





CITATION:
Ontario v. Lipsitz, 2011
          ONCA 466






DATE:  20110622



DOCKET: C51330-C51287



COURT OF APPEAL FOR
          ONTARIO



OConnor
          A.C.J.O., Laskin and MacPherson JJ.A.



BETWEEN



Her Majesty the Queen in Right of the Province of
          Ontario, College of Physicians and Surgeons of Ontario, Dr. John Fleetham,
          Caroline Kemp, Dr. Daniel Klass, Dr. Michael Fitzpatrick, Sandra Halko, Dr.
          Rocco Gerace, Karen Stanley, Marsha Barnes, Dr. Mohamed R. Goolam Hussain,
          Lori Davis, Tracey Marshall, Jeff Morgenstern, and Bruce Kirton



Defendants (Appellants/                                                                                          Respondents by way of cross-appeal)



and



Dr. Jeffrey Lipsitz, Sleep Disorders Centre of
          Metropolitan Toronto Inc., Sleep Disorders Centre  Ottawa Inc., and Sleep
          Clinic Network of Ontario Inc.



Plaintiffs (Respondents/Appellants by way of cross-appeal)



Michelle Gibbs, for the appellants College of Physicians
          and Surgeons et al.

Kim Twohig and Lise Favreau, for the appellants Her
          Majesty the Queen in Right of Ontario et al.



Neil M. Abramson and Marco Falco, for the respondents



Heard:  March 28,
          2011

On appeal from the order of Justice E. Belobaba of the
          Superior Court of Justice, dated October 20, 2009.



OConnor A.C.J.O.:

[1]

The
    two main issues on these appeals
[1]
are: (1)
    whether the underlying action should be dismissed because the appellants
    (defendants) are immune from suit under s. 38.1 of the
Independent Health Facilities Act
, R.S.O. c.I.3 (the 
IHFA
) and (2) whether the underlying
    action should be stayed as an abuse of process.

Facts

[2]

From
    approximately 1987 to December 2006, Dr. Lipsitz and his associated companies
    (Dr. Lipsitz) operated a network of independent health facilities, which
    specialized in treating sleep disorders.

[3]

In
    1998, the province amended the
IHFA
to include sleep study facilities.  Those
    facilities already operating were grandparented for one year during which time
    the operators could continue to operate and apply for licences under the new
    legislative regime.  In order to obtain a
    licence, an operator was required to show that the facility conformed to
    certain quality standards.

[4]

The
IHFA
contains the regulatory scheme under
    which the Director, appointed under the
Act
,
    is responsible for making decisions in relation to the licensing and operation
    of independent health facilities in Ontario.  The Director has the authority to issue or refuse to issue licences to
    operate and to impose conditions on licences.  The Director also has the authority to suspend, revoke or refuse to
    renew a licence and to amend the conditions of a licence.

[5]

The
    Directors decisions are directed at ensuring that independent health
    facilities are operated in accordance with appropriate standards and in a
    manner not prejudicial to the health, safety and welfare of any person.

[6]

Pursuant
    to the
IHFA
, the Director may request
    that the Registrar of the College of Physicians and Surgeons of Ontario (the CPSO)
    appoint individuals to conduct inspections or assessments of the quality and
    standards of services provided by an independent health facility.

[7]

Facility
    operators who are dissatisfied with the decisions or proposed decisions of the
    Director have a right of appeal to the Health Services Appeal and Review Board
    (HSARB) and from there to the Divisional Court on a question of law.

[8]

In
    June 1999, Dr. Lipsitz applied for licences for the 12 sleep disorder centres
    he was operating at that time.

[9]

The
    Director asked the CPSO to conduct pre-licensing inspections and assessments of
    seven of the centres.  Those inspections
    triggered what turned out to be a series of disputes between Dr. Lipsitz on the
    one hand and the Director and the CPSO on the other.  The essential aspects of these disputes
    followed a pattern and for the purposes of these appeals, need only be briefly
    summarized.

[10]

Over
    the years following Dr. Lipsitzs initial applications for licences, the CPSO,
    at the request of the Director, carried out a number of inspections and
    assessments of Dr. Lipsitzs centres.  On
    several occasions, the CPSO advised the Director that Dr. Lipsitzs centres
    were not being operated in accordance with appropriate standards and in some
    instances that they presented a risk to the health, safety and welfare of
    persons.  On receiving the reports, the
    Directors
[2]
notified
    Dr. Lipsitz that they proposed to suspend or revoke Dr. Lipsitzs licences to
    operate or to take other regulatory action such as requiring certain terms to
    be complied with as a condition of issuing of a licence.

[11]

In
    each instance, Dr. Lipsitz immediately appealed the Directors decision or
    proposed decision to the HSARB.  Pending
    the appeals, the Director permitted Dr. Lipsitz to continue to operate in accordance
    with specified standards.  Before any of
    the appeals were heard by the HSARB, Dr. Lipsitz entered into Minutes of
    Settlement with the Director and the CPSO on terms and conditions that
    permitted him to continue to operate or to transfer operating licences to
    others.  In each case, Dr. Lipsitz
    consented to an order of the HSARB dismissing his appeal.

[12]

In
    2007, Dr. Lipsitz decided to transfer the licences for the remaining centres he
    was then operating.  The Director agreed
    to the transfers.

Dr. Lipsitzs Action

[13]

In
    2008, Dr. Lipsitz commenced the action that underlies these appeals.  In his action, he sued two categories of
    defendants:  1)  the Ontario defendants, i.e. the Ontario
    Crown, two individuals who were Directors under the
IHFA
during the relevant time period, and two others who were
    managers of the Independent Health Facility Program (the Ontario appellants);
    and 2) the College defendants, i.e. the CPSO and nine individuals who were
    College employees or appointees and were involved in the inspections and
    assessments of Dr. Lipsitzs centres (the College appellants).

[14]

Dr.
    Lipsitzs statement of claim is based on the intentional torts of conspiracy,
    intentional interference with economic relations, abuse of public office, and
    abuse of process.  Throughout, he alleges
    bad faith on the part of the appellants.

[15]

In
    his statement of claim, Dr. Lipsitz alleges that from 2001 to 2007, the
    appellants engaged in a closure campaign.  As part of that campaign, they routinely engaged in excessive and unreasonable
    investigations and assessments and took reckless and unjustified steps to close
    his sleep disorder centres.  This
    improper conduct required him to operate the centres under unreasonable and
    expensive restrictions designed to make it impossible for him to continue.

[16]

As
    a result of the appellants actions, Dr. Lipsitz agreed to onerous undertakings
    in order to allow him to continue to operate.  Ultimately, after having been harassed and intimidated, Dr. Lipsitz was
    forced to close or sell all of his sleep disorder centres.  He was forced to sell at fire sale
    prices.

[17]

Dr.
    Lipsitz also alleges that as part of the closure campaign the CPSO improperly
    initiated investigations of his professional conduct under s. 75(a) of the
Health Professions Procedural Code
.

[3]


[18]

Dr.
    Lipsitz pleads that the appellants closure campaign resulted from the
    appellants desire to restrict the growth of his business, to minimize
    government spending and to diminish the relatively large amount of billings
    which his centres realized on an annual basis.

The Motion

[19]

After
    filing their statements of defence, the appellants moved to dismiss Dr.
    Lipsitzs action or to strike his statement of claim under Rules 20, 21.01(3)(d),
    and 25.11 of the
Rules of Civil
    Procedure.

[20]

The
    grounds of the motion included the following:  1) Dr. Lipsitzs claim for compensation is barred by s. 38.1 of the
IHFA
, which grants the appellants
    immunity from paying compensation; 2) the claim is an abuse of process because
    it is a collateral attack on the administrative proceedings for resolving
    licensing issues under the
IHFA
; 3)
    the claim is an abuse of process because Dr. Lipsitz is seeking to re-litigate
    issues that were or should have been disposed of in Dr. Lipsitzs appeals to
    the HSARB; 4) Dr. Lipsitzs allegation about the CPSOs investigations pursuant
    to s. 75(a) of the
Health Professions
    Procedural Code
should be struck pursuant to s. 36(3) of the
Regulated Health Professions Act, 1991
;
    and 5) Dr. Lipsitzs statement of claim does not disclose a reasonable cause of
    action.

[21]

The
    motion judge dismissed the appellants motion with the exception of the fourth
    issue listed in the preceding paragraph.  The motion judge struck those portions of Dr. Lipsitzs claim relating
    to the CPSOs investigations of Dr. Lipsitzs professional conduct.

[22]

I
    will refer to the motion judges reasons in more detail in my discussion of the
    issues.

Issues



[23]

Dr.
    Lipsitz raises a preliminary issue on these appeals.  He argues that these appeals should be
    dismissed because the appellants raised the same arguments on a motion for
    leave to appeal to the Divisional Court and were denied leave.

[24]

The
    appellants grounds of appeal can conveniently be addressed in the following
    manner.  The appellants argue that the
    motion judge erred in failing to find that:

a)

they are entitled to immunity under
    s. 38.1 of the
IHFA
;

b)

Dr. Lipsitzs claim is an abuse of
    process because it seeks to re-litigate issues finally determined in the
    regulatory process; it is a collateral attack on the orders made in the
    regulatory process; and the regulatory process under the
IHFA
has exclusive jurisdiction over the matters raised in Dr.
    Lipsitzs claim.

[25]

Dr.
    Lipsitz cross-appeals the motion judges order striking the portions of his
    statement of claim that relate to the CPSOs investigation under s. 75(a) of
    the
Health Profession Procedural Code
.

Dr. Lipsitzs Preliminary Argument

[26]

Dr.
    Lipsitz argues that the appeals should be dismissed because the appellants were
    denied leave to appeal to the Divisional Court based on the same grounds they
    now seek to advance in this court.  In
    particular, Dr. Lipsitz refers to the appellants arguments with respect to
    immunity under s. 38.1 of the
IHFA
and abuse of process.

[27]

Dr.
    Lipsitz argues that the doctrines of abuse of process, issue estoppel,
res judicata
and collateral attack
    operate to preclude this court from rehearing the same issues that they argued
    on the leave motion to the Divisional Court.  As part of this argument, he submits that the motion judges orders with
    respect to immunity and abuse of process were interlocutory and, therefore,
    appealable to the Divisional Court with leave and not to this court.

[28]

I
    do not accept these arguments.  In my
    view, the motion judges orders with respect to immunity and the abuse of process
    issues were final in nature and as such are properly appealable to this
    court.  Moreover, I am satisfied that the
    appellants took that position on the argument of the motions for leave to
    appeal to the Divisional Court.

[29]

In
    their notices of motion seeking leave to appeal to the Divisional Court, the
    appellants raised the immunity and abuse of process issues.  However, contemporaneously, they also filed
    notices of appeal to this Court raising the same issues.  Apparently, at that point, they were uncertain
    as to the proper route of appeal.

[30]

In
    their facta on the leave motions to the Divisional Court or in oral argument,
    the appellants took the position that the motion judges orders with respect to
    the two issues, immunity and abuse of process, were final orders and,
    therefore, properly appealable to this court.

[31]

In
    para. 38 of their factum on the motion at the Divisional Court, the Ontario
    appellants set out their position as follows:

In
    this case, it is the position of the Ontario defendants that the motion judges
    order in respect of the issues of statutory immunity and abuse of process is
    final as the decision appears to preclude the Ontario Defendants from raising
    these defences at the trial of the action.  A separate appeal to the Court of Appeal for Ontario has therefore been
    launched on these aspects of the motion judges decision.  In the event that the court does not consider
    these issues to have been finally decided, the Ontario defendants wish to argue
    that leave to appeal should also be granted on these aspects of the order.

[32]

The
    Ontario appellants set out the authorities in support of their position that
    the orders were final.

[33]

Before
    the Divisional Court, the College appellants took essentially the same position
    as the Ontario appellants.  After setting
    out some arguments with respect to the applicability of s. 38.1 as a defence to
    the claims against them, they concluded in para. 27 of their factum by saying:

The
    College Defendants submit that some of the findings and conclusions of the
    motions judge in relation to s. 38.1 of the
IHFA
may be final, giving rise to an automatic right of appeal to the Court of
    Appeal.  However, the fact that the motions
    judge also found there to be genuine issues for trial as to which aspects of
    the claim are barred by s. 38.1 of the
IHFA
and which aspects are not, may be found by this honourable court to be interlocutory,
    in which case, the College Defendants respectively seek leave to appeal in
    regards to these issues as well.

[34]

Neither
    set of appellants included abuse of process arguments in their factum.

[35]

In
    their motions for leave to the Divisional Court, the appellants raised one
    issue that all parties accepted was interlocutory; namely, whether the motion
    judge erred in finding that the amended statement of claim disclosed a
    reasonable cause of action.

[36]

The
    leave judge dismissed the appellants motions for leave.  She agreed with the motion judge that the
    statement of claim disclosed a reasonable cause of action.  She also addressed and agreed with the motion
    judges conclusions with respect to s. 38.1 and the abuse of process
    issues.

[37]

On
    the basis of the foregoing, I do not conclude that the appellants, in the end,
    sought leave to appeal the immunity and abuse of process issues to the
    Divisional Court.

[38]

Moreover,
    I am satisfied that the portion of the motion judges order with respect to s.
    38.1 that the appellants challenge and their abuse of process arguments are
    properly appealable to this court.  As to
    s. 38.1, the appellants challenge is directed only at the motion judges
    interpretation of what acts are protected by s. 38.1.  In this respect, the motion judge said the
    following, at para. 14:

Inspections,
    investigations and assessments (carried out, in the main, by College officials
    appointed under the
IHFA
) are not
    listed actions in s. 38.1 and are therefore not accorded statutory immunity.

[39]

This
    part of the motion judges ruling finally determines the scope of the
    protection afforded by s. 38.1 for purposes of this action.  If it stands, it would not be open to the
    appellants to later argue that s. 38.1 protects inspections, investigations and
    assessments in some circumstances.  Thus,
    that part of the motion judges ruling is final in nature.

[40]

Similarly,
    with respect to the appellants abuse of process arguments, the motion judge
    finally determined those issues for purposes of this action.  At para. 20, he said [t]he collateral attack
    doctrine does not apply.  At para. 29,
    he said [t]here is no abuse of process.

[41]

The
    motion judge did not restrict his ruling regarding abuse of process to the
    preliminary stage of the proceedings at which he was hearing the motion.  He did not leave any of the abuse of process
    arguments open for trial.  In my view,
    the motion judges orders with respect to abuse of process were final in nature
    and, therefore, properly appealable to this court.

[42]

In
    summary, I would not dismiss the appeals on the preliminary basis sought by Dr.
    Lipsitz.

Section 38.1

[43]

The
    appellants argue that the motion judge erred in rejecting their submission that
    s. 38.1 of the
IHFA
provided them
    with a complete answer to Dr. Lipsitzs claims.

[44]

Section
    38.1 reads as follows:

No
    Compensation

38.1  No compensation shall be payable by the
    Crown, the Minister, the Director or any other person engaged in the
    administration of this Act
in respect of any loss suffered as a result of
the Minister or Director refusing to issue or renew a licence, revoking or
    suspending a licence, imposing conditions or limitations on a licence, amending
    conditions or limitations on a licence or as a result of enforcing the
    prohibitions under s. 3.  [Emphasis
    added.]

[45]

The
    appellants raised their s. 38.1 argument as part of a motion to summarily
    dismiss Dr. Lipsitzs action pursuant to Rule 20.

[46]

In
    dismissing the motion, the motion judge noted that s. 38.1 is specific about
    what losses will not be compensated:  namely, any loss suffered as a result of the actions of the Minister or
    Director set out in the section.  The
    motion judge stated that if the claim for compensation is for losses sustained
    as the result of something other than one of the five actions listed [in s.
    38.1], then immunity is not available.

[47]

However,
    the motion judge went on to say that [i]nspections, investigations and
    assessments  are not listed actions in s. 38.1 and are therefore, not accorded
    statutory immunity.

[48]

In
    the result, the motion judge held that the need to determine what part of Dr.
    Lipsitzs losses were the result of inspections, investigations and/or
    assessments and what part was the result of one of the five orders referred to
    in s. 38.1 raises a genuine issue for trial.  He, therefore, dismissed the motion.

[49]

The
    appellants argue that the motion judge erred in that part of his reasons where
    he said that inspections, investigations and assessments are not accorded
    statutory immunity.  I agree that the
    impugned statement incorrectly narrows the scope of the protection afforded by
    s. 38.1.  In my view, the section provides
    immunity for those conducting inspections, investigations and assessments to
    the extent that the losses for which compensation is claimed result from one of
    the actions specified in the section.

[50]

The
    issue is one of statutory interpretation.  The well accepted approach to interpreting a statute is that the words
    of an
Act
are to be read in their
    entire context and in their grammatical and ordinary sense harmoniously with
    the scheme of the
Act
, the object of
    the
Act
and the intention of
    Parliament: see, for example,
Canada
    (Citizenship and Immigration) v. Khosa,
[2009] 1 S.C.R. 339, at para. 38.
    This approach typically involves courts considering the language of the
    provision in issue, the context in which the provision is found, and the
    purpose and scheme of the legislation.

[51]

The
    language in s. 38.1 is straightforward.  It can best be analyzed in two parts.  The first relates to the entities or individuals to whom the section
    affords protection.  The language is
    expansive.  It applies to the Crown, the
    Minister, the Director and to anyone who is engaged in the administration of the
Act
.  Significantly, I suggest, the section may include persons carrying out
    the activities mentioned by the motion judge, namely, investigations,
    inspections or assessments.  Thus, if
    investigators, inspectors or assessors are engaged in the administration of the
Act
, the first part of the
    requirement for immunity under s. 38.1 has been met.

[52]

The
    second part of s. 38.1 sets out the types of losses which are shielded by the
    section.  The effect of the second part
    is to limit the protection to only losses suffered as a result of the Minister
    or Director doing one of the actions specified in the section.  These actions are regulatory orders and are
    central to the decision-making scheme of the
IHFA
.   Thus, in general terms, s. 38.1 provides
    immunity for losses resulting from certain regulatory orders made under the
Act
.

[53]

Thus, administrative actions such as
    investigations, inspections and assessments that lead to an order referred to
    in s. 38.1 are protected for losses resulting from the order.  For example, if a Director refuses to issue a
    licence based on an inspection report, and damages ensue, not only does the
    Director have immunity for those damages, so does the inspector who prepared
    the report.  There does, however, have to
    be a link between the inspector and the order expressly protected by s. 38.1.

[54]

I
    note that s. 20(1) of the
IHFA
requires the Director to give notice to a licensee when he or she proposes to
    make some of the types of orders referred to in s. 38.1 in other than emergency
    situations.  Under s. 20(1), the Director
    must give a licensee notice if the Director proposes to revoke, suspend or
    refuse to renew a licence.  The section
    requires the Director to give reasons for the proposal.  The
licencee
is
    entitled to appeal the Directors proposed decision to the HSARB.

[55]

The
    proposal process is an integral part of the Directors decision-making process by
    which he or she may revoke, suspend or refuse to renew a licence.  As such, I see no reason why the protection
    afforded by s. 38.1 should not be interpreted to include decisions of Directors
    made under s. 20(1).

[56]

I see nothing in the context in which s. 38.1
    is found or in the purpose of the section or the statutory scheme that suggests
    an interpretation other than the one that emerges from the ordinary meaning of
    the language in the section.

[57]

In
    considering the context and statutory scheme, it is important to examine the
    other section in the
IHFA
that
    provides immunity to individuals and entities.

[58]

Section
    38(1) reads as follows:

Immunity

38(1)  Despite sections 5 and 23 of the
Proceedings Against the Crown Act
, no
    action or other proceeding for damages or otherwise shall be commenced against
    the Crown, the Minister, the Director, an inspector or assessor appointed under
    this Act or an officer, employee or agent of the Crown or of the College, the
    Registrar, the college, the council of the college or a committee established
    by the council or a member of the council or the committee for any act done or
    performed in good faith in the performance or intended performance of any duty
    or function or in the exercise or intended exercise of any power or authority
    under this Act or the regulations, or for any neglect, default or omission in
    the performance or exercise in good faith of any duty, function, power or
    authority under this Act or the regulations.

[59]

In
    my view, s. 38(1) and 38.1 can be read harmoniously.  Read together they create a logical scheme
    for providing immunity to individuals and entities carrying out functions under
    the
IHFA.


[60]

Section
    38(1) is a type of umbrella clause.  Unlike s. 38.1, the losses for which s. 38(1) provides immunity are not
    limited to losses suffered as a result of specific actions of the Minister or
    Director.  Section 38(1) prohibits an
    action being taken against any of the named individuals and entities for
    damages resulting from an act or function carried out under the
Act
.  In that respect, the immunity under s. 38(1) is broader than that
    provided by s. 38.1.

[61]

However,
    the immunity provided by s. 38(1) is limited by a specific good faith
    requirement.  Thus, acts or omissions are
    only protected under s. 38(1) if the person or entity acted in good faith.

[62]

Section
    38.1 provides immunity for a smaller category of losses than s. 38(1).  Losses are included in the protection
    afforded by s. 38.1 only if they result from one of the actions specified in
    the section.  The protection provided by
    s. 38.1, however, is not limited by a good faith requirement.

[63]

Section
    38(1) was part of the original
IHFA
enacted in 1989.  Section 38.1 was added
    in 1996 as part of the
Savings and
    Restructuring Act
.  It seems clear
    that in 1996, the Legislature intended to extend immunity to losses resulting
    from the regulatory decisions specified in s. 38.1 without the requirement of
    showing the actions resulting in those losses were done in good faith.

[64]

While
    the types of actions that are shielded by s. 38.1 are not subject to a good
    faith requirement, they are subject to the checks that govern regulatory
    decisions.  The processes that lead to the
    regulatory orders referred to in s. 38.1 are subject to the administrative law
    requirements of procedural fairness and the orders themselves are subject to a
    statutory right of appeal.

[65]

Thus,
    in my view, s. 38.1 embodies a reasonable policy of providing immunity for
    losses resulting from the regulatory decisions specified in the section without
    a good faith requirement.  The
    Legislature has sought to limit civil lawsuits that would, in effect, be a
    challenge to the regulatory decisions referred to in the section, thereby
    promoting the finality of the regulatory decisions.

[66]

I
    turn now to the application of s. 38.1 to this case.

[67]

The
    appellants fall within the group of people or entities that are afforded
    protection by s. 38.1.  The appellants
    include the Crown, two Directors under the
Act
,
    the CPSO, and others who at the time of the events giving rise to the claim
    were engaged in the administration of the
Act
in the sense that they were performing functions contemplated by the
IHFA
.

[68]

The
    thrust of Dr. Lipsitzs claim is that the appellants engaged in a closure
    campaign to force him out of business.  That campaign culminated in a series of Directors orders or proposed
    orders that ultimately led him to either close or sell his sleep disorder centres
    at a significant loss.  To the extent
    that the losses claimed by Dr. Lipsitz are found to have been losses suffered
    as a result of one or more of the Directors orders or proposed orders then s.
    38.1 would apply to preclude compensation for those losses.

[69]

The
    question then becomes whether Dr. Lipsitz has made any claims which are not the
    result of Directors orders or proposed orders covered by s. 38.1.

[70]

As
    I see it, a significant amount of the losses for which Dr. Lipsitz seeks
    compensation come within the protection afforded by s. 38.1.  However, I am not able to conclude that there
    are no claims for losses that fall outside the immunity provided by the section.

[71]

In
    order to properly address the issue of what claims are protected, it will be
    necessary to make factual findings respecting what losses were the result of
    Directors orders covered by the section and what, if any, losses were not.

[72]

From
    the statement of claim, it appears that a large portion of the losses claimed
    by Dr. Lipsitz result from the regulatory orders covered by s. 38.1.  However, some of the alleged losses may
    result from actions other than those protected by s. 38.1.  For example, in para. 39, Dr. Lipsitz alleges
    that the appellants caused harm to the plaintiffs (Dr. Lipsitz and his associated
    companies) by doing a number of different things.  Two of those are:

·

routinely
    engaging in false and unfairly critical reporting; and

·

undertaking
    a campaign of harassment and intimidation through excessive and unreasonable
    investigations and assessments.

[73]

In
    para. 7 of his affidavit, Dr. Lipsitz says:  the repeated and unnecessary
    inspections imposed by the Defendants caused an unbearable financial strain on
    me and on the Corporate Plaintiffs.

[74]

In
    paras. 46-54 of the statement of the claim, Dr. Lipsitz alleges that the
    Ministry implemented policy changes for the purpose of maliciously slowing the
    growth of his sleep business.

[75]

A
    court will be required to make factual findings and determine if any of the
    claimed losses result from actions other than those protected by s. 38.1.  In my view, those findings can only fairly be
    made at a trial in which the evidence can properly be assessed.  In the result, I agree with the motion judge
    that there needs to be a trial of an issue to determine what claims, if any,
    fall outside s. 38.1.

[76]

Finally,
    and very importantly, I note that even if some of the losses claimed are found
    to fall outside of the protection afforded by s. 38.1, those against whom the
    losses are claimed will almost certainly be immune from action under s. 38(1) if
    their actions are found to have been done in good faith.

Abuse of Process

[77]

Assuming
    some parts of Dr. Lipsitzs claims survive the immunities provided by s. 38.1
    and s. 38(1), it becomes necessary to consider the appellants argument that
    the motion judge erred in not dismissing or striking those claims as an abuse
    of process.

[78]

In
    making the abuse of process argument, the appellants rely upon Rules 21.01(3)(d)
    and 25(11).

[79]

The
    appellants primary argument is that Dr. Lipsitzs action, at its core, is an
    attempt to re-litigate issues that were the subject of the regulatory decisions
    of the Directors and the orders of the HSARB dismissing Dr. Lipsitzs
    appeals.  The HSARBs orders dismissing
    the appeals, which resulted from settlement agreements, finally determined the
    issues raised in the appeals.  Those
    issues cannot be raised again in his subsequent civil action.

[80]

The
    motion judge rejected the appellants abuse of process argument.  His reasoning was twofold:

1)

Dr. Lipsitzs claim that the appellants
    had conducted a closure campaign was not apparent to Dr. Lipsitz until long
    after the appeals had been settled; and

2)

In any event, Dr. Lipsitzs claim
    that the appellants engaged in a closure campaign could not have been
    adjudicated or remedied by the HSARB, essentially because the Board could not award
    damages.

[81]

I
    would not interfere with the motion judges conclusion that the action should
    not be dismissed or struck as an abuse of process.  However, unlike the motion judge, I would not
    preclude the appellants from raising the abuse of process argument at
    trial.

[82]

I
    agree with the motion judge that there needs to be a trial to determine whether
    the settlement agreements should operate to preclude Dr. Lipsitz from making
    the claims raised in his action.  If Dr.
    Lipsitz establishes that there was a closure campaign and that he was unaware
    of it at the time he entered into the settlement agreements, then arguably the
    settlement agreements and the resulting dismissals of his appeals would not be
    a basis for barring his civil case.

[83]

If
    on the other hand, a court were to find that the settlement agreements were not
    tainted as Dr. Lipsitz alleges, then, in my view, it would be open to a court
    to conclude that Dr. Lipsitzs civil claim or large parts of it are barred as
    an attempt to re-litigate issues that were decided or could have been decided
    in the regulatory process.

[84]

There
    is a significant overlap between the issues that Dr. Lipsitz raised in his
    appeals and those in his civil action.  For example, in each of his appeals, Dr. Lipsitz asserted that the
    Director had erred in issuing the orders under appeal because the Director had
    wrongly concluded that Dr. Lipsitz was not operating the sleep disorder centres
    in accordance with appropriate standards and, in some instances, was operating
    the centres in a way that presented risks to the health and safety of
    persons.  Dr. Lipsitzs position was that
    he had operated the centres at all times in accordance with appropriate
    standards and that there were no risks to health or safety.

[85]

Dr.
    Lipsitz negotiated settlements of the appeals and the terms of the settlements
    permitted him to continue operating or to sell the centres involved.  He agreed that the appeals be dismissed and
    the Board acted upon those agreements in dismissing his appeals.

[86]

In
    the civil action, Dr. Lipsitz takes exactly the same position as he had taken
    in the appeals to the HSARB.  He asserts
    that he operated all of the sleep disorder clinics in accordance with
    appropriate standards and did not create risks to health or safety.

[87]

In
    my view, it would be open for a court in the civil action to determine that Dr.
    Lipsitz is precluded from re-litigating the factual issues of whether he
    operated the clinics in conformity with appropriate standards because those
    issues had already been resolved in the regulatory proceedings.

[88]

Moreover,
    I do not consider the fact that the HSARB does not have jurisdiction to award
    damages to be dispositive of whether the regulatory proceedings can operate as
    a bar to the civil claim or parts of it.  It may be open to a court to bar the re-litigation of factual issues if
    it concludes that those issues were finally determined or could have been
    determined in the regulatory proceedings in which Dr. Lipsitz participated.

[89]

As
    part of the abuse of process argument, the appellants argue that the regulatory
    process under the
IHFA
was the
    exclusive forum for resolving the issues raised in the civil action. They also
    argue that Dr. Lipsitzs civil action is a collateral attack on the decisions
    of the Directors and the orders of the HSARB dismissing his appeal from those
    decisions.

[90]

In
    my view, these arguments are best left for trial and can be addressed after the
    court has determined what parts of Dr. Lipsitzs civil claims are an attempt to
    re-litigate and what parts, if any, are not.  With the benefit of that analysis, the court will be in a better
    position to determine whether there are other bases for applying the doctrine
    of abuse of process to bar Dr. Lipsitzs claim.

[91]

In
    the result, I agree with the motion judge that Dr. Lipsitzs suit should not be
    stayed at this stage on the basis of abuse of process.  However, unlike the motion judge, I would not
    finally determine the appellants abuse of process arguments.  For the reasons set out above, I am of the
    view that the appellants abuse of process arguments should remain open at
    trial.

The Cross-Appeal

[92]

Dr.
    Lipsitz asks this court to set aside that portion of the motion judges order
    striking his allegations pertaining to the Colleges investigation of him under
    s. 75(a) of the
Health Professions
    Procedural Code
.

[93]

Dr.
    Lipsitz pleaded that as part of the closure campaign, the College appellants
    began investigations into Dr. Lipsitzs professional conduct, and those
    investigations were ultimately closed without any action being taken.

[94]

In
    striking the allegations involving the Colleges investigations, the motion
    judge relied upon s. 36(3) of the
Regulated
    Health Professions Act, 1991
(
RHPA
)
,
the relevant part of which provides
    that no report or document prepared for a proceeding under a health profession
    Act is admissible in a civil proceeding.

[95]

Section
    36(3) reads as follows:

No
    record of a proceeding under this Act, a health profession Act or the
Drug and Pharmacies Regulation Act
, no
    report, document or other thing prepared for or statement given at such a
    proceeding and no order or decision made in such a proceeding is admissible in
    a civil proceeding other than a proceeding under this Act, a health profession
    Act or the
Drug and Pharmacies Regulation
    Act
, or a proceeding relating to any order under ss. 11.1 or 11.2 of the
Ontario Drug Benefits Act
.

[96]

The
    investigations into Dr. Lipsitz were conducted pursuant to s. 75(a) of the
Health Professions Procedural Code
,
    which, in accordance with section 4 of the
RHPA,
is deemed to be part of each health profession act. The
Code
is also found in schedule 2 of the
RHPA,
and is thus clearly within the
    ambit of s. 36(3).

[97]

Dr.
    Lipsitz makes three arguments why the motion judge erred.

[98]

First,
    he says that s. 36(3) only applies to a s. 75(a) investigation when the
    investigation is initiated by an external complaint.  It does not apply, he argues, when the
    College initiates the investigation and no hearing results.  Two of the s. 75(a) investigations conducted
    by the College with respect to Dr. Lipsitz were prompted by internal
    administrative decisions, not external complaints.  None of the investigations resulted in a
    hearing.

[99]

I
    do not accept this argument.  In my view,
    it places an unduly narrow interpretation on s. 36(3).

[100]

The
    language of s. 36(3) does not support the interpretation urged by Dr.
    Lipsitz.  The relevant part of the
    section refers to documents prepared for  a proceeding.  That language does not distinguish between
    proceedings initiated by external complaints and those initiated by the College
    internally.

[101]

Moreover,
    the narrow interpretation proposed by Dr. Lipsitz is not consistent with the
    purposes of the section.  In
M.F. v. Sutherland
(2000), 188 D.L.R. (4
th
)
    296 (Ont. C.A.), at paras. 29 and 31, Laskin J.A. explained the purpose of the
    section as follows:

The
    purpose of s. 36(3) is to encourage the reporting of complaints of professional
    misconduct against members of a health profession, and to ensure that those
    complaints are fully investigated and fairly decided without any participant in
    the proceedings  a health professional, a patient, a complainant, a witness or
    College employee  fearing that a document prepared for College proceedings can
    be used in a civil action.



Section
    36(3) is one of a number of legislative provisions whose broad objective is to
    keep College proceedings and civil proceedings separate.  Section 36(1) provides for the
    confidentiality of information that comes to the knowledge of College employees;
    and s. 36(2) provides that College employees cannot be compelled to testify in
    civil proceedings about matters that come to their knowledge in the course of
    their duties.

[102]

While
    Laskin J.A. referred to proceedings initiated by complaints, because that was
    the factual basis he was addressing, he points out that one of the rationales for
    the section is to ensure full and fair investigations without fear that
    documents prepared will be used in a civil action.  The broad objective, as he put it, is to keep
    College proceedings and civil proceedings separate.

[103]

I
    agree with the motion judge that it makes no sense to interpret s. 36(3) so as
    to differentiate investigations prompted by external complaints from those
    triggered by the College itself.  The
    objectives of ensuring full and fair investigations without fear that the
    documents will be used in a civil action and of keeping College proceedings
    and civil proceedings separate are applicable to all investigations whether
    initiated by an external complaint or by an internal decision of the College.

[104]

Dr.
    Lipsitzs second argument is that the term proceeding used in s. 36(3) is
    limited to proceedings where there is a hearing.  The investigations of Dr. Lipsitz did not
    result in hearings.

[105]

Dr.
    Lipsitz argues that because a proceeding is not defined in the
RHPA
, the court should look to the
    definition of proceeding in the
Statutory
    Power Procedures Act,
R.S.O. 1990, c. S.22 (
SPPA
), in order to interpret s. 36(3).  He argues that the definition of proceeding
    in the
SPPA
limits the term proceeding
    to a process where there is a hearing.

[106]

Again,
    I am of the view that the interpretation that Dr. Lipsitz urges results in an
    unduly narrow interpretation of the scope of s. 36(3).

[107]

The
    definition of proceeding in the
SPPA
does
    not assist.  Section 1(1) defines
    proceeding as a proceeding to which the
Act
applies.  Section 3(1) reads as follows:

Application
    of Act

3.(1)  Subject to subsection (2), this Act applies
    to a proceeding by a tribunal in the exercise of a statutory power of decision
    conferred by or under an Act of the Legislature, where the tribunal is required
    by or under such Act or otherwise by law to hold or to afford to the parties to
    the proceeding an opportunity for a hearing before making a decision.

[108]

The
    definition in the
SPPA
is intended to
    set out which matters fall within the scope of the
SPPA
.  Regulatory bodies
    falling within the
SPPA
have the
    powers conferred by it and are subject to its procedural requirements.  The definition sections in the
SPPA
do not purport to define the word
    proceeding for purposes of interpreting other statutes.

[109]

Section
    36(3) of the
RHPA
expressly states
    that it applies to proceedings in specified Acts.  Notably, s. 36(3) does not say that it
    applies only to proceedings to which the
SPPA
applies.  Had the Legislature intended
    that S. 36(3) be so limited, it is reasonable to infer that it would have set
    out that intention expressly.

[110]

Further,
    interpreting s. 36(3) of the
RHPA
as
    only applying to proceedings that result in the hearing could lead to undesirable
    results.  For example, where an expert
    prepares a report in connection with a complaint or an investigation, the
    report would be admissible in a civil action if the College did not pursue the
    matter to a hearing, but not if there was a hearing.  Similarly, a letter of complaint could form
    the basis of a civil suit by a doctor against the complainant if the College
    took no action on the complaint, but the same letter would be inadmissible if
    the complaint resulted in a hearing before the discipline committee.

[111]

Such
    an interpretation could discourage peer assessors and expert witnesses from
    participating in the regulatory process, have a chilling effect on members of
    the public wishing to register complaints with the College.

[112]

Dr.
    Lipsitzs third argument on the cross-appeal is that an action should not be
    struck on the basis of the inadmissibility of documents under s. 36(3) of the
RHPA
because such an order would
    interfere with the trial judges discretion to decide evidentiary issues.

[113]

In
M.F. v. Sutherland
, the court
    rejected a similar argument holding, at para. 40, that if a paragraph in a
    partys pleading pleads facts that cannot be proved at trial or pleads
    documents that cannot be admitted at trial, that paragraph may be struck out on
    a motion.  The court indicated that such
    a motion should be brought under Rule 25.11.  The motion in this case was brought under that rule.

[114]

Thus,
    I see no basis to interfere with the motion judges decision to strike Dr.
    Lipsitzs allegations pertaining to the Colleges investigations of his
    professional conduct.  I agree with the
    motion judges comment at para. 34 of his endorsement where he said:

I
    would simply add, for the plaintiffs benefit, that although the documentation
    is inadmissible, the fact that a complaint was made or that an investigative
    proceeding was commenced may be provable at trial.

[115]

In
    the result, the cross-appeal is dismissed.

Disposition

[116]

I
    would dismiss the appeals and the cross-appeal.  In my view, the immunity issue and the abuse of process issues should remain
    open at trial.

[117]

I
    would set aside the motion judges costs order in favour of Dr. Lipsitz.  I would leave the issue of costs of the
    motion to the trial judge.  On my view of
    the appellants arguments on immunity and abuse of process, Dr. Lipsitzs
    claims in the civil action will be significantly narrowed, if not disposed of
    entirely at trial on the basis of these arguments.  The exercise at trial will be to determine
    what portion, if any, of his civil claim should survive.  In those circumstances, I think it makes
    sense to reserve the costs of the motions below to the trial judge.

[118]

I
    would make no award with respect to costs of the appeal.  There has been mixed success.  On the one hand, the appellants have
    succeeded in reducing their exposure because of the view I take of the immunity
    and abuse of process arguments.  The
    appellants were also successful in having Dr. Lipsitzs cross-appeal
    dismissed.  On the other hand, I would
    not dismiss Dr. Lipsitzs action or strike his statement of claim as the
    appellants asked this court to do.  In
    that respect, Dr. Lipsitz has realized some success.

RELEASED: JUN
    22 2011  DOC

Dennis OConnor A.C.J.O.

I agree John I. Laskin J.A.

I agree J.C. MacPherson J.A.





[1]
These
    reasons address two appeals, C51330 and C51287.  The appeals are from decisions on motions that were heard together.  The motion judge issued one endorsement
    addressing both.



[2]
There
    were two Directors during the relevant period.



[3]
The
Health Professions Procedural Code
is
    found in Schedule 2 of the
Regulated
    Health Professions Act, 1991,
S.O

1991,
    c. 18
.


