Ontario court refuses to award damages previously decided in binding arbitration

Plaintiff's claim amounts to abuse of process, court says

Ontario court refuses to award damages previously decided in binding arbitration

The Ontario Superior Court of Justice has found that a civil suit filed by a homeowner against entertainment companies amounted to an abuse of process as it sought to relitigate damages previously decided in a binding arbitration.

In Doria v. Warner Bros. Entertainment Canada Inc. et al., 2022 ONSC 4454, the plaintiff rented out his home to Renraw Production Services Inc. in 2018 to film a television series. The rental period was three days in exchange of $27,500. During the course of the filming, the family room floor was scratched.

The plaintiff commenced arbitration against Renraw and its insurer, Allianz Global Risks US Insurance Company, seeking damages of over $680,000 in relation to the scratches. The arbitrator awarded him $49,668. The plaintiff applied with the Superior Court to set aside the arbitrator’s award. However, the plaintiff’s application was dismissed.

The plaintiff then brought a new action to seek damages of over $500,000 for the scratched floor. He argued that he was seeking damages different from those claimed in the arbitration because the defendants in the new action − Warner Bros. Entertainment Canada Inc., Warner Bros. Television Group, and Time Warner Inc. − were different from those in the arbitration.

The defendants moved to strike the plaintiff’s claim on the basis that it amounted to an abuse of process since it sought to relitigate damages previously decided in their binding arbitration.

In its decision, the Superior Court granted the motion and dismissed the claim as an abuse of process.

The plaintiff argued that he had the right to bring the action despite the earlier arbitration because s. 139 of the Courts of Justice Act allowed him to bring a subsequent proceeding for the same or similar relief. The court disagreed.

“I do not read s. 139 as broadly as that. While s. 139 does contemplate the existence of duplicative litigation, it must be read together with s. 138, which provides that as far as possible, multiplicity of legal proceedings shall be avoided,” Justice Markus Koehnen wrote.

According to the court, there are several circumstances in which s. 139 would properly allow duplicative litigation. These are:

  • The plaintiff has obtained judgment in a first action against one defendant but has been unable to recover;
  • The plaintiff has settled against one defendant but has pursued another defendant in a subsequent action to claim the difference between the settled amount and the actual loss;
  • The plaintiff has not succeeded in a first action against a first defendant but has a valid claim against another party not involved in the first proceeding.

“The case before me is, however, different,” Justice Koehnen wrote. “The plaintiff was able to pursue the full scope of any damages it wanted in the arbitration.”

The court found no evidence suggesting that there was a limit on the amount for which Renraw could be held liable or the plaintiff wanted to pursue a claim that was somehow precluded by the contract between himself and Renraw or by any limitation in the arbitration process. Thus, the plaintiff’s full claim was adjudicated upon.

Moreover, the court noted that bringing a second claim constituted an abuse of process even if it was against a different defendant.

“The issue here is not the identity of the defendant, but the fact that the arbitrator considered the full amount of the plaintiff’s claim but awarded the plaintiff substantially less than he asked for,” Justice Koehnen wrote.

The court believed that the plaintiff did not like the result and now wanted to bring a second action, hoping that a different adjudicator dealing with the same claim would provide a higher damage award than the arbitrator did.

Allowing the plaintiff to bring a new claim would violate principles of judicial economy, consistency, finality, and the integrity of the administration of justice, which the doctrine of abuse of process is designed to safeguard, the court concluded.

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