



COURT OF APPEAL FOR ONTARIO

CITATION: Dosen v. Meloche Monnex Financial Services Inc. (Security
    National Insurance Company), 2021 ONCA 141

DATE:
    20210305

DOCKET:
    C67664 & C67726

Pepall,
    Benotto and Coroza JJ.A.

BETWEEN

Mary
    Arlene Dosen and Rudolf Dosen

Plaintiffs

and

Meloche
    Monnex Financial Services Inc. (c.o.b. as Security National Insurance Company)
    and
Venmar Ventilation ULC

Defendants
    (
Respondent
)

and

Fasco
    Motors Limited, Von Weise of Canada Company and

Regal-Beloit
    Corporation

Third
    Parties (Appellants)

J. Thomas Curry, Scott Rollwagen and
    Sarah Bittman, for the appellants

M. Gosia Bawolska and Kara L. Denny,
    for the respondent

Heard: September 24, 2020 by
    video conference

On
    appeal from the order of Justice Kim Carpenter-Gunn of the Superior Court of
    Justice, dated October 30, 2019.

Coroza J.A.:

I.

OVERVIEW

[1]

On August 26, 2013, a fire broke
    out in the home of Mary Arlene and Rudolf Dosen (the Dosens) in Ancaster,
    Ontario, causing significant damage. The Dosens allege that the fire originated
    in a heat recovery ventilation unit (HRV) in their home. HRVs are designed to
    bring fresh outside air inside a building while expelling stale indoor air. The
    HRV contains a motor which powers the blower assembly inside the unit. The
    Dosens allege that the respondent, Venmar Ventilation ULC (Venmar),
    manufactured the HRV, and the appellants (Fasco), manufactured the motor.

[2]

On July 9, 2015, the Dosens
    commenced an action against Venmar (the Main Action), claiming that Venmar
    was liable for manufacturing and distributing a defective HRV that caused the
    fire.

[3]

On July 19, 2016, Venmar issued a
    third-party claim against Fasco for contribution and indemnity for any damages
    for which Venmar might be found liable to the Dosens in the Main Action. In
    response, Fasco issued statements of defence to the Dosens claim and to Venmars
    third-party claim on May 1, 2017.

[4]

A companion action was
    commenced on August 14, 2015, by the Dosens insurer against both
Venmar and Fasco for losses arising under a subrogated
    insurance policy due to the fire (the Companion Action). Fasco issued a
    statement of defence to this claim and a crossclaim against Venmar on
    February 4, 2016. On June 14, 2017, Venmar also issued a statement of
    defence and crossclaim for contribution and indemnity against Fasco.

[5]

Fascos defences are
    substantially the same, with respect to Venmars third-party claim and
    crossclaim for contribution and indemnity in the Main Action and Companion
    Action, respectively (collectively, the Ontario Actions). Fascos pleadings
    allege that even if the fire originated in a motor it manufactured, contained
    within the HRV, the fire was nonetheless
caused
    by Venmars negligence in the assembly, testing, and use of certain components
    in the HRV, and in Venmars failure to adequately warn the Dosens and other
    customers about the danger of the HRV. Fasco also argues that it used a
    standard form contract in supplying motors to Venmar, which provided for its
    indemnification in the event of litigation.

[6]

The trial of the
    Ontario Actions
was scheduled to begin on
    November 18, 2019. However, on October 4, 2019, Venmar brought a
    motion under r. 21.01(3)(d) of the
Rules of Civil Procedure
, R.R.O. 1990, Reg. 194, to strike Fascos defences to
    Venmars claims for contribution and indemnity on the basis of
res judicata
and abuse of process. Specifically, Venmar argued
    that the Quebec Superior Court and Quebec Court of Appeal had already decided
    the legal and factual issues between Venmar and Fasco, in earlier proceedings.
    Those proceedings related to a house fire, involving a Venmar HRV and a Fasco
    motor, in Quebec City, on April 11, 2007.

[7]

The motion judge heard Venmars
    motion on October 28 and 29, 2019, three weeks before the scheduled start of trial,
    and struck Fascos statement of defence to Venmars third-party claim in the
    Main Action based on
res
    judicata
and abuse of process. She
    also ordered that her decision be applied to the Companion Action, such that
    Fascos defence to Venmars crossclaim for contribution and indemnity was also
    struck.

[8]

Fasco now appeals the motion
    judges decision to strike its pleadings.
For the reasons that follow,
I would allow Fascos appeal.

II.

BACKGROUND

(1)

The 2007 Fire and
    Quebec Litigation

[9]

In 2014 and 2016, the
    Quebec Superior Court and Quebec Court of Appeal rendered judgments concerning
    a house fire that occurred in Quebec City on April 11, 2007 (the Quebec
    Actions). The source of the fire was traced to a HRV installed in the home.
    The homeowners insurer, Desjardins, sued both Venmar and Fasco for $86,000. At
    trial, Fasco focused their defence on a single issue  whether the fire was
    caused by a failure of the motor it manufactured or whether it was caused by a
    failure of another component of the HRV that was selected and installed by
    Venmar.

[10]

On July 22, 2014, the
    trial judge found that the fire was caused by a failure of the motor and
    concluded that Fasco was 100 percent liable for the plaintiffs damages.

[11]

Fasco appealed this
    decision to the Quebec Court of Appeal, on the basis that Venmar should have
    been found entirely liable due to its failure to obtain adequate protection for
    the motor and its failure to adequately warn customers. On November 25, 2016,
    the court dismissed Fascos appeal. However, the court found that the trial
    judge erred becausebased on his finding that both Venmar and Fasco failed to
    rebut the presumption of liability for a safety defect under Quebec lawhe
    should have found them jointly liable before proceeding to apportion liability
    between them. Notwithstanding this error, the court found no basis to interfere
    with the trial judges conclusion that Fasco was 100 percent liable for the
    fire.

(2)

The Motion Judges
    Decision

[12]

Following the parties
    submissions, the motion judge in this case gave oral reasons. She held that, in
    light of the judgments in the Quebec Actions, Fascos defences to Venmars
    claims for contribution and indemnity in the Ontario Actions should be struck
on the basis of cause of action estoppel, issue
    estoppel and abuse of process.

(a)

Res Judicata
 Cause of Action Estoppel

[13]

The motion judge applied the test
    for cause of action estoppel set out recently by this court in
The Catalyst Capital Group Inc. v.
    VimpelCom Ltd.
, 2019 ONCA 354, 145
    O.R. (3d) 759, leave to appeal refused, [2019] S.C.C.A. No. 284. She stated:

There is a specific test that has to be met to establish this
    type of estoppel and it has four requirements to it as follows:

There is a final decision of a court of competent
    jurisdiction in a prior action. This is conceded by the responding parties and
    is not at issue here;

The second requirement is the parties to the subsequent
    litigation were parties to, or in privy with the parties to the prior action;

The third requirement, the cause of action in the prior
    action is not separate and distinct and;

Fourthly, the basis of the cause of the action and the
    subsequent action was argued or
could
have been argued
in the prior action, if the parties had
    exercised reasonable diligence. [Emphasis in original.]

[14]

No issue is taken with the motion
    judges findings that the first two requirements were satisfied. With respect
    to the third requirement, the motion judge noted that the term cause of
    action refers to a factual situation which entitles one to a remedy.
    Accordingly, the pertinent question at this step was whether the facts that
    formed the basis for the apportionment of liability in the Quebec Actions were
    substantially the same as those forming the basis for assessing Venmars claims
    for contribution and indemnity in the Ontario Actions. The motion judge
    answered this question in the affirmative.

[15]

More specifically, the motion
    judge found that the factual findings in the Quebec Actions are almost
    identical to the observations of the experts and witnesses in the present case
    and that the apportionment of liability in the Quebec Actions would thus be the
    same in the Ontario Actions. She held:

In [the Quebec Actions], in determining fault, the court
    focused on what component of the HRV was responsible for the outbreak of the
    fire, which party was responsible for the design of the HRV, and the steps
    taken by Venmar and Fasco to notify each other and end-users of the potential
    danger.

The court finds that these are the same issues an Ontario court
    would be analyzing in this trial, if it were to make its own determination of
    fault between Venmar and Fasco.

[16]

With respect to the fourth
    requirement, the motion judge found that any arguments in relation to
    contribution and indemnity between the parties, such as the contractual defence
    that Fasco sought to raise in the Ontario Actions, could have been raised in
    the Quebec Actions if Fasco had exercised reasonable diligence. She found that
    Fasco failed to raise such arguments in the Quebec Actions for tactical
    reasons. She concluded that [a]ll aspects related to the respective fault of
    the parties properly belonged to the matters in the Quebec Actions and that
    Fasco could not now raise these arguments in the Ontario Actions.

(b)

Res Judicata
 Issue Estoppel

[17]

The motion judge held that if she
    was wrong in her finding that
res judicata
applied under the
    doctrine of cause of action estoppel, then issue estoppel applied, and
    prevented Fasco from re-litigating certain findings of fact and issues of mixed
    fact and law that already had been determined in the prior proceedings.

[18]

She relied on the test from the
    Supreme Court of Canadas decision in
Danyluk v. Ainsworth Technologies Inc
, 2001 SCC 44, [2001] 2 S.C.R. 460, which includes
    three preconditions for the application of issue estoppel. The motion judge
    stated:

The preconditions are: (1) that the same question has been
    decided; (2) that the judicial decision which is said to create estoppel was
    final - that has been conceded here and is not an issue and; (3) that the
    parties to the judicial decision or their privies were the same persons as to
    the parties to the proceedings in which the estoppel was raised.

[19]

The motion judge listed a number
    of issues of fact and mixed fact and law that, in her view, were determined by
    and fundamental to the decisions of the Quebec courts.

1. That Fasco bears 100% of the fault for the
    overheating of the HRVs motor and failure of the motors thermal protection;

2. That the learned intermediary r[u]le does
    not apply to relieve Fasco of liability;

3. It was possible for Fasco to discover the
    safety defect in the thermal protector at the time that it was manufactured;

4. That Venmar could not have expected that
    the motor would overheat and catch fire at the end of its life;

5. Fasco did not fully apprise Venmar of the
    dangers of the motor and lastly;

6. Venmar did not know as much as Fasco about
    motors and their components
.

[20]

The motion judge held that the
    issue of the respective fault of Venmar and Fasco was finally decided in the
    Quebec Actions.
She found that
the same questions that will need to be
    asked in these proceedings have already been asked and answered in [the Quebec
    Actions].

[21]

Finally, the motion judge held
    that there was no reason to exercise her discretion to decline to apply issue
    estoppel. She noted that there was no assertion that the court proceedings in
    Quebec were unfair, and the fact that issues were decided under Quebec law was
    irrelevant to the issue of fairness in applying issue estoppel to findings of
    fact, because the burden of proof for a finding of fact is the same in Quebec
    and Ontario.

(c)

Abuse of Process

[22]

The motion judge then considered
    the doctrine of abuse of process in the event that she was wrong in her
    holdings on cause of action estoppel and issue estoppel. The motion judge
    identified that the doctrine of abuse of process can apply where the
    requirements of
res
    judicata
are not met, but where the
    litigation would violate the principle of judicial economy, consistency,
    finality, and integrity of the administration of justice.

[23]

The motion judge held that Fasco
    was attempting to raise defences to issues that had already been determined in
    Quebec while relying on almost identical facts. Additionally, she held that
    Fasco chose not to raise a contractual defence in the earlier proceedings, and
    this was not a case where the defence was based on new evidence that could not
    have been discovered with reasonable diligence in the prior proceeding. In her
    view, Fasco should not be permitted a second chance to defend itself on the
    same issues. The pleadings were an abuse of process. These reasons, and the
    motion judges observation that the proceedings in the Quebec action were not
    unfair, also informed her decision not to exercise her residual discretion to
    decline to apply the doctrine of abuse of process.

III.

GROUNDS OF APPEAL

[24]

Fasco advances several grounds of
    appeal, which can be organized under the following headings:

i)

Did the motion judge apply the correct test under r. 21.01(3)(d)?

ii)

Did the motion judge err in striking Fascos defences on the basis of
    cause of action estoppel:

a.

because the cause of action in the Quebec Actions was separate and
    distinct from the cause of action in the Ontario Actions; or

b.

because she erred in finding that the contractual argument Fasco sought
    to raise in the Ontario Actions properly belonged to the Quebec Actions?

iii)

Did the motion judge err in striking Fascos defences on the basis of
    issue estoppel?

iv)

Did
    the motion judge err in striking Fascos defences on the basis of abuse of
    process?

v)

Did the motion judge err by not exercising her residual discretion to
    decline to apply the doctrines of
res judicata
or issue estoppel?

IV.

REVIEW OF GENERAL PRINCIPLES

[25]

I will briefly review several
    legal principles that were referred to by the parties in their written and oral
    argument to give context to the issues Fasco raises on this appeal.

(1)

Rule 21.01(3)(d)

[26]

Rule 21.01(3)(d) provides:

21.01(3) A defendant may move before a judge to have
    an action stayed or dismissed on the ground that,



(d) the action is frivolous or vexatious or is
    otherwise an abuse of process of the court

[27]

When a party moves under r.
    21.01(3)(d) to strike pleadings on the basis of
res judicata
or abuse of process, it bears the onus of satisfying the plain and obvious
    test. This test is more commonly applied under r. 21.01(1)(b) to strike out
    claims that disclose no reasonable cause of action, following the Supreme
    Courts decision in
Hunt
    v. T&N plc
, [1990] 2 S.C.R. 959.
    However, this court has affirmed that the same test also applies under r. 21.01(3)(d).
    In
Simone Estate v.
    Cheifetz
(2005), 201 O.A.C. 120
    (C.A.), at paras. 24-25, this court noted that on a r. 21 motion to strike
    pleadings on the basis of issue estoppel and abuse of process, the moving party
    bears a heavy onus and must establish that it is plain, obvious and beyond
    doubt that the plea could not succeed. In
Waterloo (City) v. Wolfraim
, 2007 ONCA 732, 287 D.L.R. (4th) 65, at para. 3, this
    court re-iterated that [a] court should invoke its authority to stay an action
    for abuse of process only in the clearest of cases.

Similarly,
    in
Salasel v. Cuthbertson
, 2015 ONCA 115, 124 O.R. (3d) 401, at para. 8,
    this court held that [a] court only invokes its authority under
    rule 21.01(3)(d)  in the
clearest
of cases (emphasis added).
[1]


[28]

Extrinsic evidence is permitted on
    a motion under r. 21.01(3)(d), and a motion judge may make factual
    determinations, including with respect to whether the facts in an underlying
    action were already litigated in earlier proceedings:
Aba-Alkhail v. University of Ottawa
, 2013 ONCA 633, 311 O.A.C. 89, at paras. 13-14, leave
    to appeal refused, [2013] S.C.C.A. No. 491. The rule requires a motion judge to
    take a hard look at the factual background, and especially the position and
    conduct of the parties:
Salasel
, at para. 9.

[29]

To summarize, Venmar
    had the onus of proving that it was plain and obvious that Fascos defences to
    Venmars claim for contribution and indemnity could not succeed, due to the
    application of
res judicata
or abuse of process.

(2)

Res

Judicata

[30]

The law recognizes a
    number of doctrines to prevent the abuse of the decision-making process. One of
    the doctrines is
res judicata
. In
Danyluk
, Binnie J.
    described the doctrine, at para. 18, as follows:

The law rightly seeks a finality to litigation.
    To advance that objective, it requires litigants to put their best foot forward
    to establish the truth of their allegations when first called upon to do so. A
    litigant, to use the vernacular, is only entitled to one bite at the cherry.
    An issue, once decided, should not generally be re-litigated to the benefit of
    the losing party and the harassment of the winner. A person should only be
    vexed once in the same cause. Duplicative litigation, potential inconsistent
    results, undue costs, and inconclusive proceedings are to be avoided.

[31]

Res judicata
has two main branches: cause of action estoppel and
    issue estoppel. Cause of action estoppel prohibits a litigant from bringing an
    action against another party when that same cause of action has been determined
    in earlier proceedings by a court of competent jurisdiction. Cause of action
    estoppel also prevents a party from re-litigating a claim that could have been
    raised in an earlier proceeding.

[32]

Issue estoppel is narrower. It
    applies to prohibit the re-litigation of an issue that has already been decided
    in an earlier proceeding, even where the cause of action is different in the
    two proceedings.

[33]

The overall goal of the doctrine
    of
res judicata
, and therefore of both cause of action estoppel and
    issue estoppel, is judicial finality:
Minott v. OShanter Development Co
. (1999), 42 O.R. (3d) 321 (C.A.), at paras. 16-17;
Hoque v. Montreal Trust Co. of
    Canada
, 1997 NSCA 153, 162 N.S.R.
    (2d) 321, leave to appeal refused, [1997] S.C.C.A. No. 656.

(3)

Abuse of Process

[34]

The re-litigation of issues that
    have been before the courts in a previous proceeding may create an abuse of
    process. That is because re-litigation carries serious detrimental effects and
    should be avoided unless the circumstances dictate that re-litigation is in fact
    necessary to enhance the credibility and the effectiveness of the adjudicative
    process as a whole:
Toronto
    (City) v. C.U.P.E., Local 79
, 2003
    SCC 63, [2003] 3 S.C.R. 77, at para. 52.

[35]

The law 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:
C.U.P.E.
, at para. 51; Donald J. Lange,
The Doctrine of Res Judicata in Canada
, 4th ed. (Markham: LexisNexis Canada Inc., 2015), at
    pp. 217-18.

(4)

Residual Discretion

[36]

A court may decline to apply
res judicata
or abuse of process where its application would work
    an injustice. This might occur where the first proceeding denied a party a full
    and fair hearing, even though that party exercis
ed reasonable diligence.
    Additionally, even if the first proceeding was conducted with scrupulous
    fairness, it might still be unfair to use the results of the first proceeding
    to preclude re-litigation of an issue.

[37]

It may be appropriate to exercise discretion to decline to apply
    the abuse of process doctrine when (1) the first proceeding is tainted by fraud
    or dishonesty, (2) fresh, new evidence, previously unavailable,
    conclusively impeaches the original results, or (3) fairness dictates that the
    original result should not be binding in the new context:
Catalyst
,
    at para. 68. The list of relevant factors to this discretion is not closed. The
    discretionary factors for whether to decline to apply the abuse of process
    doctrine may also apply in the context of deciding whether to apply the
    doctrine of
res judicata
.

(5)

Standard of Review

[38]

This court owes deference to the motion judges application of
    the tests for issue estoppel, cause of action estoppel, and abuse of process
    and should intervene only if the motion judge misdirected herself, came to a
    decision that is so clearly wrong as to be an injustice, or gave no or
    insufficient weight to relevant considerations:
Catalyst
,

at para. 24.

V.

DISCUSSION

(i)

Did the motion judge apply the correct test under r. 21.01(3)(d)?

[39]

Fascos first submission is that the motion judge did not apply
    the correct test; rather she applied an unprecedented approach to the r.
    21.01(3)(d) motion. Instead of determining whether it was plain and obvious
    that Fascos pleadings in response to Venmars claims were barred by
res judicata
or as an abuse of process, the motion judge
    effectively treated the motion as one for summary judgment. Fasco submits that
    she made significant inferential leaps on a paper record, including making
    findings of fact that the circumstances of the Quebec fire were the same as the
    Ontario fire. These findings of fact could have only been made after a trial.

[40]

Venmar argues that the trial judge did not err in deciding the
    motion on a paper record and that she properly considered the extrinsic
    evidence in the form of affidavits filed by both parties as permitted by r.
    21.01(3)(d). The motion judge quite properly determined that the defences
    raised by Fasco had previously been litigated and decided by a court of
    competent jurisdiction based on the unchallenged evidentiary record before her.

[41]

I agree with the appellants that the motion judge did not
    identify or apply the correct test for striking a pleading pursuant to r.
    21.01(3)(d).

[42]

As will be evident from my discussion of the other grounds of
    appeal, it is clear that the motion judge did not apply this test. Put
    differently, as I discuss below, this was not the clearest of cases as
    required by the governing case law.

(ii)

Did the motion judge err by applying cause of
    action estoppel?

[43]

Fasco
    submits that the motion judge erred in her analysis of the third and fourth
    requirements of the test for cause of action estoppel. With respect to the
    third requirement, Fasco argues that because the Quebec Actions and Ontario
    Actions involve two different fires, six years apart, it was not plain and
    obvious that the cause of action for contribution and indemnity in the two
    proceedings is the same.
It argues that the motion judge
    misconceived what it means for two causes of action to be separate and distinct
    because cause of action estoppel operates only where two cases arise out of the
    same factual foundation. The two fires were separate events.

[44]

Venmar argues that cause of action estoppel can be applied to two
    separate fires which arise from the very same conduct and the motion judge was
    entitled to examine the evidence to find that the two fires involved an
    identical cause of action. The motion judge considered evidence of the design
    of the HRV, the design of the motor, the manufacturing relationship between the
    parties, Venmars knowledge of the danger, and the failure of the motor and
    found that the relevant fact situation in the Quebec Actions was identical in
    the Ontario Actions.

[45]

While I acknowledge that there was evidence before the motion judge
    that the HRV and the motor in both fires bore similarities, I respectfully
    disagree with the motion judges decision to strike Fascos defences to
    Venmars claims on the basis of cause of action estoppel.
Venmars
    claims against Fasco for contribution and indemnity will require an assessment
    of Venmars and Fascos comparative fault.
It is not plain and
    obvious that the facts that would form the basis for the apportionment of
    liability between Venmar and Fasco in the Ontario Actions are substantially the
    same as they were in the Quebec Actions.

[46]

For
    example, Venmar may be found liable to the Dosens or their insurer in the
    Ontario Actions on a basis that was not considered and that could not have been
    fully considered in the Quebec Actions. In the Main Action, the Dosens
    pleadings allege that Venmar was aware of defects in the HRVs since early 2007
    and failed to take any proactive measures to mitigate risk of fire in the
    intervening period. Similarly, the insurers pleadings in the Companion Action
    allege that Venmar failed to properly warn consumers  that the HRV and/or
    Motor, or components thereof, was prone to fail. These arguments were not
    considered in the Quebec Actions. An Ontario court presented with these
    arguments would have to consider evidence of Venmars knowledge of the risk and
    efforts to mitigate risk, including during a period of time subsequent to the
    Quebec Actions that could not have been considered by the Quebec courts. Its
    determination could impact Venmars and Fascos relative fault.

[47]

In
    addition, it bears noting that the earlier fire occurred shortly after Venmar
    commenced a Canada-wide Safety Upgrade Program to warn customers of the issue
    with the HRV and to offer an after-market fix. While it may not have been
    reasonable to expect, in 2007, that this program would reach the homeowner in
    Quebec, by 2013, Venmar had known about the issue for over six years.
    Ultimately, this will be a matter for trial. However, this indicates that it
    was not plain and obvious that the factual basis for assessing Venmars
    potential liability for failing to warn its customers was the same in 2007 and
    in 2013. Since Venmars potential liability in this regard forms part of the
    basis for assessing its claims for contribution and indemnity in the Ontario
    Actions, I conclude that it was not plain and obvious that the cause of action
    in the Quebec Actions and Ontario Actions is the same.

[48]

In
    oral submissions, Fasco advanced a further argument, concerning the nature of a
    claim for contribution and indemnity, to explain why the third requirement of
    cause of action estoppel was not satisfied. According to Fasco, this courts
    decision in
Placzek v. Green
, 2009 ONCA 83,
    245 O.A.C. 220, established that the basis for a claim of contribution and
    indemnity is the failure of a concurrent tortfeasor to pay its share of the
    injured partys damages, before the contribution and indemnity claimant is
    found liable to the injured party. Drawing on this decision, Fasco claims that
    the basis for Venmars claims of contribution and indemnity does not simply lie
    in Fascos alleged wrongdoing, related to, for example, its design of the
    motor. Rather, it argues that Venmars claims for contribution and indemnity
    depend on Fascos failure to pay for its share of the damages related to the
    fire in Ontario before Venmar is found liable in relation to this fire.

[49]

Of
    course, Fascos failure to pay its share of damages related to a fire that
    broke out in 2013 could not have been the basis for a claim for contribution
    and indemnity against Fasco at the time of the Quebec Actions. Therefore, Fasco
    says, a claim for contribution and indemnity for damages arising in 2007 is
    necessarily separate and distinct from a claim for contribution and indemnity based
    on events arising in 2013and this means the causes of actions in the two sets
    of proceedings cannot be the same.

[50]

Without
    commenting upon the ultimate strength of this submission, I find that it is at
    least arguable, and reinforces my conclusion that it was not plain and obvious
    that the cause of action in the Quebec Actions is the same as in the Ontario
    Actions.

[51]

The
    motion judges error with respect to the third requirement of cause of action
    estoppel is sufficient to dispose of this appeal since, as explained below, the
    same error carried over into her analysis of issue estoppel and abuse of
    process. Nevertheless, I will also consider Fascos argument that the motion
    judge erred with respect to the fourth requirement of cause of action estoppel,
    when she held that Fascos contractual indemnity defence should have been
    argued in the Quebec Actions. The motion judges ruling effectively precludes
    Fasco from raising the terms of any contract that allocates risk between it and
    Venmar.

[52]

I
    conclude that the motion judge erred in her analysis of the fourth requirement
    of cause of action estoppel. It was not plain and obvious that Fasco
should
have advanced an argument
    based on contractual indemnity in the Quebec Actions.

[53]

An
    unchallenged affidavit from Fascos appeal counsel in the Quebec Actions was
    before the motion judge. It made three significant points.

[54]

First,
    whether there was a contract between Fasco and Venmar that governed allocation
    of fault was not argued in the Quebec Actions.
[2]
Second, given the modest amount of the claim in the Quebec Actions, Fasco chose
    to focus its defence on a narrow issue of causation. Raising contractual issues
    would not have been proportional to the claim (which was for an amount of
    $86,000, with a $13,000 deductible). Third, the decision not to raise
    contractual issues was based in part on the law governing manufacturer
    liability in Quebec. In connection with this latter point, I note that a court
    requires expert evidence to decide issues involving the content of foreign law:
Das v. George Weston Limited
, 2018 ONCA 1053,
    43 E.T.R. (4th) 173, at para. 67, leave to appeal refused, [2019] S.C.C.A. No.
    69. There was no expert evidence on the content of Quebec law before the motion
    judge, only the unchallenged affidavit that stated that Fascos decision to
    focus its defence on a single issue was informed by the nature of Quebec law.
    The motion judge did not consider the absence of expert evidence on Quebec law
    in reaching the conclusion that Fasco would simply have to live with the tactical
    decisions it made in the Quebec Actions.

[55]

Leaving
    aside the fact that a much larger sum of money is at stake in the Ontario
    Actions, the issue of contribution and indemnity, and the effect of any
    contract, is now squarely before the Ontario court. Venmar has brought the
    issue of the contract with Fasco into focus, since its third-party claim
    alleges that it may be entitled to indemnity from Fasco on account of breach of
    contract. It is not plain and obvious that Fasco
should
be precluded from now raising its contractual
    argument.

[56]

I
    would give effect to this ground of appeal. The motion judge erred in striking
    Fascos defences based on cause of action estoppel.

(iii)

Did the motion judge err in striking Fascos defences on the basis of
    issue estoppel?

[57]

The
    motion judge held that if she was wrong in her conclusion that cause of action
    estoppel applied, then issue estoppel should be invoked to strike Fascos
    pleadings. Fasco argues that the motion judge erred with respect to the first
    precondition for issue estoppel, concerning whether the same question (or
    issue) raised in the Ontario Actions has been decided in the Quebec Actions.

[58]

Since
    the relief Venmar sought on its r. 21.01(3)(d) motion was to strike the
    entirety of Fascos defences to Venmars claims for contribution and indemnity,
the real issue for the motion judge, in considering the first
    precondition, was whether it was plain and obvious that the question of the
    parties relative fault that was determined in the Quebec Actions was the same
    as the question at issue between Venmar and Fasco in the Ontario Actions.

[59]

The same question test was described by Goudge J.A. in
Heynen
    v. Frito Lay Canada Ltd.
(1999), 45 O.R. (3d) 776 (C.A.), at para. 20, as
    follows:

Although at a high level of generalization,
    two proceedings might seem to address the same question, this requirement of
    issue estoppel is met only if on careful analysis of the relevant facts and
    applicable law the answer to the specific question in the earlier proceeding
    can be said to determine the issue in the subsequent proceeding.

[60]

In light of my conclusion regarding the cause of action estoppel
    issue, it was not plain and obvious that Venmar satisfied the same question
    test. Again,
it is at least arguable that the factual foundation for
    Venmars claims of contribution and indemnity was altered in the years
    following the fire at issue in the Quebec Actions.
Accordingly, I would also give effect to this ground of appeal.

[61]

As noted above, the motion judge appeared to generally consider
    which aspects of the Quebec litigation would raise an issue estoppel. It was
    not necessary for the motion judge to take this approach. She found that Fasco
    was precluded from re-litigating specific factsfor example, that Venmar did
    not know as much as Fasco about motors and their components. However, this was
    not at issue on the motion to determine if Fascos pleadings should be struck
    in their
entirety
. The result of the motion
    judges findings could have only been to strike the portion of Fascos defences
    that sought to put that fact back in issue in the Ontario litigation.

[62]

The motion judge erred in striking Fascos pleadings in their
    entirety on the basis of issue estoppel. I note that this does not foreclose an
    argument that issue estoppel may apply to certain factual determinations made
    in the Quebec Actions. However, since the question of whether or not issue
    estoppel applied to any specific factual determination made in the Quebec
    Actions, was not at issue in the motion, it should be deferred until the trial
    of the Ontario Actions.
The judge hearing the matter will be in a better
    position to define the factual issues in respect of which issue estoppel may apply.

(iv)

Did the motion judge err in striking Fascos defences on the basis of
    abuse of process?

[63]

The motion judge found that the doctrine of abuse of process also
    applied to bar Fascos defences. I agree with Fasco that the motion judges
    findings of abuse are tethered to her finding that cause of action estoppel
    barred Fascos pleadings. The core of the motion judges reasons on abuse of
    process was that Fasco is attempting to raise defences which have already been
    determined in [the Quebec Actions] on the basis of almost identical facts.

[64]

Accordingly, for the reasons noted above in relation to cause of
    action estoppel, it was not plain and obvious that Fascos pleadings were
    abusive. I would give effect to this ground of appeal.

(v)

Did the motion judge err in declining to exercise her residual
    discretion to refuse to strike Fascos pleadings?

[65]

Finally, Fasco argues that the motion judge should have exercised
    her residual discretion to decline to apply
res judicata
and abuse of
    process.

[66]

Venmar responds that this residual discretion is rarely exercised in
    the court-to-court context and that the motion judge specifically found that
    the Quebec proceedings were fair. Since there was no unfairness in the Quebec
    proceedings, the motion judge correctly refused to exercise her residual
    discretion and allowed Venmars motion.

[67]

Since I have concluded that the motion judge
    erred by applying
res judicata
and abuse of process to strike Fascos
    pleadings, it is not necessary to consider if the motion judge also erred by
    refusing to exercise her discretion to not apply these doctrines. That said, I
    agree with Venmars submission that if the preconditions for applying these
    doctrines were satisfied, the motion judges residual discretion would have
    been very limited since the first proceeding giving rise to the estoppel was
    a court proceeding:
Danyluk
, at para. 62. It seems to me that Fasco
    faced an uphill climb in advancing the argument that the motion judge should
    exercise her discretion to refuse to strike its pleadings.

[68]

Furthermore,
    though it is not necessary to address this ground of appeal, I wish to offer
    some remarks concerning the timeliness of Venmars r. 21.01(3)(d) motion, since
    it was addressed by the parties in oral argument, and is relevant to the issue
    of the motion judges residual discretion.

[69]

Rule
    21.02 provides that A motion under rule 21.01 shall be made promptly and a
    failure to do so may be taken into account by the court in awarding costs. The
    motion judge did not reference this rule but stated that while
she did not condone the lateness of Venmars motion, the fact it was
    brought late did not detract from its merits.

[70]

Without
    determining that the motion judge erred in the exercise of her discretion, I
    note that, in the circumstances, the timing of Venmars motion should have
    pulled her towards exercising her discretion to not hear Venmars motion in the
    first place, or to exercise her residual discretion to not grant the relief
    that Venmar sought. Venmars motion was contemplated in the summer of 2019, but
    was not brought until October 4, 2019, and it was heard just three weeks before
    trial.

[71]

Case law is clear that delay in bringing a motion under r. 21.01,
    including r. 21.01(3)(d), can be a sufficient ground to dismiss the
    motion. In
Fleet Street Financial Corp. v. Levinson
, [2003] O.T.C. 94
    (S.C.), Rouleau J. (as he then was), stated, at para. 16:

The obligation to act promptly is clear and
    the failure to bring a rule 21.01 motion promptly can, in the appropriate
    circumstances, be the basis for the judge exercising his discretion pursuant to
    rule 21.01 not to grant the relief sought.

[72]

What constitutes appropriate circumstances to dismiss a r. 21.01
    motion for delay partly depends on what effect the motion will have on trial
    efficiency.

[73]

For example, in
Hill v. Hamilton-Wentworth Regional Police
    Services Board
(2003), 64 O.R. (3d) 28 (S.C.), leave to appeal refused,
    [2003] O.J. No. 1820 (Div. Ct.), a motion under r. 21.01(3)(d) was brought
    years after the litigation commenced, all examinations for discovery have been
    completed, and a fixed trial date has been set: at para. 45. There was no
    justification for the delay. The motion judge also noted that the issues to be
    dealt with on the motion would also arise with respect to some of the moving
    parties other claims at trial. Accordingly, dealing with the issues before the
    trial would risk compromising the record at this late stage in the
    proceedings and not enhance trial efficiency: at para. 48. On that basis,
    the motion was dismissed for delay.

[74]

Similarly, in this case, the benefits of hearing and resolving
    Venmars r. 21.01(3)(d) motion, in terms of judicial economy or trial
    efficiency, were marginal. It appears that much of the same evidence and
    similar issues will nonetheless be considered at trial. For example, even if
    Fascos defences were properly struck because the issue of Fasco and Venmars
    relative fault was finally determined in the Quebec Actions, a judge in the
    Ontario Actions would nonetheless have to hear issues concerning Venmars
    potential liability for failure to warn or negligence in assembly or testing of
    the HRV, in relation to the Dosens and their insurers claims. The motion judge
    should have considered this fact and looked at the litigation as a whole. In my
    opinion, it should have weighed heavily in the analysis as to whether the
    discretion to dismiss the motion or to refuse to apply the doctrines should
    been exercised.

VI.

CONCLUSION

[75]

In conclusion, the motion judge erred by not applying the plain and
    obvious test to determine whether the cause of action in the Quebec Actions was
    separate and distinct from the cause of action in the Ontario Actions, whether
    Fasco should have raised any contractual defences in the Quebec Actions,
    whether the principle of issue estoppel applied to strike Fascos pleadings in
    their entirety, and whether Fascos pleadings were an abuse of process.

[76]

For these reasons, I would allow the appeal. I would award Fasco its
    costs of the appeal in the agreed amount of $35,000, inclusive of disbursements
    and applicable taxes.

Released: March 5, 2021 S.E.P.

S.
    Coroza J.A.

I
    agree. S.E. Pepall J.A.

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





[1]
Other provincial appellate courts have held that the plain and
    obvious test applies on a motion to strike pleadings on the basis of cause of
    action estoppel, issue estoppel or abuse of process
: World Wide Treasure Adventures Inc. v. Trivia
    Games Inc.
(1996), 17 B.C.L.R. (3d) 187 (C.A.), at para. 39;
Mohl v. University of British Columbia
,
    2006 BCCA 70, 52 B.C.L.R. (4th) 89, at paras. 41-42; and
Hozaima v. Perry
, 2010 MBCA 21, 251 Man.
    R. (2d) 148, at para. 44.




[2]
During oral argument before this court, Fascos counsel confirmed
    that neither party raised contribution and indemnity in the Quebec Actions.


