding as a cross-application.

(c)

Analysis

Absolute privilege

[35]

The
    doctrine of absolute privilege contains several basic elements: no action lies,
    whether against judges, counsel, jury, witnesses or parties, for words spoken
    in the ordinary course of any proceedings before any court or judicial tribunal
    recognised by law; the privilege extends to documents properly used and
    regularly prepared for use in the proceedings; and, a statement will not be
    protected if it is not uttered for the purposes of judicial proceedings by
    someone who has a duty to make statements in the course of the proceedings:
Amato
    v. Welsh
, 2013 ONCA 258, at para. 34.

[36]

At
    issue in this case is a communication made by counsel for the respondent physicians
    before the actual commencement of legal proceedings.  As noted by Cullity J. in
Moseley-Williams v. Hansler Industries Ltd.
(2004), 38 C.C.E.L. (3d)
    111 (Ont. S.C.), affd [2005] O.J. No. 997 (Ont. C.A.), Ontario has adopted a
    broader application of the rule of absolute privilege to such pre-suit
    statements than jurisdictions such as British Columbia, Alberta and England.
    The scope of the Ontario rule was summarized comprehensively by the Divisional
    Court in
1522491 Ontario Inc. v. Steward, Esten Professional Corp.
,
    2010 ONSC 727, 100 O.R. (3d) 596, at paras. 37 and 39 to 44:

[37] In Ontario, absolute privilege may extend to
    communications by a party's solicitor made before the actual commencement of
    proceedings.

[39] As Cullity J. points out in
Moseley-Williams
, the
    following statement from Fleming has been referred to with approval in Ontario
    decisions:

The privilege is not confined to statements made in court,
    but extends to all preparatory steps taken with a view to judicial
    proceedings.... But the statement or document must be directly concerned with
    actual contemplated proceedings.

[40] However, Cullity J. also found that the authorities do not
    appear to support an extension of the privilege to all occasions when the
    possibility of litigation is contemplated, or even when a threat of litigation
    is made, or when a lawyer is endeavouring to assert and protect a client's
    rights.

[41] Thus, when a defendant in these circumstances moves to
    dismiss the claim on the ground of absolute privilege, the decision the court
    has to make is whether the communication was made for the purpose of, or
    preparatory to, the commencement of [judicial] proceedings.

[42] Something more than merely a contemplation of the
    possibility of litigation is required. The court must decide whether the
    occasion is incidental or preparatory or intimately connected to judicial
    proceedings and not one that is too remote.

[43] It is in this sense that Cullity J. accepted that ...
    some inquiry into the purpose of their publication would appear to be
    unavoidable That case dealt with a motion for judgment under rule 20. On a
    rule 21.01(1)(b) motion, the inquiry is made on the assumed truth of the
    facts pleaded in the statement of claim.

[44] It must be stressed that
it is the occasion, not the
    communication, that is privileged
. The privilege belongs to the occasion
    by reason of the setting. [Citations omitted; emphasis in original.]

Determining  whether an occasion is preparatory to, or
    intimately connected with, judicial or quasi-judicial proceedings involves, as
    Cullity J. aptly put the matter in
Moseley-Williams
, at paras. 57 and
    58, an exercise of ascertaining where a line is to be drawn so that the degree
    of connection between the occasion and the judicial proceeding is not too
    remote.

[37]

Against
    that background, let me turn to consider the three reasons the appellants advance
    in support of their submission that the motion judge erred in finding that the
    Underwood Letter was protected by absolute privilege.

Availability of absolute privilege in non-defamation actions

[38]

First,
    the appellants submit that the doctrine of absolute privilege for
    pre-litigation communications only precludes the bringing of defamation claims
    in respect of the communication.  That is not correct.  As stated by this court
    in
Samuel Manu-Tech Inc. v. Redipac Recycling Corp.
(1999), 124 O.A.C.
    125, at para. 20, the immunity afforded by absolute privilege extends to any
    action, however framed, and is not limited to actions for defamation.  In that
    case, the intentional acts upon which the plaintiff by counterclaim was relying
    in support of its claim for intentional interference with contractual relations
    were affidavits sworn by the defendants to obtain receivership orders.  This
    court upheld the decision of the motion judge striking out the counterclaim on
    the basis that the affidavits were protected by absolute privilege.

The degree of connection between the Underwood Letter and the
    litigation

[39]

The
    second reason advanced by the appellants contains two inter-connected
    elements.  They argue that absolute privilege did not attach to the Underwood
    Letter because at the time it was written no substantive steps had been taken
    to prepare for litigation in the sense that the respondent physicians had not
    made a decision to litigate, and it was the appellants, not the respondents,
    who first commenced a legal proceeding following the communication of the
    Underwood Letter.

[40]

Certainly
    by the date of the Underwood Letter, a decision to litigate had been made by
    the appellants.  As disclosed by the chronology of events set out above, by
    January 13, 2011, Ms. Salasel had informed the Hospital of her decision to
    commence an application in the Superior Court of Justice seeking to restrain
    the physicians from withdrawing life-support from her husband without her
    consent.  The Hospitals counsel passed that information along to the
    physicians counsel, Mr. Underwood.  The decision to litigate the issue of
    consent had been made and communicated 11 days before Mr. Underwood sent his
    letter to counsel for the Rasouli family.  The Underwood Letter not only
    communicated the physicians position on the appropriate treatment for Mr.
    Rasouli  a position not acceptable to the Rasouli family  but also advised
    that the physicians would co-operate in seeking a prompt determination of the
    dispute from the courts:

The doctors are prepared to defer
    the implementation of their decision provided that you proceed, immediately, to
    obtain an urgent appointment for a one day hearing of the intended
    application.  That matter has been left in your hands and I await word from you
    as to the available date or dates.

The two applications were commenced shortly thereafter.
    When read in the context of the contemporaneous events, the Underwood Letter
    was written at a time when it was clear that the physicians would be required
    to respond to the litigation which Ms. Salasel intended to initiate against
    them.

[41]

The
    appellants submit that absolute privilege should not attach to the Underwood
    Letter because the first legal proceeding had been commenced by the recipient
    of that letter, not the party whose counsel wrote it.  I do not accept that
    submission.  It is true that in several Ontario cases which held that absolute
    privilege attached to a pre-suit communication of a lawyer, the communication
    had come from plaintiffs counsel who sent a letter attaching the intended
    statement of claim either to counsel for the opposite party or to a witness:
Dingwall
    v. Law
(1988), 63 O.R. (2d) 336 (Ont. H.C.) and
Steward, Esten
    Professional Corp.
By contrast, the Underwood Letter was not written on
    behalf of Ms. Salasel, the party who commenced the first of the Prior
    Proceedings, but by counsel for the respondent physicians who only started
    their application after Ms. Salasel had issued hers.  I do not see that
    sequence of events as preventing absolute privilege from attaching to the
    Underwood Letter.  Before the Underwood Letter was written, it was clear that
    judicial proceedings would take place over the issue of whether consent was
    required to withdraw mechanical ventilation.  Shortly after the Underwood Letter
    was written, the proceedings commenced, with the application and cross-application
    seeking opposing relief in respect of the same issue.  Since the privilege
    extends to communications directly concerned with actual contemplated
    proceedings, it would be inconsistent to afford the protection to
    communications by counsel for one party, but to deny it to communications by counsel
    for the other party.

The applicability of the principles set out in
Amato v.
    Welsh

[42]

Finally,
    the appellants submit that the motion judge erred by failing to consider the
    implications of the decision of this court in
Amato v. Welsh
, 2013
    ONCA 258, 305 O.A.C. 155.  That decision, the appellants argue, supports their
    position that absolute privilege should not be used as a rationale for
    protecting doctors from suits in which their patient alleges the physicians
    threatened to harm him.  According to the appellants, the public policy
    considerations outlined in
Amato
preclude a finding, at least on a
    Rule 21.01(3)(d) motion, that an action based on the Underwood Letter is barred
    by reason of absolute privilege.

[43]

Amato
involved a motion to strike out a claim under Rule 21.01(1)(b) as disclosing no
    reasonable cause of action.  In
Amato
the plaintiffs, former clients
    of the defendant lawyers, sued for negligence, breach of fiduciary duty and
    breach of the duty of loyalty during the course of the lawyers representation
    of the plaintiffs.  The plaintiffs had invested funds in a scheme run by other
    clients of the lawyers.  The Ontario Securities Commission (OSC) conducted a
    hearing into whether the investment set-up was a Ponzi scheme.  In their
    action, the plaintiffs alleged that their lawyers failed to disclose at the OSC
    hearing the investments they had made, thereby diminishing their chances of
    recovering their investments.  Although the lawyers did not question their
    clients right to sue in negligence, breach of fiduciary duty and breach of the
    duty of loyalty, the lawyers argued that those causes of action could only be
    founded on the allegation of the competing retainers the lawyers had with
    different clients, not on any statements the lawyers had made or failed to make
    during the OSC hearing.  Consequently, the lawyers moved to strike out that
    portion of the plaintiffs pleading, arguing that it disclosed no reasonable
    cause of action because the statements made by the lawyers during the OSC
    hearing were protected by absolute privilege.  This court viewed the interplay
    between a lawyers obligation arising out of the duty of loyalty to a client
    and the protection afforded to a lawyer by the doctrine of absolute privilege
    as central to the attack on the plaintiffs pleading.  It concluded, at para.
    69 of its reasons, that it was at least arguable that, in a proper case and on
    a full record, the duty of loyalty owed by a lawyer to a client could trump the
    immunity afforded by the doctrine of absolute privilege, and this court was not
    prepared to strike out the claim on a Rule 21.01(1)(b) motion.

[44]

The
    appellants draw on
Amato
to advance two reasons why absolute privilege
    should not attach to the Underwood Letter.  First, the appellants contend that
    just as
Amato
held that a duty of loyalty by a lawyer might trump the
    immunity afforded by absolute privilege, similarly a physicians duty not to
    threaten to harm his patient could be held to trump absolute privilege.  In my
    view, the appellants argument overlooks a material difference between the
    circumstances in
Amato
and those in the present case.  In
Amato
the disputed statements were made by lawyers during the course of their
    retainer by the plaintiff clients, thereby giving rise to a possible conflict
    between the lawyers duty of loyalty to their clients and absolute privilege.
    By contrast, in the present case the statutory regime concerning consent to
    medical treatment established by the
Health Care Consent Act
, S.O.
    1996, c. 2, Sched. A (
HCCA
) recognizes that disputes over
    appropriate medical treatment may arise between treating physicians and a
    patients substitute decision-maker, and the
HCCA
establishes a
    mechanism for resolving those disputes through applications to the Consent and
    Capacity Board:
Cuthbertson
, at para. 2.  It is difficult to see how a
    duty of loyalty by the physician in respect of treatment decisions for a
    patient  akin to the duty of loyalty owed by a lawyer to a client discussed in
Amato
 could arise when the statutory regime governing treatment
    decisions specifically recognizes that the physician and the substitute
    decision-maker may disagree about a treatment plan.

[45]

Placed
    in that context, the Underwood Letter communicated the physicians views on
    treatment and discussed some of the mechanics involved in resorting to the
    courts to resolve the dispute, as previously proposed by counsel for the
    Rasouli Family.  The Underwood Letter did not create a potential conflict
    between the principles of duty of loyalty and absolute privilege, which was the
    concern of this court in
Amato
.

[46]

Second,
    the appellants submit that the integrity of the justice system is not protected
    by extending immunity to a physician who threatens to end his patients life
    unless the intended victim has resort to that justice system to prevent the
    injustice of his own death.  The appellants characterize the Underwood Letter
    as a threat.  When considering whether the doctrine of absolute privilege applies
    to a particular communication, the analysis necessarily focuses on the occasion
    on which a communication was made, not on its content.  Nevertheless, in
    assessing this particular submission advanced by the appellants, one cannot
    ignore the judicial statements made in the Prior Proceedings which described
    the dispute between the appellants and the respondent physicians over the
    treatment plan for Mr. Rasouli as one of public importance which merited
    judicial consideration.  In the Superior Court of Justice decision, Himel J.
    stated, at para. 103:

It is clear from the evidence that the hospital, doctors and
    substitute decision-maker in this case all have as their priority the best
    interests of the applicant [Mr. Rasouli].

In its reasons, this court stated, at para. 16:

For reasons that follow, we would dismiss the appeal.  In so
    concluding, we do not minimize the concerns raised by the appellants [the physicians].
    They are serious and warrant careful consideration.

Finally, the Supreme Court of Canada, at para. 205 of
    its reasons, concluded that the parties should bear their own costs of the
    appeal [i]n light of the public importance of the questions raised in this
    appeal.

[47]

In
    sum, I see no reason to interfere with the conclusion of the motion judge that
    the appellants remaining claims constitute an abuse of process, for the
    purpose of Rule 21.01(3)(d), and should be dismissed.  In light of the specific
    circumstances in which the Underwood Letter was written, as described above, I
    conclude that this is a clear case in which the communication was protected by
    the doctrine of absolute privilege.

VI.

DISPOSITION

[48]

For
    those reasons, I would dismiss the appeal.

[49]

The
    parties agreed that the costs of the appeal should be fixed at $7,500, all
    inclusive, so I order the appellants to pay the respondents that amount.

Released: February 20, 2015 (A.H.)

David
    Brown J.A.

I agree
    Alexandra Hoy A.C.J.O.

I
    agree K. van Rensburg J.A.