Thursday, February 5, 2009

Pending Primary Litigation Can an Alleged Defendant Sue For Related but Independent Causes of Action

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"...[18] The issue that lies behind the dispute about the proper characterization of the Plaintiff’s claim is this: What effect should the pending criminal proceedings have on the ability of the Plaintiff to pursue his claim?

[20] These charges of fraudulent manipulation of Livent’s accounting record are the same accusations that the Plaintiff alleges in this action were falsely made against him to the board and others as a result of the conduct of the Defendants in the course of their conspiracy to harm the Plaintiff. A central element of the Plaintiff’s claim to have suffered compensable harm from the accusations is that these accusations were false. It is not apparent how the Plaintiff could make a claim for damages based on these accusations if they were not false.

[21] If the Plaintiffs’ action were to proceed prior to the resolution of the criminal charges, and the Plaintiff were to be successful in this action, and the criminal proceedings were then prosecuted with the result of a conviction, the outcome of the action and the criminal prosecution would, in terms of the proper administration of justice, obviously be incompatible.

[22] It is the possibility of an incompatibility of this kind that provides the rationale for the requirement of a favourable conclusion to the criminal proceedings as a necessary element in a claim for malicious prosecution. As Viscount Dilhorne observed, “The administration of justice would become chaotic if, after the start of a prosecution, declarations of innocence could be obtained from a civil court.”: Imperial Tobacco Ltd. v. Attorney General, [1981] A.C. 718 (H.L.) at 741.

[23] The possibility of the same unacceptable incompatible results would arise if the Plaintiff were to be convicted and then sought to proceed with this action. In those circumstances, the claim in this action could not be sustained, because it is an abuse of process to attempt to re-litigate, in a civil case, the result of a criminal hearing that the plaintiff had a full opportunity to defend. As Lord Diplock said in Hunter v. Chief Constable of the West Midlands Police, [1982] A.C. 529 at 541 (H.L.), it is an abuse of process to engage in:

…the initiation of proceedings…for the purpose of mounting a collateral attack upon a final decision against the…plaintiff which has been made by another court of competent jurisdiction in previous proceedings in which the…plaintiff had a full opportunity of contesting the decision in the court by which it was made.

[24] For this reason, an action complaining of criminal proceedings can only be brought in respect of proceedings resolved in favour of the plaintiff and, if the criminal proceedings have not been resolved in favour of the plaintiff, the action must be struck.

Court of Appeal
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[1] The appellant’s claim, alleging that the defendants conspired to accuse him falsely of fraud, was commenced in the face of on-going criminal proceedings against the appellant in relation to that very fraud. Although the appellant’s claim is cast in terms of conspiracy, the motion judge characterized it as being essentially one of malicious prosecution. He struck the claim on the ground that an essential element, namely, favourable determination of the criminal proceedings, was not pleaded.

[2] Even if the claim is be regarded as one of conspiracy to injure, central to that conspiracy as it is pleaded is the allegation that the appellant was falsely implicated in a fraudulent scheme with which he had been charged prior to bringing this action. We agree with the motion judge that such a claim cannot proceed in the face of the on-going criminal proceedings or in the absence of a determination favourable to the appellant in the criminal proceedings.

[3] Before us, counsel for the appellant argued that within the statement of claim can be read an allegation of a conspiracy to fabricate certain specific evidence and that a cause of action lies even if the appellant is convicted in the criminal proceedings. It is difficult to see how such a claim could be dealt with prior to the determination of the criminal proceedings as it would be impossible to know what, if any, damages the appellant had suffered until he has been acquitted or convicted on the criminal charges.

[4] We need not decide, however, whether such a claim exists in law as even on a broad and generous reading of this detailed statement of claim it simply does not assert this narrower cause of action as a distinct and identifiable claim. The statement of claim is plainly based on the assertion that the respondents falsely accused the appellant of fraud. Even if the narrower and distinct cause of action now advanced in argument exists in law, the “further further amended” statement of claim would have to be entirely recast to plead that cause of action so as to permit scrutiny under Rule 21. Given the history of this matter, there is no basis to give the appellant leave to amend the claim.

[5] As the statement of claim fails to disclose a valid cause of action, ordering that it be stayed pending determination of the criminal proceedings would be inappropriate.

[6] Accordingly, we agree with the motion judge that the claim should be struck out in its entirety as disclosing no cause of action...."


The suggestion here is that if it had been properly pleaded that the defendants conspired "to fabricate certain specific evidence and that a cause of action lies even if the appellant is convicted in the criminal proceedings", it would be an open question under Rule 21 whether that cause action is known to law.

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