COURT OF APPEAL FOR ONTARIO

CITATION: Canada v. McDonald, 2019 ONCA 367

DATE: 20190506

DOCKET: C65186 and C65498

Feldman, Miller and Fairburn JJ.A.

DOCKET: C65186

BETWEEN

Her
    Majesty the Queen

in Right
    of Canada

Appellant

and

Louie John McDonald

Respondent

DOCKET: C65498

BETWEEN

Her
    Majesty the Queen

in the
    Right of Ontario

Respondent

and

Louie John McDonald

Appellant

James Sutton and Jeannine Plamondon, for the appellant,
    Her Majesty the Queen in Right of Canada, C65189

Michael Crystal, for the respondent Louie John McDonald

Michael Crystal, for the appellant Louie John McDonald,
    C65498

David Friesen, for the respondent, Her Majesty the Queen
    in Right of Ontario

Heard and released orally: May 1, 2019

On appeal from the acquittal and the conviction entered
    on May 5, 2018 by Justice Leroy of the Superior Court of Justice.

REASONS FOR DECISION

[1]

Mr. McDonald was acquitted of
    conspiracy to commit human smuggling and convicted of two counts of
    manslaughter by criminal negligence. This matter arises out of an incident
    where the appellant, Mr. McDonald, picked up three men on the east shore of
    Cornwall Island and began transporting them on a Sea-Doo in the St. Lawrence
    River. The men were from India. Mr. McDonald was alleged to have been part of a
    conspiracy to transport those individuals to another location in Quebec, their
    ultimate destination being illegal entry into the United States.

[2]

Mr. McDonald arrived at the pickup
    location on his Sea-Doo. In his reasons for judgment, the trial judge expressed
    a strong doubt whether Mr. McDonald arrived at the location knowing that he was
    picking up people, there being considerable evidence that in fact Mr. McDonald originally
    thought he was going there to retrieve and transport contraband.

[3]

In any event, once at the location Mr.
    McDonald was met by his confederate who had made the prior arrangements. At
    that point, Mr. McDonald became aware that he would be transporting three men
    for a considerable distance across the St. Lawrence River. The men did not
    speak English and there was no way to know whether they could swim or not.
    There were no life jackets for the three men.

[4]

The three men and appellant loaded onto
    the Sea-Doo. It capsized with the four men aboard about 25 metres from shore.
    Mr. McDonald was able to swim to shore, one of the men was assisted to shore by
    a concerned civilian, and the other two men drowned.

[5]

The Federal Crown appeals the acquittal
    on the conspiracy to commit human smuggling charge. The Federal Crown alleges
    two errors: first, the trial judge erred by excluding the accuseds statement
    on the basis that while he was initially afforded his right to counsel and availed
    himself of that opportunity, his jeopardy changed before the interview
    commenced and he should have been given another opportunity to speak with
    counsel; and second, that the trial judge erred in excluding the statement of
    the surviving passenger, Mr. Patel, whom the authorities were not able to
    locate by the time of trial.

[6]

We do not agree.

[7]

On the first ground of appeal, the
    Federal Crown accepts that the trial judge stated the law correctly but argues
    that the trial judge misapplied that law to the facts of this case. We
    disagree. When the appellant initially spoke with his counsel, he only knew
    that he was facing charges relating to criminal negligence causing death. He
    did not know that he was facing jeopardy respecting conspiracy to commit human
    smuggling. Particularly in light of the significant mandatory minimum penalty applicable
    to the conspiracy count, it was open to the trial judge to find that the
    additional charge significantly changed Mr. McDonalds jeopardy and that he
    should have been again afforded his right to counsel.

[8]

On the second ground, the Federal Crown
    submits that the trial judge erred in excluding the hearsay statements of the
    surviving passenger Mr. Patel, one of which was a
K.G.B.
statement.  Again, while it is acknowledged that the trial
    judge correctly stated the law, the Crown submits that the trial judge failed
    to apply it correctly, particularly on the criteria related to threshold
    reliability. We would not give effect to this submission. We defer to the trial
    judges determination on the threshold reliability issue, a finding that was
    well supported by the factual record.

[9]

The appeal with respect to the acquittal
    on the conspiracy charge is therefore dismissed.

[10]

Turning to the conviction appeal. Mr.
    McDonald appeals his two convictions for manslaughter by criminal negligence.

[11]

His main ground of appeal is that,
    while the trial judge correctly stated the law, he misstated the test for the
mens
    rea
element of the offence and failed to
    consider all of the relevant circumstances in determining whether the appellant
    was wanton and reckless.

[12]

The trial judge properly referred to
    the law as follows the offence required a marked and substantial departure for
    what a reasonably prudent person would do in the same circumstances. And the
    second part of the test is whether he showed wanton and reckless disregard for
    the lives or safety of others. The trial judge went on to describe wanton and
    reckless disregard as importing some degree of awareness or advertence by the
    accused to the threat to the lives of others.

[13]

The appellant submits that the latter articulation
    minimizes the necessary cognition of risk and he relies on statements in some
    case law that refer to the requirement that the risk be more obvious.

[14]

In our view, the trial judge made no
    error. Regardless of the articulation of the test, the trial judge made the
    following clear finding at para. 127 of the reasons:

The reasonable person would foresee
    risk of the drownings inherent in the circumstances before the Court. A person
    functioning with normal faculties of awareness and engaging in conduct which
    represents a grave departure from the norm is either aware of the risk or is
    wilfully blind to the risk.

[15]

The next issue is the requirement to
    take into account all of the circumstances in determining whether the conduct
    was wanton and reckless. The trial judge focused on three primary factors that
    made the appellants action in taking the three men out on his Sea-Doo to cross
    the St. Lawrence River amount to criminal negligence. The first was overloading
    the Sea-Doo with four men when the load limit was three; the second was that he
    did not have life jackets for the men; and the third was that they did not
    speak English and he had no knowledge of their ability to swim and no way to
    communicate with them.

[16]

The appellant submits that the trial
    judge failed to consider as a relevant circumstance his own earlier finding at
    paras. 99 and 100 of the reasons that the appellant had to reach a quick
    decision whether to take the men and did not have time for reflection.

[17]

We do not accept that the trial judge
    failed to consider that circumstance. The appellant clearly deliberately
    decided to proceed, even though he may have made that decision after he had
    arrived at the location where the men were waiting. The time that he had to
    make the decision to transport the three men did not undermine the appellants
mens
    rea
.

[18]

Mr. McDonald raised additional grounds of appeal in his factum that were
    not advanced in oral argument. We do not agree with those submissions.

[19]

Specifically, Mr. McDonald argued the following. First, that the trial
    judge erred by improperly relying on Canadian safety standards and lay opinion
    evidence in determining that Mr. McDonalds actions constituted a marked and
    substantial departure from the standard of a reasonable person in the
    circumstances.

[20]

We do not agree that the trial judge made any error in taking the safety
    standards into account. The incident occurred in Canadian waters. Furthermore,
    even in the absence of any regulation, it would have been open to the trial
    judge to find the absence of lifejackets to be a significant factor in his
    analysis of the standard of care applicable when crossing a navigable river in
    an open water craft.

[21]

Similarly, the trial judge was entitled to accept the observations of a
    witness that the Sea-Doo capsized as an observable consequence of becoming
    unbalanced from having too many passengers.

[22]

Second, Mr. McDonald argued that the trial judge improperly relied on a
K.G.B.
statement from the surviving witness to the effect that the Sea-Doo capsized
    once prior to the fatal incident. The objection is purely speculative and we do
    not accept it. The trial judge specifically refused to admit the surviving
    witnesss police statements and there is no mention of that evidence in his
    reasons for conviction. The fact that the trial judge made a stray reference to
    the first capsize event in his sentencing reasons does not lead to the
    conclusion that he also considered it in his reasons for conviction.

[23]

Third, Mr. McDonald objects to the admission of a statement he made to
    an EMT worker that was recorded while he was seated in the backseat of a police
    cruiser, and that was overheard by a police officer standing outside of the
    cruiser. There is no need to address this issue in light of the fact that the
    evidence received was duplicative of evidence from other sources.

[24]

The appeal from conviction is dismissed.

K. Feldman J.A.

B.W. Miller J.A.

Fairburn J.A.


COURT OF APPEAL FOR ONTARIO

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

DATE: 20190502

DOCKET: C65431

Tulloch, Benotto and
    Huscroft JJ.A.

BETWEEN

The Catalyst Capital
    Group Inc.

Plaintiff (Appellant)

and

VimpelCom Ltd.
,
Globalive
    Capital Inc.
,
UBS Securities Canada Inc.,

Tennenbaum Capital
    Partners LLC
,
64NM Holdings GP LLC
,
64NM Holdings LP
,
LG
    Capital Investors LLC
,
Serruya Private Equity Inc.,

Novus
    Wireless

Communications Inc.,

West Face Capital Inc.
and
    Mid-Bowline Group Corp.

Defendants (
Respondents)

John E. Callaghan, Benjamin Na, Matthew Karabus, and
    David C. Moore, for the appellant

Orestes Pasparakis and Danny Urquhart, for the
    respondent VimpelCom Ltd.

James D.G. Douglas, Caitlin R. Sainsbury, and Graham
    Splawski, for the respondent Globalive Capital Inc.

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

Michael Barrack, Kiran Patel, and Daniel Szirmak, for
    the respondents Tennenbaum Capital Partners LLC, 64NM Holdings GP LLC, 64NM
    Holdings LP and LG Capital Investors LLC

Lucas Lung, for the respondent Serruya Private Equity
    Inc.

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

Kent Thomson and Matthew Milne-Smith, for the
    respondent West Face Capital Inc.

Heard: February 19 and 20, 2019

On appeal from the judgment of Justice Glenn A. Hainey
    of the Superior Court of Justice, dated April 18, 2018, with reasons reported
    at 2018 ONSC 2471.

Tulloch J.A.:

OVERVIEW

[1]

This case
arises
    out of the failed attempt by the appellant, The Catalyst Capital Group Inc. (Catalyst),
    to purchase WIND Mobile Corp. (Wind). After its attempt to purchase Wind
    failed, Catalyst sued the respondents claiming more than $1 billion in damages.
    The motions judge dismissed the action on the basis of issue estoppel, cause of
    action estoppel, and abuse of process.

[2]

Catalyst appeals. For the reasons that follow, I would
    dismiss the appeal.

FACTS

(1)

Background

[3]

Wind is a Canadian telecommunications provider. From 2011 to 2014, it
    was owned by the respondents VimpelCom Ltd. (VimpelCom) and Globalive Capital
    Inc. (Globalive). VimpelCom held the majority of the total equity and Globalive
    held the majority of the voting equity.

[4]

In 2013, VimpelCom announced its intention to sell its interest in Wind.
    Catalyst began negotiating with VimpelCom to purchase that interest. The
    respondent UBS Securities Canada Inc. (UBS) advised VimpelCom in these
    negotiations.

[5]

The negotiations proceeded over many months and gave rise to two
    agreements. On March 22, 2014, Catalyst and VimpelCom negotiated a
    Confidentiality Agreement providing that the existence and content of their
    negotiations were confidential. On July 23, 2014, Catalyst and VimpelCom signed
    an Exclusivity Agreement pursuant to which VimpelCom could negotiate only with
    Catalyst and could not solicit other bids. The exclusivity period under this
    agreement expired on August 18, 2014.

[6]

By August 11, 2014, a deal seemed imminent. However, on this date,
    VimpelCom advised Catalyst that it wanted a $5 million to $20 million break fee
    and insisted on shortening the regulatory approval period for the deal from
    three months to two months. Catalyst refused to agree to these demands and
    ceased negotiations. The negotiations between Catalyst and VimpelCom proved
    unsuccessful. The exclusivity period expired on August 18, 2014 without a deal.

[7]

After the exclusivity period expired, a group of purchasers (the Consortium)
    successfully purchased VimpelComs interest in Wind. The Consortium concluded
    the deal within a month of the exclusivity periods expiry. The Consortium had
    made an unsolicited purchase proposal to VimpelCom on August 6, 2014. VimpelCom
    did not respond to the proposal until the exclusivity period under its
    Exclusivity Agreement with Catalyst expired. The members of the Consortium
    included the respondents West Face Capital Inc. (West Face), Tennenbaum
    Capital Partners LLC (Tennenbaum), 64NM Holdings LP (64NM LP), 64NM
    Holdings GP LLC (64NM GP), LG Capital Investors LLC (LG), Serruya Private
    Equity Inc., and Novus Wireless Communications Inc. Globalive was not initially
    part of the Consortium but joined the Consortium following the expiry of the
    exclusivity period on August 18, 2014.

(2)

Commencement of the

Moyse
Action

[8]

Brandon
Moyse (Moyse)
,
a junior analyst at Catalyst, left Catalyst and began working for West Face
    during the course of Catalysts negotiations with VimpelCom. He resigned from
    Catalyst after the signing of the Confidentiality Agreement but before the
    conclusion of the Exclusivity Agreement. Catalyst commenced an action against Moyse
    and West Face (the
Moyse
Action) to enforce the non-competition clause in Moyses employment contract
    with Catalyst prior to the failure of Catalysts bid to acquire Wind.

[9]

Following the Consortiums purchase of VimpelComs interest in Wind,
    Catalyst broadened the scope of the

Moyse
Action. It amended its statement of claim to allege that Moyse had communicated
    confidential information to West Face about Catalysts acquisition strategy
    with respect to Wind. Catalyst alleged that West Face used the confidential
    information it received from Moyse to successfully acquire Wind from VimpelCom.
    The amendments included a claim for a constructive trust over West Faces
    interest in Wind.

(3)

Plan of Arrangement Proceedings

[10]

Not
    long after acquiring Wind, the Consortium agreed to sell the company to Shaw
    Communications in December 2015. The sale proceeded by a plan of arrangement
    under s. 182 of the
Business Corporations Act
, R.S.O. 1990, c. B.16, to
    enable Shaw to obtain clear title to Winds shares notwithstanding Catalysts
    constructive trust claim. Catalyst opposed the plan because it would release
    the constructive trust claim.

[11]

In
    his decision on the plan of arrangement, reported as
Re Mid-Bowline Group
    Corp
., 2016 ONSC 669, Newbould J. made several adverse findings against
    Catalyst:

1)

Catalyst deliberately
    delayed its claim against West Face to prevent it from selling its shares
    (para. 33);

2)

Catalyst knew the
    facts underlying its claim for inducing breach of contract in March 2015 but
    only mentioned this claim for the first time in oral argument at the plan of arrangement
    hearing in January 2016 (paras. 52, 56);

3)

Catalyst acted in bad
    faith by choosing to lie in the weeds until the hearing of the plan of
    arrangement application and then springing the new theory of inducing breach
    of contract (para. 59).

[12]

Newbould
    J. did permit Catalyst to pursue a mini-trial of its constructive trust claim
    in the plan of arrangement proceedings. However, he declined to permit Catalyst
    to advance its claim for inducing breach of contract in this mini-trial.
    Catalyst ultimately declined to pursue a mini-trial, and Newbould J. approved
    the plan of arrangement on February 3, 2016.

[13]

In
    early February 2016, following the revelation of Catalysts intention to bring
    a claim for inducing breach of contract, counsel for West Face explicitly
    invited Catalyst to amend its pleadings in the Moyse Action to include such a
    claim if Catalyst in fact intended to pursue it. Catalyst declined to do so.
    The parties to the
Moyse
Action
    proceeded to schedule trial dates for June 2016.

(4)

Commencement of Current Action

[14]

Five
    days before the trial in the

Moyse

Action was to begin, Catalyst issued its statement of claim against West
    Face and the other respondents to the current action (the Current Action)
    alleging breach of contract, breach of confidence, conspiracy, and inducing
    breach of contract. Counsel for West Face immediately wrote to Catalysts
    counsel, asserting that the Current Action was litigation by installment and an
    abuse of process. Catalyst did not take any steps in response to this protest
    and instead proceeded to trial in the Moyse Action.

(5)

Decisions in the

Moyse
Action

[15]

In
    reasons reported at 2016 ONSC 5271, 35 C.C.E.L. (4th) 242 (
Moyse
Trial Reasons), Newbould J. found
    that Catalyst had failed to make out each of the three elements of the breach
    of confidence claim. First, Moyse did not communicate any confidential
    information about Catalysts acquisition strategy to West Face. Second, West
    Face made no use of such information in acquiring Wind. Third, even if West
    Face made use of Catalysts confidential information, Catalyst suffered no
    detriment.

[16]

Newbould
    J.s findings on the detriment requirement of the breach of confidence cause of
    action are most relevant to this appeal. First, Newbould J. found that it was
    Catalysts failure to agree to the break fee that VimpelCom requested that
    caused Catalyst to cease negotiations with VimpelCom: para. 130. Second,
    Newbould J. found that there was no chance that Catalyst could have closed
    the deal with VimpelCom because Catalyst insisted on making the deal
    conditional on receiving regulatory concessions from Industry Canada, a
    condition VimpelCom was unwilling to agree to: para. 131.

[17]

In
    reasons reported at 2018 ONCA 283, 130 O.R. (3d) 675 (Moyse ONCA Reasons),
    this court dismissed Catalysts appeal. This court rejected Catalysts attack
    on Newbould J.s factual findings. Contrary to Catalysts submissions, this
    court found that Catalyst was free to amend its pleadings in the
Moyse
Action to include a claim for
    inducing breach of contract but elected not to do so: para. 40. Similarly, this
    court noted that evidence pertaining to the dealings between VimpelCom, on the
    one side, and West Face and the Consortium on the other was relevant to
    Catalysts claim and West Faces defence that it pursued its own strategies to
    purchase the Wind shares. The court noted that Catalyst did not object to any
    of this evidence at trial: paras. 41-42. The Supreme Court dismissed Catalysts
    application for leave to appeal: [2018] S.C.C.A. No. 295.

(6)

Decision of the Motions Judge: 2018 ONSC 2471

[18]

The
    respondents in the Current Action moved to dismiss Catalysts claims. Following
    this courts dismissal of Catalysts appeal in the
Moyse
Action, the motions judge released comprehensive
    reasons dismissing Catalysts claim (Motions Reasons). The motions judge dismissed
    the claim on the basis of issue estoppel and cause of action estoppel against
    VimpelCom and Globalive, as well as against Tennenbaum, 64NM LP, 64NM GP, and
    LG (the US Investors). While Globalive and the US Investors were not parties
    to the
Moyse
Action, the
    motions judge found that they were privies of West Face. The motions judge also
    dismissed Catalysts claim against all respondents as an abuse of process.
    Finally, the motions judge struck Catalysts claim of breach of contract
    against Globalive and UBS without leave to amend.

[19]

First,
    the motions judge applied issue estoppel to dismiss the claim against
    VimpelCom, Globalive, and the US Investors because he found that Catalyst was
    trying to re-litigate the issue of why Catalyst failed to acquire Wind from
    VimpelCom. For the motions judge, Catalysts claim was premised on a new theory
    that the Consortium conspired to induce VimpelCom to insist on a break fee
    condition that it knew Catalyst would reject. Newbould J., however, had found
    that Catalyst had no chance of concluding the deal. He found that there was no
    evidence that the Consortiums bid played any part in VimpelComs decision to
    request a break fee, and that it was VimpelComs refusal to agree to making the
    purchase conditional on receiving regulatory concessions that made a deal
    impossible. Thus, for Catalyst to succeed in the Current Action, the court
    would have to make a finding inconsistent with that of Newbould J. The motions
    judge declined to exercise his residual discretion not to apply issue estoppel
    because Catalyst was not entitled to a second bite at the cherry: para. 75.

[20]

Second,
    the motions judge applied cause of action estoppel to dismiss the claim against
    VimpelCom, Globalive, and the US Investors because he concluded that Catalysts
    claims in the
Moyse
Action and the
    Current Action arose from the same set of facts. The motions judge identified
    those facts as Catalysts failure to acquire Wind and Winds subsequent
    acquisition by the Consortium. Newbould J. determined this issue against
    Catalyst in the

Moyse
Action. While Catalyst advanced a new theory of liability in the Current
    Action, it could have and should have advanced this theory in the
Moyse

Action. Newbould J.s ruling
    in the plan of arrangement proceedings did not bar it from doing so.

[21]

Third,
    the motions judge dismissed Catalysts claims against all the respondents as an
    abuse of process because he found that Catalyst was attempting to re-litigate
    why its bid failed. He stressed two factors: first, Catalyst could have
    advanced its claims from the Current Action in the
Moyse

Action; and second, for Catalyst to succeed
    in the Current Action, the court would have to make factual findings
    inconsistent with those of Newbould J.

[22]

Finally,
    the motions judge struck Catalysts claim for breach of contract against
    Globalive and UBS without leave to amend. He found that Catalyst had failed to
    plead the required elements of a breach of contract claim because it failed to
    plead that Globalive and UBS were parties to the Exclusivity Agreement and the
    Confidentiality Agreement. He declined leave to amend because Catalyst had many
    opportunities to properly plead its breach of contract claim and no amendment
    could produce a viable cause of action.

ISSUES

[23]

The
    following issues arise on this appeal:

1)

Did the motions judge
    err in dismissing the Current Action on the ground of issue estoppel?

2)

Did the motions judge
    err in dismissing the Current Action on the ground of cause of action estoppel?

3)

Did the motions judge
    err in dismissing the Current Action as an abuse of process?

4)

Did the motions judge
    err in striking Catalysts pleadings of breach of contract against UBS and
    Globalive without leave to amend?

ANALYSIS

Standard of Review

[24]

This
    court owes deference to the motions judges application of the tests for issue
    estoppel, cause of action estoppel, and abuse of process. As the Supreme Court
    held in
Penner v. Niagara (Regional Police Services Board),
2013 SCC
    19, [2013] 2 S.C.R. 125, at para. 27, the decision to apply issue estoppel is
    discretionary. Accordingly, an appellate court should intervene only if the
    motions judge misdirected himself, came to a decision that is so clearly wrong
    as to be an injustice, or gave no or insufficient weight to relevant
    considerations. This same standard of review applies to the application of the
    tests for cause of action estoppel and abuse of process:
Law Society of
    Manitoba v. Mackinnon
, 2014 MBCA 28, 370 D.L.R. (4th) 385, at para. 31;
Burcevski
    v. Ambrozic
, 2011 ABCA 178, 505 A.R. 359, at paras. 7-9, leave to appeal
    refused, [2011] S.C.C.A. No. 388. I agree with the respondents that Catalyst
    has not pointed to an extricable error of law that would justify applying the correctness
    standard.

(1)

Did the motions judge err in dismissing the Current Action on the ground
    of issue estoppel?

(a)

The
    Law

[25]

In
Danyluk v. Ainsworth Technologies Inc.
, 2001 SCC 44, [2001] 2 S.C.R.
    460, at para. 25, the Supreme Court outlined the three requirements for issue
    estoppel:

1)

The same question has
    been decided;

2)

The judicial decision
    said to give rise to the estoppel is final; and

3)

The parties to the
    judicial decision or their privies were the same persons as the parties to the
    proceeding in which the estoppel is raised or their privies.

Even if all three requirements are met, however, the
    court still has a residual discretion not to apply issue estoppel when its
    application would work an injustice:
Danyluk
, at paras. 62-63.

[26]

The
    second and third of these requirements were not seriously contested in this
    court. Catalysts only argument on the third requirement is that parties can
    only be privies if the same question is involved in both proceedings. Catalyst
    does not argue that, should this court find that the same question is involved
    in both proceedings, the US Investors and Globalive were insufficiently
    connected to West Face to be its privies. Accordingly, the focus of these
    reasons is on the first requirement, that the question decided in the two
    proceedings be the same, as well as on the residual discretion.

[27]

Different
    causes of action may have one or more material facts in common. Issue estoppel
    prevents re-litigation of the material facts that the cause of action in the
    prior action embraces:
Danyluk
, at para. 54. However, the question out
    of which the estoppel arises must be fundamental to the decision arrived at
    in the prior proceedings:
Angle v. M.N.R.
, [1975] 2 S.C.R. 248, at p.
    255. Accordingly, the question must be necessarily bound up with the
    determination of the issue in the prior proceeding for issue estoppel to apply:
Danyluk
, at paras. 24, 54.

[28]

Catalyst
    argues that the motions judge erred in applying issue estoppel for the
    following reasons:

1)

Newbould J.s findings
    in the Moyse Action were obiter and collateral to his decision;

2)

Newbould J.s findings
    are merely overlapping facts and are incidental to Catalysts claims in the Current
    Action;

3)

Catalyst may be
    entitled to a remedy without any inconsistent findings; and

4)

The exercise of
    residual discretion favours not applying issue estoppel.

[29]

I
    disagree and would reject this ground of appeal.

(b)

Newbould
    J.s Findings Are Not Obiter

[30]

Catalyst
    submits that Newbould J.s findings are in obiter and collateral because they
    were not necessary to his decision. For Catalyst, the central issue in the
Moyse

Action was whether Moyse
    passed confidential information to West Face and since Newbould J. found that Moyse
    had not, his other findings were collateral.

[31]

I
    would reject this submission. Catalysts submission is premised on the
    assumption that the only fundamental issue in the
Moyse

Action was whether Moyse passed confidential
    information to West Face. However, to succeed in its breach of confidence
    claim, Catalyst was also required to prove that West Face used confidential
    information in its bid for Wind and that this misuse caused detriment to
    Catalyst:

Moyse

ONCA
    Reasons, at para. 8.

[32]

Canadian
    courts have consistently rejected the argument that a judicial finding is merely
    dictum or collateral because there was another sufficient basis for the judges
    decision. In
Stuart v. Bank of Montreal
(1909), 41 S.C.R. 516, the
    Supreme Court rejected the argument that a judicial finding that is a distinct
    and sufficient ground for its decision [is] a mere dictum because there is
    another ground upon which, standing alone, the case might have been
    determined: p. 534, per Duff J. (Fitzpatrick C.J. concurring), pp. 539-540,
    per Anglin J., quoting
New South Wales Taxation Commissioners v. Palmer
,
    [1907] A.C. 179 (P.C.), at p. 184. More recently, the Federal Court of Appeal
    held that a judges finding on one necessary element of a claim gave rise to
    issue estoppel even though the judge had earlier in his reasons reached a
    conclusion on another element that was sufficient to dispose of the claim:
Pharmascience
    Inc. v. Canada (Health)
, 2007 FCA 140, 282 D.L.R. (4th) 145, at paras.
    34-35.

[33]

As
    West Face submits, accepting Catalysts argument would lead to absurd
    consequences, because it would make the applicability of issue estoppel
    dependent on the order in which the court chooses to address issues in its
    reasons. Baron Bramwells statement in
Membery v. The Great Western Railway
    Co.
(1889), 14 App. Cas. 179 (H.L.), at p. 187, cited in
Stuart
by
    Anglin J. at p. 539, provides a complete answer to Catalysts argument:

Of course it is in a sense not
    necessary that I should express an opinion on this as the ground I have first mentioned,
    in my opinion, disposes of the case. But if, instead of mentioning that ground
    first, I had mentioned the one I am now dealing with, it would, on the same
    reasoning, be unnecessary to mention that. What I am saying is not obiter, not
    a needless expression of opinion on a matter not relevant to the decision.
    There are two answers to the plaintiff; and I decide against him on both; on
    one as much as on the other.

(c)

Newbould
    J.s Findings Are Central to the Current Action

[34]

Catalyst
    further submits that Newbould J.s findings are merely overlapping facts such
    that the same question was not determined. For Catalyst, the Moyse Action was
    about confidential information that Moyse received and transmitted. In
    contrast, Catalyst submits that this action concerns the transmission of
    confidential information by VimpelCom and/or UBS to the Consortium in breach of
    the Confidentiality Agreement and the Exclusivity Agreement. As a result, it
    follows that Newbould J.s finding that even if Moyse did pass on confidential
    information to West Face, and such confidential information did not cause
    detriment to Catalyst, it does not mean that confidential information that
    VimpelCom and/or UBS leaked to the Consortium did not cause detriment to
    Catalyst.

[35]

I
    do not accept this argument. It is facially appealing. However, it is premised
    on a misunderstanding of what the parties put at issue in the
Moyse

Action.

[36]

The
Moyse

Action necessarily
    concerned the overall conduct of West Face and the other Consortium members. As
    Catalyst had no direct evidence that
Moyse
gave West Face confidential information, it submitted that the court should
    infer from all the evidence that he did so:
Moyse
Trial Reasons, at para. 7. As Newbould J. recognized, this
    required the court to examine West Faces overall course of conduct to
    determine if there was a transfer of Catalysts confidential information or if there
    were other explanations for West Faces conduct
:
Moyse

Trial Reasons, at paras.
    72-73. Therefore, whether West Face received any confidential information in
    breach of the Confidentiality Agreement and the Exclusivity Agreement, and
    whether West Faces use of confidential information caused any detriment to
    Catalyst, were live issues at trial.

[37]

Newbould
    J. was thus required to analyze whether the conduct of West Face and other
    Consortium members was consistent with the use of confidential information and
    whether there was any evidence that the use of confidential information caused
    Catalyst a detriment. He was entitled to draw inferences from the evidence as
    to what would likely have happened but for a misuse of confidential information:
Cadbury Schweppes Inc. v. FBI Foods Ltd.
, [1999] 1 S.C.R. 142, at
    para. 73. As the motions judge noted, West Face invited Newbould J. to make
    findings of fact that Catalyst failed to acquire Wind because it refused
    VimpelComs demand for a break fee and because it would have been unable to
    obtain regulatory concessions. Catalyst did not object to any of these proposed
    findings of fact as being outside of the scope of the Moyse Action: Motions
    Reasons, at para. 40. In fact, Catalyst elicited considerable evidence on the
    dealings between VimpelCom and UBS, and the Consortium, and urged Newbould J.
    to make certain findings in respect of these dealings:
Moyse
ONCA Reasons, at para. 42. Catalyst
    cannot now complain that it was improper for Newbould J. to make contrary
    findings or that those contrary findings were not essential to his decision.

[38]

I
    thus do not accept Catalysts argument that Newbould J.s findings on detriment
    were restricted to detriment from confidential information transmitted by
Moyse
. Perhaps this would have been the
    case had Catalyst litigated the
Moyse

Action differently or had it produced direct evidence of leaks of
    confidential information by Moyse. However, Catalyst chose to put at issue not
    only the Consortiums entire conduct, but also the reasons why Catalyst failed
    to acquire Wind and whether misuse of confidential information by the
    Consortium had anything to do with that failure. As this court found, Newbould
    J. did not overstep his bounds in finding against Catalyst on these issues:
Moyse
ONCA Reasons, at paras. 39-42.

(d)

Newbould
    J.s Findings Would Bar Catalyst from Establishing Liability

[39]

Catalyst
    submits that Newbould J.s findings about why it failed to acquire Wind would
    not bar it from gaining a remedy for its claims. Catalyst argues that, even
    accepting Newbould J.s findings, it is nonetheless entitled to recovery. I
    would reject this submission.

[40]

In
    its argument, Catalyst focuses in particular on its claims against West Face,
    Globalive, and the US Investors for breach of confidence and inducing breach of
    contract. Relying on certain statements in
Cadbury Schweppes
that
    establish that the court has jurisdiction to grant a remedy dictated by the
    facts of the case rather than strict doctrinal considerations, Catalyst submits
    that it may be entitled to equitable remedies such as an accounting of profits
    even if it suffered no financial loss.

[41]

However,
    the jurisprudence is clear that a claimant must prove detriment to establish
    liability for breach of confidence, inducing breach of contract, and
    conspiracy:
Lysko v. Braley
(2006), 79 O.R. (3d) 721 (C.A.), at paras.
    17-19;
Persaud v. Telus Corporation
, 2017 ONCA 479, at para. 26;
Cement
    LaFarge v. B.C. Lightweight Aggregate
, [1983] 1 S.C.R. 452, at pp.
    471-472. There is no contradiction between this requirement to prove detriment
    and the passages from
Cadbury Schweppes
that Catalyst points to.
Lysko
explicitly accepted that
Cadbury Schweppes
adopted a broad definition
    of detriment but confirmed the requirement: paras. 18-19. Accordingly, Newbould
    J.s findings would bar Catalyst from establishing the liability of West Face,
    Globalive, and the US Investors for breach of confidence, inducing breach of
    contract, and conspiracy.

[42]

Nor
    do I accept that the fact that detriment is not required to establish liability
    for breach of contract changes my analysis. Catalyst did not plead breach of
    contract against West Face or the US Investors. Admittedly, Catalyst did plead
    breach of contract against Globalive. However, as I will explain later in these
    reasons, the motions judge correctly struck Catalysts pleading of breach of
    contract against Globalive as disclosing no reasonable cause of action without
    leave to amend. Accordingly, Catalyst was required to prove detriment for each
    of the causes of action it validly pled against West Face, Globalive, and the
    US Investors.

[43]

Moreover,
    I do not place weight on the availability of alternative remedies. Catalyst did
    not plead any of the alternative remedies such as an accounting for profits
    that it now refers to on appeal. Instead, it repeatedly pled that the breach of
    confidence and inducement of breach of contract caused it to fail to acquire
    Wind. This is a precise inconsistency with Newbould J.s findings.

[44]

These
    inconsistencies also lead me to reject Catalysts submission that the fact that
    it has pled different causes of action in the Current Action means issue
    estoppel cannot apply. Issue estoppel applies precisely when there are
    different causes of action as long as those causes of action have a material
    fact in common:
Danyluk
, at para. 54. For instance, in
Danyluk
,
    the claim to unpaid commissions was a material fact in both the administrative
    proceeding under the
Employment Standards Act
, R.S.O. 1990, c. E.14,
    and the civil claim for wrongful dismissal: para. 55. In the present case, the
    motions judge correctly identified that the need to prove detriment, namely
    that the respondents conduct caused Catalyst to fail to acquire Wind, was a
    material fact common to the relevant causes of action Catalyst asserted in both
    actions.

[45]

Lastly,
    I do not accept that issue estoppel cannot apply even in the face of Newbould
    J.s findings because those findings simply overlap with the issues in the
    Current Action and are not fundamental to his decision. Comparing the present
    case with the Supreme Courts decision in
Angle

illustrates
    that Newbould J.s findings were not merely overlapping.
Angle
was a
    case involving merely overlapping facts. There, Dickson J. concluded that a
    finding that a shareholder was not under an obligation to pay a corporation for
    a benefit was not legally indispensable to the judgment in the prior tax
    proceeding as this indebtedness was only relevant to a subsidiary issue. There
    was no necessary inconsistency between the shareholder being obligated to pay
    the corporation and the decision that the shareholder had received a taxable
    benefit: pp. 255-256. In contrast, here Newbould J.s finding that there was no
    chance Catalyst could have successfully concluded a deal with VimpelCom made it
    impossible for Catalyst to succeed on its breach of confidence claim in the
Moyse

Action. This finding
    similarly makes it impossible for Catalyst to succeed on its claims in the
    Current Action against West Face, Globalive, and the US Investors for breach of
    confidence, inducing breach of contract, and conspiracy without a court having
    to make inconsistent findings, as proof of loss is an element of those claims.

(e)

Residual
    Discretion

[46]

Catalyst
    argues that the motions judge erred in not exercising his residual discretion
    to permit Catalysts action to proceed. Relying on
Danyluk
, Catalyst
    argues that the motions judges analysis was cursory and that he erred in
    principle by failing to address the factors for and against the exercise of the
    discretion. Catalyst submits that applying issue estoppel results in an injustice
    to Catalyst because there has been no discovery of VimpelCom or UBS regarding
    the circumstances surrounding the sale of VimpelComs shares of Wind.

[47]

I
    would not accept this argument. The court does have residual discretion, but
    its exercise is more limited in nature in this case because the Moyse Action
    was a court proceeding, not an administrative proceeding as in
Danyluk
:
Danyluk
, at para. 62. The passage in the motions judges reasons where
    he explicitly referred to residual discretion was brief. However, his conclusion,
    at para. 75, that Catalyst failed to put its best foot forward and is not
    entitled to a second bite at the cherry was reasonable. It must be read in
    light of the motions judges extensive reasons addressing Catalysts failure to
    advance its current claims in the
Moyse

Action and its attempt to re-litigate Newbould J.s findings in the

Moyse

Action.

[48]

Finally,
    I am not convinced that the application of issue estoppel in these
    circumstances would work an injustice. In
Danyluk
, the court found
    such an injustice because the appellants claim to employment commissions was
    never properly adjudicated due to procedural unfairness in the administrative
    proceedings the appellant pursued before commencing a civil action: para. 80.
    In contrast, in this case, Catalyst received a procedurally fair trial, the
    result of which this court upheld on appeal. While issue estoppel bars Catalyst
    from eliciting evidence and advancing new theories of liability against West
    Face, this is not a manifest injustice since Catalyst could have elicited that
    evidence and advanced those theories in the
Moyse

Action.

(2)

Did the motions judge err in dismissing the Current Action on the ground
    of cause of action estoppel?

(a)

The
    Law

[49]

The
    purpose of cause of action estoppel is to prevent the re-litigation of claims
    that have already been decided. As expressed by Vice Chancellor Wigram in
Henderson
    v. Henderson
(1843), 67 E.R. 313, at p. 319, it requires parties to bring
    forward their whole case. The court thus has the power to prevent parties from
    re-litigating matters by advancing a point in subsequent proceedings which
    properly belonged to the subject of the [previous] litigation.

[50]

For
    cause of action estoppel to apply, the basis of the cause of action and the
    subsequent action either must have been argued or could have been argued in the
    prior action if the party in question had exercised reasonable diligence:
Grandview
    v. Doering
, [1976] 2 S.C.R. 621, at p. 638. That said, I accept Catalysts
    submission that it is not enough that the cause of action could have been
    argued in the prior proceeding. It is also necessary that the cause of action
    properly belonged to the subject of the prior action and should have been
    brought forward in that action:
Hoque v. Montreal Trust Co. of Canada
,
    1997 NSCA 153, 162 N.S.R. (2d) 321, at para. 37, leave to appeal refused,
    [1997] S.C.C.A. No. 656;
Pennyfeather v. Timminco Ltd.
, 2017 ONCA 369,
    at para. 128, leave to appeal refused, [2017] S.C.C.A. No. 279.

[51]

Like
    issue estoppel, cause of action estoppel also requires a final judicial
    decision and that the parties to that decision were the same persons or the
    privies to the parties to the present proceeding:
Pennyfeather
, at
    para. 128;
Canam Enterprises Inc. v. Coles
(2000), 51 O.R. (3d) 481
    (C.A.), at para. 21, revd on other grounds, 2002 SCC 63, [2002] 3 S.C.R. 307.
    As these requirements were not seriously contested before us, I will not
    discuss them further.

(b)

Catalyst
    Could Have Brought Forward its Claims in the
Moyse
Action

[52]

Catalyst
    submits that cause of action estoppel should not apply because it could not have
    brought forward its current claims in the
Moyse

Action. In particular, Catalyst argues that it was barred from advancing
    its claim for inducing breach of contract in the Moyse Action. Newbould J.,
    however, found that Catalyst was aware of its claim for inducing breach of
    contract by March 2015 and that it chose to lie in the weeds rather than
    assert its claim:
Mid-Bowline
, at para. 59. Catalyst never took steps
    to amend its pleadings in the
Moyse

Action to add a claim for inducing breach of contract in the
Moyse
Action even though West Face
    explicitly invited it to four months prior to the trial. This case is thus analogous
    to
Martin v. Goldfarb
, [2006] O.T.C. 629 (S.C.), where Perell J.
    applied cause of action estoppel against corporate claims when the individual
    plaintiff had the opportunity to join the corporate claims to a previous
    individual action but failed to do so: at paras. 70, 78-79.

[53]

Furthermore,
    I would reject Catalysts argument that the possibility that new evidence would
    be obtained from VimpelCom and UBS regarding the sale of Wind in the Current
    Action means that cause of action estoppel should not apply. New evidence is
    only a basis to re-open litigation if it would entirely chang[e] the case and
    the party could not have reasonably ascertained it through reasonable
    diligence:
Grandview
, at pp. 636-637. Even assuming that the new
    evidence was so important as to entirely change the case, Catalyst could have
    ascertained this evidence through reasonable diligence in the
Moyse

Action. Catalyst knew of
    the facts underlying its claim for inducing breach of contract by March 2015.
    It thus had ample time to elicit this evidence at the trial of the
Moyse
Action. In
Grandview
, the
    plaintiff learned of a new theory of liability only following the trial of the
    first action, and the majority of the Supreme Court still applied cause of
    action estoppel: pp. 632-633. Here, the case for applying cause of action
    estoppel is even more compelling, as Catalyst was aware of its new theory of
    liability more than a year prior to the trial of the
Moyse
Action.

(c)

Catalyst
    Should Have Brought Forward its Claims in the Moyse Action

[54]

Catalysts
    central argument on cause of action estoppel is that it was appropriate for
    Catalyst to advance its current claims in a new action rather than amending its
    pleadings in the

Moyse

Action. Catalyst submits that the focus of the
Moyse
Action was the leak of confidential information by Moyse.
    In contrast, the Current Action focuses on breaches of the Exclusivity and
    Confidentiality Agreements that West Face allegedly induced. The Current Action
    thus involves separate and distinct causes of action that flow from distinct
    legal relationships. Catalyst submits that the factors
Hoque
outlined to
    guide the courts determination of whether a party should have raised a matter
    in a prior proceeding show that Catalyst should not have advanced its current
    claims in the
Moyse

Action.

[55]

I
    do not agree. In
Hoque
, at para. 37, Cromwell J.A. (as he was then) outlined
    several factors that are relevant to whether a matter should have been raised
    in a prior proceeding. These include the following:

1)

Whether the second
    proceeding is a collateral attack against the earlier judgment;

2)

Whether the second
    proceeding relies on evidence that could have been discovered in the past
    proceeding with reasonable diligence; and

3)

Whether the second
    proceeding relies on a new legal theory that could have been advanced in the
    past proceeding.

[56]

These
    three factors weigh against Catalyst in this case. As I have already found, the
    Current Action would require the court to make findings inconsistent with those
    of Newbould J. in order for Catalyst to establish liability for conspiracy,
    breach of confidence, and inducing breach of contract. It thus involves a
    collateral attack against Newbould J.s trial decision. Moreover, as I have previously
    stated, the new evidence that Catalyst points to could have been discovered in
    the
Moyse

Action
    through reasonable diligence.

[57]

The
    same is true of Catalysts new legal theory that Globalive and UBS communicated
    confidential information to the Consortium and the Consortium used this
    information to induce VimpelCom to breach the Exclusivity and Confidentiality
    Agreements. I agree with Catalyst that its legal theory of causation in the
    Current Action is distinct from its theory of causation in the
Moyse
Action. However, I accept West
    Faces submission that this is analogous with
Grandview
, where the
    majority of the Supreme Court applied cause of action estoppel. In
Grandview
,
    the subject matter of both actions was that water flowed from the defendants
    land onto the plaintiffs. Only the theory as to which way the water reached
    the plaintiffs land changed between the two actions. Similarly, in this case,
    the subject matter of both the
Moyse

Action and the Current Action is the flow of confidential information to
    West Face. While Catalyst does have a different legal theory in this action,
    that theory only outlines a different means by which confidential information
    flowed to and was used by West Face.

[58]

Nor
    am I persuaded that the different legal claims Catalyst has advanced in this
    action bar the operation of cause of action estoppel. I acknowledge that the
    existence of a separate and distinct cause of action is a factor that might
    weigh against applying cause of action estoppel:
Hoque
, at para. 37.
    However, as Sharpe J. (as he was then) held in
Las Vegas Strip Ltd. v.
    Toronto (City)

(1996), 30 O.R. (3d) 286 (Gen. Div.), at p. 297,
    affd (1997), 32 O.R. (3d) 651 (C.A.), the law does not permit the manipulation
    of the underlying facts to advance a new legal theory. Similarly, this court
    has held that cause of action estoppel bars a subsequent lawsuit relating to
    the same loss being advanced on a
different cause of
    action
:
Lawyers Professional Indemnity Co. v. Rodriguez
, 2018
    ONCA 171, 139 O.R. (3d) 641, at para. 47, leave to appeal refused, [2018]
    S.C.C.A. No. 128 (Emphasis added).

[59]

I
    find that Sharpe J.s decision in
Las Vegas Strip
is analogous and
    confirms that cause of action estoppel should apply even though Catalyst has
    advanced distinct legal claims in the Current Action. In
Las Vegas Strip
,
    a strip club unsuccessfully argued that its operation was a legal
    non-conforming use under a municipal bylaw in a prior proceeding. The strip
    club then commenced a subsequent proceeding alleging that the bylaw was invalid
    on municipal law and
Charter

grounds. Sharpe J. acknowledged
    that the strip club had raised new legal arguments in the second proceeding:
    p. 298. However, he found that it was barred from doing so because the prior
    proceedings put squarely in issue the same matter central to the second
    proceeding, namely the strip clubs legal right to operate. The strip club was
    free to raise the municipal law and
Charter
arguments in the prior
    proceeding but elected not to do so: pp. 295-296. This court affirmed Sharpe
    J.s decision on the same basis: p. 651.

[60]

Similarly,
    in this case Catalyst was free to raise its inducing breach of contract and
    conspiracy claims in the
Moyse

Action but elected not to do so. I acknowledge, as Sharpe J. did, that
    Catalyst has raised new legal arguments. However, the motions judge reasonably
    concluded, at para. 78 of his reasons, that these new legal arguments arose
    from the same set of facts, namely Catalysts failure to acquire Wind and its
    acquisition by the Consortium. Catalysts current claims certainly sought to
    add certain facts related to VimpelCom and UBSs conduct and to subtract other
    facts related to Moyses conduct. However, as Sharpe J. held in
Las Vegas
    Strip
, attempting to add or subtract facts does not change the reality that
    the underlying subject matter is the same and all of the facts were available
    in the earlier action: p. 297.

(3)

Did the motions judge err in dismissing the Current Action as an abuse
    of process?

(a)

The
    Law

[61]

It
    is well-recognized that the re-litigation of issues that have been before the
    courts in a previous proceeding will create an abuse of process. As stated by
    the Supreme Court of Canada in
Toronto (City) v. C.U.P.E., Local 79
,
    2003 SCC 63, [2003] 3 S.C.R. 77, at para. 52:

[F]rom the systems point of view, relitigation
    carries serious detrimental effects and should be avoided
unless
the circumstances dictate that relitigation is in fact necessary to
    enhance the credibility and the effectiveness of the adjudicative process as a
    whole.

[62]

The
    abuse of process doctrine applies to prevent the attempt to impeach a judicial
    finding by re-litigation in a different forum:
C.U.P.E.
, at para. 46. It
    is a flexible doctrine unencumbered by the mutuality of parties requirement
    that applies to issue estoppel and cause of action estoppel:
C.U.P.E.,
at para. 37. While abuse of process does include a finality requirement, that
    requirement is met in this case because the Supreme Court dismissed Catalysts
    application for leave to appeal from this courts decision in the Moyse Action.

[63]

The
    need to protect the integrity of the adjudicative functions of courts compels a
    bar against re-litigation:
C.U.P.E
.
, at para. 43. If
    re-litigation leads to the same result, there will be a waste of judicial
    resources, and if it leads to a different result, the inconsistency will
    undermine the credibility of the judicial process:
C.U.P.E.
, at para.
    51. The law thus seeks to avoid re-litigation primarily for two reasons: first,
    to prevent overlap and wasting judicial resources; and second, to avoid the
    risk of inconsistent findings:
Petrelli v. Lindell Beach Holiday Resort
    Ltd.
, 2011 BCCA 367, 24 B.C.L.R. (5th) 4, at para. 71; see also
C.U.P.E.
,
    at para. 51; Donald J. Lange,
The Doctrine of Res Judicata in Canada
,
    4th ed. (Markham, ON: LexisNexis Canada Inc., 2015), pp. 217-218.

(b)

The Current
    Action is an Abuse of Process

[64]

The
    motions judge rightly concluded that Catalysts Current Action was an abuse of
    process as against all respondents because the Current Action is an attempt to
    re-litigate the findings in the
Moyse
Action.

[65]

Both
    of the concerns underlying the abuse of process doctrine are present here. Catalysts
    claim is abusive both because: (a) it directly overlaps with the issues that
    were before the court in the
Moyse

Action; and (b) it can
only
be successful if the court rejects the
    findings made by Newbould J. For the reasons already outlined under issue
    estoppel and cause of action estoppel, Catalyst is trying to re-litigate
    Newbould J.s factual finding that Catalysts own actions caused its failure to
    acquire Wind. This is an abuse of process.

[66]

Moreover,
    Catalysts behaviour exhibits classic signs of re-litigation. Newbould J. found
    that Catalyst chose to lie in the weeds for strategic reasons and then to
    spring a new theory at the last moment:

Mid-Bowline Group
, at
    para. 59. Catalyst filed its statement of claim in the Current Action mere days
    before the trial of the
Moyse
Action. This is analogous to
Bear v. Merck Frosst Canada & Co.
,
    2011 SKCA 152, 345 D.L.R. (4th) 152,

where a law firm directed the
    commencement of a new class action merely a day after it exhausted its appeal
    processes of the dismissal of the previous class action. In that case, the
    Saskatchewan Court of Appeal found that there was nothing in the second class
    action that could not have been advanced in the first class action and that the
    law firm was attempting to litigate by installment: paras. 76-78.
    Accordingly, the court found that the new class action was an abuse of process.

[67]

Catalysts
    submission that abuse of process is not intended to prevent the raising of a
    separate cause of action in a subsequent action should be rejected. As
    previously discussed, Catalyst could have raised the claims it advances in the
    Current Action in the
Moyse

Action.
    It elected not to. As this court recently held, abuse of process applies where
    issues could have been determined but were not:
Winter v. Sherman Estate
,
    2018 ONCA 703, 42 E.T.R. (4th) 181, at para. 7. Moreover, it also applies to
    prevent re-litigation of previously decided facts:
Winter
, at para. 8.
    As previously stated, for Catalyst to succeed in the Current Action, a court
    would have to reach different factual findings from those of Newbould J. on the
    reasons why Catalyst failed to acquire Wind.

[68]

Moreover,
    none of the factors the Supreme Court outlined in
C.U.P.E.
that would
    permit re-litigation apply in this case. The Supreme Court stated, at para. 52,
    that it might be appropriate to permit re-litigation in the following
    circumstances:

1)

When the first
    proceeding is tainted by fraud or dishonesty;

2)

When fresh, new
    evidence, previously unavailable, conclusively impeaches the original results;
    or

3)

When fairness dictates
    that the original result should not be binding in the new context.

[69]

Catalyst
    does not allege that the first proceeding is tainted by fraud or dishonesty. To
    the extent that there is a possibility that new evidence from VimpelCom and UBS
    regarding the sale of Wind might impeach the original results, this evidence
    was not previously unavailable and could have been adduced by Catalyst at the
    trial of the
Moyse

Action.
    As for the fairness factor, the Supreme Court clarified that this would apply
    if the stakes in the original proceeding were too minor to give a party an
    adequate incentive to litigate:
C.U.P.E.
, at para. 53. However, the
    financial stakes in the
Moyse

Action were not minor and Catalyst robustly litigated that proceeding.

[70]

Catalysts
    reliance on Goudge J.A.s dissenting reasons in
Canam
, which the
    Supreme Court subsequently upheld, is misplaced.
Canam
is
    distinguishable on the facts because it concerned a claim that a party could
    not have raised in prior proceedings, not one which a party could have raised
    but chose not to. In
Canam
, a purchaser first sued the vendor in
    contract. The court found that there had been a misrepresentation by the vendors
    realtors but dismissed the purchasers claim because of the doctrine of merger.
    The purchaser then sued its lawyer in tort for professional negligence. The
    lawyer commenced third party proceedings against the realtors in which he
    sought to add them as joint tortfeasors for their misrepresentations to the
    purchaser. As neither the lawyer nor the realtor were parties to the purchasers
    original contractual action against the vendor, Goudge J.A. found that the
    lawyer was not attempting to re-litigate a claim because he had not and could
    not have raised this issue previously: para. 58. In contrast, in this case
    Catalyst could have raised its claims in the Current Action but elected not to
    do so.

(4)

Did the motions judge err in striking Catalysts pleadings of breach of
    contract against UBS and Globalive without leave to amend?

[71]

The
    motions judge struck Catalysts pleadings of breach of contract against UBS and
    Globalive without leave to amend. Catalyst makes two submissions. First, it
    argues that the motions judge erred in striking the pleadings because Catalyst
    did plead all elements of privity of contract against both Globalive and UBS.
    Second, Catalyst submits that the motions judge should have granted leave to
    amend because an amendment could have cured any deficiencies without
    incompensable prejudice to the respondents.

[72]

I
    do not agree.

[73]

First,
    the motions judge correctly concluded that the pleadings did not disclose a
    reasonable cause of action because they failed to plead privity of contract. A
    claim for breach of contract must contain sufficient particulars to identify
    the parties to the contract:
McCarthy Corporation PLC v. KPMG LLP
,
    [2007] O.J. No. 32 (S.C.), at para. 26. Similarly, it is trite law that,
    subject to certain exceptions that are not applicable here, a non-party to a
    contract cannot be sued for breach of contract:
Greenwood Shopping Plaza
    Ltd. v. Beattie
, [1980] 2 S.C.R. 228, at pp. 236-238.

[74]

As
    the motions judge found, Catalyst failed to plead that either Globalive or UBS
    were parties to the Exclusivity Agreement or the Confidentiality Agreement. Catalysts
    statement of claim listed the parties to each agreement without including
    either Globalive or UBS. While Catalyst did plead that UBS was bound by these
    agreements, the motions judge correctly concluded that as a matter of law UBS
    could not be bound to an agreement to which it was not a party in these
    circumstances. With respect to Globalive, the motions judge found that the claim
    must also fail. Catalysts theory is that Globalive is vicariously liable for
    the actions of its principal, Anthony Lacavera (Lacavera), who Catalyst in
    turn pleads was bound not to undermine the Exclusivity Agreement. However,
    Catalyst pleads that Lacavera was not a party to the Exclusivity Agreement, so
    this claim similarly fails.

[75]

Second,
    the motions judges decision to deny leave to amend was reasonable. The
    decision whether or not to grant leave to amend is a discretionary decision
    entitled to deference:
RWDI Air Inc. v. N-SCI Technologies Inc.
, 2015
    ONCA 817, at para. 14. The motions judge denied leave to amend both pleadings because
    Catalyst had many opportunities to properly plead its breach of contract claims
    and since the absence of any contract between Catalyst and Globalive or UBS
    meant that no amendments could make the pleading legally tenable. Both of these
    findings are consistent with jurisprudence establishing that a court may deny
    leave to amend where a party has had many opportunities to properly plead the
    claims and where amendments could not make the pleadings legally tenable: see
Cavanaugh
    v. Grenville Christian College
, 2013 ONCA 139, 360 D.L.R. (4th) 670, at
    paras. 82-83;
RWDI
, at para. 14.

CONCLUSION

[76]

In
    all the circumstances, I would dismiss the appeal.

[77]

With
    respect to the issue of costs, the parties agreed that should the disposition
    of this appeal be in favour of the respondents, then they should be awarded
    their costs collectively fixed in the amount of $300,000. Accordingly, costs are
    hereby awarded to the respondents collectively, fixed in the mount of $300,000,
    inclusive of all taxes and disbursements.

Released: M.H.T. May 2, 2019

M. Tulloch J.A.

I agree. M.L. Benotto
    J.A.

I agree. Grant
    Huscroft J.A.


COURT OF APPEAL FOR ONTARIO

CITATION: Curley v. Taafe, 2019 ONCA 368

DATE: 20190507

DOCKET: C65627

Lauwers, Pardu and Nordheimer JJ.A.

BETWEEN

Antoinette Curley

Plaintiff (Respondent)

and

Lesley Mary Taafe

Defendant (Appellant)

P. James Zibarras, for the appellant

Lubomir Poliacik, for the respondent

Heard: April 11, 2019

On appeal from the judgment of Justice Mark L. Edwards of
    the Superior Court of Justice, dated June 13, 2018, with reasons reported at
    2018 ONSC 3150, 47 C.C.E.L. (4th) 228.

Pardu J.A.:

[1]

The appellant, Ms. Taafe, appeals from a
    judgment awarding damages for breach of contract and for malicious prosecution
    in favour of the respondent, Ms. Curley.

[2]

The appellant alleges that the trial judge erred
    in three respects:

1.

By failing to recognize that in the absence of
    any evidence from police about the effect of the appellants complaint to them
    upon their investigation, he could not conclude that the appellant initiated a
    criminal prosecution of the respondent, in light of the other evidence that
    showed that the police did in fact conduct an independent investigation of
    their own.

2.

By applying the rule in
Browne v. Dunn
(1893),
    6 R. 67 (U.K. H.L.)

to discount evidence supporting the appellants
    position and undermining the respondents position. The appellant submits that
    the application of the rule to a letter written by the respondent, which had
    the potential to significantly impact the trial judges assessment of the
    parties credibility, was flawed given that the appellants trial counsel
    referred to the letter in her opening statement at trial and provided an
    opportunity for the respondent to explain the contents of the letter during
    cross-examination.

3.

By taking judicial notice of the effect of a
    criminal charge on a paralegals practice, and upon the respondents ability to
    mitigate her damages for breach of contract.

[3]

I would give effect to each of these arguments,
    allow the appeal, set aside the judgment below, and dismiss the action.

A.

Factual issues

[4]

The appellant is a lawyer. She had a referral
    contract with the respondent, who was working as a paralegal, albeit unlicensed
    by the Law Society. The respondent promised to refer clients exclusively to the
    appellant for real estate and family law matters. The respondent would do
    paralegal type work on the files. An associated confidentiality agreement
    between the parties specifically provided that confidential information
    contained within the files was the property of the appellant. Any work done on
    any file that contained confidential information, including without limitation
    notes, financial information, or any text from which confidential information
    could implicitly be understood, was deemed to be confidential information. The
    file contents were to remain the sole property of the appellant, and the
    agreement provided that confidential information (including any reproduction
    therefore) shall remain the sole property of TAAFE LAW and shall be returned to
    TAAFE LAW immediately upon request or immediately after the termination of the
    employees employment, for any reason.

[5]

Although the agreement was for a one year term,
    the relationship fell apart earlier for widely divergent reasons given by each
    of the parties. The appellant testified that she terminated the relationship on
    January 15, 2013 because of complaints from clients, and after determining that
    the respondent was not a qualified law clerk or paralegal. The appellant also
    pointed to a letter, dated January 15, 2013, which she says confirms an
    in-person discussion in which she terminated the respondent. The respondent
    testified that she did not receive the aforementioned letter. The respondent
    testified that she knew by February 19, 2013 that the appellant had terminated
    the arrangement but took the position that the appellant had breached the
    contract between them by unilaterally terminating it.

[6]

The appellant testified that she asked the
    respondent to return all of her client files to her home on January 15, 2013.
    She says the respondent did come to her home that day but did not leave the
    files.  The respondent testified that she went to the appellants home, on her
    own initiative, only to leave closed files there. According to her evidence,
    she did keep two files, the M file and the S, file in her possession. The
    appellant also claimed to have sent a letter to the respondent on February 12,
    2013, in which she alleged she would go to the police if she did not get her
    client files back. The respondent testified that she did not receive the
    February 12, 2013 letter.

[7]

There was divergent evidence about what, if any,
    communications passed between the parties after January 15, 2013. As has
    already been mentioned, the appellant claimed to have sent letters to the
    respondent on January 15, 2013 and February 12, 2013. The respondent maintained
    that she did not receive these letters.

[8]

The appellant testified that she was worried
    about retrieving her client files. She said she called the Law Society and that
    they advised her to contact the police. On February 27, 2013, the appellant
    wrote to the police to complain that the respondent had not returned her client
    files after the termination of their contractual arrangement. She related that the
    respondent had come to her home on January 15, 2013 but that no files were
    left. She related efforts to retrieve the files by email communications. She also
    related that the respondent denied taking the files and said she had left them
    on the table in her kitchen. The appellant said she reviewed security camera
    footage that showed the respondent entering her home carrying orange folders
    used for her client files, and leaving the home, still carrying those files. The
    appellant asserted ownership of the files, and said she did not know why the
    respondent would not return the files, despite numerous attempts to obtain
    their return.

[9]

On March 2, 2013, an officer went to the
    respondents home. The officer showed the respondent a list of seven files the
    appellant wanted. The respondent provided the officer with two files, the M
    and the S files. The officer showed the respondent the security camera images
    capturing her arrival and departure from the appellants home. The officer did
    not lay any charges at this time.

[10]

On April 30, 2013, the appellant forwarded to the
    police a letter sent to her by the respondent dated April 23, 2013. In that
    letter the respondent demands payment of an outstanding invoice, and describes
    at length, her side of the dispute with the appellant. Further, the respondent
    threatens the appellant with multiple courses of action she proposes to take. Notably,
    in the letter, she says the following:

Now Ms. Taafe, please do not take this as a
    threat but merely an outline of my intentions regarding this matter.

If I dont receive my payment in full as set
    out in my Invoice of March 2
nd
2013 including interest, by May 1,
    2013, I will proceed to package up any and all files/documents here in my
    office that relate to your clients and forward same detailing [
sic
] the
    matter at hand to the Law Society of Upper Canada.

Simply put, make
    the payment and I will consider all matters settle [
sic
] in full.
Please
    do not send anyone to pick-up any documents or files
unless they have
    certified funds payable to Trinity Legal Services in the full amount as set out
    in my invoice of March 2, 2013. [Emphasis added.]

[11]

Following this apparent admission that the
    respondent still had possession of files belonging to the appellant, police
    charged her with theft under $5000 and possession of stolen property under
    $5000. Those charges were ultimately withdrawn.

[12]

After these charges were laid, the appellant
    testified that she learned the respondent was altering her letterhead, and
    using it without her consent. On the other hand, the respondent testified that
    she had the appellants authorization to use her letterhead, so that the
    appellant would not be bothered by real estate clients about work to be handled
    by the respondent as a paralegal. The appellant expressed concern she might be
    liable to phantom clients of whom she was unaware. According to her evidence
    she contacted the Law Society and on their advice spoke to the police. Charges
    of fraud under $5000 and forgery were laid against the respondent, but these
    charges were also ultimately withdrawn by the Crown.

B.

Trial judges reasons

[13]

The trial judge was scathing in his assessment
    of the appellants credibility, and accepted the respondents evidence. He
    found that the appellant did not terminate her business relationship with the
    respondent on January 15, 2013, but continued working with her, and that the
    respondents possession of the client files and use of the letterhead in
    January and February 2013 was accordingly with the appellants consent:
Curley
    v. Taafe
, 2018 ONSC 3150, 47 C.C.E.L. (4th) 228, at
    paras. 68, 72.

[14]

The trial judge, at para. 67, cited the elements
    identified by Simmons J.A. in
Pate v. Galway-Cavendish
, 2011 ONCA 329, 342 D.L.R. (4th) 632, at paras. 51-53, leave to
    appeal refused, [2011] S.C.C.A. No. 293 [
Pate I
] relating to when a defendant in a malicious prosecution action can
    be said to have initiated a prosecution:

1. Did the defendant knowingly withhold
    exculpatory information from the police?

2. Did the conduct of the defendant undermine
    the independence of the police investigation?

3. Did the defendant communicate to police in
    a manner that misled the officers into not conducting an independent
    investigation?

4. Did the
    defendant undermine the independence of the decision making process to lay
    charges and prosecute?

[15]

The trial judge found that the appellant made
    misleading statements to police and withheld exculpatory evidence, specifically
    the video surveillance tape from which the still photos were extracted and
    turned over to the police:
Curley
, at para. 68.
    The misleading statements were the statements that the appellant ended the
    contractual relationship on January 15, 2013 and that the respondent was not
    authorized to use the appellants letterhead at the relevant time. Based on the
    evidence before him, the trial judge found these statements to be untrue.

[16]

Further, although no testimonial evidence was elicited
    from any police officer who swore the informations laying the charges, or from
    any investigating officer, the trial judge concluded that had police known of
    the true state of affairs, the first information would never have been laid:
Curley
, at para. 45. Pursuant to
Browne v. Dunn
,
he refused to give any
    weight to the respondents letter of April 23, 2013 in which she seemingly
    acknowledged possession of the appellants files at a time when she conceded
    the contractual relationship was over. The trial judge reasoned that because
    the appellants counsel did not cross-examine the respondent about the specific
    parts of her own letter in which she appeared to acknowledge possession of the
    appellants files, he was only left to speculate as to what the respondent
    meant in the relevant extracts from her letter:
Curley
, at para. 43. He awarded general damages of $50,000 and punitive
    damages of $25,000 on the malicious prosecution claim.

[17]

The trial judge also awarded $7,500 to the
    respondent for the appellants wrongful termination of their contract,
    reflecting the continued earnings the respondent would have accumulated from
    her relationship with the appellant for the rest of the contractual term. It so
    happened that the respondent started work for a credit union on January 21,
    2013. The record before this court suggests that the respondent had part-time
    earnings from that source in excess of her earnings as a paralegal pursuant to
    the contract. The trial judge noted, at para. 76, that the respondent also
    received an $85,000 settlement from the credit union as compensation for her termination
    from that position in June 2013.

[18]

There was no evidence of any attempts by the
    respondent to replace her earnings with the appellant by referring client files
    to other lawyers and doing the same kind of work. The trial judge rejected the
    argument that there was insufficient evidence of reasonable efforts to mitigate
    her damages by taking judicial notice of the effects of criminal charges, at
    para. 77:

The suggestion
    that the Plaintiff could mitigate her damages by referring other real estate
    transactions to other lawyers in Durham, has to be viewed in the context that
    the Plaintiff was also having to deal with the criminal charges laid in the
    first information. The court can take judicial notice of the fact that anyone
    having to deal with the criminal justice system for the first time, would find
    that experience a difficult one that might otherwise impact on ones ability to
    work. In my view, an appropriate award with respect to the Plaintiffs claim
    for breach of contract is an amount of $7,500.

C.

ANALYSIS

(1)

Malicious prosecution: Initiation of the
    prosecution

[19]

There are four necessary elements which a
    plaintiff must prove in an action for the intentional tort of malicious
    prosecution:

1.

The proceedings must have been initiated by the defendant

2.

The proceedings must have terminated in favour of the plaintiff

3.

The plaintiff must show that the proceedings were instituted without
    reasonable and probable cause and

4.

The defendant was actuated by malice.

See
Nelles v. Ontario
, [1989] 2 S.C.R. 170, at pp. 192-93.

[20]

The bar for a successful malicious prosecution
    action is deliberately set high, to avoid unduly chilling the willingness of
    individuals to seek recourse from the police. As Low J. observed in
Correia
    v. Canac Kitchens
(2007)
, 56 C.C.E.L. (3d) 209 (Ont. S.C.), at para. 75, revd on other
    grounds 2008 ONCA 506, 91 O.R. (3d) 353:

It is often
    observed that the bar is set very high in a claim of malicious prosecution and
    that a plaintiff has a very difficult burden to meet to make out the claim. It
    is in the public interest that this be the case because criminal prosecutions
    are brought not for the benefit of the prosecutor nor for the benefit of the
    complainant but rather for the common welfare of society. Second, because the
    standard of proof is very high in a criminal prosecution, there will be many
    prosecutions brought that do not succeed not because the charge is unfounded
    but because the standard of proof has not been met. That the threshold for
    success is high in an action of malicious prosecution therefore balances the
    public interest in bringing to justice persons who may have broken the law
    against the private interest of persons who have been wrongfully prosecuted
    without reasonable grounds and for oblique or improper motives.

[21]

As indicated in
Nelles
, the first element that a plaintiff in an action for malicious
    prosecution must establish is initiation of the proceedings by the defendant. Simmons
    J.A. elaborated on the nature of the conduct required to amount to initiation
    of a prosecution by a private citizen in
Kefeli v. Centennial
    College of Applied Arts and Technology
(2000),
    23 C.P.C. (5th) 35 (Ont. C.A., in Chambers),

at para. 24:

A claim for
    malicious prosecution requires that the defendant must have initiated the
    prosecution or set it in motion, and that, ordinarily, the court will view the
    police officer who laid the charge as being the person who set the prosecution
    in motion. However, he also submits, correctly, that the complainant may be
    treated as the prosecutor in exceptional circumstances, including the
    following:

·

the complainant desired and intended that the
    plaintiff be prosecuted;

·

the facts were so peculiarly within the complainants
    knowledge that it was virtually impossible for the professional prosecutor to
    exercise any independent discretion or judgment; and

·

the complainant procured the institution of
    proceedings by the professional prosecutor, either by furnishing information
    which he knew to be false, or by withholding information which he knew to be
    true, or both. [Citations omitted.] [Footnotes omitted.]

[22]

Here, there was no testimonial evidence adduced
    at trial from the officers who investigated the appellants complaint or who
    laid the charges as to the effect of the appellants complaints on their
    investigation.

[23]

Rather, the available evidence suggests that the
    police exercised independent discretion over their investigation. The first
    written complaint by the appellant, dated February 27, 2013, laid out the
    appellants position and made note of the respondents competing version of the
    events. Police visited the respondent on March 2, 2013, and after listening to
    what she had to say and collecting two files from her, elected not to lay
    charges. The police decided to lay charges only after reviewing the
    respondents letter of April 23, 2013, describing a litany of complaints she
    had against the appellant, and after speaking to her about the missing files. The
    police exercised their discretion, firstly not to lay charges, and later, after
    hearing both sides and drawing their own factual inferences, to lay the
    charges. This is not a case where it was impossible for the police to exercise
    any independent discretion or judgment. As is evidenced by the aforementioned
    sequence of investigatory events, they in fact exercised that very judgment.

[24]

The trial judges finding, that the only reason these proceedings
    were initiated by the police was as a result of the misleading information
    supplied by the appellant, cannot stand. As has been explored, the evidence
    regarding the sequence of investigatory events and the absence of any evidence
    from the police as to the effect of the appellants complaint on their
    investigation leads to the conclusion that the police exercised independent
    discretion and judgment over the investigation. The trial judge committed a
    palpable and overriding error in concluding that the appellant initiated the
    prosecution.

[25]

The decision of
Pate Estate v. Galway-Cavendish
    and Harvey (Township)
,
2013 ONCA 669, 117 O.R. (3d) 481 [
Pate II
], stands in contrast to the case at bar on this point. In
Pate
    II
, the complainant was a former police officer who went
    to great lengths to manage his contacts with police and to encourage them to
    lay charges while discouraging as unnecessary any additional investigation:
Pate
    II,
at para. 73. However in
Pate II
, the police trusted the complainant because he was a former police
    officer and testified that if they had the exculpatory information withheld by
    the complainant, they would not have charged the plaintiff: at paras. 37-42,
    51, 78-79. In upholding the trial judges conclusion that the Township was
    liable for malicious prosecution, this court reasoned that the element of initiation
    can be satisfied if the defendant knowingly withheld exculpatory information
    from the police that the police could not be expected to find in all the
    circumstances
[1]
:
Pate II
, at para. 51.

[26]

In the case at bar there was no police testimony
    to speak to the effect of the appellants complaints on their investigation;
    there was no police testimony to proffer a view on whether they would have
    still charged the respondent had the appellant disclosed the surveillance
    camera video footage. Furthermore, while the prosecution would not have been
    initiated but for the appellants complaint to the police, the evidence shows
    that the decision to initiate the prosecution was nonetheless within the
    discretion of, and exercised, by the police in this case:
Chaudhry
    v. Khan
, 2015 ONSC 1847, at para. 18. As such, the
    element of initiation has not been satisfied and the respondents malicious
    prosecution claim must fail. Given the trial judges error on the initiation
    element, it is not necessary to address the appellants arguments pertaining to
    the other elements of the malicious prosecution test.

(2)

The
Browne v. Dunn
error

[27]

The rule in
Browne v. Dunn
creates an obligation to give a witness, called by the opposite
    side, an opportunity to explain evidence which the cross-examiner intends to
    later use to impeach the testimony or credibility of the witness. This rule was
    expressly adopted in Canada in
Peters v. Perras
(1909), 42 S.C.R. 244.

[28]

Here, the respondents letter of April 23, 2013
    amounts to an admission that she retained files belonging to the appellant at a
    time when she knew their contractual relationship was over. This letter had the
    potential to significantly affect the trial judges assessment of the relative
    credibility of the parties, however the trial judge discounted the effect of
    that letter, in accordance with the rule in
Browne v. Dunn
, at para. 44:

As a matter of
    fairness and in accordance with the rule in
Browne v. Dunn
, the Plaintiff [respondent] should have been given an opportunity
    to respond to the suggestion now being made by Mr. Zibarras, that the aforesaid
    extract from Exhibit 23 [the letter dated April 23, 2013] confirms that the
    Plaintiff [respondent] wrongfully had withheld files belonging to the Defendant
    [appellant].

[29]

The appellants trial counsel referred to the
    respondents letter in her opening statement. Later during the trial, after the
    respondent re-read her own letter to refresh her memory, appellants counsel cross-examined
    her on the letter. The respondent admitted writing the letter and delivering it
    to the appellant. During cross-examination, the respondent did not explain her
    statements in the letter about packaging up any and all files/documents here
    in my office that relate to your clients and refusing to give them to the
    appellant unless the conditions stipulated by her were met. Further, the
    respondent also did not explain such statements during re-examination when her
    own counsel had the opportunity to deal with issues raised in
    cross-examination.

[30]

In the appellants direct examination, after the
    respondents case was complete, the appellant testified about receiving the
    letter and forwarding it to police. At that time the respondents trial counsel
    did not object to that evidence on the basis that the letter had not been put
    to the respondent in cross-examination. The respondents trial counsel raised
    the
Browne v. Dunn
issue for the first time in
    closing submissions.

[31]

Trial judges do have discretion as to the remedy
    to be afforded for a breach of the rule in
Browne v. Dunn
, if a breach has occurred
. The effect that a court should give to a breach of the rule
    depends on a number of factors and the circumstances of the case
: R
    v. Dexter
, 2013 ONCA 744, 313 O.A.C. 266, at para. 20;
R
    v. Lyttle
, 2004 SCC 5, [2004] 1 S.C.R. 193, at para. 65;
R
    v. Werkman
, 2007 ABCA 130, 404 A.R. 378, at para. 9. In
Dexter
, this court delineated two permissive options to rectify a breach
    of the rule. First, the trial judge can take into account the breach of the
    rule when assessing a witnesss credibility and deciding the weight to attach
    to that witnesss evidence:
Dexter
, at para.
    21;
Werkman
, at para. 9;
R v. Paris
(2000), 138 O.A.C. 287 (Ont. C.A.), at para. 22, leave to appeal
    refused, [2001] S.C.C.A. No. 124. Second, the trial judge can also allow
    counsel to recall the witness whose evidence was impeached without notice:
Dexter
, at para.
21;
R v.
    McNeill
(2000), 48 O.R. (3d) 212 (Ont. C.A.), at
    paras.
47-49.

[32]

Although such discretion rests with trial
    judges, here the rule was not engaged, as occurred in
Yan v.
    Nadarajah
, 2017 ONCA 196, 82 R.P.R. (5
th
) 175,
    at paras. 15-16:

We agree with the
the motion judge that
    the appellants seem to have misunderstood the rule in
Browne v. Dunn
.
    The application of that rule is generally restricted to situations where a
    party cross-examining a witness called by the opposite side is planning on
    adducing contradictory evidence to impeach the witnesss credibility. The
    cross-examiner must put the contradictory evidence to the witness to allow
    the witness to provide an explanation for it:
R. v. Quansah
, 2015 ONCA
    237, 125 O.R. (3d) 81, at paras. 75-76, leave to appeal to S.C.C. refused,
    [2016] S.C.C.A. No. 203. The rule reflects fairness to the witness whose
    credibility is attacked and to the party whose witness is impeached. It
    prevents the ambush of a witness by not giving him an opportunity to state
    his position with respect to later evidence which contradicts him on an essential
    matter:
R. v. Verney
(1993), 87 C.C.C. (3d) 363 (Ont. C.A.), at p. 376,
    cited in
R. v. M.B.
, 2009 ONCA 524, 68 C.R. (6th) 55, at para. 73.

In the present case, there was no
    element of the kind of unfairness or surprise that the rule in
Browne v.
    Dunn
protects against. The contradictory evidence used to impeach the
    appellants came in the form of the appellants own affidavits. Moreover, at the
    beginning of the cross-examination the appellants were asked whether there was
    anything in their affidavits that was incorrect or needed to be changed. They
    declined to make any changes or corrections. In the circumstances, there was no
    violation of the rule in
Browne v. Dunn.
[Citations in original.]

[33]

There was no unfairness or surprise associated
    with the appellants reliance on the respondents own letter at trial. The
    respondent was cross-examined on the letter and offered no explanation as to
    the portions of the letter that were later used by the appellants trial
    counsel to cast doubt on her credibility. As such, the trial judge erred in
    relying on
Browne v. Dunn
to discount this
    evidence, which is highly relevant to credibility.

(3)

Judicial notice and mitigation of damages

[34]

The respondent had access to a stream of clients
    related to real estate transactions. After the termination of her contract with
    the appellant, the respondent had up to six other lawyers available to whom she
    could refer files. The trial judge took judicial notice of the effect the
    criminal charges had upon her ability to work as a paralegal at para. 77 of his
    reasons, as noted in para. 18 above.

[35]

Apart from the respondents own statements
    regarding her tarnished reputation, there was no evidence that the charges had
    any effect on her ability to work or refer files to other lawyers. At trial,
    the respondent failed to produce any witnesses to support her claim that she
    could not secure new paralegal business due to her damaged reputation. No one
    asked the trial judge to take judicial notice of any such effect, nor did the
    trial judge advise counsel that he was considering taking judicial notice.

[36]

R. v. Find
, 2001 SCC
    32, [2001] 1 S.C.R. 863, at para. 48
sets out
    limits for resorting to judicial notice:

Judicial notice dispenses with the
    need for proof of facts that are clearly uncontroversial or beyond reasonable
    dispute. Facts judicially noticed are not proved by evidence under oath. Nor
    are they tested by cross-examination. Therefore, the threshold for
    judicial notice is strict: a court may properly take judicial notice of facts
    that are either: (1) so notorious or generally accepted as not to be the
    subject of debate among reasonable persons; or (2) capable of immediate and
    accurate demonstration by resort to readily accessible sources of indisputable
    accuracy. [Citations omitted.]

[37]

The trial judge erred in relying on judicial
    notice to conclude that the respondent had reasonably mitigated her damages on
    the basis that anyone who has to deal with the criminal justice system for the
    first time would find their ability to work impacted.

[38]

It is a basic tenet of contract law that a
    victim of a breach cannot recover losses that could have been avoided by taking
    reasonable steps post-breach; this principle against avoidable loss applies in
    all contractual settings: John D. McCamus,
The Law of Contracts
, 2nd ed. (Toronto: Ont.: Irwin Law, 2012), at p. 926. The burden of
    establishing that the plaintiff failed to take reasonable steps to mitigate
    damages is on the defendant: McCamus, at p. 928;
Red Deer College v.
    Michaels
, [1976] 2 S.C.R. 324, at p. 331.

[39]

Here, the appellant has satisfied that burden
    and established that the respondent failed to mitigate her damages. This
    conclusion is based on the evidence that the respondent could have offered her
    referral and paralegal services to others lawyers she was in contact with, in
    combination with the lack of evidence of reasonable steps on the respondents
    part to mitigate her damages. The damage award cannot stand and must be set
    aside. This is quite apart from the difficulty of awarding damages for loss of
    paralegal income when the respondent was not licensed by the Law Society to
    provide legal services.

D.

CONCLUSION

[40]

I need not address other arguments of error
    advanced by the appellant as the foregoing is sufficient to dispose of the appeal.
    In the result, the appeal is allowed, the judgment of June 13, 2018 is set
    aside and the action is dismissed, with costs of the appeal to the appellant in
    the agreed sum of $15,000 inclusive of disbursements and taxes. The parties
    agree that in this event, the costs of the trial should be reversed in favour
    of the appellant. Accordingly, there will be a costs award in favour of the
    appellant for the trial in the sum of $75,000.00.

G. Pardu J.A.

I agree P. Lauwers
    J.A.

I agree I.V.B.
    Nordheimer J.A.

Released: May 7, 2019

[1]
Lauwers J.A. continued to analyze the other three factors that
    Simmons J.A. identified in
Pate I
relating to when a defendant in a
    malicious prosecution action can be said to have initiated a prosecution
    (whether the conduct of the defendant undermined the independence of the police
    investigation; whether the defendant communicated to police in a manner that
    misled the officers into not conducting an independent investigation and;
    whether the defendant undermined the independence of the decision making
    process to lay charges and prosecute).