Leblanc v. Canada, 2003 FCT 776

Date: 20030624

Docket: T-436-03

Citation: 2003 FCT 776

BETWEEN:

            CHRISTOPHER LEBLANC, JOANNE BEAULIEU, STEPHANE BEAULIEU,

                     STEVEN FARROW by his Litigation Guardian JOANNE BEAULIEU

                                                                                                                                                        Plaintiffs

                                                                                 and

                       HER MAJESTY THE QUEEN, JO HAUSER, LILETH GERVAIS,

                                                                 RANDALL KLOTZ

                                                                                                                                                    Defendants

                                                            REASONS FOR ORDER

TABIB P.:

[1]                 This is a motion by the Defendants for an Order striking the Plaintiffs' statement of claim pursuant to Rules 221(a), (c) and (f) of the Federal Court Rules, 1998.

[2]                 More particularly, the individual Defendants Jo Hauser, Lileth Gervais and Randall Klotz claim that this Court lacks jurisdiction to determine the cause of action asserted against them, and

all the Defendants claim that the Plaintiffs' action discloses no reasonable cause of action and is frivolous, vexatious, or otherwise an abuse of process on the grounds of issue estoppel and/or that it is a collateral attack on the judgement of the Ontario Court of Appeal in the matter of Robb, Rintoul and Farrow v. Canadian Red Cross Society (CRCS), Ontario et al., [2001] O.J. No. 4605.

I.           The facts

[3]                 The main Plaintiff, Christopher Leblanc, (previously Christopher Farrow) was born with a congenital blood disorder known as Hemophilia B or Factor IX hemophilia. The Plaintiff's condition required treatment on an ongoing basis with a biological product known as F-IX concentrate, manufactured from pools of whole blood or plasma collected by the Canadian Red Cross Society ("CRCS") from volunteer donors in Canada. The manufacturing process, which was carried out commercially by blood fractionators under contract with the CRCS, involved extracting small amounts of F-IX and other clotting factors from plasma. Each lot of commercially extracted F-IX is manufactured from many thousands of units of whole blood.

[4]                 By the fall of 1984, the informed medical community knew that human immunodeficiency virus ("HIV") was a blood-borne infection that could be transmitted through factor concentrates such as F-IX and that hemophiliacs who used these products were at risk of contracting HIV.

[5]                 In the autumn of 1984, it was demonstrated that the heat treatment of factor concentrates such as F-IX would inactivate HIV. As a result of this discovery, an office within Health Canada called the Bureau of Biologics ("BoB") issued a directive to the CRCS on November 16, 1984, stipulating that the use of non-heat-treated factor concentrates no longer could be justified and calling for a transition to heat-treated factor concentrates as soon as possible.

[6]                 The Canadian Blood Committee ("CBC") was created in 1981. It was a committee comprised of representatives from the provinces, the territories and the federal government. It acted as a forum for the exchange of views, the development of policy and fixing budgets, including overseeing the budget of the CRCS. At the initiative of the CBC, a Consensus Conference of all key people in the blood industry was convened in late 1984 to consider how the BoB Directive should be implemented.

[7]                 The proceedings of the CBC were, at the relevant time, recorded on audio-cassette and a verbatim transcript was then prepared, from which the records of the decisions were prepared. In 1989, the CBC ordered a change in that practice. Any existing tapes of earlier meetings were ordered to be erased and the transcripts destroyed. Thereafter, (and at the time the Plaintiffs began the Ontario action discussed below) the formal records of decisions, as approved by the CBC, provided the only documentary source for what had occurred during the deliberations of the CBC.

[8]                 Making heat-treated F-IX available to Canadian hemophiliacs required, not only the implementation of the transition by the CRCS, but the issuance of a Notice of Compliance ("NoC") for the heat-treated F-IX by the BoB. Under the applicable legislation, a drug manufacturer may not sell or distribute a new drug product (such as heat-treated F-IX) until the BoB has been satisfied that it is safe and effective and issued a NoC for that new drug. The application for a NoC for F-IX was required to be made by the manufacturer, in this case, the American commercial fractionator under contract to the CRCS. Although an application for a NoC for F-IX was made in July 1984, the NoC was not issued by the BoB until April 10, 1985.

[9]                 Heat-treated F-IX manufactured in the United States first arrived in Canada on May 30, 1985, and was distributed for the first time by the CRCS in early July 1985.

[10]            Christopher Leblanc required treatment with F-IX between April 26 and May 14, 1985; he was treated with unheated F-IX. In March 1986, he was found to have been infected by HIV.

II.         The Ontario Litigation

[11]            In 1992, the Plaintiffs took action in Ontario against the CRCS and the Ontario Government^[1]. This action was one of three negligence actions tried together, the other main plaintiffs being Wayne Robb and Gray Rintoul. The Crown in right of Canada ("Canada") was not a defendant to the Ontario action, the Plaintiffs having accepted payments from Canada under the no-fault plan known as the Extraordinary Assistance Program against a release of all claims they may have from all matters arising out of having been infected with HIV. However, both the CRCS and Ontario pursued third-party claims for contribution and indemnity against Canada for any liability they may have had to the Plaintiffs.

[12]            In their action, the Plaintiffs submitted, inter alia, that the CRCS and Ontario breached the duty of care they each owed to them by delaying the introduction of the heat-treated F-IX into Canada. More specifically, they claimed that the CRCS had voluntarily delayed the introduction of heat-treated F-IX in Canada because of concerns over the financial implications of having to write-off its existing stock of unheated F-IX, and the mistaken assumption that the Plaintiffs and others like them would already have been exposed to HIV. They further claimed that Ontario and the CRCS stood in a relationship of principal and agent, so that Ontario was responsible for the CRCS's negligence.

[13]            Some time before the beginning of the trial, the Plaintiffs sought leave to amend their statement of claim to add, against Ontario, a claim based on the tort of spoliation of evidence . The claim was premised on the allegation that Ontario, as a member of the CBC, had ordered the Secretariat of the CBC to destroy the transcripts and audiotapes of meetings of the CBC prior to 1989 in an attempt to cover up wrong doing by government officials regarding Canada's blood program. Significantly, the Plaintiffs did not seek to assert the claim of spoliation directly against Canada. The motions court judge granted leave, but her decision was overturned on appeal to the Divisional Court. This took place at a time when the British Columbia Court of Appeal had just rendered its decision in Endean v. Canadian Red Cross Society (1998), 48 B.C.L.R. (3d) 90, holding that destruction or spoliation of evidence only gave rise to an evidentiary rule raising a presumption against the party guilty of spoliation, and not to an independent tort. Following Endean, the Divisional Court held that while the Plaintiffs were entitled to raise the spoliation issue as an evidentiary issue, they could not plead spoliation as a cause of action against Ontario. The decision was handed down on the eve of trial, and the Plaintiffs proceeded to trial on that basis.

[14]            The judgement at trial was issued in June 2000^[2]. The findings of the trial judge relevant to the issues considered herein can be summarized as follows:

-            The CRCS did unduly delay the transition to heat-treated F-IX in order to exhaust its inventory of non-heat-treated product.         

-            The CRCS could and should have intervened with the BoB to hasten the issuance of the NoC, and its failure to do so delayed the availability of F-IX to the Plaintiffs.

-            The BoB was negligent in failing to process the NoC as expeditiously as circumstances warranted.

-            The Plaintiffs were infected with HIV between April 26, 1985 and May 14, 1985, at a time where heat-treated F-IX would have been available for distribution to hemophiliacs in Canada had the CRCS and the BoB not committed the breaches of duty identified above.

-            The CRCS was not the agent of Ontario, and Ontario is therefore not liable for its negligence.

-            The tapes and transcripts of the CBC meetings were not proven to have ever been in Ontario's possession. The Secretariat of the CBC was comprised of employees of Canada, and was therefore not under Ontario's control. There was therefore no evidence that Ontario spoliated evidence.

[15]            The trial judge therefore dismissed the action against Ontario, condemned the CRCS to pay damages to the Plaintiffs and held Canada liable to indemnify the CRCS to the extent of 25% of the damages paid to the Plaintiffs.

[16]            Appeals and cross-appeals were taken from the trial judgement. By then, the Ontario Court of Appeal had held in Spasic Estate v. Imperial Tobacco (2000), 49 O.R. (3d) 699 that a claim for damages based on the independent tort of spoliation should be permitted to proceed to trial. In view of the fact that spoliation had been canvassed at length at trial and that a factual record existed, and in view of the change in the law reflected in the Spasic decision, the Plaintiffs were permitted to include in their cross-appeals specific claims for the tort of spoliation against Ontario^[3].

[17]            In a lengthy and elaborate judgement, the Ontario Court of Appeal reviewed the evidence led at trial against the conclusions reached by the trial judge, and reversed the trial judge's findings of liability on the part of the CRCS and Canada. The Plaintiffs' cross appeals were dismissed.

[18]            The Court of Appeal reached the following conclusions:

-            The CRCS did not have a duty to try to expedite the issuance of the NoC for heat-treated F-IX, and it was further not proven that it could have done so.

-            The BoB was not negligent in the manner it processed the NoC application, and it was neither required, nor able to dispense with the regulatory requirements.

-            There was no undue delay in making heat-treated F-IX available to the Plaintiffs once the NoC had been issued and the heat-treated F-IX became available in Canada;

-            Thus, whatever intention the CRCS might have had in late 1984 or early 1985 to delay the transition to heat-treated F-IX in order to exhaust existing stocks of unheated product did not in fact cause any delay in the availability of heat-treated F-IX;

-            The Plaintiffs had failed to prove the dates upon which they became infected. Accordingly, even had the trial judge's findings of negligence on the part of CRCS been upheld, the Plaintiffs could not establish that such negligence caused them to become infected with HIV.

-            The trial judge's findings as to spoliation of evidence were upheld.

[19]            Leave to appeal to the Supreme Court of Canada from the Ontario Appeal was denied on September 5, 2002.

III.        The Proceedings Herein

[20]            The three individual Defendants were, in 1989, employees of the Federal Government seconded to the Secretariat of the CBC. It is alleged in the Plaintiffs' statement of claim that it is these three Defendants who initiated and carried out the CBC's decision to destroy the transcripts and audiotapes of the CBC proceedings. The Plaintiffs allege that, but for the destruction of the transcripts and audiotapes, they would have been able to sustain the Ontario trial verdict in the Ontario Court of Appeal. In their current action before this Court, the Plaintiffs therefore seek damages (equal to the award of damages made by the Ontario trial judge) against the three individual Defendants for the torts of misfeasance in public office, trespass and negligence, and/or for breach of fiduciary duties. The Plaintiffs also seek damages against Canada, as a member of the CBC, and vicariously for the acts of the individual Defendants.

[21]            The Plaintiffs claim that they had a right to the preservation of these records under the Access to Information Act, S.C. 1980-81-82-83, c. 111 (as it existed in 1989) (the "ATIA") and under the National Archives of Canada Act, R.S.C. 1985, c. 1 (3^rd Supp.) (the "NACA"), and that the Defendants breached their duties under these statutes when they destroyed the documents. The Plaintiffs further claim that the CBC's role and objectives being to ensure the safety of the blood system, it had, by extension, a fiduciary duty to those who relied on it to preserve records so that the due performance of the CBC's mandate could be reviewed; the Plaintiffs claim that the CBC and its staff are liable for the damage caused when they breached this fiduciary duty.

IV.        The Jurisdictional Issue

[22]            The test for determining whether the Federal Court of Canada has jurisdiction over a matter has been succinctly set out by the Supreme Court of Canada in ITO-International Terminal Operators Ltd. v. Miida Electronic Inc., [1986] 1 S.C.R. 752, at page 766, as follows:

"1.        There must be a statutory grant of jurisdiction by the federal Parliament.

2.        There must be an existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction.

3.        The law on which the case is based must be "a law of Canada" as the phrase is used in s. 101 of the Constitution Act, 1867."

[23]            The first condition is clearly satisfied by paragraph 17(5)(b) of the Federal Court Act. In order to overcome the second and third parts of the test, the Plaintiffs have framed their claim, not as a claim for the tort of spoliation, which would, if recognized as an existing tort, be a common law tort within the constitutional jurisdiction of the provinces, but as claims for trespass, negligence, misfeasance in public office and breach of fiduciary obligation, arising from rights and duties created by the ATIA, the NACA and the CBC terms of reference.

[24]            It has been held by this Court that the fact that a power allegedly misused by a federal public servant emanates from a federal statute, or that a duty alleged to have been breached was created by a federal statute is not sufficient in itself to satisfy the second part of the jurisdictional test. (See Hendricks v. Fairweather and Canada (1991), 45 F.T.R. 171; Nichols v. R., [1980] 1 F.C. 646; Robinson v. Canada, [1996] 2 F.C. 624, aff'd. at (1996), 120 F.T.R. 157.) The rights arising from such misuse of power or breach of statutory duty, including the tort of misfeasance in public office, remain "emanations of provincial law relating to tortious liability"^[4].

[25]            What the second part of the test developed in ITO, supra, contemplates is a "detailed statutory framework" of federal law, from which the plaintiff acquires specific rights and which govern their exercise, so that the cause of action itself arises out of federal law. (See Oag v. Canada, [1987] 2 F.C. 511; Kigowa v. Canada, [1990] 1 F.C. 804.)

[26]            Had the Plaintiffs themselves made a request for access to the CBC transcripts and audiotapes pursuant to the ATIA prior to the time the records were destroyed, they might then have been able to claim a specific right to be given access to the documents, arising from the detailed framework created by the ATIA. As matters stand, the Plaintiffs have made no such allegation, and Plaintiffs' counsel confirmed during the hearing of this motion that while a request for access had indeed been pending at the time of the destruction, that request was not made by any one of the Plaintiffs.

[27]            The purpose of the ATIA is "to provide a right of access to information in records under the control of a government institution" (s. 2 of the Act). The right to access is not to be confused with a right to the preservation of records. A person's right to access to government records under the ATIA arises only upon a request made pursuant to s. 4, and attaches only to those records which are at that time under the control of the government institution. The records of the CBC were destroyed before the Plaintiffs ever requested them. Once destroyed, they are no longer under the control of the CBC, and no longer subject to the ATIA .The Plaintiffs never acquired any rights under the ATIA , and the Defendants did not owe any duties specifically to the Plaintiffs under that Act. The fact that others may have requested the documents, acquired rights, and be owed specific duties by the CBC under the ATIA does not assist the Plaintiffs: they themselves have no reasonable cause of action arising out of federal law based on the ATIA .

[28]            The Plaintiffs' reliance on the NACA also falls short of bringing the Plaintiffs' claim against the individual Defendants within the jurisdiction of this Court. Section 5 (1) of the NACA prohibits the destruction of records under the control of government institutions without the consent of the National Archivist of Canada. The stated purpose of the NACA is to conserve records of national significance for archival purposes, not to facilitate the conservation of evidence for the purposes of private litigation. The duties created by the NACA are clearly public duties only. As stated by the Federal Court of Appeal in Pacific Western Airlines v. R., [1980] 1 F.C. 86, at pages 88-89:

"Those provisions are obviously part of the existing federal law but that does not help the appellants because the causes of action disclosed by the statement of claim, in so far as they are founded on those provisions, are not reasonable causes of action. In my opinion, the Trial Division was right in holding that the provisions of the Aeronautics Act and the Air Traffic Regulations invoked by the appellants, when they create duties, create public duties only and do not confer any direct right of action on any individual citizen who may suffer damage by reason of their breach."

[29]            I therefore find that this Court has no jurisdiction over the claims raised by the Plaintiffs against the individual Defendants.

V.         Collateral Attack, Issue Estoppel and Abuse of Process

[30]            The Defendants agree that whatever my conclusions as to the Court's jurisdiction over the

claim against the individual Defendants, the claims against Canada, both under direct and vicarious

liability, are properly within the jurisdiction of this Court by virtue of the Crown Liability and Proceedings Act. I must therefore consider whether by reason of issue estoppel, the doctrine of collateral attack, or a more general doctrine of abuse of process, the Plaintiffs' action herein should be struck out, pursuant to Rule 221 (a), (c) and (f). I should mention at the outset that the judgements in the Ontario action, both at trial and in the Court of Appeal, are referred to in the Plaintiffs' statement of claim and are matters of record, of which I am entitled to take notice in the context of this motion (Apotex inc. v. Merck & Co. (1999), 167 F.T.R. 59; Weber v. Canada (Public Service Commission), [1989] F.C.J. No.236).

A.         Collateral Attack

[31]            The doctrine of collateral attack is not, in my view, appropriate for application to the present case. The rule against collateral attack applies where a party attempts to circumvent the administrative process or judicial appeal route established to remedy a judgement or administrative decision, by instituting separate proceedings. The Plaintiffs here have pursued, and indeed exhausted, all appeals from the Ontario Court of Appeal judgement. While the success of the action they have taken before this Court does ultimately involve a re-examination of the issues decided by the Ontario Court of Appeal, the Plaintiffs do not seek to change the end result of the Ontario action, in that they do not seek a condemnation against the CRCS or Ontario.

B.         Issue Estoppel

(1)         Definition

[32]            The application of issue estoppel to the present situation raises some difficulties. Issue estoppel, together with cause of action estoppel, are species of the doctrine of res judicata or estoppel per rem judicatem. While cause of action estoppel applies to the entire cause of action adjudicated in a prior proceeding, comprising every fact which it would be necessary to prove to support the plaintiff's alleged right, issue estoppel attaches to any material fact or issue determined as part of the entire cause of action:

"A cause of action has traditionally been defined as comprising every fact which it would be necessary for the plaintiff to prove, if disputed, in order to support his or her right to the judgment of the court: Poucher v. Wilkins (1915), 33 O.L.R. 125 (C.A.). Establishing each such fact (sometimes referred to as material facts) constitutes a precondition to success. It is apparent that different causes of action may have one or more material facts in common. In this case, for example, the existence of an employment contract is a material fact common to both the ESA proceeding and to the appellant's wrongful dismissal claim in court. Issue estoppel simply means that once a material fact such as a valid employment contract is found to exist (or not to exist) by a court or tribunal of competent jurisdiction, whether on the basis of evidence or admissions, the same issue cannot be relitigated in subsequent proceedings between the same parties. The estoppel, in other words, extends to the issues of fact, law, and mixed fact and law that are necessarily bound up with the determination of that "issue" in the prior proceeding. (Danyluk v. Insworth Technologies [2001] 2 S.C.R. 460, at pages 489-490.)

[33]            The criteria for the existence of issue estoppel are the same as for cause of action estoppel: (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies ([1975] 2 S.C.R. 248">Angle v. Minister of National Revenue, [1975] 2 S.C.R. 248, at page 254). No issue arises out of the second part of the test, the decision of the Ontario Court of Appeal having become final with the refusal of leave to appeal to the Supreme Court. The first and third parts of the test must however be considered carefully.

(2)         Identity of issues

[34]            The Defendants submit that the following issues, material to the determination of the Ontario action and to the present action, have been determined by the Ontario Court of Appeal:

-            That whatever the intention of the CRCS in December 1984 regarding delaying the distribution of heat-treated F-IX until the depletion of the non-heat-treated F-IX inventory, in actual fact, the heat-treated F-IX was distributed as soon as it became available, and despite existing inventories of unheated product.

-            That regardless of the CRCS's conduct, heat-treated F-IX could not be introduced in Canada before May 30, 1985 because of Canadian and American regulatory requirements, which were outside the CRCS's control.

-            That the Plaintiffs did not prove the date on which they became infected, and therefore could not establish that delay caused their infection.

-            That there was no evidence of spoliation of evidence.

[35]            I agree with the Defendants' submissions on the first three issues. The factual determinations made by the Ontario Court of Appeal went directly to causation in the Ontario action, and doomed the Plaintiffs' action to failure. In order to succeed in the present action, the Plaintiffs need to establish that they had evidence of all elements needed to sustain a favourable verdict against the CRCS, including causality and damages, and that the only missing element was evidence of the CRCS' deliberate plan to delay introduction of heat-treated F-IX, to be found in the destroyed records. The issues, as to what caused the delay in introduction of heat-treated F-IX in Canada and whether the Plaintiff's infection occurred at a time where delay could have been avoided, are identical in both proceedings.

[36]            As regards the issue of spoliation, the Ontario Court of Appeal repeats and adopts without reservations the reasons for judgement of the trial judge (at paragraphs [207] and [208] of the Court of Appeal's judgement):

"There is no admissible evidence to support the conclusion that Ontario spoliated or destroyed evidence. The plaintiffs did not prove that the tapes and transcripts prepared by the Secretariat or the CBC were ever in the possession or control of Ontario; the evidence is to the contrary. The Secretariat was comprised of employees of Canada. These employees were not controlled by Ontario."

[37]            It seems clear that the decision was confined to Ontario's role in the destruction of the records, to the explicit exclusion of Canada's role as employer of the Secretariat personnel who had actual possession and control of the records. I am mindful that the doctrine of issue estoppel is not limited to the issues which were specifically addressed, but extends to all matters which could, or should have been brought forward by the parties in the exercise of reasonable diligence ([1976] 2 S.C.R. 621">Grandview (Town of) v. Doering, [1976] 2 S.C.R. 621). However, I am not prepared to hold, based only on the reasons for judgement of the Ontario Courts, that the issue of spoliation by Canada should or could have been brought before the Ontario Courts. Bearing in mind that the Plaintiffs were initially precluded from pleading spoliation as an independent tort against Ontario and were only allowed to do so on Appeal from the final judgement and on the record as constituted, I have serious doubts that the Plaintiffs could have amended their action before trial to add Canada as a principal Defendant on an independent tort of spoliation, in order to prove Canada's involvement in spoliation. I therefore consider that the issue of spoliation by Canada remains a live issue between the Plaintiffs and the Defendants, but that the issues of duty of care and causation are identical to the issues raised herein.

(3)         Identity of parties "or their privies"

[38]            The Plaintiffs and the Defendant Canada both participated in the Ontario action, although not in the direct relationship of plaintiff and defendant. Canada was called by Ontario and the CRCS as a third party, but, according to the Plaintiffs, chose to defend only the third party action, and not to directly defend the principal action of the Plaintiffs. The Defendants say that they were at risk in the Ontario action, in that (as it indeed turned out in the trial judgement), if Ontario or the CRCS were found liable to the Plaintiffs, Canada would be bound by that determination in the third party action, and could be condemned to indemnify one or both of the Defendants based on the findings of the principal action. This, they say, makes them parties to the Ontario action, or at least "privies" thereto.

[39]            The Plaintiffs, in their written submissions, made the surprising proposition that the third party in this situation would be bound by the results in the main action, but that there would be no mutuality, in that the Plaintiffs themselves would be free, in a subsequent suit against the third party, to correct gaps in its evidence and hope for a better result than in the first action. This argument is based on Rule 29.05 (5) of the Ontario Rules of Civil Procedure, which provides that "A third party who does not deliver a statement of defence in the main action is bound by any order or determination made in the main action between the plaintiff and the defendant who made the third party claim". The Plaintiffs argue that because the rule provides that the third party is bound but does not specifically say that the plaintiff is bound, then one must conclude that the plaintiff itself is not so bound. The Plaintiffs' argument is untenable. I read rule 29.05(5) as primarily governing the relationship between the defendant in the main action and the third party. Because a third party plaintiff's right of recovery against a third party is dependant upon the success of the main action, the third party may not, as against the third party plaintiff, deny the conclusions of the main action simply by dint of not defending it. This rule has no application in determining whether there is res judicata as between the plaintiff and the third party who has not defended the main action.

[40]            The parties have submitted no case law where the issue of privity between a plaintiff and a third party was considered in the context of issue estoppel. The Supreme Court of Canada, in Danyluk, supra, made the following comments on the issue of identity of parties and privity (at page 491):

"This requirement assures mutuality. If the limitation did not exist, a stranger to the earlier proceeding could insist that a party thereto be bound in subsequent litigation by the findings in the earlier litigation even though the stranger, who became a party only to the subsequent litigation, would not be: Machin, supra; Minott v. O'Shanter Development Co. (1999), 42 O.R. (3d) 321 (C.A.), per Laskin J.A., at pp. 339-40. The mutuality requirement was subject to some critical comment by McEachern C.J.B.C. when sitting as a trial judge in Saskatoon Credit Union Ltd. v. Central Park Ent. Ltd. (1988), 22 B.C.L.R. (2d) 89 (S.C.), at p. 96, and has been substantially modified in many jurisdictions in the United States: see Holmested and Watson, supra, at 21 § 24, and G. D. Watson, "Duplicative Litigation: Issue Estoppel, Abuse of Process and the Death of Mutuality" (1990), 69 Can. Bar Rev. 623.

The concept of "privity" of course is somewhat elastic. The learned editors of J. Sopinka, S. N. Lederman and A. W. Bryant in The Law of Evidence in Canada (2nd ed. 1999), at p. 1088 say, somewhat pessimistically, that "[i]t is impossible to be categorical about the degree of interest which will create privity" and that determinations must be made on a case-by-case basis. In this case, the parties are identical and the outer limits of "mutuality" and of the "same parties" requirement need not be further addressed."

[41]            The modifications to the requirement of mutuality in the United States referred to in the above passage have also had some echoes in England. Lord Denning, in Tebbutt v. Haynes, [1981] 2 All E.R. 227, wrote, at page 242:

"I venture to suggest this principle: if there has been an issue raised and decided against a party in circumstances in which he has had a full and fair opportunity of dealing with the whole case, then that issue must be taken as being finally and conclusively decided against him. He is not at liberty to reopen it unless the circumstances are such as to make it fair and just that it should be reopened"

[42]            In Canada, this approach has been specifically endorsed in Manitoba by Hewak, C.J.Q.B. in Bjarnarson et al. v. Manitoba, (1987) 21 C.P.C. (2d) 302. In that case, the plaintiff alleged that the defendant had been negligent in carrying out drainage works, flooding the neighbouring lands. The plaintiff's brother had already successfully sued the same defendant for the flooding of his land,

adjacent to the plaintiff's land. The defendant attempted to dispute liability for the flooding. There was clearly an identity of issues between the two actions, but no mutuality of the parties. Chief Justice Hewak held that issue estoppel existed and struck out those paragraphs of the statement of defence which raised the issue of liability. In dismissing the appeal (at page 312 of the same report), the Manitoba Court of Appeal was careful to endorse the result, if not the principle, stating that to allow the defence to stand would be an abuse of the Court's process.

[43]            I do not need to go quite so far on the issue of mutuality in the present matter. The degree of interest required to create privity sufficient to give rise to issue estoppel in its classic form is to be determined on the circumstances of each case. To use the words of Justice Binnie in Danyluk, supra, Canada is far from being "a stranger" to the Ontario action. It was, indeed, at risk of prejudicial consequences from the findings in the principal action. It actively participated in the trial and the appeal. And even if it did decline to exercise its right to become a party to the main action by filing a statement of defence therein, the fact that it could have done so without the Plaintiffs' consent is eloquent to the degree of privity which it acquired by reason of the third party proceedings. I therefore find that there is sufficient privity between the Plaintiffs and Canada in the Ontario action to meet the third part of the test on issue estoppel.

(4)         Conclusion, issue estoppel

[44]            The preconditions to issue estoppel being met in this case, the decision in Danyluk, supra requires that I consider whether I should nevertheless refuse to apply estoppel as a matter of discretion. The parties have not made submissions on that aspect. After careful consideration, I find no unusual circumstances in this case such that the operation of the doctrine of issue estoppel would work an injustice. As a matter of fact, and as more fully discussed below, I would hold that even if issue estoppel did not arise in the circumstances of this case, the Plaintiffs' action should nevertheless be dismissed as being an abuse of process.

[45]            Having found that issue estoppel applies in this case, I must now determine whether the Plaintiffs' action, as a whole, can stand in view of the estoppel. After careful consideration, I have come to the conclusion that the Plaintiffs' action cannot succeed in view of the findings on causation made in the Ontario action, and which the Plaintiffs are estopped from challenging. However culpable the destruction of the CBC's records might have been, it has caused none of the damages claimed by the Plaintiffs.

[46]            The Plaintiffs claim, specifically at paragraph 37 of their statement of claim:

37.            A substantial reason for the loss of the Ontario action was the absence of verbatim records for CBC executive committee and board meetings in 1984 and 1985, which were among those destroyed. The Plaintiffs had succeeded at trial without those records. The Court of Appeal disagreed with the trial judge that there was sufficient evidence of liability on the part of CRCS or other Defendants. Other, secondary, reasons were also given for the reversal, but none was sufficient, on its own, to sustain the reversal, or was uncorrectable with the exercise of discretion to allow the Plaintiff to fill in perceived gaps in the evidence, and there was a reasonable possibility that discretion would have been exercised on the secondary reasons if the verbatim evidence from key meetings of the CBC had been available as additional proof on liability. [Emphasis added]

[47]            Although, for the purpose of considering a motion of strike under Rule 221(1)(a), the material facts alleged in the statement of claim must be taken as true, this obligation does not extend to allegations based on assumptions or speculations:

"The rule that the material facts in a statement of claim must be taken as true for the purpose of determining whether it discloses a reasonable cause of action does not require that allegations based on assumptions and speculations be taken as true. The very nature of such an allegation is that it cannot be proven to be true by the adduction of evidence. It would, therefore, be improper to accept that such an allegation is true. No violence is done to the rule where allegations, incapable of proof, are not taken as proven." (Operation Dismantle Inc. v. The Queen, [1985] 1 S.C.R. 441, at page 455.)

[48]            The Plaintiffs speculate that, had sufficiently strong evidence of wrong doing been found in the destroyed CBC records, the Court of Appeal would either have come to a different conclusion on the two issues of the cause of the delay and on the issue of the date of infection, or that it would have used its discretion to allow the Plaintiffs to reopen the evidence to add to the evidence led at trial on those three central issues (when, it must be noted, no request to that effect was made by the Plaintiffs on Appeal). This is speculation in the third degree, where this Court would be called upon, not only to rewrite the conclusions of the Ontario Court of Appeal, but to do so based on speculation of how damning the information supposedly contained in the destroyed records might have been. It further flies in the face of the stated reasons for judgement of the Ontario Court of Appeal.

[49]            No amount of damning evidence showing that the CRCS deliberately intended to put its financial concerns ahead of the safety of hemophiliacs, which the Plaintiffs claim might have been found in the CBC records, could, on the basis of the reasons for judgement delivered by the Ontario Court of Appeal, overcome the fundamental lacunas found in the Plaintiffs' case against the CRCS and Ontario. The Plaintiffs' claim therefore discloses no reasonable cause of action, is frivolous, vexatious and an abuse of the process of the Court, and must be stuck out.

C.         Abuse of process

[50]            Even if I had not found sufficient privity between the parties for issue estoppel to be created, I would still have struck out the Plaintiffs' action as an abuse of process.

[51]            As I have said before, the success of the Plaintiffs' action is premissed on an ability to show that, but for the destruction of evidence by the Defendants, they would have succeeded on all aspects of a negligence claim against the CRCS. As I see it, either the parties are bound by the conclusions of the Ontario Court of Appeal on the issues of duty of care, causality and damages, in which case there is issue estoppel and the Plaintiffs' within action must fail, or they are not, in which case the evidence on these issues must again be presented before this Court for determination. This would in fact result in relitigating the entire Ontario action, a process which took eight years before the Ontario Superior Court of Justice, including eight months of trial. This would not only impose a considerable burden on the resources of this Court, but would again vex those who participated in the initial proceedings - not just the Plaintiffs and the Defendants herein, but the witnesses for the CRCS, blood fractionator, BoB and the medical personnel who treated the Plaintiff. That all of these resources should again be mobilized so that, if the Plaintiffs have their wish, this Court could come to a result diametrically opposed to the considered judgement of the Ontario Court of Appeal on the issues of duty of care and causality, is a result that simply cannot be countenanced, lest it brings the administration of justice into disrepute.

[52]            This Court, in Sauvé v. Canada, [2002] F.C.J. No. 1001, 2002 FCT 721, approved the reasoning of the Ontario Court of Appeal in Canam Enterprises Inc v. Coles (2000), 51 O.R. 481 as follows:

[14] In Canam Enterprises Inc., supra, Justice Finlayson, for the majority, said this about abuse of process at paragraph 31 of the report:

[31] However, we are not limited in this case to the application of issue estoppel. The court can still utilize the broader doctrine of abuse of process. Abuse of process is a discretionary principle that is not limited by any set number of categories. It is an intangible principle that is used to bar proceedings that are inconsistent with the objectives of public policy... .

[15] In that same case, Goudge J.A. in dissent, framed the concept of abuse of process in these words at paragraphs 55 and 56 of the report:

[55] The doctrine of abuse of process engages the inherent power of the court to prevent the misuse of its procedure, in a way that would be manifestly unfair to a party to the litigation before it or would in some other way bring the administration of justice into disrepute. It is a flexible doctrine unencumbered by the specific requirements of concepts such as issue estoppel... .

[56] One circumstance in which abuse of process has been applied is where the litigation before the court is found to be in essence an attempt to relitigate a claim which the court has already determined... .

[53]            In Solomon v. Smith et al. (1987) 45 D.L.R. (4^th) 266, the plaintiff had refused to execute an agreement to purchase property, alleging misrepresentation by the vendor or its agents. In a suit brought by the vendor in Alberta, the plaintiff was condemned, the Court finding that there had been no reliance on the part of the purchaser on any representation. The plaintiff then commenced suit in Manitoba against the vendor's agent to recover the damages paid to the vendor, on the basis of

the misrepresentations allegedly made by the agent. Lyon J.A. expressed himself as follows, at pages 275-276:

"I agree with Philp J.A. that a plea of issue estoppel is not available. However, to permit that statement of claim to proceed would be an abuse of process and that is the principle applicable. In considering this doctrine, it seems to me prudent to avoid hard and fast, institutionalized rules such as those which attach to the plea of issue estoppel. By encouraging the determination of each case on its own facts against the general principle of the plea of abuse, serious prejudice to either party as well as to the proper administration of justice can be best avoided. Maintaining open and ready access to the courts by all legitimate suitors is fundamental to our system of justice. However, to achieve this worthy purpose, we must be vigilant to ensure that the system does not become unnecessarily clogged with repetitious litigation of the kind here attempted. There should be an end to this litigation. To allow the plaintiff to retry the issue of misrepresentation would be a classic example of abuse of process - a waste of the time and resources of the litigants and the courts and an erosion of the principle of finality so crucial to the proper administration of justice.

Nor can I subscribe to the view that, because an issue was tried in another jurisdiction, a Manitoba court is somehow foreclosed from applying the principle based on those proceedings. It is trite to observe that in a federal state such as Canada, with superior courts in common law provinces having concurrent jurisdiction, an adjudication of fact arising from proceedings in one province should be capable of supporting a plea of abuse of process if the same factual issue is sought to be relitigated in another."

[54]            The first part of this passage was quoted with approval by this Court in Musqueam Indian Band v. Canada, [1990] 2 F.C. 351.

[55]            The Manitoba Court of Appeal's decision in Bjarnarson v. Manitoba, supra, is another case on point for the proposition that an attempt by a party to relitigate issues already fully canvassed and determined in another proceeding is an abuse of process, even where issue estoppel is not applicable.

VI.        Other issues

[56]            Towards the end of his oral argument, the Plaintiffs' counsel suggested that, even if the Plaintiffs' cause of action in damages were to fail by reason of the Ontario Court of Appeal's decision, the Plaintiffs' claims for costs thrown away in the Ontario action and for punitive damages could nevertheless stand.

[57]            As for the claim for costs in the Ontario action, it cannot be dissociated from the fate of the claim for damages. If the dismissal of the Plaintiffs' Ontario action was not caused by the alleged spoliation of evidence by the Defendants, then I can not see how the costs thrown away by the Plaintiffs in that endeavour can be laid at the door of the Defendants.

[58]            As regards a stand-alone claim for punitive damages, the following rule, laid down by McIntyre J. In Vorvis v. Insurance Corp. of British Columbia, [1989] 1 S.C.R. 1085 at pages 1105-1106, and reiterated by the Supreme Court in Whiten v. Pilot Insurance Co., [2002] 1 S.C.R. 595, disposes of the issue:

"When then can punitive damages be awarded? It must never be forgotten that when awarded by a judge or jury, a punishment is imposed upon a person by a Court by the operation of the judicial process. What is it that is punished? It surely cannot be merely conduct of which the Court disapproves, however strongly the judge may feel. Punishment may not be imposed in a civilized community without a justification in law. The only basis for the imposition of such punishment must be a finding of the commission of an actionable wrong which caused the injury complained of by the plaintiff." [Emphasis added.]

[59]            Absent injury caused to the Plaintiffs by an actionable wrong allegedly committed by the Defendants, there can be no claim for punitive damages. The Defendants' destruction of documents having caused no damage or injury to the Plaintiffs, it is not actionable, and no claim in punitive damages lie at the suit of the Plaintiffs.

VII.      Costs

[60]            The Defendants have requested costs against the Plaintiffs, to be fixed in the amount of $1,000.00. The Plaintiffs have agreed that in the event the Defendants' motion is granted, the Defendants' demand as to costs is reasonable. Costs shall therefore be fixed in the amount of $1,000.00, payable to the Defendants.

                                                                                                                                              "Mireille Tabib"        

                                                                                                                                                   Prothonotary          

                                                    FEDERAL COURT OF CANADA

                                                                 TRIAL DIVISION

                              NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                           T-436-03

STYLE OF CAUSE:                                        CHRISTOPHER LEBLANC ET AL v. HER MAJESTY THE QUEEN ET AL

PLACE OF HEARING:                                   TORONTO

DATE OF HEARING:                                     MAY 27, 2003

REASONS FOR ORDER:                              MADAM PROTHONOTARY MIREILLE TABIB

DATED:                                                              JUNE 24, 2003

APPEARANCES:

KENNETH ARENSON                                                               FOR PLAINTIFFS

Toronto, Ontario

JOHN SPENCER AND                                                               FOR DEFENDANTS - HER

JAMES GORHAM                                                                        MAJESTY THE QUEEN AND OTHERS

SOLICITORS OF RECORD:

KENNETH ARENSON                                                               FOR PLAINTIFFS

Toronto, Ontario

MORRIS ROSENBERG                                                              FOR DEFENDANTS - HER

Deputy Attorney General of Canada                                             MAJESTY THE QUEEN AND

OTHERS