Case Name:

Tucker v. Canada (Attorney General)

Between

Elizabeth Ann Tucker and Paul Anthony Smihal, plaintiffs

(moving party), and

The Attorney General of Canada, the Canada Customs and Revenue

Agency and Rick DesRosiers, defendants (responding party)

[2003] O.J. No. 5299

Court File No. 02-GD-53449

Ontario Superior Court of Justice

Granger J.

Heard: September 25, 2003.

Judgment: December 23, 2003.

(44 paras.)

Practice -- Judgments and orders -- Summary judgments -- Conditions precedent -- Estoppel -- Estoppel by record (res judicata).

Motion by the plaintiffs Tucker and Simhal for partial summary judgment in their action against Canada and DesRosiers, for violations of their Charter rights. Upon investigation by DesRosiers, Canada suspected that the plaintiffs were violating the Customs Act by evading the payment of lawful duties. Canada obtained search warrants, executed them and laid criminal charges against the plaintiffs. The trial judge found that the warrants had been unlawfully obtained and that the subsequent searches were illegal. This left Canada without a criminal case against the plaintiffs. DesRosiers was not a party to that proceeding, although he participated as a witness. The plaintiffs sought damages for their legal expenses and other losses, plus exemplary and punitive damages. They contended that to the extent that damages were based on the issues covered in the judgment below, those issues were res judicata or subject to issue estoppel, such that Canada was unable to relitigate them.

HELD: Motion dismissed. There were numerous genuine issues in respect of material facts requiring a trial. The Charter rulings respecting Canada were res judicata. Therefore, the Attorney-General of Canada and the Canada Customs and Revenue Agency were estopped from attacking those findings. However, the plaintiffs' entitlement to damages for the Charter breaches was a different matter, and one which was not in issue below. As DesRosiers was neither a party to nor a privy to the proceedings below, he was entitled to defend the action on all issues. It would be unfair to allow issue estoppel or res judicata to prevent him from putting forward a full defence.

Statutes, Regulations and Rules Cited:

Canadian Charter of Rights and Freedoms, 1982, ss. 7, 8, 24(2).

Counsel:

Raymond G. Colautti, for the plaintiffs (moving party).

Christopher Parke, for the defendants (responding party).

GRANGER J.:--

NATURE OF THE MOTION

1 The plaintiffs seek partial summary judgment as against all of the defendants for a declaration that their rights under the Canadian Charter of Rights and Freedoms were violated by the defendants. In addition, the plaintiffs seek summary judgment for damages for out of pocket expenses and special damages incurred while defending the prosecution in which their Charter Rights were violated. Furthermore, the plaintiffs seek an order directing a trial or a reference to determine any compensatory, aggravated and punitive damages for malicious prosecution, invasion of privacy, trespass and false imprisonment by the defendants.

OVERVIEW

2 The plaintiffs are married to each other but reside in separate residences. Mr. Smihal resides in the United States while Mrs. Tucker resides in Windsor, Ontario. The defendant Rick DesRosiers ("DesRosiers") embarked on an investigation of the plaintiffs in order to determine if Smihal was a resident of Canada, and if so, did he contravene the Customs Act, R.S.C. 1985, c. 1 (2nd Supp.) by bringing assets into the country without paying duty. The plaintiffs allege that in the course of his investigation, DesRosiers violated their rights under ss. 7 & 8 of the Canadian Charter of Rights and Freedoms by acting outside the scope of his legal authority, seizing confidential and private information belonging to them, conducting warrantless searches and seizures, invading their privacy and wrongfully detaining them. Criminal charges were laid against the plaintiffs and an application to quash the search warrants was brought by their respective counsel. On June 21, 2001 the Honourable Mr. Justice S. Nosanchuk of the Ontario Court of Justice found that the information used by the defendant DesRosiers to obtain the search warrants was false, inaccurate, and misleading and that the searches and seizures were illegal, and in violation of the plaintiffs rights under the Charter of Canadian Rights and Freedoms. The evidence gathered as a result of the search and by invading the plaintiffs right to privacy was excluded because the admission of it in the criminal proceedings would bring the administration of justice into disrepute. Additionally, on October 1, 2001, the Honourable Mr. Justice Nosanchuk made an Order requiring the Crown to return the property seized as a result of the illegal searches, and with no further evidence being offered against either of the plaintiffs the criminal charges were dismissed.

3 The plaintiffs based their claim for partial summary judgment on the doctrine of res judicata and issue estoppel which they claim makes the decision of Justice Nosanchuk dated June 21, 2001 binding on these defendants.

THE FACTS

4 Ms. Tucker resides in Windsor, Ontario and is married to Paul Anthony Smihal.

5 Paul Anthony Smihal alleges that at all material times he resided in the State of Michigan.

6 The defendant, The Attorney General of Canada, is the legal representative of Her Majesty the Queen in right of Canada (the Crown) and the person against whom, proceedings against the Crown may be taken. The Crown is liable for the damages in respect of a tort committed by a servant of the Crown: see: Crown Liability and Proceedings Act, 1985 R.S.C., c. C.50, s. 3 & s. 23.

7 The defendant, DesRosiers, was at all material times a servant of the Crown. He was employed as an investigator for the Canada Customs and Revenue Agency.

8 The defendant, Canada Customs and Revenue Agency, is a Crown agency.

FACTS GIVING RISE TO THIS MOTION

9 In 1998 Smihal decided to store his luxury boat in Canada. Smihal alleges that the storage agreement filled out by the marina operator, incorrectly listed his address as 205 Randolph, Windsor, Ontario as opposed to his actual residence of 28740 Harper, St. Clair Shores, Michigan.

10 The marina report triggered an investigation by the Canada Customs and Revenue Agency, to determine whether or not Smihal was a resident of Canada, and if so, did he contravene the Customs Act by bringing assets into the country without paying the required duty.

11 When Smihal became aware that DesRosiers was questioning the marina about his boat, he thought that DesRosiers was investigating the previous owner of the boat. Smihal telephoned DesRosiers and left him a message indicating that he would be happy to answer any of his questions. DesRosiers did not contact Smihal.

12 Smihal first discovered that it was he and his wife who were being investigated when Canada Customs and Revenue Agency started asking them more questions than usual about their boating vacations and were reluctant to give them a clearance number. The plaintiffs subsequently learned that they were tagged on the Canada Customs computer and that they were being monitored. In addition, the plaintiffs subsequently learned that DesRosiers was picking up the trash which was placed in an closed container behind Ms Tucker's residence at 205 Randolph without a search warrant.

13 On December 1, 1998 DesRosiers prepared an Information and obtained a search warrant pursuant to the Customs Act. On December 2, 1998, approximately twelve (12) agents and employees of the Canada Customs and Revenue Agency and the Crown, together with DesRosiers attended at 205 Randolph with a search warrant and searched the entire house and garage. While the search and seizures at 205 Randolph were being conducted, Canada Customs was simultaneously searching the Westport Marina in LaSalle, Ontario. During the searches property and personal effects owned by the plaintiffs were seized.

14 On December 2, 1998, Smihal retained Dewer Laing a solicitor to arrange to have the seized items returned. Canada Customs issued a Customs Seizure Receipt for the seized items. Due to the value placed on the seized chattels by Canada Customs Smihal was forced to post cash security in the amount of $64,355.56 CDN. He was forced to cash in certain investments in order to raise the necessary funds to obtain release of the seized items.

CRIMINAL CHARGES & HEARING

15 In 1999, criminal charges were laid against the plaintiffs alleging an evasion or attempt to evade payment of duties under the Customs Act, c. 1 (2nd Supp.), possession of imported goods contrary to the Customs Act and making false statements.

16 The plaintiffs each retained a lawyer, who then brought an application to quash the search warrant and have the charges dismissed. The application was heard before Justice S. Nosanchuk, of the Ontario Court of Justice on July 25, 26, October 2, 2000, June 20, and October 1, 2001.

17 Justice Nosanchuk delivered his decision on June 20, 2001 finding that the Informations sworn to obtain the search warrants were misleading, inaccurate, omitted information and without factual foundation, and as a result the searches and seizure were illegal and in violation of the plaintiffs rights under section 8 of the Canadian Charter of Rights and Freedoms. The evidence gathered was excluded under s. 24(2) of the Charter because the admission of it in the proceedings would bring the administration of justice into disrepute.

18 On October 1, 2001, Mr. Justice Nosanchuk made an Order requiring the Crown to return the property seized as a result of the illegal searches. With no further evidence being offered against either of the plaintiffs, the criminal charges were dismissed. The Crown did not appeal the decision of Justice Nosanchuk.

DAMAGES

19 The plaintiffs allege they have spent $195,965.28 in out of pocket expenses, lost income, losses in stock holdings and lost opportunity billings to defend and attend to the criminal proceedings which are as follows:

Legal Fees from Criminal Proceedings:

$102,114.41CDN

2.		Lost income for Paul Smihal:	$11,450.38USD
			(17,747.00CDN)

Lost income for Elizabeth Tucker

$3,456.00CDN

Losses in stock holdings for 2000

$35,042.87CDN

5.		Car rental expense for the seized
		vehicle	$605.00CDN

6.	Lost opportunity billings 200 hrs
	X $185/hr	$37,000.00CDN
		----------------
	TOTAL:	$195,965.28CDN

20 The plaintiffs seek to recover their special damages at this time by way of partial summary judgment. They also seek an Order directing a trial, or a reference, to determine any compensatory, aggravated and punitive damages for the malicious prosecution, invasion of privacy, trespass and false imprisonment. In addition, the plaintiffs seek a declaration that their fundamental right to life, liberty and security of the person, and their right not to be deprived thereof except in accordance with the principles of fundamental justice as guaranteed by s. 7 of the Charter of Rights and Freedoms has been violated by the defendants.

21 The Issues:

Does issue estoppel operate to bar:

i. The Defendants the Attorney General of Canada and Canada Customs and Revenue Agency from re-litigating the finding of Justice Nosanchuk that there was a violation of the plaintiffs s. 8 Charter rights?

ii. The Defendant DesRosiers from putting forward a full defence to all of the facts and issues before the court pursuant to the plaintiffs Statement of Claim?

22 The three requirements for issue estoppel were set forth in Carl-Zeiss-Stiftung v. Rayner and Keeler Ltd. (No. 2), [1967] 1 A.C. 853 and adopted by the Supreme Court in Angle v. Ministry of Natural Resources, [1975] 2 S.C.R. 248. They are:

1) that the same question has been decided; and

2) that the judicial decision which is said to create the estoppel is final; and

3) that the same parties or their privies participated in the earlier litigation.

23 The application of issue estoppel precludes re-litigation of an issue that has been conclusively and finally decided in previous litigation between the same parties or their privies: Grandview (Town) v. Doering, [1976] 2 S.C.R. 621. Issue estoppel also applies to render that decision conclusive in a later action between the parties, notwithstanding that the cause of action may be different. However, issue estoppel only applies if the issues of fact or law in question were decided as a fundamental step in the prior decision: Merck & Co. v. Apotex Inc. (1999), 5 C.P.R. (4th) 363.

24 The Supreme Court of Canada in Maynard v. Maynard, [1951] S.C.R. 346 made it clear that issue estoppel operates to preclude a party from litigating new issues that could have been raised, but were not, at the earlier hearing. In addition a privy of a party is barred by issue estoppel from re-litigating a question that has been decided in the first proceeding.

25 In the case at bar, the defendants seek to re-litigate the issue of Charter breaches while the plaintiffs wish to rely on Justice Nosanchuk's findings of the s. 8 Charter violation. In order for res judicata to operate, the party invoking the estoppel and the party against whom it is invoked must both have been parties to the former proceedings: J. Sopinka, S. Lederman and A. Bryant, The Law of Evidence in Canada, (Toronto: Butterworths, second edition, 1999) at p. 1086.

26 In the case at bar, Justice Nosanchuk's ruling on the s. 8 Charter violation is conclusive. The Attorney-General of Canada and the Canada Customs and Revenue Agency were parties in the criminal proceeding. Therefore, the Attorney-General of Canada and the Canada Customs and Revenue Agency are estopped from attacking the finding by Justice Nosanchuk that there was a s. 8 Charter violation.

27 The Plaintiffs are also seeking a declaration that there was a breach of their s. 7 Charter rights. This issue was not before Justice Nosanchuk and as a result the Attorney-General of Canada and the Canada Customs and Revenue Agency are not estopped from litigating this issue and putting forth a full answer and defence to this claim.

28 Notwithstanding that the Attorney-General of Canada and the Canada Customs and Revenue Agency are estopped from attacking the finding of a s. 8 Charter violation by Justice Nosanchuk these defendants are entitled to put forward a complete defence to the plaintiff's claim for damages pursuant to s. 24(1) of the Charter, arising from the s. 8 Charter violation. Such a violation standing alone does not entitle the plaintiffs to be compensated for damages which they allege they have suffered. In addition to the s. 8 Charter breach, the plaintiffs must demonstrate that there was malice or ill will before the defendant is liable in damages for a Charter breach, which distinguishes this action from the issue and relief sought before Justice Nosanchuk. In Persaud v. Donaldson (1997), 32 O.R. (3d) 349 (Div. Ct.); [1997] O.J. No. 542 Soubliere J. speaking for the court stated:

Consequently, although the warrant was later held to be invalid and quashed and the rights of the plaintiffs violated, both Donaldson, who obtained the warrant, and the officers, who enforced it, were acting in good faith. In particular, there is nothing to support a finding of reckless or intimidating behaviour on the part of the officers. They were enforcing a warrant in the manner in which they were lawfully entitled to do. They were entitled to search in the bedroom of the plaintiffs. In so doing, they did not abuse their powers in a manner which might have attracted personal liability.

The mere failure to disclose sufficient written information in obtaining a search warrant, or the enforcing of a warrant later held to be invalid, will not of itself attract personal liability, at least as where good faith is established. Moore v. Ontario, Ontario District Court, April 4, 1990, Loukidelis D.C.J.; Scorpio Rising Software Inc. v. Saskatchewan (Attorney General) (1986), 46 Sask. R. 230 (Q.B.); Lagiorgia v. R., [1985] 1 F.C. 438, 18 C.R.R. 348 (T.D.); reversed on other grounds by [1987] 3 F.C. 28, 87 D.T.C. 5245 (C.A.).

29 Accordingly the Attorney General of Canada and the Canada Customs and Revenue Agency are entitled to adduce evidence in an attempt to show that there was no breach of the plaintiffs s. 7 Charter rights which would entitle the plaintiffs to relief under s. 24(1) of the Charter. In addition, the Attorney General of Canada and the Canada Customs and Revenue Agency are entitled to adduce evidence to show that there was no lack of malice which would disentitle the plaintiffs to damages pursuant to s. 24(1) of the Charter if thee has been a breach of the plaintiffs s. 8 and/or s. 7 Charter rights. The Attorney-General of Canada and the Canada Customs and Revenue Agency cannot attack the finding of Justice Nosanchuk that there was a breach of the plaintiffs s. 8 Charter rights which resulted in the evidence obtained as a result of such breach being excluded from the anticipated trial pursuant to s. 24(2) of the Charter. As I stated previously the s. 8 Charter breach does not in itself entitle the plaintiffs to monetary damages.

DOES ISSUE ESTOPPEL BAR THE DEFENDANT DESROSIERS FROM DEFENDING HIMSELF REGARDING ANY OF THE ISSUES?

30 The parties in this action are not the same as the parties in the criminal proceedings. In particular the defendant DesRosiers was not a party to the application before Justice Nosanchuk and as a result he cannot be bound by issue estoppel based on being a party to the prior proceedings. The issue is whether he is a privy to the Attorney-General of Canada and/or the Canada Customs and Revenue Agency for whom he worked as an investigator. A privy to a party has been defined as a person who has a community or privity of blood, title or interest with a party. In Jones v. Kindrachuk (1991), 96 Sask. R. 73 (Q.B.) at 76, Lawton J. stated:

For a person to be privy to a party there must be community or privity of blood or title or interest between them. Because of community of interest, employees have been held to be privies of their employer.

31 In my view DesRosiers was neither a party to nor a privy to the proceedings before Justice Nosanchuk. He participated in those proceedings as a witness only. He was not in a position to raise issues or adduce evidence in chief or cross-examine witnesses. His participation as a witness was limited to answering questions put to him by counsel for the plaintiffs. In these proceedings DesRosiers is being sued personally.

32 Even if I am wrong and DesRosiers is a privy to the Attorney-General of Canada and/or the Canada Customs and Revenue Agency it would be unfair to allow issue estoppel or res judicata to prevent DesRosiers from putting forward a full defense to the claim in these proceedings that the plaintiffs s. 8 Charter rights were breached by the actions of this defendant. Special circumstances can preclude the operation of the doctrine of res judicata in some cases. Special circumstances are those that demonstrate that it would be unjust to apply res judicata: Grandview (Town) v. Doering, [1976] 2 S.C.R. 621. Not only was DesRosiers not a party to the proceedings, his participation in the proceedings before Justice Nosanchuk was limited to cross-examination by counsel for the plaintiffs. If DesRosiers is not allowed to litigate all of the issues in his defence, it would lead to injustice as he was not examined in chief by his own counsel and was thereby denied the right to bring forward evidence which could have resulted in a finding that there was not a breach of the s. 8 Charter rights of the plaintiffs. In addition DesRosiers was excluded from hearing the evidence of the plaintiffs by a witness exclusion order.

33 In Minott v. O'Shanter Development Co. (1999), 42 O.R. (3d) 321 (C.A.) the Court of Appeal held that even when the requirements of issue estoppel are otherwise met, a Court will exercise its discretion and refuse to apply it when to do so would cause unfairness or work an injustice. Laskin J.A., for the Court stated at p. 340:

"Issue estoppel is a rule of public policy and, as a rule of public policy, it seeks to balance the public interest in the finality of litigation with the private interest of achieving justice between litigants. Sometimes these two interests will be in conflict, or at least there will be a tension between them. Judicial discretion is required to achieve practical justice without undermining the principles on which issue estoppel is founded. Issue estoppel should be applied flexibly where an unyielding application would be unfair to a party who is precluded from re-litigating an issue.

That the courts have always exercised this discretion is apparent from the authorities. For example, courts have refused to apply issue estoppel in "special circumstances" which include a change in the law or the availability of further material ... and where foreclosing a subsequent civil proceeding would be unfair."

34 Laskin J.A. continued at p. 342-3 stating:

Fourth, the procedural differences between a hearing under the Act and a civil action for wrongful dismissal may cause a court to exercise its discretion against applying issue estoppel. The Restatement (Second) of Judgments sets out several exceptions to the application of issue estoppel (see Restatement, para. 28 "Exceptions to the General Rule of Issue Preclusion"). One exception recognizes that procedural differences in the two proceedings may be a sufficient reason not to apply issue estoppel. Section 28(3) of the Restatement states that "a new determination of the issue is warranted by differences in the quality or extensiveness of the procedures followed in the two courts". Morden A.C.J.O. expressed a similar view in his concurring judgment in Rasanen when he said (at p. 295), "I do not exclude the possibility that deficiencies in the procedure relating to the first decision could properly be a factor in deciding whether or not to apply issue estoppel". In Rasanen itself, Morden A.C.J.O. held that the tribunal procedures were sufficient to apply issue estoppel. Carthy J.A., dissenting on this point, held that they were insufficient.

Procedural differences should be looked at in practical terms. In the present case, Minott did not have a prehearing discovery. Although he had limited formal education, he appeared before the Board of Referees unrepresented, led no evidence, called no witnesses and had no opportunity to build his case through cross-examination. His claim failed because the Board had in its file, and apparently acted on, information from O'Shanter later proved incorrect in the wrongful dismissal action. I do not say that the procedures before the Board of Referees were deficient. They may have been appropriate for the purpose of the Act and for the summary determination of the disqualification period to be made by the Board, but entirely inappropriate for the determination in the wrongful dismissal action of Minott's claim for damages and of O'Shanter's defence of just cause.

35 In my opinion if the issue estoppel or res judicata rule is applied in this case to prevent DesRosiers from making a full answer and defense to the allegation that he breached the s. 8 Charter rights of the plaintiff it would create an injustice. Accordingly for the purpose of deciding this motion I would exercise my discretion and allow DesRosiers to present a full answer and defence to the allegations that he breached the s. 8 Charter rights of the plaintiffs.

36 In addition, for the reasons previously stated DesRosiers is entitled to present a full answer and defense to the allegation that there was a breach of the plaintiffs' s. 7 Charter rights and that the plaintiffs are entitled to damages pursuant to s. 24(1) of the Charter.

THE MOTION

37 A party may move before a judge, for summary judgment on all or part of the claim in the Statement of Claim: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 20.01(1). The purpose of a motion for summary judgment is to secure the most just, expeditious and least expensive determination of the proceeding if the proceeding does not involve a genuine issue for trial; see: Irving Ungerman Ltd. v. Galannis (1991), 4 O.R. (3d) 545 at p. 551; Pizza Pizza Ltd. v. Gillespie, Chicken Inc. (1990), 75 O.R. (2d) 225; ITN Corp. v. ACC Long Distance Ltd. (1992), 9 O.R. (3d) 447 (Gen. Div.).

38 Where the court is satisfied that there is no genuine issue for trial with respect to a claim or defence, the court shall grant summary judgment accordingly: Rules of Civil Procedure, R.R.O. 1990, Reg. 194, Rule 20.04(2). The test is not whether the responding party cannot possibly succeed in a trial, but whether the responding party's case is so doubtful that it does not warrant the consideration by a trier of fact at a future trial. The motions court judge must take a good hard look at the responding party's case, including its overall credibility, to see if they deserve to proceed to trial: Pizza Pizza Ltd. v. Gillespie, Chicken Inc., supra. The appropriate test to be applied on a motion for summary judgment is satisfied when the applicant has shown that there is no genuine issue of material fact requiring trial and, therefore, summary judgment is a proper question for consideration by the court. Once the moving party has made this showing, the respondent must then establish that his claim is a real one with a chance of real success: Guarantee Co. of North America v. Gordon Capital Corp., [1999] 3 S.C.R. 423 at p. 434-435. The Court's function is not to resolve an issue of fact, but rather to determine whether a genuine issue of fact exists: Irving Ungerman Ltd. v. Galanis, supra. On a motion for summary judgment brought pursuant to Rule 20, the parties must put their "best foot forward", and the motions judge is required to take a hard look at the merits of the action: Rogers Cable T.V. Limited v. 373041 Ontario Limited (1994), 22 O.R. (3d) 25 at p. 27-28 (Ont. Ct. Gen. Div). A motions judge hearing a motion for summary judgment should not assess credibility, weight the evidence or draw factual inferences from conflicting evidence or from evidence that is not in conflict when more than one inference is reasonably available. The Court's role is narrowly limited to assessing the threshold issue of whether a genuine issue exists as to material facts requiring a trial. However, the motions judge's consideration of the evidence which constitutes the record is central to determining the existence of a genuine issue in respect of material facts: Transamerica Occidental Life Insurance Company v. Toronto-Dominion Bank (1999), 44 O.R. (3d) 97 at 110 (Ont. C.A.).

39 The position of the plaintiff in seeking partial summary judgment is founded on the application of the doctrine of issue estoppel and/or res judicata which if applicable would establish without the necessity of a trial a breach of the plaintiffs s. 8 Charter rights which according to the plaintiffs would entitle them to monetary damages.

40 In my view the doctrine of issue estoppel and/or res judicata is only applicable to prevent the Attorney-General of Canada and the Canada Customs and Revenue Agency from attacking the finding of Justice Nosanchuk that the s. 8 Charter rights of the plaintiffs had been breached and as a result the evidence obtained as a result of such breach was inadmissible in the criminal proceedings pursuant to s. 24(2) of the Charter. The finding of the s. 8 Charter breach does not by itself entitle the plaintiffs to monetary damages pursuant to s. 24(2) of the Charter. The plaintiffs must establish malice on the part of the defendants before they would be entitled to monetary damages pursuant to s. 24(1) of the Charter.

41 In this case, all of the defendants are entitled to present a full answer and defence on the issue of malice and the plaintiffs' entitlement to damages pursuant to s. 24(1). All of the defendants are entitled to present a full answer and defence to the plaintiffs' claim to damages for an alleged breach of their s. 7 Charter rights. DesRosiers is entitled to defend himself against the allegation that he breached the plaintiffs' s. 8 Charter rights.

42 On the basis of the material available on this motion, there are numerous genuine issues in respect of material facts, which must proceed to trial for a determination.

43 Accordingly, the plaintiffs' motion for summary judgment is dismissed.

44 Counsel may make written submissions on costs within 30 days.

GRANGER J.

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