Crosby v. Fisher, 2003 NSSC 057

IN THE SUPREME COURT OF NOVA SCOTIA Citation: Crosby v. Fisher, 2003 NSSC 057 Date: 20030401 Docket: SH 150840 Registry: Halifax Between: Howard Crosby Plaintiff v. Sterling Fisher Defendant Judge: The Honourable Justice Arthur J. LeBlanc Heard: January 29, 2003, in Halifax, Nova Scotia Counsel: Mr. Bruce Outhouse and Mr. Lester Jesudason for the Plaintiff Mr. Sterling Fisher, on his own behalf

By the Court: I. Howard Crosby, a lawyer, applies for a stay of proceedings of the counterclaim filed by Mr. Fisher, an airline pilot, under CPR 14.25 on the basis that the counterclaim is res judicata , vexatious or frivolous, as abuse of process, or fails to disclose a reasonable cause of action. Background II. Mr. Fisher retained Richard Murtha, a lawyer, to initiate an action against two medical doctors. Mr. Murtha is a member of the Nova Scotia Barristers Society. In the course of these proceedings, Mr. Fisher filed a complaint against Mr.

Murtha with the Nova Scotia Barristers Society (the “Murtha Complaint”). Mr. Crosby, represented Mr. Murtha in the complaint proceedings. III. Mr. Fisher, represented by William Leahey, commenced a lawsuit against Mr. Crosby on May 29, 1966, S.H. No. 128736 (the “Fisher Action”), alleging defamation in that Mr. Crosby used certain confidential information provided to Murtha in making certain representations which he alleges impaired his career as airline pilot. Mr. Crosby entered a defence to this lawsuit and was represented throughout by Bruce Outhouse, Q.C. In addition to the lawsuit, Mr.

Fisher filed a complaint against Mr. Crosby with the Nova Scotia Barristers Society. The second complaint was eventually dismissed or not proceeded with. Eventually, Mr. Fisher made a complaint against Mr. Leahey to Nova Scotia Barristers Society and Mr. Leahey’s withdrawal as counsel for Fisher was approved by an Order of the Supreme Court taken out October 15, 1997. IV. During the period Mr. Leahey represented Fisher, Mr. Outhouse made a written offer to settle the Fisher-Crosby lawsuit on August 5, 1997 by agreeing to dismissal of the statement of claim without costs (the “August 1997 Offer”). V. Mr.

Fisher, though represented by Mr. Leahey, maintains that he did not receive a copy of the offer to settle and this was not communicated to him by Mr. Leahey while he was the solicitor of record. Mr. Richard Bureau became the solicitor of record for Fisher and a Notice of Change of Solicitor was filed on November 26, 1997 . Mr. Fisher also alleges that a copy of offer to settle was not included in the file material released by Mr. Leahey to Mr. Bureau. Mr. Fisher notified Mr.

Outhouse by letter of September 11, 1998 that he had only become aware of the Offer to Settle of August 1997 at a discovery held in April 1998 when Mr. Fisher raised the issue of a settlement without further costs. VI. On January 26, 1998 , Mr. Bureau, on behalf of Mr. Fisher contacted Mr. Outhouse offering to settle the Fisher-Crosby matter and seeking mutual releases from both Mr. Crosby and Mr. Fisher on the issues between the parties. This proposal was not acted upon and there appears to be no issue about this. VII. On September 11, 1998, Mr. Fisher wrote directly to Mr.

Outhouse indicating that he was prepared to accept the August 1997 offer claiming that he was “accepting your client’s offer in good faith and as far as I am concerned the Fisher-Crosby matter is now history.” VIII. Mr. Fisher wrote a second letter to Mr. Outhouse on September 11, 1998 formally accepting the August 1997 offer with no further financial costs to either party. Mr.

Fisher stated that he was “accepting your client’s offer in a spirit of, ‘good faith and good intentions’ and as such I will be expecting no further confrontations, or interference in my personal life, or career, on the part of your client, Mr. Howard E. Crosby. With this, I will not be considering the FISHER v. CROSBY to now be over, thank you.” IX. Mr. Outhouse sent a copy of these letters to Mr. Richard Bureau by letter of September 15, 1998 and also enclosed a Consent Order asking Mr. Bureau to consent to it. X. Apparently, on learning of the letter to Mr. Bureau, Mr. Fisher directed a letter to Mr.

Outhouse on September 19, 1998 indicating that Mr. Bureau had been dismissed from the matter and that there was no further need to direct any matters to him pertaining to the Fisher-Crosby matter. Mr. Fisher reminded Mr. Outhouse that he had accepted the offer of August 5, 1997 and as far as he was concerned the Fisher v. Crosby matter was over. XI. Mr. Outhouse sent copies of Mr. Fisher’s two September 11, 1998 and September 19, 1998 letter and a draft order incorporating the terms of the settlement to Justice Suzanne Hood on September 22, 1998 requesting that Justice Hood initial the Order

dismissing the Fisher v. Crosby matter. The order was granted and returned to Mr. Outhouse and issued by the Prothonotary on September 25, 1998 (the “Dismissal Order”). XII. Mr. Crosby filed a statement of claim against Mr. Fisher October 9, 1998 for a claim of defamation alleging that he had been defamed as a result of newspaper

article and the allegations contained in the complaint to the Nova Scotia Barristers Society (the “Crosby Action”). Mr. Crosby amended the statement of claim on April 15, 1998. A defence to the amended statement of claim was filed on September 22, 1999 . Mr. Fisher filed a counterclaim to the Crosby action on February 7, 2000 (the counterclaim”) and a defence to the counterclaim was filed on February 15, 2000 pleading that the counter claim was res judicata and beyond the limitation period in the Limitation of Actions Act . Mr. Fisher filed a Rebuttal/Defence to the defence on February 21, 2000 .

Crosby filed a further amended statement of claim against Fisher pursuant to an Order of December 10, 2001 . XIII. At the hearing, Mr. Fisher acknowledged that but for the Crosby action filed against him, the counter claim which he filed against Mr. Crosby would not have materialized. XIV. Mr. Fisher claims that the counterclaim is more specific than the original statement of claim in the Fisher action. XV. The issue to be determined is whether the plea of res judicata applies or whether the counterclaim is otherwise frivolous and vexatious, an abuse of process, or fails to disclose a cause of action?

Counterclaim as Statement of Claim XVI. Civil Procedure Rule 16 sets out the manner in which a court is to treat a counterclaim. XVII. CPR 16.01 states that 16.01.

(1) Where a defendant has a claim against a plaintiff in respect of any cause of action, whenever and however arising, he may, instead of bringing a separate proceeding , make a counterclaim in respect of the claim. [emphasis added] XVIII. CPR 16.03 states that a counterclaim is a “separate proceeding” and sets out the powers a court may exercise in the context of a counterclaim. XIX. CPR 16.04 provides for the application of the Civil Procedure Rules to counterclaims: 16.04.

The provisions of these Rules shall apply, with any necessary modification, to a counterclaim as if the counterclaim were a statement of claim and the defendant making it, the plaintiff, and to the defence to the counterclaim, as if it were a defence and the party making it, a defendant. [emphasis added] XX. CPR 16.01 and CPR 16.04 make it clear that a counterclaim is not merely a response to the statement of claim in the initial proceeding. It is a separate cause of action. Lever v. Positronic Software Inc. , [1996] N.S.J. No. 177 at para. 17 (S.C.) .

For a counterclaim to be made, it must be capable of being advanced as a claim in its own right. The Civil Procedure Rules, including CPR 14.25 and res judicata , apply to a counterclaim as if it was an independent statement of claim.

Res Judicata XXI. In Hogue v. Montreal Trust Co. of Canada (1997), 1997 NSCA 153 (CanLII) , 162 N.S.R. (2d) 321 ( C.A. ) , Cromwell J.A. explained the nature of res judicata : Res judicata has two main branches: cause of action estoppel and issue estoppel. They were explained by Dickson, J. (as he then was) in Angle v. M.N.R. (1974), 1974 CanLII 168 (SCC) , 47 D.L.R. (3d) 544 at 555 : ....The first, "cause of action estoppel", precludes a person from bringing an action against another when that same cause of action has been determined in earlier proceedings by a Court of competent jurisdiction. .....

The second species of estoppel per rem judicata is known as "issue estoppel", a phrase coined by Higgins, J., of the High Court of Australia in Hoysted et al. v. Federal Commissioner of Taxation (1921), 1925 CanLII 607 (UK JCPC) , 29 C.L.R. 537 at pp. 560-1 : I fully recognize the distinction between the doctrine of res judicata where another action is brought for the same cause of action as has been the subject of previous adjudication, and the doctrine of estoppel where, the cause of action being different, some point or issue of fact has already been decided (I may call it "issue- estoppel").

Res judicata is mainly concerned with two principles. First, there is a principle that "... prevents the contradiction of that which was determined in the previous litigation, by prohibiting the relitigation of issues already actually addressed." : see Sopinka, Lederman and Bryant, The Law of Evidence in Canada (1991) at p. 997. The second principle is that parties must bring forward all of the claims and defences with respect to the cause of action at issue in the first proceeding and that, if they fail to do so, they will be barred from asserting them in a subsequent action.

This "...prevents fragmentation of litigation by prohibiting the litigation of matters that were never actually addressed in the previous litigation, but which properly belonged to it.": ibid at 998. Cause of action estoppel is usually concerned with the application of this second principle because its operation bars all of the issues properly belonging to the earlier litigation. ..... Res judicata requires that the previous court decision be final and between the same parties or their privies. XXII. There is no dispute that the parties to the Fisher action and the counterclaim are the same.

The facts of both claims must be reviewed to determine if they both arise from the same cause of action, or alternatively, whether issue estoppel applies to any part of the counterclaim. Finally, the Dismissal Order, and the correspondence between the parties which led to that order, must be reviewed to determine whether the common causes of action, if any, were intended to be covered under its terms. The Fisher Action and Crosby Action Counterclaim Compared XXIII. The comparison of the two actions is summarized in the following chart.

References to the appropriate paragraphs of the statement of claim or counterclaim are provided after a description of the allegations which form the basis for the claims. The Fisher Action 1 ) 10 days after the filing of the Murtha Complaint, Mr. Fisher was suspended and examined by a medical officer. He was told by the medical officer that Mr. Crosby had called the Ministry of Transport and stated that Mr. Fisher was mentally ill and unfit to fly. Mr.

Crosby has continued to make these allegations to government officials since November 1995. (Paras. 6, 9); An unknown individual requested that medical documents be placed on Mr. Fisher’s Transport Canada file. (Tab 25 of Mr. Fisher’s List of Documents) 2 ) As implied above, Mr. Crosby’s actions were the result of the filing of the Murtha Complaint. (Para. 13) 3 ) On March 15, 1996, Mr. Crosby used confidential medical information, obtained from Richard Murtha, in an attempt to have Mr. Fisher diagnosed as unfit to fly. (Paras 10, 12)

The Crosby Action Counterclaim 1) Within days of the filing of the Murtha Complaint in November 1995, Mr. Crosby called Transport Canada , Civil Aviation Authority, identified himself and stated that Mr. Fisher was mentally ill and should not be flying. (Paras. 34.0-34.5); Mr. Crosby requested that medical information in his possession be placed on Mr. Fisher’s Transport Canada file. (Para. 36.0, 36.2) 2) As implied above, Mr. Crosby’s actions were the result of the filing of the Murtha Complaint. (Paras. 34.3, 36.1, 37.3, 39.0(b)) 3) Mr.

Crosby was in possession of private and confidential medical information because of his relationship/partnership with Richard Murtha; this information was used by Mr. Crosby. (Paras. 35.0-35.3; 35.7-35.8, 41.0(d)) 4 ) Mr. Crosby contacted Canadian Airlines staff, as well as the President of the company, in order to disrupt Mr. Fisher’s relationship with his employer. (Paras. 38.0-38.2) 5 ) A list of confidential medical documents have been filed by Mr. Crosby in this action and the previous Court of Appeal application (C.A.

No. 129341) pertaining to disciplinary proceedings before the Nova Scotia Bar Society. (Para. 35.2) 6 ) That the above was done with the intent to defame Mr. Fisher. (Paras. 39.0(d), 40.0(a),(b), (c), (e), (f)) 7 ) Mr. Fisher claimed damages based on defamation and interference with his career. (Paras. 41.0(a), (b), (c)) 4) Mr. Crosby made representations to officials connected with his employer, Canadian Airlines, to the effect that Mr. Fisher was unfit to operate an aircraft. (Para. 11) 6) That the above was done with the intent to defame Mr. Fisher. (Paras. 6-9, 13, 14, 15) 7) Mr.

Fisher claimed damages based on defamation and risk of loss of employment. (Paras. 17, 18)

I. Mr. Fisher has admitted that the basis for the counterclaim is substantially the same as the basis for the Fisher action. He made these admissions during his discovery, as cited in Mr. Outhouse’s brief of November 28, 2002, and before this Court during the hearing of this application. II. While the counterclaim provides some factual details not included in the Fisher action, it is apparent that the counterclaim is based on essentially the same cause of action which underlay the Fisher action . Res judicata applies to all of the paragraphs of the counterclaim referred to in the chart above. III.

Even if the listing of the confidential medical documents does constitute a new cause of action, which I do not make a finding on either way, it is essentially bound to the facts which gave rise to the Fisher action and was contemporaneous with that action, and would thus be barred by virtue of issue estoppel. IV. While I have found that res judicata applies to the majority of the counterclaim, before those paragraphs can be struck it must be determined whether the causes of action were intended by the parties to be conclusively dealt with by the Dismissal Order. V.

In determining whether a dismissal order was intended to cover the matters which would otherwise be subject to res judicata , the court must look to any agreements, correspondence or releases leading to its entry; Spender (Guardian ad litem of) v. Spender , 1999 CanLII 6548 (BC SC) , [1999] B.C.J. No. 910 at para. 20 (S.C.) . VI. There were no releases obtained by either side in this case. Mr. Bureau had requested a release from Mr. Crosby in January of 1998, but there is no evidence before me to indicate that this request was responded to by Mr. Crosby or Mr. Outhouse. VII.

The Dismissal Order itself contains no details and simply states that the August 1997 Offer was accepted by the plaintiff and that the action was dismissed without costs to either party. VIII. The August 1997 offer simply states that “[the] Defendant offers to settle your claim against him on the basis that same be dismissed without costs to either party.” I believe that Mr. Crosby and Mr. Outhouse intended this offer to cover all causes detailed in the statement of claim of the Fisher Action. IX. Also, Mr.

Fisher’s two letters of September 11, 1998 leave no doubt that the causes of action detailed in the Fisher action statement of claim were intended by both parties to be concluded under the terms of the dismissal. Mr. Fisher stated that he considered that the acceptance of the offer meant that the Fisher action was “over”, and that there would be no further “confrontations” over these issues. X. The August 1997 offer and Mr.

Fisher’s letters of September 11, 1998 are sufficient to indicate that both parties intended the causes of action detailed in the Fisher Action statement of claim to be concluded by the Dismissal Order. Therefore res judicata applies to the counterclaim and the following paragraphs are struck out based on res judicata : 34.0-34.5, 35.0-35.3, 35.7-35.8, 36.0-36.2, 37.3, 38.0-38.2, 39.0(b), 39.0(d), 40.0(a)-(c), 40.0(e)-(f), 41.0(a)-(d). CPR 14.25 (1)(a) & (

b) XI. The portions of the counterclaim which have survived the res judicata challenge must also be reviewed to determine whether they plainly and obviously disclose no reasonable cause of action, under CPR 14.25(1)(a), or are scandalous, frivolous or vexatious, under CPR 14.25 (1)(b). CPR 14.25 XII. Civil Procedure Rule 14.25 provides the basis upon which an application may be made to strike pleadings:

14.25.

(1) The court may at any stage of a proceeding order any pleading, affidavit or statement of facts, or anything therein, to be struck out or amended on the ground that, (

a) it discloses no reasonable cause of action or defence; (

b) it is false, scandalous, frivolous or vexatious; (

c) it may prejudice, embarrass or delay the fair trial of the proceeding; (

d) it is otherwise an abuse of process of the court; and may order the proceeding to be stayed or dismissed or judgement to be entered accordingly. CPR 14.25 (1)(a): No Reasonable Cause of Action XIII. Under a CPR 14.25 (1)(

a) challenge, the court must determine whether, after accepting the stated facts as true, it is plain and obvious that the statement of claim discloses no reasonable cause of action. Hunt v. Carey Canada Inc . 1990 CanLII 90 (SCC) , [1990], 2 S.C.R. 959 at para. 33 ; Future Inns Canada Inc. v. Labour Relations Board (N.S.) et al. (1999), 1999 NSCA 94 (CanLII) , 179 N.S.R. (2d) 213 at para. 28 ( C.A. ) . XIV. The remainder of the counterclaim, without the paragraphs struck due to res judicata , do not disclose a reasonable cause of action; Paragraphs 30.0 to 33.0 are merely

preamble statements by Mr. Fisher regarding the limited time in which he had to prepare the counterclaim. Paragraphs 35.4 and 35.5, as discussed above with regard to res judicata , only disclose a cause of action against Richard Murtha, not against Mr. Crosby. Paragraphs 39.0(

a) and 39.0(

c) comprise statements to the effect that the Crosby Action is “nothing more than an ongoing continuation of the campaign of harassment, abuse and intimidation” against Mr. Fisher and that the damages claimed by Mr. Crosby are evidence of this harassment. These statements form a response to Mr. Crosby’s allegations of defamation, and do not rise to the level of an independent cause of action in and of themselves. Similarly, paragraphs 40.0(a), (b), (c), (e), and (f), aside from the aspects discussed above in the context of res judicata , are simply responses to Mr.

Crosby’s claims for damages listed in his statement of claim. They do not form or support an independent cause of action. XV. All of the above paragraphs of the statement of claim should be struck as disclosing no reasonable cause of action, pursuant to CPR 14.25(1)(a). CPR 14.25 (1)(b): vexatious proceedings XVI. The characteristics of a vexatious proceeding include: 1) an action brought to determine an issue which has already been determined by a court of competent jurisdiction; and 2) grounds and issues raised in previous proceedings are rolled forward into subsequent actions and repeated and supplemented.

In this way, a challenge based on the vexatious nature of the pleadings is similar to a challenge based on res judicata . Sherman v. Giles (1994), 1994 NSCA 226 (CanLII) , 137 N.S.R. (2d) 52 at para. 17 ( C.A. ) . XVII. For the reasons discussed above regarding res judicata , in reference to the same paragraphs discussed in that section, I find

that Mr. Fisher’s pleadings in the counterclaim are repetitious of those previously put forward in the Fisher action. Those prior claims having been conclusively dismissed under the Dismissal Order of Justice Hood, Mr. Fisher’s re-pleading is vexatious and should be struck under CPR 14.25 (1)(b). Extending the terms of the Dismissal Order XVIII. Mr.

Fisher has maintained that his use of the phrase “I will be expecting no further confrontations, or interference in my personal life, or career” constitutes evidence that any further claims not covered in the Fisher Action should also be considered as barred by the Dismissal Order (Crosby Action Statement of Defence, para. 20(f)). Essentially, he submits that this statement constitutes a release from Mr. Crosby and an additional term to the August 1997 Offer. With deference, I cannot agree. XIX. I have seen no evidence that it was the intent of both parties that future claims by Mr. Crosby against Mr.

Fisher be disposed of through the consent order. Spender (Guardian ad litem of) v. Spender , supra , at para. 25 . XX. Mr. Bureau had suggested a release in January 1998; this offer was not accepted by either Mr. Crosby or Mr. Outhouse. Mr. Fisher then accepted the August 1997 offer, as it was proposed, on September 11, 1998 . While I do believe that Mr. Fisher thought that this brought any related matter to a close, his post-acceptance statement to that effect cannot constitute an additional term to the Dismissal Order. As stated in the Dismissal Order, and accepted by Mr. Fisher and Mr.

Crosby, the dismissal was effective according to the terms of the August 1997 offer; that offer did not contain any release. XXI. If Mr. Fisher had been represented by counsel, perhaps that counsel would have insisted on an express release from Mr. Crosby. However, Mr. Fisher had dismissed Mr. Bureau prior to accepting the offer, and in his letter of September 19, 1998, he had instructed Mr. Outhouse not to send any further correspondence to Mr. Bureau. XXII. Mr. Fisher’s unilateral statement, made after the acceptance of the August 1997 Offer, did not constitute a release of Mr.

Crosby’s right to launch a future action related to the same chain of events. Conclusion XXIII. The application to strike the counterclaim is allowed, based on an application of res judicata and CPR 14.25 (1)(a) & (b). XXIV. Paragraphs 34.0-34.5, 35.0-35.3, 35.7-35.8, 36.0-36.2, 37.3, 38.0-38.2, 39.0(b), 39.0(d), 40.0(a)-(c), 40.0(e)-(f), and 41.0(a)- (

d) of the Counterclaim all duplicate matters raised in the Fisher Action, and were intended to be conclusively disposed of by the Dismissal Order of Justice Hood. XXV. These paragraphs are also vexatious and should be struck under CPR 14.25 (1)(b). XXVI. Paragraphs 30.0-33.0, 35.4-35.5, 39.0(a) & (c), and 40.0(a), (b), (c), (

e) and (

f) all plainly and obviously disclose no independent cause of action against Mr. Crosby and are struck under CPR 14.25 (1)(a). XXVII. Despite Mr. Fisher’s belief that all future actions by either party were barred by virtue of his September 11, 1998 letter, this letter did not constitute a release on the part of Mr. Crosby and did not expand the terms of the August 1997 offer which Mr. Fisher had accepted. XXVIII. Accordingly, the Crosby Action counterclaim is struck in its entirety. I award costs in the amount of $500 payable in the cause in any event to the Applicant.

J.