



COURT OF APPEAL FOR ONTARIO

CITATION: Taylor
    Made Advertising Ltd. v. AtlificInc., 2012 ONCA 459

DATE: 20120628

DOCKET: C54584

MacPherson and Juriansz JJ.A., and Pattillo J. (
ad
    hoc
)

BETWEEN

Taylor Made Advertising Ltd.

Plaintiff (Appellant)

and

Atlific
    Inc.
and Royal Host Corp.

Defendants (
Respondent
)

Tara L. Lemke, for the appellant

Katherine J.
Menear
,
    for the respondent Atlific Inc.

Heard: March 19, 2012

On appeal from the order of Justice David
Salmers
of the Superior Court of Justice, dated October
    13, 2011.

Pattillo J.
(
ad hoc
):

Introduction

[1]

Taylor Made Advertising Ltd. (Taylor Made),
    appeals from an order dated October 13, 2011 (the Order) dismissing its
    action (the Action) against the respondent Atlific Inc. (Atlific) as an
    abuse of process.

[2]

In 1999, Taylor Made commenced an action against
    Venture Inns Inc. (Venture Inns) claiming $73,031.25 plus pre-judgment
    interest for promotional services rendered by Taylor Made in late 1998 and
    early 1999 (the First Action). In August 2000, following an undefended trial,
    Taylor Made obtained judgment against Venture Inns for the full amount of its
    claim plus costs. The judgment remains unpaid.

[3]

Taylor Made commenced the Action against Atlific
    and Royal Host Corp. on February 10, 2005 and claimed the same principal amount
    plus pre-judgment interest in respect of the same services which were the
    subject of the First Action. The Action has subsequently been dismissed against
    Royal Host.

[4]

Atlific moved to dismiss the Action as an abuse
    of process on the ground that Taylor Made had a contract with Venture Inns and
    had sued it and obtained judgment in the First Action for exactly the same
    amount.

[5]

The motion judge found that the president of
    Taylor Made purposely withheld evidence from the trial judge during the trial
    of the First Action concerning Taylor
Mades
relationship with
Atlific
. As a result, the motion
    judge held it would be an abuse of the process of the court to permit Taylor
    Made to present evidence at the trial of the Action which had been knowingly
    and purposely withheld by it in the First Action.

[6]

For the reasons that follow, I would allow the
    appeal. In my view, the motion judge erred in his conclusion that the Action
    was an abuse of process. The evidence does not support the motion judges
    finding that Taylor
Mades
president purposely
    withheld evidence from or misled the court in the First Action. Further, and
    absent that error, I do not consider that the Action otherwise constitutes an
    abuse of process as that concept has been developed by the courts.

Background

[7]

Taylor Made is in the advertising business. It
    was formed by Alistair Taylor in the fall of 1998. In the period 1998 to 1999,
    Atlific owned and managed hotels, one of which was Venture Inns. Atlific was a
    client Mr. Taylor had done work for at his previous firm. Mr. Taylor had also
    previously done work for Venture Inns under the direction of Atlific. In
    December 1998, Atlific retained Taylor Made to do a marketing program promotion
    for Venture Inns.

[8]

Taylor Made carried out the work under the
    direction and approval of Atlific employees. The first invoice was addressed to
    the National Director Sales & Marketing of Atlific at Venture Inns/Atlific
    Hotel & Resorts. At
Atlifics
request, it was
    reissued to Venture Inns at the same address. Atlific noted that there was a
    sale taking place of Venture Inns and it wanted to ensure Taylor Made was paid
    in a timely manner. The remaining two invoices were similarly addressed to
    Venture Inns. The invoices totalled $74,951.25.

[9]

The First Action was commenced on November 10,
    1999. Venture Inns filed a defence pleading there was no contract because the
    work was subject to approval of Venture Inns purchaser and no such approval
    was ever granted. In the alternative, Venture Inns pleaded a number of the
    charges on the invoices were improper, excessive and that the materials were
    deficient and of no use to it.

[10]

The trial of the First Action took place on
    August 14, 2004. Although Venture Inns had been represented by counsel up to
    that time, no one appeared at trial on its behalf. Mr. Taylor testified briefly
    on behalf of Taylor Made.

[11]

Although Mr. Taylor initially said that his
    client was Venture Inns, he subsequently corrected that and said his client was
    Atlific Hotel & Resorts and Venture Inns was a chain of hotels owned by
    Atlific. On occasion, they would work directly for the Atlific chain and on
    other occasions, they would work directly for Atlific Hotels, but he said the
    two were inseparable.

[12]

The trial judge inquired about the sale of
    Venture Inns which was raised in the statement of defence. Mr. Taylor
    responded:

At the time of rendering the first invoice, which we
    traditionally did to Atlific Resort Hotels/Venture inns, we were subsequently
    asked to change the invoice to Venture Inns Inc. and we were, at that point,
    told the hotel was being sold; that, you know, the transaction would happen as
    time went by, not to worry, you know, everythings under control, you know,
    Youre part of the sale. Youll be paid, not to worry. The hotel was then
    subsequently sold to Roy Host, a group out in Calgary.

[13]

Mr. Taylor said that he received the assurance
    Taylor Made would be paid by the controller of Venture Inns or Atlific. He also
    said Atlific was an ongoing client at the time of the trial. The trial judge
    asked some additional questions concerning the amount claimed which was less
    than the amount of the invoices.

[14]

At the conclusion of Mr. Taylors evidence, the
    trial judge granted judgment against Venture Inns for the full amount claimed
    of $73,031.25 plus $4,888.49 for pre-judgment interest and $5,974.17 in costs.

[15]

In its statement of claim in the Action, Taylor
    Made pleaded that Atlific and Royal Host either jointly or individually
    engaged it to do the work. In its defence, Atlific, among other things, denied
    that it entered into any agreement with Taylor Made either jointly with Royal
    Host or on its own behalf. It pleaded the First Action and Taylor
Mades
judgment against Venture Inns. In the alternative,
    if invoices were delivered to it, it was for convenience and not as an agent
    for Venture Inns. Finally, it pleaded in the further alternative that if it is
    liable, the amount claimed is excessive, unreasonable and does not reflect the
    value of the work.

The Reasons of the Motion Judge

[16]

The motion judge concluded that the Action was
    an abuse of process because in order for Taylor Made to obtain judgment in the
    Action, it would have to adduce evidence that had been purposely withheld from
    the court by Mr. Taylor during his testimony at the trial of the First Action.

[17]

In order to reach this conclusion, the motion
    judge made a number of findings arising from Mr. Taylors testimony at the
    trial in the First Action.

[18]

In particular the motion judge found that the
    trial judge was concerned about whether Taylor
Mades
contract for advertising services was with Venture Inns and/or with Atlific;
    that Mr. Taylor was concerned Atlific was still an ongoing client; that Mr.
    Taylor understood that the trial judge was concerned about whether liability
    for payment of the invoices rested with Venture Inns or Atlific; and that as a
    result of Mr. Taylors testimony, the trial judge was reasonably satisfied and
    persuaded that Venture Inns was liable for payment of the invoices.

[19]

Based on these findings, the motion judge went
    on to state at paragraph 16 of the reasons:

During his testimony, in order to preserve the plaintiffs then
    ongoing business relationship with Atlific, Mr. Taylor purposely avoided
    testifying that, with respect to these particular invoices, the plaintiffs
    contract for advertising services was with Atlific or that Atlific was somehow
    liable for payment of the invoices. He intentionally and successfully persuaded
    and satisfied that trial judge that the plaintiffs contract for the invoices
    was with Venture and not Atlific; and that it was Venture, not Atlific that was
    liable for payment of the invoices.

Discussion

[20]

In my view, Mr. Taylors evidence at the trial
    of the First Action does not support the findings the motion judge made in
    reaching his conclusion that Mr. Taylor purposely avoided testifying that the
    contract was with Atlific or that he intentionally and successfully persuaded
    the trial judge that it was Venture Inns that was liable for payment of the
    invoices.

[21]

As noted, the trial proceedings were brief. Mr.
    Taylor was the only witness. The transcript of his evidence is all of nine
    pages in length. During his evidence, he responded to questions asked by his
    counsel and the trial judge. In addition, a brief of documents was filed as an
    exhibit.

[22]

While the trial judge asked a few questions
    during Mr. Taylors evidence, they were for clarification and did not, in my
    view, indicate any concern on the part of the trial judge as to whom Taylor
Mades
contract was with.

[23]

As noted by the motion judge, Mr. Taylor did not
    testify that Atlific was primarily or jointly responsible for the invoices in
    question. He was never asked that question. He did, however, explain how the
    contract came about and referred to Atlific as the client, its role in the
    formation of the contract, its request to re-address the first invoice and its
    assurances that Taylor Made would be paid.

[24]

While Mr. Taylor indicated during his evidence
    that Atlific was an ongoing client, there was never any indication Taylor Made
    was suing Venture Inns to preserve its relationship with Atlific. Even if such
    an inference can be drawn from the evidence, that fact, by itself, is not
    sufficient to support the finding that Mr. Taylor purposely avoided testifying
    that the contract was with Atlific given his other testimony. As noted, Mr.
    Taylor testified that the contract was initially with Atlific but the invoices
    were changed to Venture Inns at
Atlifics
request.
    The documents filed with the court further support Mr. Taylors evidence
    concerning the involvement of Atlific in the contract.

[25]

Mr. Taylor answered the questions he was asked
    both by counsel and the trial judge. There is no evidence in the record to
    suggest that any of his answers were untruthful or misleading in any way. To
    the contrary, the evidence supports what Mr. Taylor testified to.

[26]

This court may only interfere with the motion
    judges findings of fact where there is a palpable and overriding error and
    such error affected the result. A palpable and overriding error has been
    described as one that is clearly wrong. Findings of fact by a lower court
    which can be characterized as unreasonable or unsupported by the evidence
    are clearly wrong and entitle an appellate court to intervene.
L.(
H.) v. Canada (Attorney General)
,
    [2005] 1 S.C.R. 401 (S.C.C.)
paras
. 55  56.

[27]

In my view, the motion judges finding that Mr.
    Taylor purposely withheld evidence from the court at the trial in the First
    Action is clearly wrong. It simply cannot be supported by Mr. Taylors evidence
    in the First Action. In addition, that finding clearly affected the result in
    the motion. It was the basis for the motion judges conclusion that the Action
    was an abuse of process.

[28]

In the circumstances, therefore, it is my view
    the motions judge committed a palpable and overriding error which entitles this
    court to intervene.

[29]

Notwithstanding the absence of any evidence to
    conclude that Taylor Made misled the court in the First Action, is the Action otherwise
    an abuse of process?

[30]

Courts have an inherent and residual discretion
    to dismiss or stay an action on the grounds of abuse of process. As Arbour J.
    stated in
Toronto
    (City) v. Canadian Union of Public Employees (C.U.P.E.), Local 79
,
    [2003] 3 S.C.R. 77 (S.C.C.) at
para
. 35:

Judges have an inherent and residual discretion to prevent an
    abuse of the court's process. This concept of abuse of process was described at
    common law as proceedings "unfair to the point that they are contrary to
    the interest of justice" (R. v. Power, [1994] 1 S.C.R. 601, at p. 616),
    and as "oppressive treatment" (
R. v. Conway
, [1989] 1 S.C.R.
    1659, at p. 1667). McLachlin J. (as she then was) expressed it this way in
R.
    v. Scott
, [1990] 3 S.C.R. 979, at p. 1007:

abuse
of process may be established
    where: (1) the proceedings are oppressive or vexatious; and, (2) violate the
    fundamental principles of justice underlying the community's sense of fair play
    and decency. The concepts of oppressiveness and
vexatiousness
underline the interest of the accused in a fair trial. But the doctrine evokes
    as well the public interest in a fair and just trial process and the proper
    administration of justice.

[31]

In
Foy
    v. Foy (No. 2)
(1979), 26 O.R. (2d) 220 (C.A.) at p. 237, Blair
    J.A., in dissent, referred to the purpose of the doctrine of abuse of process:

The concept of abuse of process protects the public interest in
    the integrity and fairness of the judicial system. It does so by preventing the
    employment of judicial proceedings for purposes which the law regards as
    improper. These improper purposes include harassment and oppression of other
    parties by multifarious proceedings which are brought for purposes other than
    the assertion or defence of a litigant's legitimate rights. Such abuse of
    process interferes with the business of the Courts and tarnishes their image in
    the administration of justice.

[32]

The doctrine of abuse of process has been
    utilized by the courts in various ways in order to maintain the integrity of
    the adjudicative function. In particular, it has been invoked in civil
    proceedings in circumstances where the courts procedure has been misused in
    such a way that the administration of justice would be brought into disrepute.
    As was further stated by Arbour J. in
Toronto (City) v. C.U.P.E., Local 79
at
para
. 37:

In the context that interests us here, 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 ... bring the administration of justice into
    disrepute" (
Canam
Enterprises Inc.
    v. Coles
(2000), 51 O.R. (3d) 481 (C.A.), at
para
.
    55, per Goudge J.A., dissenting (approved [2002] 3 S.C.R. 307, 2002 SCC 63)).
    Goudge J.A. expanded on that concept in the following terms at
paras
. 55-56:

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
. See
House of Spring
    Gardens Ltd. v. Waite
, [1990] 3 W.L.R. 347 at p. 358, [1990] 2 All E.R.
    990 (C.A.).

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
. [Emphasis added.]

As Goudge J.A.'s comments indicate, Canadian courts have
    applied the doctrine of abuse of process to preclude
relitigation
in circumstances where the strict requirements of issue
estoppel
(typically the
privity
/mutuality requirements) are
    not met, but where allowing the litigation to proceed would nonetheless violate
    such principles as judicial economy, consistency, finality and the integrity of
    the administration of justice.
(See, for example,
Franco v. White
(2001), 53 O.R. (3d) 391
    (C.A.);
Bomac
Construction Ltd. v.
    Stevenson
, [1986] 5 W.W.R. 21 (Sask. C.A.); and
Bjarnarson
v. Government of Manitoba
(1987), 38 D.L.R. (4th) 32 (Man. Q.B.),
aff'd
(1987), 21 C.P.C. (2d) 302 (Man. C.A.).)
This
    has resulted in some criticism, on the ground that the doctrine of abuse of
    process by
relitigation
is in effect non-mutual issue
    estoppel by another name without the important qualifications recognized by the
    American courts as part and parcel of the general doctrine of non-mutual issue
    estoppel (
Watson, supra
, at pp. 624-25).

[33]

In the circumstances of this case, I do not
    consider the Action to be an abuse of process. In my view, it is not a misuse
    of the courts procedure which is manifestly unfair to Atlific or otherwise so
    serious that it brings the administration of justice into disrepute.

[34]

The facts surrounding the formation of the
    contract at issue give rise to the argument that Atlific is jointly and
    severally liable for the work done. In circumstances of joint and several
liability
under a contract, judgment against one party does
    not bar further action against another for the same cause of action.
Campbell Flour Co. Ltd. v. Bowes
(1914), 32 O.L.R. 270 (C.A.) at pp. 279-80;
Courts of Justice Act
, R.S.O. 1990, c. C-43, s.
    139(1).

[35]

As Goudge J.A. noted in
Canam
Enterprises
, as referred to above, courts have applied the
    doctrine of abuse of process in circumstances where a party is attempting to
relitigate
a claim which has been determined. That,
    however, is not the case here. There has been no determination of whether
    Atlific is liable to Taylor Made for the work done.

[36]

While it no doubt would have been better if Taylor
    Made had joined Atlific in the First Action so that the issue of liability for
    the work done could have been determined in one proceeding, failure to do so in
    the circumstances of this case does not in my view constitute an abuse of
    process as the courts have defined that term. The Action is not a misuse of the
    courts procedure that is so serious that it brings the administration of
    justice into disrepute. While s. 138 of the
Courts
    of Justice Act
provides that multiplicity of legal proceedings is to be
    avoided, where possible, failure to do so may give rise to cost consequences
    but not to the dismissal of an action.

[37]

Nor in my view can it be said that the Action is
    unfair to Atlific. It was not involved in the First Action. The record clearly
    indicates that it had some involvement at the time of the formation of the
    contract and thereafter. It has denied in the Action that it was acting as an
    agent for Venture Inns. Whether it is liable to Taylor Made for the services
    rendered remains to be determined in the Action.

Conclusion

[38]

The appeal is therefore allowed and the Order is
    set aside.

[39]

Taylor Made is entitled to its costs, both of
    the motion and the appeal, which are fixed at $5,000 in each case, inclusive of
    disbursements and applicable taxes.

Released: June 28, 2012 (J.C.M.)

L.A. Pattillo J. (ad hoc)

I agree. J.C. MacPherson
    J.A.

I agree. R.G. Juriansz J.A.


