CITATION:
United States of
          America v.
Khadr
, 2011
          ONCA 358

DATE: 20110506

DOCKET: C52633

COURT OF APPEAL FOR ONTARIO

Laskin, Sharpe and Cronk JJ.A.

BETWEEN

The
          Attorney General of Canada on Behalf of The United States of America

Appellant

and

Abdullah
Khadr

Respondent

Richard Kramer and Matthew
          Sullivan, for the appellant

Dennis
Edney
and Nathan J.
Whitling
, for the respondent

Heard: April 8, 2011

On appeal from the stay of
          extradition proceedings of Justice Christopher M. Speyer of the Superior
          Court of Justice dated August 4, 2010, with reasons reported at (2010), 258
          C.C.C. (3d) 231.

Sharpe J.A.:

[1]

This appeal raises fundamental issues concerning the
    appropriate judicial response to a violation of the human rights of an
    individual sought for extradition on terrorism charges.  The United States of America paid the
    Pakistani intelligence agency, the Inter-Services Intelligence Directorate (the
    ISI), half a million dollars to abduct Abdullah
Khadr
in Islamabad, Pakistan in 2004.
Khadr
, a Canadian citizen, was suspected of supplying
    weapons to Al Qaeda forces in Pakistan and Afghanistan.  Following his abduction,
Khadr
was secretly held in detention for fourteen months.  He was beaten until he cooperated with the ISI,
    who interrogated him for intelligence purposes.  The ISI refused to deal with the Canadian
    government but did have contact with a CSIS official.  The American authorities discouraged the CSIS
    officials request that
Khadr
be granted consular
    access, and the ISI denied access for three months.  The ISI refused to bring
Khadr
before the Pakistani courts.  After the ISI
    had exhausted
Khadr
as a source of anti-terrorism
    intelligence, it was prepared to release him.  The Americans insisted that the ISI hold
Khadr
for a further six months in secret detention, to
    permit the United States to conduct a criminal investigation and start the
    process for
Khadrs
possible rendition to the United
    States.  When
Khadr
was finally repatriated to Canada, the United States sought to have him
    extradited on terrorism charges.

[2]

The Superior Court judge who conducted the extradition
    committal hearing concluded, at
para
. 150, that the
    sum of the human rights violations suffered by
Khadr
is both shocking and unjustifiable.  The
    judge granted a stay of proceedings on the basis that to permit the proceedings
    to continue in the face of the requesting states misconduct would constitute
    an abuse of the judicial process.

[3]

On behalf of the United States, the Attorney General of
    Canada appeals to this court, arguing that the extradition judge had no
    jurisdiction to grant a stay, and that even if he did, this case did not
    qualify as the clearest of cases warranting a stay.

[4]

I would dismiss the appeal.  There is no appeal against the extradition
    judges finding that the human rights violations were shocking and
    unjustifiable.  Because of the requesting
    states misconduct, proceeding with the extradition committal hearing
    threatened the courts integrity.  Responding
    to that threat was a judicial matter to be dealt with by the extradition judge,
    not an executive decision reserved to the Minister.  The extradition judge did not err in
    concluding, at
para
. 150, that [
i
]n
    civilized democracies, the rule of law must prevail.  Moreover, the remedy of a stay of extradition
    proceedings did not, as the Attorney General submits, allow an admitted terrorist
    collaborator to walk free.
Khadr
is liable to prosecution in Canada for his alleged
    terrorist crimes.  The stay granted by
    the extradition judge does not impair the Attorney Generals ability to
    exercise his lawful powers to commence a prosecution in Canada.

FACTS

[5]

While there is a substantial record in this case, the
    essential facts as found by the extradition judge are not in dispute and may be
    stated briefly.

[6]

Khadr
was born in Canada in
    1981.  He moved with his family to
    Pakistan when he was three years old, and then moved back and forth between
    Canada and Pakistan until 1997 when the family settled in Pakistan.
Khadrs
father was
    associated with Osama Bin Laden, and the
Khadr
family
    had moved to Afghanistan by the time of the 2001 invasion by coalition forces.  Sometime after the invasion, the
Khadr
family returned to Islamabad, Pakistan.

Khadrs
apprehension and detention in Pakistan

[7]

The United States alleges that in 2003 and 2004,
Khadr
procured munitions and explosives to be used by Al
    Qaeda against the United States and coalition forces in Afghanistan.  The United States paid the ISI $500,000 to
    capture and detain
Khadr
for interrogation and, on
    October 15, 2004, ISI agents apprehended
Khadr
in
    Islamabad.  The American and Pakistani
    authorities apprehended and interrogated
Khadr
solely
    for intelligence purposes and initially had no intention of laying criminal
    charges.  From the time
Khadr
was apprehended to his release fourteen months later,
    the ISI refused to lay criminal charges, or to bring
Khadr
before or submit his case to the courts of Pakistan.  It was only after
Khadrs
use as an intelligence source was exhausted some six months after he was
    apprehended that the United States turned to the possibility of criminal
    prosecution.

[8]

The extradition judge did not accept
Khadrs
evidence that he had been subjected to prolonged
    torture while in the ISIs custody.  However,
    the extradition judge did find that
Khadr
was mistreated
    and physically abused during the first three days of his detention, and that he
    was thereafter held in a hostile environment.  The extradition judge found that the physical
    abuse and mistreatment
Khadr
suffered led him to
    cooperate with his ISI and American interrogators.  He also found, at
para
.
    124, that while the American authorities did not have actual knowledge that
Khadr
would be abused, given the way the ISI operated and Pakistans
    reputation for human rights abuses in such circumstances, the United States ought
    to have known that there was a credible risk that [
Khadr
]
    would be mistreated.

[9]

Khadr
was detained in
    Pakistan for fourteen months in a secret detention centre without any charges
    being laid and without access to legal counsel, the court or a tribunal.  For the first three months of his detention,
Khadr
was denied access to Canadian consular services.

[10]

By the end of October 2004, the United States privately
    informed CSIS that
Khadr
was being detained, even
    though the ISI refused to acknowledge that fact.  The ISI refused to deal with Canadian
    government officials but did have regular contact with John, the senior CSIS
    official on the ground in Pakistan during the period of
Khadrs
detention.  In his capacity as an
    intelligence officer, John interviewed
Khadr
for
    intelligence purposes and served as the
de
    facto
point of contact between the Pakistani authorities and the Canadian
    government in relation to
Khadrs
situation.

[11]

Johns attempts to arrange for consular access were
    rebuffed by the ISI.  The extradition
    judge found that the American authorities requested CSISs forbearance in
    insisting on prompt consular access, at
para
. 55.  Consular visits were eventually permitted in
    January, April and September 2005.

[12]

By March 2005, the ISI decided that it had exhausted
Khadr
as an intelligence source and wanted the RCMP to
    charge him and take him back to Canada.  John arranged for the RCMP to visit and
    interview
Khadr
in April 2005, but the ISI refused to
    allow the interview to be videotaped or to allow
Khadr
access to legal counsel, and it insisted that any interview be conducted in the
    presence of a Pakistani official.  The
    RCMP officer conducting the interview decided in these circumstances not to
    take a statement for law enforcement purposes and, without any evidence to
    support charges, the RCMP was unwilling to take
Khadr
into custody.

[13]

In June 2005, the ISI informed CSIS that
Khadr
would not be prosecuted in Pakistan and that, as it
    was unwilling to detain him any longer, he would be released and returned to
    Canada.  At this point, American
    intelligence officials pressured the ISI to continue detaining
Khadr
so that the FBI could interrogate him with a view to
    criminal prosecution in the United States.  That interrogation took place in July 2005.  The American authorities then asked the ISI to
    allow for
Khadrs
rendition to the United States.  The ISI refused to do so without permission
    from Canada and Canada refused to consent.  Finally, on December 2, 2005,
Khadr
was sent to Canada.

Khadrs
arrival and later arrest in Canada

[14]

Upon his arrival at Pearson Airport in Toronto,
Khadr
was greeted by the RCMP officer who had interviewed
    him in Pakistan.  The officer advised
Khadr
that he was free to leave, and that he was under no
    obligation to cooperate, but that the RCMP would be interested in speaking with
    him.  Before his abduction in 2004,
Khadr
had told CSIS that he was willing to talk, and upon
    his arrival in Toronto,
Khadr
agreed to be
    interviewed by the RCMP.  He was taken to
    a small room at the airport, given a full caution and offered access to legal
    counsel, which he declined.  The
    interview was video recorded and lasted about two and one half hours.

[15]

Within a few days of the Pearson statement, the same
    RCMP officer asked
Khadr
if he would be willing to
    speak to the FBI.
Khadr
agreed, and the same FBI officers who had interrogated him in Pakistan
    conducted an interview at the Delta Hotel in Toronto.  Many of the questions posed during the Delta
    interview made reference to
Khadrs
previous
    statement in Pakistan.
Khadr
was fully cooperative and forthright in his
    responses.

[16]

Criminal charges were filed against
Khadr
in Boston.  On December 17, 2005,
Khadr
was arrested on a Provisional Arrest Warrant and
    detained for extradition to the United States.  He was denied bail and held in custody until
    the extradition judge issued the stay of proceedings on August 4, 2010.

[17]

A formal Request for Extradition was made to Canada on
    February 9, 2006.  On March 15, 2006, the
    Minister of Justice issued an Authority to Proceed (ATP) pursuant to s. 15 of
    the
Extradition Act
, S.C. 1999,
    c. 18 (the Act), authorizing the Attorney General to seek an order for
Khadrs
committal.  The Canadian offences identified in the ATP that
    correspond to the conduct alleged in the Boston charges are:

·

Directly or indirectly providing or
    making property available knowing that, in whole or in part, it will be used by
    or will benefit a terrorist group contrary to s. 83.03(b) of the
Criminal
    Code
;

·

Knowingly participating in or
    contributing to, directly or indirectly, any activity of a terrorist group for
    the purpose of enhancing the ability of the terrorist group to facilitate or
    carry out a terrorist activity contrary to s. 83.18 of the
Criminal Code
;

·

Conspiracy to traffic in weapons
    contrary to ss. 99 and 465(1)(c) of the
Criminal Code
;

·

Possession of an explosive substance
    contrary to s. 82(1) of the
Criminal Code
;

·

Commission of an indictable offence for
    the benefit of, at the direction of, or in association with, a terrorist group
    contrary to s. 83.2 of the
Criminal Code
.

[18]

The Record of the Case recites three statements by
Khadr
as evidence to support the Request for Extradition:

·

The statement taken by the FBI in
    Pakistan over a three-day period in July 2005;

·

The statement taken by the RCMP at
    Pearson Airport on December 2, 2005; and

·

The statement taken by the FBI at the
    Delta Hotel in Toronto on December 4, 2005.

[19]

Khadr
sought production of American
    and Canadian documents.  The Attorney
    General refused to disclose any material from the United States, but voluntarily
    disclosed CSIS, Department of Foreign Affairs and International Trade (DFAIT)
    and RCMP documents redacted for reasons of national security.
Khadr
challenged the
    redactions under s. 38.04(2
)(
c) of the
Canada Evidence Act
, R.S.C. 1985, c. C-5.
     The Federal Court judge generally upheld
    the claims of privilege but ordered that a summary of some information be
    provided, including the important fact that the United States had paid the bounty.
     The extradition judge refused
Khadrs
request for disclosure of the American documents,
    initially in July 2007, before the Federal Court proceedings, and again in
    January 2009, after the summary ordered by the Federal Court judge had been
    provided.

Proceedings
    before the Extradition Judge

[20]

The extradition judge conducted a blended hearing over
    several days that embraced all issues: the extradition hearing proper; a
    voluntariness
voir
dire
relating to the Pearson and Delta
    statements; and
Khadrs
motion for a
Charter
remedy or stay of proceedings
    based upon abuse of process.

[21]

The extradition judge summarized his key factual
    findings in relation to the abuse of process motion, at
para
.
    124:

A summary of my findings is as follows:

1.
Khadr
was
    captured in Islamabad, Pakistan by the ISI at the behest of the United States,
    who paid a $500,000 bounty for his arrest.

2.
Khadr
was
    initially sought by American officials solely for intelligence purposes and not
    for criminal prosecution purposes.

3.    I am satisfied that
Khadrs
detention by the ISI was both arbitrary and illegal, according to the law of
    Pakistan.

4.    During his initial three days of
    detention,
Khadr
was mistreated and physically
    abused, but not on the level of severity he alleges in his affidavit.  I am satisfied that the United States intelligence
    agency did not have actual knowledge that
Khadr
would
    be abused when it paid the bounty for his arrest.  However, I am equally satisfied this agency
    ought to have known that there was a credible risk he would be mistreated.

5.
Khadrs
rights to consular access without delay were denied by Pakistan. The United
    States and Pakistan collaborated in this delay in order to facilitate the
    completion of American intelligence interrogations.

6.    I am satisfied for reasons previously
    stated that the United States intelligence agency pressured the ISI to delay
Khadrs
repatriation to Canada for a period of six months.
    The delay was caused by American dissatisfaction with the decision to return
Khadr
to Canada without charges being laid. This delay was
    contrary to Canadian officials expectations and wishes that
Khadr
be repatriated. It was a source of frustration:
    Canadian officials had fully expected
Khadr
to be
    released and had made preparations for his return to Canada.

[22]

The extradition judge found that the Canadian
    authorities, CSIS, DFAIT and the RCMP, had acted properly and lawfully
    throughout the process.  In Pakistan,
    CSIS and DFAIT endeavoured to gain consular access for
Khadr
and to have his case brought before the Pakistani courts.  CSIS and DFAIT also refused to agree to
Khadrs
rendition to the United States.  The judge also found that the RCMP had
    respected
Khadrs
legal and
Charter
rights when questioning him both in Pakistan and at Pearson
    Airport.

[23]

The extradition judge reviewed the law relating to abuse
    of process and, at
para
.
132,
identified two categories of cases: the first category dealing with state
    misconduct that implicates the fairness of the hearing, and the second residual
    category unrelated to the fairness of the hearing, but involving state conduct
    which undermines the integrity of the judicial process.  He concluded, at
para
.
    133, that this case fell within the residual category, as

one
of those exceptional
    cases that involves state misconduct that contravenes fundamental notions of
    justice, and which undermines the justice system.  The extrajudicial misconduct in this case does
    not, in the narrow procedural sense, compromise the fairness of this
    extradition hearing.  However, that is
    not to say the conduct of the Requesting State is not linked or connected to
    this proceeding.  I disagree with the
    submission by counsel for the Attorney General that there is no nexus between
    the abuse and the fairness of this hearing.  On the contrary, in a broader sense, the gross
    misconduct that occurred in Pakistan very much affects these proceedings in
    Canada.  The basis of this case has its
    genesis in the serious misconduct by the Requesting State.  The Requesting State is seeking a benefit from
    this court, committal, based on evidence derived from its own misconduct.

[24]

The extradition judge recognized, at
para
.
150, that
a stay should only
    be granted in the clearest of cases.  He
    also recognized that the collection of reliable intelligence is of the highest
    importance in protecting and securing a nation from the dangers of terrorism
    and that there will always be a tension, especially in troubled times, in the
    balancing of intelligence and security issues with cherished democratic values,
    such as the rule of law and protection from human rights violations.  He concluded, however, that a stay was
    warranted in this case:

In civilized democracies, the rule of law must
    prevail over intelligence objectives.  In
    this case, the sum of the human rights violations suffered by
Khadr
is both shocking and unjustifiable.  Although
Khadr
may
    have possessed information of intelligence value, he is still entitled to the
    safeguards and benefit of the law, and not to arbitrary and illegal detention
    in a secret detention centre where he was subjected to physical abuse.  The United States was the driving force behind
Khadrs
fourteen month detention in Pakistan, paying
    a $500,000 bounty for his apprehension.  The
    United States intelligence agency acted in concert with the ISI to delay
    consular access by DFAIT to
Khadr
for three months,
    contrary to the provisions of the
Vienna Convention
.  The United States, contrary to Canadas
    wishes, pressured the ISI to delay
Khadrs
repatriation because of its dissatisfaction with
Khadr
being released without charge, even though there was no admissible evidence
    upon which to base charges at that time.  In my view, given this gross misconduct, there
    cannot be a clearer case that warrants a stay.

[25]

The extradition judge also gave reasons disposing of
    the other issues.  He ruled that in view
    of
Khadrs
detention and treatment before and at the
    time the FBI statement was taken in Pakistan, that statement should be excluded
    on the ground that it was both manifestly unreliable and gathered in an
    abusive manner, at
para
. 163.  He further held, at
para
.
    175, that the Delta Hotel statement should also be excluded, as it was derived
    and contaminated in an overwhelming fashion by the virtual cross-examination
    on the excluded Pakistan statement.

[26]

However, the extradition judge ruled that the statement
    taken by the RCMP at Pearson Airport should not be excluded.  Unlike the Delta Hotel statement, the Pearson
    statement was not contaminated by what had occurred in Pakistan.  The extradition judge found, at
para
.
165, that
the RCMP officers
    conduct was exemplary, that
Khadr
was fully aware
    that he was not under arrest and free to leave at any time, and that the
    statement had not been induced by threats or promises.
Khadr
was told to
    disregard any statements he had made in Pakistan and was fully advised of his
    right to counsel and right to silence.

[27]

The extradition judge concluded that, had he not stayed
    the proceeding for abuse of process, the evidence contained in the Pearson
    statement was sufficient to commit
Khadr
on all the
    offences identified in the ATP, except for possession of an explosive substance
    contrary to s. 82(1) of the
Criminal Code
.

ISSUES

[28]

The Attorney General does not appeal any of the
    extradition judges findings of fact or his ruling excluding the Pakistan and
    Delta Hotel statements.  The grounds of
    appeal are as follows:

1. Did the extradition judge
    have jurisdiction to stay extradition proceedings on the ground of abuse of
    process?

2. Did the extradition judge
    err in determining that the clearest of cases standard for a stay of
    proceedings had been met
by:

(a)
failing
to consider whether any abuse would be perpetuated;

(b)
exceeding
his jurisdiction by considering foreign law;

(c)
failing
to order a less draconian yet effective remedy; or

(d)
failing
to conduct a meaningful balancing?

ANALYSIS

1.  Did the extradition judge have jurisdiction to
    stay extradition proceedings on the ground of abuse of process?

The
    residual power to grant a stay for an abuse of process

[29]

In

R. v.
Jewitt
,

[1985] 2 S.C.R. 128
,
    the Supreme Court of Canada affirmed the common law power of a superior court
    judge to enter a stay of proceedings to remedy an abuse of process.  At p. 135, Dickson C.J., writing for the
    court, adopted the proposition stated by
Dubin
J.A. of
    this court in
R. v. Young
(1984), 46 O.R. (2d) 520
,
at
p. 551:

[T]here is a residual discretion in a trial court
    judge to stay proceedings where compelling an accused to stand trial would
    violate those fundamental principles of justice which underlie the communitys
    sense of fair play and decency and to prevent the abuse of a courts process
    through oppressive or vexatious proceedings.

[30]

Dickson C.J. also adopted the qualification added in
Young
that this is a power which can be
    exercised only in the clearest of cases.

[31]

While this discretion is ordinarily exercised to ensure
    procedural fairness, the residual category extends to cases where the
    misconduct does not produce procedural unfairness.  The residual power to grant a stay of
    proceedings for abuse of process where the individuals right to a fair trial
    is not implicated was described by
LHeureux-Dubé
J.
    in
R. v. OConnor
, [1995] 4 S.C.R.
    411, at
para
. 73, as addressing the panoply of diverse and sometimes unforeseeable
    circumstances in which a prosecution is conducted in such a manner as to
    connote unfairness or
vexatiousness
of such a degree
    that it contravenes fundamental notions of justice and thus undermines the
    integrity of the judicial process.

[32]

The residual power to stay proceedings that do not
    produce procedural unfairness is not focused on protecting the rights of the
    individual litigant.  Rather, it is aimed
    at vindicating the courts integrity and the publics confidence in the legal
    process in the face of improper state conduct.  The prosecution is set aside, not on the
    merits, but because it is tainted to such a degree that to allow it to proceed
    would tarnish the integrity of the court:
R.
    v. Conway
, [1989] 1 S.C.R. 1659, at p. 1667.  As Lamer J. stated in
R. v. Mack
, [1988] 2
    S.C.R. 903, at p. 942:

The court is, in effect, saying it cannot condone
    or be seen to lend a stamp of approval to behaviour which transcends what our
    society perceives to be acceptable on the part of the state.  The stay of the prosecution of the accused is
    the manifestation of the courts disapproval of the states conduct.  The issuance of the stay obviously benefits
    the accused but the Court is primarily concerned with a larger issue: the
    maintenance of public confidence in the legal and judicial process.  In this way, the benefit to the accused is really
    a derivative one.

[33]

The Attorney Generals core submission on this appeal
    is that the conduct of the requesting state was entirely unrelated to the
    committal hearing and did not implicate the fairness of the hearing.  By granting a stay on the residual ground that
    the requesting states conduct undermined the integrity of the judicial
    process, the extradition judge exceeded his jurisdiction and usurped the
    Minister of Justices allegedly exclusive jurisdiction under the
Extradition Act
, s. 44(1)(a), to refuse
    surrender if it would be unjust or oppressive having regard to all the
    relevant circumstances.

Does the
    Minister of Justices jurisdiction under the
Extradition Act
limit the courts residual power to grant a
    stay?

[34]

In assessing this submission, I recognize that the
    extradition process often involves executive discretion on sensitive matters calling
    for political judgment.  The courts must
    accord appropriate deference to ministerial discretion in those areas.  However, the extradition process embraces as
    one of its central and essential components a significant role for the
    judiciary and, in this
case,
we have not yet reached
    the phase in the process where deference to ministerial discretion may be
    invoked.  This case concerns the scope of
    the judicial role, and the issue is whether the general language of s. 44(1
)(
a) of the Act, conferring authority on the Minister to
    refuse to make a surrender order at the end of the process, deprives a court of
    its power to protect its own integrity by staying proceedings on the ground of
    abuse of process.  In my view, s. 44(1
)(
a) does not have that effect.  The Attorney Generals contention that an
    extradition judge has no jurisdiction to stay proceedings for abuse of process
    under the residual category is wrong in law and should not be accepted.

[35]

I begin by considering the purpose and importance of
    the judicial phase of the process established by the
Extradition Act
:
    see
Canada (Justice) v.
Fischbacher
, [2009] 3 S.C.R. 170;
United States of
    America v.
Ferras
; United States of America v.
Latty
,
[2006] 2 S.C.R. 77.

[36]

There are four phases involved in the extradition
    process.  Responsibility for the first
    phase of the process is assigned to the executive.  Section 15 of the Act gives the Minister of
    Justice authority to issue an ATP authorizing the Attorney General to seek, on
    behalf of the extradition partner, an order of a court for the committal into
    custody of the person sought to await surrender.

[37]

The second phase  the phase under consideration in
    this appeal  is judicial.  Under s. 29
    of the Act,

the extradition judge is
    charged with making a judicial determination as to whether there is sufficient
    evidence of the alleged conduct that, had it occurred in Canada, would justify
    committal for trial in Canada on the offence set out in the [ATP].  The judicial phase in the extradition process
    is not subservient to the executive phases that precede and follow.  As the Supreme Court of Canada stated in
Ferras
,

at
para
. 23, the judicial phase must not play a
    supportive or subservient role to the executive.  The judicial phase is an essential component
    that necessarily retains all its attributes to ensure that the basic demands
    of justice are observed and that the person sought for extradition is accorded
    fair process:
Ferras
,

at
para
. 19.  The separate and independent judicial
    phaseprovides a check against state excess by protecting the integrity of the
    proceedings and the interests of the named person in relation to the state
    process:
Ferras
,
    at
para
. 23.

[38]

The third phase engages ministerial executive
    discretion.  The Minister may, pursuant
    to s. 40, order that the person sought be surrendered to the extradition
    partner, or, as already noted, pursuant to s. 44(1)(a), refuse surrender if it
    would be unjust or oppressive having regard to all the relevant circumstances.

[39]

It is at the final supervisory stage, where the
    provincial appellate courts have jurisdiction to entertain appeals from the
    committal order of the extradition judge under s. 49, and applications for
    judicial review of the Ministers surrender order under s. 57, that curial
    deference becomes significant.  As stated
    by this court in
Whitely v. United States of America
(1994),
    20 O.R. (3d) 794, at p. 805,
affd
[1996] 1 S.C.R.
    467:

[I]f the Minister violates the fugitives
    constitutional rights or otherwise errs in law, or if the Minister denies the
    fugitive procedural fairness, acts arbitrarily, in bad faith or for improper
    motives, or if the Ministers decision is plainly unreasonable then the reviewing
    court is entitled to interfere; otherwise the court should defer to the
    Ministers surrender decision.

[40]

The division of responsibility between the Minister and
    the courts in relation to the application of the
Charter
and the common law jurisdiction to grant a stay of
    proceedings

was dealt with in
United States of America v. Cobb
,
    [2001] 1 S.C.R. 587, and
United States of
    America v. Kwok
, [2001] 1 S.C.R. 532.  Those cases hold that
Charter
issues which by their very nature arise only at the
    surrender stage  the s. 6
Charter
right to remain in Canada and the s. 12
Charter
right not to be subjected to cruel and unusual treatment or punishment  fall within
    the jurisdiction of the Minister, not the extradition judge.
Cobb
also holds that issues which by their very nature pertain to the committal
    stage  including the courts common law power to stay proceedings on grounds
    of abuse of process in order to protect the courts integrity  fall within the
    jurisdiction of the extradition judge, not the Minister.

[41]

Cobb
and its
    companion case,
United States of America
    v.
Shulman
,
[2001] 1 S.C.R. 616, hold that the
    extradition judge has the discretion to grant a stay on grounds of abuse of
    process where making a committal order would taint the integrity of the court due
    to the requesting states conduct.  Of
    particular importance to this appeal is the statement of Arbour J., writing for
    the court in
Cobb
, at
paras
. 44 and 48, rejecting the argument that it was for
    the Minister alone to deal with complaints regarding the requesting states conduct
    at the surrender stage:

These concerns, and the
    remedies to which they give rise, properly belong to the judicial phase of the
    extradition process as they are not dependent on the ultimate outcome of either
    the committal or the surrender decision.
Nothing the Minister could have done would address the unfairness which
    would taint a committal order obtained under the present
    circumstances.   The Minister is not the guardian of the integrity of
    the courts.  It is for the courts themselves to guard and preserve their
    integrity.
This is therefore not a
    case that must await the executive decision.  The violations of the
    appellants rights occurred at the judicial stage of the process and call for
    redress at that stage and in that forum.

As I indicated before, the
    existence of potential remedies at the executive stage does not oust the
    jurisdiction of the courts to control their own process in cases such as here,
    where
the courts are required to preserve
    the integrity of their own proceedings
. [Emphasis added.]

[42]

In
Cobb
, the United
    States judge and prosecuting attorney made statements suggesting that if the
    parties sought for extradition contested the process, they would be given the
    maximum sentence and subjected to homosexual rape in prison.  The Supreme Court of Canada restored a stay of
    proceedings granted by the extradition judge on the ground that the conduct of
    the United States judge and prosecuting attorney shocks the Canadian
    conscience and is simply not acceptable, at
paras
.
    14, 54.

[43]

The Attorney General argues that
Cobb
is distinguishable as it dealt with conduct by the requesting
    state that had a direct bearing on the committal hearing.  It is submitted that the offensive statements in
Cobb
were made to intimidate the
    parties sought from exercising their right to an extradition hearing, while the
    misconduct of the requesting state in this case did not directly implicate the
    extradition hearing.

[44]

I disagree.  First,
    as the extradition judge pointed out, at
para
. 133,
    there was a nexus between the requesting states misconduct and the committal
    hearing:

[T]he gross misconduct that occurred in Pakistan
    very much affects these proceedings in Canada.  The basis of this case has its genesis in the
    serious misconduct by the Requesting State.  The Requesting State is seeking a benefit from
    this court, committal, based on evidence derived from its own misconduct.

[45]

I agree with that analysis.  To the extent that there must be a nexus
    between the conduct alleged to constitute an abuse of process and the committal
    hearing itself, one was made out on the facts of this case.

[46]

Second, I disagree with the Attorney Generals narrow
    reading of
Cobb
.  While
Cobb
involved threats or inducements to force the person sought to abandon the right
    to a hearing, those comments did not implicate the fairness of the committal
    hearing itself, and the residual category of abuse of process was therefore
    necessarily engaged.  I am not persuaded
    that there is anything in
Cobb
that
    limits or curtails the scope of the residual category.

[47]

The Attorney General cites no authority adopting this narrow
    view of
Cobb
.  On the other hand, there is authority, in
    addition to
Cobb
, supporting the
    proposition that an extradition judge does have jurisdiction to stay proceedings
    for an abuse of process on residual grounds, unrelated to the fairness of the
    hearing.  In
R. v.
Larosa
(2002), 166 C.C.C. (3d) 449 (Ont.
    C.A.),
at
para.
52, Doherty J.A. stated that
    an extradition judge has the jurisdiction to grant a stay if the actual
    conduct of the committal proceedings produces unfairness which reaches the
    level of a breach of s. 7 or an abuse of process, but also where proceeding
    with committal proceedings would amount to an abuse of process or a breach of
    the principles of fundamental justiceno matter how fairly that proceeding
    might be conducted.

[48]

In
R. v.
Horseferry
Road Magistrates
    Court, Ex parte Bennett
, [1994] 1 A.C. 42, the House of Lords dealt with
    the different issue of a disguised extradition, where an individual had been
    subjected to improper treatment in a foreign jurisdiction and brought before an
    English Court.  Nevertheless,
Bennett
supports the need to preserve a
    broad residual judicial discretion to deal with situations that impugn or
    threaten the integrity of the judicial process.  At p. 62, Lord Griffiths stated that even
    though the practice did not implicate trial fairness, it would be unthinkable
    for the court to stand idly by rather than end the proceedings as an abuse of
    process.  In addition, Lord Bridge of
    Harwich stated, at pp. 67-68:

There is, I think, no principle more basic to any
    proper system of law than the maintenance of the rule of law itself... To hold
    that the court may turn a blind eye to executive lawlessness beyond the
    frontiers of its own jurisdiction is, to my mind, an insular and unacceptable
    view Since the prosecution could never have been brought if the defendant had
    not been illegally abducted, the whole proceeding is tainted.

[49]

See also
United
    States of America v.
Tollman
(2006), 212 C.C.C.
    (3d) 511 (Ont. S.C.), at
para
. 18;
United States of America v.
Licht
(2002), 168 C.C.C. (3d) 287 (B.C.S.C.), at
para
. 64: The conduct of United States agents in this case
    is so egregious as to constitute an abuse of process to disentitle the
    requesting state from the assistance of this court.

[50]

Recognizing the extradition judges residual power to
    stay proceedings for an abuse of process also coincides with the deeply-embedded
    common law principle that, absent express legislation to the contrary, the
    courts must not surrender the authority to protect their own integrity to the
    executive.  It has long been recognized
    that the jurisdiction of the superior courts is not taken away, except by
    express words or necessary implication:
Albon
v.
Pyke
(1842), 4 Man. & G. 421;
Canada (A.G.) v.
TeleZone
Inc.
(2010),

327 D.L.R. (4th) 527
    (S.C.C.), at
paras
. 42-43.  In
Connelly
    v. Director of Public Prosecutions
, [1964] A.C. 1254 (H.L.), a seminal
    authority on abuse of process, Lord Devlin insisted, at p. 1354, upon the need
    for the courts themselves to assert and maintain the power to ensure the
    integrity of the law and the judicial process:

Are the courts to rely on the Executive to protect
    their process from abuse?  Have they not
    themselves an inescapable duty to secure fair treatment for those who come or
    are brought before them?  To questions of
    this sort there is only one possible answer.  The courts cannot contemplate for a moment the
    transference to the Executive of the responsibility for seeing that the process
    of law is not abused.

That statement was adopted by
    Dickson C.J. in
Jewitt
,
    at
para
. 25.

[51]

I am unable to read the general permissive language of
    s. 44(1
)(
a), conferring ministerial discretion at the
    surrender stage, as removing the Superior Courts jurisdiction to grant a stay
    for abuse of process at the committal stage.  The jurisdiction to stay proceedings on the
    grounds of abuse of process lies at the heart of the courts integrity and the
    independence of the judicial process.  That core jurisdiction should not be hobbled by the narrow
    interpretation urged upon us by the Attorney General.  To accept that interpretation would not only
    unduly weaken judicial authority, but would undermine the integrity of the
    extradition process itself by subverting the courts capacity to ensure the
    necessary element of scrutiny by an independent judiciary.

[52]

The extradition judge exercised a well-established
    authority to stay proceedings on grounds of abuse of process in order to
    protect the integrity of the courts and the judicial process.  Accordingly, I would dismiss the Attorney
    Generals first ground of appeal.

2.  Did the
    extradition judge err in determining that the

clearest of cases

standard for a
    stay of proceedings had been met?

[53]

As a stay of proceedings is a discretionary remedy, an
    appellate court will be justified in interveningonly if the trial judge
    misdirects himself or if his decision is so clearly wrong as to amount to an
    injustice:
Canada (Minister of
    Citizenship and Immigration) v.
Tobiass
, [1997] 3
    S.C.R. 391, at
para
. 87;
R. v.
Regan
, [2002] 1 S.C.R. 297, at
para
.
    117.

[54]

The Attorney General accepts that an appellate court
    must accord substantial deference to a superior court judges discretionary
    decision to grant a stay, but submits that the extradition judge erred in
    several respects and that such errors justify this courts intervention.

(a) Failing to consider whether any abuse would be
    perpetuated

[55]

The Attorney General submits that the extradition judge
    erred by failing to consider whether the abuse of process he found would be perpetuated
    if
Khadr
were committed for extradition and
    surrendered by the Minister.

[56]

That submission is essentially based on the more typical
    cases falling within the first category of abuse of conduct, where the abuse
    leads to procedural unfairness: See
OConnor
,
    at
para
. 75;
Regan
,
    at
para
. 54.  While
    ordinarily, a stay will only be granted to remedy an abuse that would be
perpetuated,
there are exceptional cases in which the past
    misconduct is so egregious that the mere fact of going forward in the light of
    it will be offensive:
Tobiass
,
at
para
. 91.  As noted by the extradition judge, at
paras
. 132-33, these cases fall within the residual
    category of abuse of process.

[57]

The extradition judge certainly took into account the clearest
    of cases requirement for a stay and directed his mind to the prospective
    element of the remedy he granted.  Citing
Tobiass
, he
    stated, at
para
.
151, that a stay
    was appropriate, not as a form of punishment for past wrongdoing, but rather [as]
    a specific deterrent; that is, a remedy aimed at preventing similar abuse in
    the future.
The remedy was also aimed
    at this court dissociating itself with the conduct of the requesting state.  Neither the extradition judges statement, at
para
. 150, that the sum of the human rights violations
    suffered by
Khadr
is both shocking and unjustifiable,
    nor his specific findings supporting that statement, at
para
.
124,
are appealed by the Attorney General.  In my view, those findings are sufficient to
    bring this case within the range of exceptional cases contemplated in
Tobiass

where a judge has the residual discretion
    to grant a stay on the grounds of past misconductso egregious that the mere
    fact of going forward in the light of it will be offensive.

[58]

I see no error on the part of the extradition judge
    under this ground of appeal that would justify this courts intervention.

(b) Considering foreign law

[59]

The Attorney General submits that the extradition judge
    had no jurisdiction to find that
Khadrs
abduction
    and detention were illegal under Pakistani law or to criticize the conduct of American
    and Pakistani officials in Pakistan.

[60]

The issue of illegality under Pakistani law was neither
    difficult nor contested.
Khadr
introduced a law
    professors affidavit to establish that his treatment had been illegal in
    Pakistan.  The Attorney General did not
    cross-examine that witness or object to the admissibility of the affidavit when
    it was referred to and relied on at various stages of the process.  It surely can come as no surprise that in a
    country like Pakistan with a constitution guaranteeing fundamental rights and
    freedoms, it is illegal to accept a bounty or bribe from a foreign government,
    to abduct a foreign national from the street, to beat that individual until he
    agrees to cooperate, to deny him consular access, to hold him in a secret
    detention centre for eight months while his utility as an intelligence source is
    exhausted, and then to continue to hold him in secret detention for six more
    months at the request of a foreign power.

[61]

This case is readily distinguishable from the cases
    relied on by the Attorney General, such as
Fischbacher
.  Those cases hold that an extradition judge is
    required by s. 29(1
)(
a) of the Act to determine
    whether the evidence justifies committal on the corresponding Canadian offences
    identified in the ATP and not on the foreign offences upon which the request is
    based.  In those cases, evidence of
    foreign law is irrelevant and therefore inadmissible.  In the admittedly exceptional cases such as
    this one where foreign law is relevant to the issues raised before the
    extradition judge, I can see no reason why it should not be admitted and
    considered.

[62]

Finally, the argument that the extradition judge was
    not entitled to consider the conduct of the Pakistani and American authorities
    in Pakistan is impossible to reconcile with cases such as
Cobb
;
Shulman
;
United States v.
Dynar
,
    [1997] 2 S.C.R. 462; and
R. v.
Harrer
, [1995] 3 S.C.R. 562.

[63]

Again, I see no error on the part of the extradition
    judge under this ground that would justify this courts intervention.

(c) Failing to award a less draconian yet effective
    remedy

[64]

The Attorney General submits that the extradition judge
    could and should have excluded the Pakistan and Delta Hotel statements as an
    effective but less draconian remedy and committed
Khadr
solely on the basis of the Pearson statement.

[65]

Excluding the two statements found to have been tainted
    by the misconduct of the Pakistani and American authorities certainly would have
    been less draconian.  But it was
    plainly the view of the extradition judge that, given the serious nature of the
    misconduct, merely excluding those statements would not have been an effective
    remedy.  In my view, he committed no
    error of law in coming to that conclusion.

[66]

Excluding the statements but permitting the committal
    to proceed would not accomplish what the extradition judge determined to be a necessary
    objective given the gravity of the requesting states conduct: namely, for the
    court to dissociate itself from that very conduct.  I need not repeat here the extradition judges
    assessment of the gravity of the human rights abuses perpetuated against
Khadr
and, as I have already stated, those factual findings
    are not challenged on appeal.  In my
    view, that conduct brings this case well within the range of the extradition
    judges discretion to qualify it as gross misconduct that could not be
    remedied by anything short of a stay of proceedings.

(d) Failing to conduct a meaningful balancing

[67]

The Attorney General submits that the extradition judge
    erred by failing to conduct a meaningful balancing exercise to weigh the
    gravity of the requesting states conduct against societys interest in seeing
    an alleged terrorist committed for extradition.

[68]

The starting point for analysis of this argument is the
    extradition judges finding that the gravity of the requesting states conduct
    and the shocking violations of
Khadrs
human rights
    amount in law to the clearest of cases warranting a stay.  I agree that there is a compelling societal
    interest in having an alleged terrorist sought by a requesting state committed
    for extradition.  But did the extradition
    judge exceed his discretion or err in law by failing to balance the human
    rights violations and protection of the courts integrity on the one hand, and
    the societal interest in having
Khadr
committed for extradition
    on the other?

[69]

To the extent that the Attorney Generals submission
    assumes that a judge is always required to balance the gravity of state misconduct
    against the benefit of allowing a proceeding to go forward, this submission is
    wrong and contrary to the law as stated by the Supreme Court.  Balancing is the exception, not the rule.  In
Tobiass
, at
para
. 92, and
Regan
, at
para
.
    57, the court states that it is only where it is unclear whether the abuse is
    sufficient to warrant a stay, [that] a compelling societal interest in having a
    full hearing could tip the scales in favour of proceeding.  See also
R.
    v. Tran
(2010), 103 O.R. (3d) 131 (C.A.), at
para
.
    105; Kent Roach,
Constitutional Remedies
    in Canada
,
looseleaf
(Aurora, Ont.: Canada Law
    Book, 2010), at
para
. 9.114: This balancing should
    only occur in borderline cases.  On the extradition
    judges findings, this is a clear case, not a borderline case.  It was therefore not a case where he was
    required to balance the protection and vindication of the courts integrity
    with the societal interest in responding positively to the extradition request.

[70]

This court has recently spoken on the need for a strong
    legal response to the threat of terrorism in
R. v.
Khawaja
(2010), 103 O.R. (3d) 321,
    at
para
. 231:

To be sure, terrorism is a crime unto itself.  It has no equal.  It does not stop at, nor is it limited to, the
    senseless destruction of people and property.  It is far more insidious in that it attacks
    our very way of life and seeks to destroy the fundamental values to which we
    ascribe  values that form the essence of our constitutional democracy.

[71]

But
Khawaja
dealt with the imposition of a legal penalty duly
    enacted by Parliament, for crimes established after trial and conviction.  This case poses very different questions: is a
    judge required to withhold a remedy necessary to protect the integrity of the
    judicial process, and effectively sanction serious violations of human rights,
    because of the competing societal interest in bringing alleged terrorists to
    justice?  Is a judge required by law to
    sacrifice important legal rights and democratic values in the name of ensuring
    that a proceeding against an alleged terrorist is able to go forward?  In my view, the answer to those questions is no.

[72]

Cases involving alleged terrorists or other enemies of
    the state who oppose and seek to destroy the fundamental values of democracy
    and the rule of law put our commitment to those very values to the test.  No doubt some will say that those who seek to
    destroy the rule of law should not be allowed its benefits.  I do not share that view.  I find compelling the extradition judges
    statement, at
para
. 150, that [
i
]n
    civilized democracies, the rule of law must prevail over intelligence
    objectives.

[73]

One of the most famous statements as to the need to
    maintain respect for the rule of law despite the threat of subversion in time
    of national peril is Lord
Atkins
speech in
Liversidge
v. Anderson
, [1942] A.C. 206 (H.L.).
Liversidge

concerned
    the judicial review of the ministerial power to intern persons of hostile
    origin or association involved in activities prejudicial to public safety.  At p. 244, in a memorable and often quoted
    passage, Lord
Atkin
stated that amid the clash of arms,
    the laws are not silent.  While the laws
    may be changed to meet the threat of subversion, they speak the same language
    in war as in peace.  It is the role of
    judges to stand between the subject and any attempted encroachments on his
    liberty by the executive, alert to see that any coercive action is justified in
    law.  Although expressed in dissent,
    Lord
Atkins
speech has since been accepted as a
    proper statement of the law: See
Khawaja
v. Secretary
    of State for the Home Department
, [1984] A.C. 74 (H.L.).

[74]

The same point was made in decisions by the Supreme
    Court of the United States requiring the state to respect certain basic legal
    rights of suspected terrorists detained at Guantanamo Bay.  In
Hamdi
v. Rumsfeld
,
    542 U.S. 507 (2004), OConnor J. held, at p. 509, that due process demands
    that a citizen held in the United States as an enemy combatant be given a
    meaningful opportunity to contest the factual basis for that detention before a
    neutral
decisionmaker
 and, at p. 536, that a state
    of war is not a blank check for the President when it comes to the rights of
    the Nations citizens.  In
Boumediene
v. Bush
, 553 U.S. 723 (2008), Kennedy
    J. held, at p. 797, that suspected terrorists could not be denied the
    constitutionally guaranteed right of
habeas
    corpus
: Security subsists, too, in fidelity to freedoms first principles.
     In a similar spirit, both the Supreme
    Court of Canada and the House of Lords have vindicated fundamental legal rights
    infringed by anti-terrorism legislation: See
Charkaoui
v. Canada (Citizenship
    and Immigration),
[2007] 1 S.C.R. 350;
A.
    v. Secretary of State for the Home Department,
[2005] 2 A.C. 68, at
para
. 97, per Lord Hoffman: The real threat to the life of
    the nationcomes not from terrorism but from laws such as these.

[75]

Another powerful judicial voice defending the rule of
    law against erosion from threats to national security is that of President
Aharon
Barak of the Supreme Court of Israel, who stated in
Public Committee Against Torture v. Israel
(1994), HCJ 5100/94, that it is the destiny of democracynot [to] see all
    means as acceptable: at
para
. 39.  Adherence to the rule of law means that a
    democracy must sometimes fight with one hand tied behind its back; but this
    does not deprive a democracy of the upper hand as, at the end of the day, the
    rule of law and individual liberty strengthen its spirit and this strength
    allows it to overcome its difficulties.  See also Louise Arbour, In our name and on
    our behalf (2006), 4 Eur. H.R.L. Rev. 371; Owen M.
Fiss
,
    The war against terrorism and the rule of law (2006), 26 Oxford J. Legal
    Stud. 235; David
Dyzenhaus
, Intimations of legality
    amid the clash of arms (2004), 2 Intl J. Const. L. 244.

[76]

These eminent jurists make a fundamental point: the
    rule of law must prevail even in the face of the dreadful threat of terrorism.  We must adhere to our democratic and legal
    values, even if that adherence serves in the short term to benefit those who
    oppose and seek to destroy those values.  For if we do not, in the longer term, the
    enemies of democracy and the rule of law will have succeeded.  They will have demonstrated that our faith in
    our legal order is unable to withstand their threats.  In my view, the extradition judge did not err
    in law or in principle by giving primacy to adherence to the rule of law.

[77]

Finally, I think it important to point out that even if
    balancing is required or warranted, there is a compelling argument that tips
    the balance in favour of a stay.  In my
    view, the Attorney Generals emotive argument that because of what the
    extradition judge did, an admitted terrorist collaborator is allowed to walk
    free is unfounded.  Although this point
    was not mentioned by the extradition judge, the stay of the extradition
    proceedings does not remove the Attorney Generals capacity to deal with the
    allegations of terrorist activity according to law.
Khadr
is a Canadian
    citizen and, as conceded by counsel for the Attorney General in oral argument,
    under the
Criminal Code
, Khadr is
    liable to be prosecuted in Canada for acts of terrorism committed outside
    Canada.

[78]

Thus, even if I am wrong in concluding that the
    extradition judge was not required to engage in balancing the stay against the
    societal interest in allowing the committal to proceed, the fact that Khadr is
    liable to prosecution in Canada would tip the scales in favour of the stay.

CONCLUSION

[79]

For these reasons I would dismiss the appeal.

Robert J. Sharpe J.A.

I agree John Laskin
    J.A.

I agree E.A. Cronk
    J.A.

RELEASED:  May 6, 2011


CITATION:
Wolfe v. Pickar, 2011
          ONCA 347

DATE:
          20110505

DOCKET: C52181

COURT OF APPEAL FOR ONTARIO

Goudge, Gillese and Watt JJ.A.

BETWEEN

Dr. Bernard Wolfe and DMW Kildeer Incorporated

Plaintiffs (Respondents)

and

Wyeth and James H. Pickar
and Wyeth Corporations

Defendants (
Appellants
)

John P. Koch and Allison A. Thornton, for the appellants

Earl Cherniak (Q.C.), Peter Kryworuk and Yola Ventresca, for
          the respondents

Heard: April 20, 2011

On appeal from the order of Justice Steven Rogin of the
          Superior Court of Justice dated April 30, 2010, with reasons reported at 2010
          ONSC 2368.

Goudge J.A.:

[1]

The appellants appeal from the order of Rogin J.
    dismissing their motion (a) to dismiss or permanently stay the respondents
    action as
res judicata
because of a
    Pennsylvania court order that the respondents claims are time barred under
    Pennsylvania law or, in the alternative, (b) to declare that the Ontario court
    has no jurisdiction over the appellants or the subject matter of the action, or
    (c) to declare that Ontario is not a convenient forum for this action.

[2]

For the reasons that follow, I agree with the
    conclusions of the motion judge on all three issues. I would therefore dismiss
    the appeal.

THE BACKGROUND

[3]

In
    this action, the respondents allege that the respondent Dr. Wolfe conceived and
    developed a low dose hormone replacement therapy for women, through his
    research at the University of Western Ontario in London. Pursuant to an
    agreement he made with the appellants, he disclosed confidential information to
    them concerning the therapy.

[4]

On
    September 12, 2002, the appellant Wyeth filed a patent application in Canada
    for a low dose hormone replacement therapy naming the appellant Dr. Pickar, its
    assistant vice president clinical research and development, as the sole
    inventor. The appellants position is that this was developed independently of
    Dr. Wolfes work.

[5]

On
    September 27, 2007, Dr. Wolfe commenced an action against Wyeth in the Federal
    Court of Canada seeking an order that its patent application be amended to list
    him as the sole inventor.

[6]

The
    same day, the respondents commenced this action, claiming damages for breach of
    contract, wrongful use of confidential information, and breach of fiduciary
    duty, and an accounting of profits earned by the appellants, together with
    corollary relief. The statement of claim was served on the appellants in
    Pennsylvania on November 28, 2007.

[7]

On
    February 15, 2008, the appellants commenced an action in Pennsylvania for a
    declaration that any claims Dr. Wolfe may have against Wyeth for breach of
    contract, misappropriation and breach of fiduciary duty are barred by the
    Pennsylvania statute of limitations and that, on the merits, Wyeth has not
    committed any of these wrongs.

[8]

Dr.
    Wolfe sought an order from the Pennsylvania court staying the appellants
    action in that court. On May 8, 2008, Judge Robert F. Kelly of the United
    States District Court for the Eastern District of Pennsylvania dismissed the
    motion. In his reasons, he found that that court had personal jurisdiction over
    Dr. Wolfe and that venue was proper there.

[9]

In
    July 2008, both parties to the Pennsylvania action moved for judgment on the
    pleadings.

[10]

On
    August 28, 2008, Judge Kelly issued his order with reasons granting Dr. Wolfes
    motion and also granting Wyeths motion insofar as Wyeth requests that this
    court declare that Dr. Wolfes claims are barred by the Pennsylvania statute of
    limitations. He denied Wyeths motion in all other respects. In particular, he
    declined to decide the merits of Dr. Wolfes claims.

[11]

On
    September 15, 2008, the appellants then brought the motion in this action that
    resulted in the order under appeal.

[12]

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
    defense at trial on the basis of all the evidence and thereby avoid an
    accusation of forum shopping, one of the evils the doctrine is designed to
    avoid.

[13]

The
    motion judge went on to find that Ontario could properly accept jurisdiction
    over the action because the real and substantial connection test was met.

[14]

Finally,
    the motion judge concluded that Ontario is a convenient forum for the action.

ANALYSIS

[15]

In
    this court, the appellants focus primarily on the first of these findings but
    challenge the other two as well. I will deal with each issue in turn.

First
    Issue:
Res Judicata
and Issue
    Estoppel

[16]

The
    appellants position is that in adjudicating the action brought by the
    respondents, the Ontario court must find that their claims are time barred by
    the Pennsylvania statute of limitations because of the August 28, 2008, order
    of the Pennsylvania court. They argue that the Ontario court must recognize and
    apply that order. The appellants say that, as a consequence, the respondents
    action must be dismissed or permanently stayed, as being time barred.

[17]

The
    appellants position is not that any of the causes of action advanced by the
    respondents have been adjudicated but rather that the limitation issue has
    been.

[18]

While
    the appellants notice of motion seeks an application of
res judicata
, it is better described as issue estoppel, because the
    appellants focus on one issue not on an entire cause of action: see
Danyluk v. Ainsworth Technologies
, [2001]
    2 S.C.R. 460, at p. 474.

[19]

In
Danyluk
, Binnie J., writing for the
    court, begins with the admonition that this judicial doctrine was designed to
    serve the ends of justice and should not be applied mechanically to work an
    injustice. He went on to make clear that the court always has the discretion,
    albeit one of quite limited application, to decline to apply the doctrine on
    this basis.

[20]

At
    p. 476 of
Danyluk,
Binnie J. adopted
    the definition of issue estoppel offered by Middelton J.A. in
McIntosh v. Parent
, [1924] 4 D.L.R. 420,
    at p. 422:

When
    a question is litigated, the judgment of the Court is a final determination as
    between the parties and their privies. Any right, question, or fact
distinctly
    put in issue and directly determined
by a Court of competent jurisdiction
    as a ground of recovery, or as an answer to a claim set up, cannot be re-tried
    in a subsequent suit between the same parties and their privies, though for a
    different cause of action.

[Justice
    Binnies Emphasis]

[21]

Justice
    Binnie also added the refinement offered by Dickson J. (later C.J.) in
Angle v. Minister of National Revenue
, [1975]
    2 S.C.R. 248, at p. 255:

It will not suffice he said, if the question
    arose collaterally or incidentally in the earlier proceedings or is one which
    must be inferred by argument from the judgment.

[22]

At p. 477 Binnie J. went on to lay out the three
    requirements for the application of the issue estoppel:

(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 or their privies.

[23]

The first of these three is the focus here: has the
    same question been decided in the prior proceeding. The question in the Ontario
    action is whether the Ontario court should find that the respondents claims in
    this action are time barred by the Pennsylvania statute of limitations. As the
    respondents argue, that question unpacks into two parts: should the Ontario
    court apply Pennsylvania law to these claims; and if so, does the Pennsylvania
    statute bar the claims. It is apparent that if the choice of law by the Ontario
    court is not Pennsylvania law, the Pennsylvania statute has no application to
    this case.

[24]

It is necessary then to determine what the Pennsylvania
    court decided and whether it is the same two part question that is before the
    Ontario court. Only if both parts were directly put in issue before the
    Pennsylvania court and directly determined by it is the first requirement of
    issue estoppel met.

[25]

The Pennsylvania order was the response to motions for
    judgment on the pleadings by both Wyeth and Dr. Wolfe.

[26]

Wyeth had pleaded that Dr. Wolfes claims for breach of
    contract, misappropriation and breach of fiduciary duty asserted in the Ontario
    action were time barred by the Pennsylvania statute of limitations. Hence its
    motion for partial judgment on the pleadings sought a declaration that these
    claims are time barred.

[27]

Dr. Wolfe moved for judgment on the pleadings that the
    Pennsylvania statute of limitations procedurally precludes him from asserting
    Pennsylvania based claims for breach of contract, misappropriation, or breach
    of fiduciary duty against Wyeth in the Pennsylvania court.

[28]

In its reasons for its August 28 order, the court said
    only this about the limitation issue:

With regard to the statute of limitations question,
    the parties agree, and this Court finds, that Dr. Wolfes claims are
    time-barred by the Pennsylvania statute of limitations.

[29]

The August 28 order of the Pennsylvania court is as
    follows:

(1)

The Motion
    for Judgment on the Pleadings filed by the Plaintiff Wyeth (Doc. No. 24) is
GRANTED
insofar as Wyeth requests that
    this Court declare that Dr. Wolfes claims are barred by the Pennsylvania
    statute of limitations. Wyeths Motion is
DENIED
in all other respects;

(2)

The Motion
    for Judgment on the Pleadings filed by Defendant Dr. Bernard M. J. Wolfe (Doc.
    No. 25) is
GRANTED
.

[30]

This order granted the order sought by Dr. Wolfe that
    the Pennsylvania statute of limitations precludes him from asserting his claims
    in the Pennsylvania court.

[31]

In this order, the court also granted Wyeths motion
    for judgment but only insofar as Wyeth requested that the court declare that
    Dr. Wolfes claims were barred by the Pennsylvania statute of limitations.

[32]

The Pennsylvania court went on to decline Wyeths
    requests to consider the merits of Dr. Wolfes claims saying in its reasons
    that it would be improper to make a declaration as to the merits for the sole
    purpose of providing Wyeth with a judgment that it can later use for the
    purposes of
res judicata
in the
    Ontario action. The reasons conclude by saying:

The Canadian court is free to accept or reject any
    findings of this Court. Neither this Court, nor the parties, have any basis
    with which to determine how the Ontario Court will handle this case before it.

[33]

When the Pennsylvania order is considered with this
    background, it is clear that it is a consent order. It is also clear that Dr.
    Wolfes position before that court was confined to claims he might assert in
    the Pennsylvania court. He said nothing about his claims made in the Ontario
    action, let alone the choice of law that should be made by the Ontario court to
    adjudicate them.

[34]

The consent order must therefore be taken as going no
    further than Dr. Wolfes position, namely that his claims are time barred if he
    were to assert them in the Pennsylvania court. It is not a consent order that
    in adjudicating the appellants claims the Ontario court should apply
    Pennsylvania law to find the claims to be barred by the Pennsylvania statute of
    limitations.

[35]

This reading is consistent with the tenor of the
    closing passage of the Pennsylvania courts reasons, which indicate that its
    decision was not intended to determine how the Ontario court will adjudicate
    the appellants claims.

[36]

Moreover, on its face, the Pennsylvania court order
    says nothing about the choice of law that the Ontario court should make in
    adjudicating the appellants claims. Nor does the Pennsylvania court put
    forward any reasoning on that issue. It was clearly not a question distinctly
    put in issue and directly determined by that court.

[37]

In short the Pennsylvania court did not decide the
    question that the appellants put before the Ontario court in this action. It
    did not decide that the Ontario court should find that Pennsylvania law applies
    and, as a consequence, find the respondents claims to be time barred.

[38]

This result is consistent with the ends of justice, the
    objective of the doctrine. The choice of law question is fact dependant, may
    well be complicated and may be differently answered depending on the particular
    cause of action. It is a question best decided on a full record at trial: see
General Refractions Co. of Canada v.
    Venturedyne Ltd.
2001 Carswell Ont. 613 at para. 27. It best serves the
    ends of justice to address that question on a full trial record not on a
    preliminary motion.

[39]

The other side of the coin is that to give the court
    order the effect contended for by the appellants would not serve the ends of
    justice. In the circumstances, it is not necessary to do so in order to permit
    the appellants their limitation defence. They can advance that at trial in the
    Ontario action. Moreover, to give it that effect in the circumstances, would at
    least give the appearance of sanctioning forum shopping, something courts ought
    not to do: see
Amchem Products Inc. v.
    B.C. (W.C.B.)
, [1993] 1 S.C.R. 897, at p. 912.

[40]

Because it would not serve the ends of justice to do
    so, I agree with the motion judge that, in any event, the court ought not to
    exercise its discretion and should refuse to apply the doctrine of issue
    estoppel.

[41]

For these reasons, I reject the appellants argument
    based on the Pennsylvania order of August 28, 2008, that issue estoppel applies
    and requires the appellants claims to be dismissed or permanently stayed as
    time barred. Since that order does not give rise to issue estoppel, there is no
    need, at least at this stage of the action, for the Ontario court to consider
    whether to recognize and apply that order.

Second
    Issue: Jurisdiction

[42]

Independent
    of the applicability of issue estoppel, the appellants argue that the motion judge
    erred in finding that the Ontario court can take jurisdiction over them for the
    purposes of this action. They say that he erred in finding that the real and
    substantial connection test was met.

[43]

The
    respondents primary answer is that, in any event, the appellants have attorned
    to the jurisdiction of the Ontario court. The Ontario court therefore has
    consent-based jurisdiction, and there is no need to examine whether Ontario can
    assume jurisdiction over the appellants. The respondents base this on the position
    taken by the appellants before the motion judge, where they sought an order
    from the Ontario court declaring that this action is
res judicata
and an abuse of process and should therefore be
    dismissed or permanently stayed. Only in the alternative did the appellant seek
    an order declaring that the Ontario court has no jurisdiction over them.

[44]

I
    agree with the respondents. 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, dismiss or permanently stay the Ontario action. They sought to
    have the Ontario court engage with that issue. I agree with the British
    Columbia Court of Appeal in
Mid-Ohio
    Imported Car Co. v. Tri K Investments Ltd.
(1995), 129 D.L.R. (4
th
)
    181 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 appearing voluntarily, thus giving the court consent-based
    jurisdiction. That is what happened here.

[45]

In
    any event, in my view, the motion judge was correct to conclude that the
    Ontario court could assume jurisdiction on the basis of the real and
    substantial connection test. The appellants do not contest that the taking of
    jurisdiction by the Pennsylvania court is no impediment to this conclusion.
    More than one court can have jurisdiction over a particular matter.

[46]

In
    assessing this issue where there are factual matters in dispute, the
    plaintiffs version of the facts should be accepted as long as it has a
    reasonable basis in the record. I agree with the reasoning of my colleague
    Laskin J.A. in
Young v. Tyco International
    of Canada Ltd.
(2008), 92 O.R. (3d) 161 (Ont. C.A.). While he was speaking
    of the
forum non

conveniens
analysis the same logic applies to jurisdiction
simpliciter
. At para. 34 he said this:

However,
    the important point is that at this preliminary stage of the action, the motion
    judges assessment and weighing of the
forum
    non conveniens
factors should be based on the plaintiffs claim if it has a
    reasonable basis in the record, not on the defendants defence to that claim.
    This approach makes sense to me because the ultimate question is whether an
    Ontario court should take jurisdiction over the plaintiffs claim.

[47]

In
    my view, in this case, it is clear that
service
    ex juris
was properly done under rule 17.01(f) and (g) and that
    jurisdiction should therefore be presumed unless the appellants demonstrate
    otherwise. The respondents assert that the contract in question was made in
    Ontario. All the negotiations, save one minor meeting, took place in London.
    Moreover, they point to the appellants misuse of confidential information to
    support their patent application to acquire legal protection in Ontario for
    that information as the commission here of the torts pleaded.

[48]

Turning
    to the core considerations for real and substantial connection, the connection
    between Ontario and the respondents claim is clear. Among other things, Dr.
    Wolfes research was all done here. The negotiations underlying the relationship
    between the parties essentially all took place here and the respondents
    suffered their loss of profits here.

[49]

I
    think the connection with the appellants is equally clear. They carried on
    business in Ontario by concluding their arrangement with the respondents here.
    Both respondents interacted with Dr. Wolfe in support of his research here.
    They received confidential information coming from Ontario. Both appellants
    were in a relationship with Dr. Wolfe that originated in Ontario in which
    activity in Ontario was central. They could well have foreseen litigation in
    Ontario if obligations arising out of this relationship were not honoured. They
    have sought legal protection in Ontario for the use of this confidential
    information.

[50]

Finally,
    viewed through the lens of fairness, these connecting factors must be assessed
    to be even stronger. It is not unfair to the appellants for Ontario to take
    jurisdiction, since they will still have every opportunity in the Ontario
    action to argue that the respondents claims are time barred by the
    Pennsylvania legislation. However, if Ontario declines jurisdiction, the
    respondents will be left without a forum to provide a remedy.

[51]

Thus,
    I conclude that the motion judge correctly decided this issue. I do so without
    the need to assess whether the same conclusion could be justified by the
    doctrine of necessity.

Third
    Issue:
forum conveniens

[52]

Here,
    too, the appellants argued that the motion judge erred. They acknowledge that
    he exercised his discretion in reaching his decision and that this court must
    give that decision deference. However, based on
Frimer v. Bretschaur
(1994), 19 O.R. (3d) 60 (C.A.), they argue
    that he placed the onus on them to demonstrate that Ontario is not the most
    convenient forum and that this constitutes error since they have been brought
    into the jurisdiction by
service ex juris
.

[53]

The
    simple answer is that they have attorned to the jurisdiction. They have
    voluntarily appeared. They have not been brought unwillingly by
service ex juris
.

[54]

Even
    if attornment had not occurred, I do not think the motion judge erred. He
    correctly proceeded on the basis that the appellants could succeed only by
    clearly establishing that Pennsylvania is a more appropriate forum to have the
    issues decided than Ontario, the forum chosen by the respondents. That is the
    ultimate question: see
Precious Metal
    Capital Corp. v. Smith
(2008), 92 O.R. (3d) 701 (C.A.) at para. 30.

[55]

The
    motion judges only passing reference to onus was in reference to two factors:
    the location of key witness and the location of the bulk of the evidence.
    Without resort to any evidentiary onus, he determined both to be equally
    balanced between Ontario and Pennsylvania and therefore neutral. The reference
    to onus is to say no more than that if the appellants wished to have him put
    these factors on the Pennsylvania side of the scales for the ultimate question,
    the motion judge had to find that neither were equally balanced. That is true.
    The trial judge made no error in principle in his approach to this issue.

[56]

Absent
    a basis on which to interfere with the motion judges exercise of discretion, I
    see no basis for interfering with his conclusion that Ontario is the convenient
    forum for this action.

[57]

For
    these reasons, the appeal is dismissed. Costs to the respondent fixed at
    $25,000, inclusive of disbursements and applicable taxes.

RELEASED:  MAY 05 2011
    (S.T.G.)

S. T. Goudge J.A.

I agree. E. E. Gillese J.A.

I agree. David Watt J.A.


CITATION:
1230995 Ontario
          Inc. v. Badger
Daylighting
Inc., 2011 ONCA 442

DATE: 20110608

DOCKET: C52312

COURT OF APPEAL FOR ONTARIO

Laskin, Goudge and Karakatsanis JJ.A.

BETWEEN

1230995 Ontario Inc.

Plaintiff (Respondent)

and

Badger
Daylighting
Inc.

Defendant (Appellant)

Irving Marks and Shawn
Pulver
, for
          the defendant (appellant)

Thomas J. Corbett, for the plaintiff (respondent)

Heard & released orally:
June 1, 2011

On appeal from the judgment of Justice W.A. Jenkins of the
          Superior Court of Justice dated May 25, 2010.

ENDORSEMENT

[1]

The appellant
Badger argues three points on appeal:

1)

The trial judge erred in finding that the respondent
    had complied with its obligation under s. 4.7(2) of the 2003 Marketing
    Agreement to aggressively and fully develop and exploit the market for the
    Services and diligently solicit orders in the four counties;

2)

the trial judge erred by enforcing the entire agreement
    clause section 10.11, instead of giving effect to the common understanding and
    reasonable expectations of the parties that the nine counties were work zones
    and continued to be governed by the 2002 Work Zone Amendment and the letter of
    understanding and;

3)

the
trial judge erred in
    finding that the nine counties had been assigned to the respondent as work zones
    under the 2003 Marketing Agreement.

We do not accept any of these
    arguments.

[2]

Badgers first argument fails for two reasons.  First, it runs up against the trial judges
    finding of fact in
para
. 187 of his reasons
Given the market conditions, I am satisfied
    that the plaintiff fully developed the London market to the extent possible.  I therefore find that the plaintiff complied
    with
para
. 4.7 (2) of the Marketing Agreement and
    that there was no breach of that agreement by the plaintiff.  This finding is well supported by the
    evidence at trial.

[3]

The trial
    judges reference to the potential for increased revenues by putting a truck in
    the London area is not inconsistent with this finding.  The trial judges finding under s. 4.7(2) is
    that the respondent has complied
to
date.  His finding on damages recognizes that the
    respondent could grow the market in the future.

[4]

Additionally,
    the trial judges use of the phrase to the extent possible does not amount to
    a misinterpretation of s. 4.7(2).  It
    simply reflects the commercial reality that
Benko
had
    a strong presence in the London market.

[5]

Second, in
    taking the four counties away from the respondent, Badger did not rely on s.
    4.7(2).  Nor did it exercise the right in
    s. 9.1(3) to terminate the marketing agreement for breach of s. 4.7(2).  Rather, Badger exercised what it thought,
    mistakenly, was its unilateral right to reassign the four counties.  For these reasons, we reject Badgers first
    argument.

[6]

The trial
    judge rejected Badgers second argument, and in our view, he was fully
    justified in doing so in the light of the entire agreement clause and the
    definition of Territory, which included the work zones.  To the extent that the 2003 Marketing Agreement
    was ambiguous, the trial judge correctly noted that this was a contract of
    adhesion to be interpreted
contra
proferentum
.

[7]

Part of
    Badgers argument on this point is that the trial judge improperly curtailed
    cross-examination that was designed to elicit support for applying the
    principle of
estoppel
by representation or
    convention.

[8]

We think that the trial judges ruling was correct.  He upheld an objection to a question that
    asked for Mr. Potters subjective understanding of the Agreement.  That question was irrelevant to the
    interpretation of the contract.  It was
    also irrelevant to
estoppel
by convention, which
    requires shared assumptions based on representations by statements or conduct.

[9]

Further, although the trial judge did not expressly
    address the parties reasonable expectations, implicitly he concluded that his
    interpretation of the Marketing Agreement gave effect to their reasonable
    expectations.  Accordingly, Badgers
    second argument fails.

[10]

Finally, we reject Badgers third argument.  Having found that the respondents territory
    included work zones, the trial judge was entitled to consider extrinsic
    evidence to identify what those work zones were.  And on the evidence, there was no doubt
    whatsoever that the work zones referred to the nine counties.

[11]

Accordingly, the appeal is dismissed with costs to the respondent
    fixed in the amount of $ 16,000 inclusive of disbursements and applicable
    taxes.

John Laskin J.A.

S.T. Goudge J.A.

Karakatsanis J.A.