Lipsitz et al. v. Ontario et al., (2011) 281 O.A.C. 67 (CA)

• Judge: O'Connor, A.C.J.O., Laskin and MacPherson, JJ.A.
• Court: Court of Appeal (Ontario)
• Case Date: March 28, 2011
• Jurisdiction: Ontario
• Citations: (2011), 281 O.A.C. 67 (CA);2011 ONCA 466

Lipsitz v. Ont. (2011), 281 O.A.C. 67 (CA)

MLB headnote and full text

Temp. Cite: [2011] O.A.C. TBEd. JN.028

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)) v. 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))

(C51330-C51287; 2011 ONCA 466)

Indexed As: Lipsitz et al. v. Ontario et al.

Ontario Court of Appeal

O'Connor, A.C.J.O., Laskin and MacPherson, JJ.A.

June 22, 2011.

Summary:

Dr. Lipsitz sued: (1) the Ontario Crown, two individuals who were Directors under the Independent Health Facility Act during the relevant time period, and two managers of the Independent Health Facility Program; and (2) the College of Physicians and Surgeons of Ontario and nine of its employees or appointees who were involved in the inspections and assessments of Dr. Lipsitz's sleep disorder centres. Dr. Lipsitz alleged that from 2001 to 2007, the defendants engaged in a "closure campaign" and that ultimately he was forced to close or sell all of his sleep disorder centres at "fire sale" prices. He also alleged that the College improperly initiated investigations of his professional conduct under s. 75(a) of the Health Professions Procedural Code. After filing their statements of defence, the defendants moved to dismiss the action or to strike the statement of claim.

The Ontario Superior Court, in a decision reported at [2009] O.T.C. Uned. P09, dismissed the motion, with one exception. The court struck those portions of Dr. Lipsitz's claim relating to the College's investigations of Dr. Lipsitz's professional conduct. The defendants appealed. Dr. Lipsitz cross-appealed. The two main issues on the appeals were: (1) whether the underlying action should be dismissed because the defendants were immune from suit under s. 38.1 of the Independent Health Facilities Act, and (2) whether the underlying action should be stayed as an abuse of process.

The Ontario Court of Appeal dismissed the defendants' appeals and the plaintiff's cross-appeal.

Courts - Topic 7446

Provincial courts - Ontario - Court of Appeal - Jurisdiction - General - The two main issues on these appeals were whether the underlying action should be dismissed (1) because the defendants were immune from suit under s. 38.1 of the Independent Health Facilities Act and (2) as an abuse of process - On a preliminary basis, the plaintiff argued that the appeals should be dismissed because the defendants were denied leave to appeal to the Divisional Court based on the same grounds they now sought to advance - He argued that the doctrines of abuse of process, issue estoppel, res judicata and collateral attack precluded the court from rehearing the same issues - He also submitted that the motion judge's orders were interlocutory - The Ontario Court of Appeal rejected those arguments - The motion judge's orders with respect to the two issues were final in nature and as such were properly appealable to the court - Moreover, the defendants took that position on the argument of the motions for leave to appeal - Nor did the defendants seek leave to appeal the immunity and abuse of process issues to the Divisional Court - Moreover, the portion of the motion judge's order with respect to s. 38.1 that the defendants challenged and their abuse of process arguments were properly appealable to the court - See paragraphs 26 to 42.

Crown - Topic 2803

Crown immunity - General - Immunity under provincial legislation - As part of a motion to summarily dismiss the plaintiff's action, the defendants argued that the claim for compensation was barred by s. 38.1 of the Independent Health Facilities Act, which granted the defendants immunity from paying compensation - The motion judge stated that inspections, investigations and assessments were not accorded statutory immunity - The Ontario Court of Appeal agreed with the defendants that the impugned statement incorrectly narrowed the scope of the protection afforded by s. 38.1 - "[T]he 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. The issue is one of statutory interpretation ... The language in s. 38.1 is straightforward ... [I]f 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 ... The second part of s. 38.1 sets out the types of losses which are shielded by the section ... [I]n general terms, s. 38.1 provides immunity for losses resulting from certain regulatory orders made under the Act. Thus administrative actions ... that lead to an order referred to in s. 38.1 are protected for losses resulting from the order" - See paragraphs 43 to 53.

Crown - Topic 2803

Crown immunity - General - Immunity under provincial legislation - An issue on these appeals was whether the underlying action should be dismissed because the defendants were immune from suit under s. 38.1 of the Independent Health Facilities Act (IHFA) - The Ontario Court of Appeal saw nothing in the context in which s. 38.1 was found or in the purpose of the section or the statutory scheme that suggested an interpretation other than the one that emerged from the ordinary meaning of the language in that section - In considering the context and statutory scheme, the court examined the other section in the Act that provided immunity to individuals and entities, namely, s. 38(1) - Section 38(1) and 38.1 could be read harmoniously - "Read together they create a logical scheme for providing immunity to individuals and entities carrying out functions under the IHFA" - Section 38(1), "a type of umbrella clause", was part of the original IHFA enacted in 1989 - Section 38.1 was added in 1996 - "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" - See paragraphs 56 to 65.

Crown - Topic 4542.1

Actions by and against Crown in right of a province - Capacity of Crown to be sued - Statutory immunity - [See both Crown - Topic 2803 ].

Medicine - Topic 610

Governing bodies - General - Liability - No action clause - [See both Crown - Topic 2803 ].

Medicine - Topic 2118.2

Discipline for professional misconduct - Evidence - Use in civil proceedings - The plaintiff sued, among others, the College of Physicians and Surgeons of Ontario and nine of its employees or appointees who were involved in the inspections and assessments of the plaintiff's sleep disorder centres - The plaintiff alleged that the defendants engaged in a "closure campaign" and that the College improperly initiated investigations of his professional conduct under s. 75(a) of the Health Professions Procedural Code - The defendants moved to dismiss the action or strike the claim - In striking the allegations involving the College's investigations, the motion judge relied upon s. 36(3) of the Regulated Health Professions Act (RHPA), i.e., that no report or document prepared for a proceeding under a health profession Act was admissible in a civil proceeding - The Ontario Court of Appeal dismissed the plaintiff's cross-appeal - It made no sense to interpret s. 36(3) so as to differentiate investigations prompted by external complaints from those triggered by the College itself - As to the plaintiff's argument that the term "proceeding" used in s. 36(3) was limited to proceedings where there was a hearing, had the legislature intended that s. 36(3) be so limited, it would have set out that intention expressly - Further, such an interpretation could lead to undesirable results - The court also rejected the argument that an action should not be struck on the basis of s. 36(3) because such an order would interfere with the trial judge's discretion to decide evidentiary issues - The motion in this case was correctly brought under rule 25.11 - See paragraphs 92 to 115.

Practice - Topic 2233

Pleadings - Striking out pleadings - Grounds - Privilege or immunity - [See first Practice - Topic 5719 ].

Practice - Topic 2239

Pleadings - Striking out pleadings - Grounds - Abuse of process or delay - [See second and third Practice - Topic 5719 ].

Practice - Topic 5719

Judgments and orders - Summary judgments - To dismiss action - The plaintiff claimed that the defendants engaged in a "closure campaign" that ultimately led him to either close or sell his sleep disorder centres at a significant loss - The defendants included the Ontario Crown, two Directors under the Independent Health Facilities Act (IHFA), the College of Physicians and Surgeons, and others engaged in the administration of the IHFA - As part of a motion to summarily dismiss the plaintiff's action, the defendants argued that the claim for compensation was barred by s. 38.1 of the IHFA - The motion judge held that there needed to be a trial to determine what claims, if any, fell outside s. 38.1 - The Ontario Court of Appeal agreed - To the extent that the claimed losses were "suffered as a result of" one or more of the Directors' orders or proposed orders, then s. 38.1 applied to preclude compensation for those losses - It appeared that a large portion of the claimed losses resulted from the regulatory orders covered by s. 38.1 - However, a court would be required to make factual findings and determine if any of the claimed losses resulted from actions other than those protected by s. 38.1 - Those findings could only fairly be made at a trial - "Finally, and very importantly", even if some of the losses were found to fall outside of the protection afforded by s. 38.1, those against whom the losses were claimed would almost certainly be immune from action under s. 38(1) if their actions were found to have been done in good faith - See paragraphs 67 to 76.

Practice - Topic 5719

Judgments and orders - Summary judgments - To dismiss action - The plaintiff claimed that the defendants engaged in a "closure campaign" that ultimately led him to either close or sell his sleep disorder centres at a significant loss - The defendants included the Ontario Crown, two Directors under the Independent Health Facilities Act (IHFA), the College of Physicians and Surgeons, and others engaged in the administration of the IHFA - As part of a motion to summarily dismiss the action, the defendants argued that the action was an attempt to relitigate issues that were the subject of the regulatory decisions, settlement agreements and orders of the Health Services Appeal and Review Board (HSARB) dismissing the appeals - The motion judge rejected the abuse of process argument - The "closure campaign" was not apparent to the plaintiff until long after the appeals had been settled - In any event, the HSARB could not award damages - The Ontario Court of Appeal would not interfere with the motion judge's conclusion that the action should not be dismissed or struck as an abuse of process - However, unlike the motion judge, the court would not preclude the defendants from raising the abuse of process argument at trial - There needed to be a trial to determine whether the settlement agreements should operate to preclude the plaintiff from making the claims raised in his action - It would be open for a court to determine that the plaintiff was precluded from relitigating 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 - Moreover, the fact that the HSARB did not have jurisdiction to award damages was not dispositive of whether the regulatory proceedings could operate as a bar to the civil claim or parts of it - It might be open to a court to bar the relitigation of factual issues if it concluded that those issues were finally determined or could have been determined in the regulatory proceedings - See paragraphs 77 to 88.

Practice - Topic 5719

Judgments and orders - Summary judgments - To dismiss action - The plaintiff claimed that the defendants engaged in a "closure campaign" that ultimately led him to either close or sell his sleep disorder centres at a significant loss - The defendants included the Ontario Crown, two Directors under the Independent Health Facilities Act (IHFA), the College of Physicians and Surgeons, and others engaged in the administration of the IHFA - The defendants moved to dismiss the action on the ground, among others, that the claim was an abuse of process because the regulatory process under the IHFA was the exclusive forum for resolving the issues raised in the civil action - They also argued that the action was a collateral attack on the decisions of the Directors under the IHFA and the orders of the Health Services Appeal and Review Board - The Ontario Court of Appeal stated that those arguments were best left for trial and after it was determined what parts of the claims, if any, were an attempt to relitigate - In the result, the court agreed with the motion judge that the suit not be stayed on the basis of abuse of process - However, unlike the motion judge, the court would not finally determine the abuse of process arguments - Those arguments should remain open at trial - See paragraphs 89 to 91.

Practice - Topic 8984

Appeals - When appeal available - From final judgment or order - [See Courts - Topic 7446 ].

Statutes - Topic 516

Interpretation - General principles - Ordinary meaning of words - [See second Crown - Topic 2803 ].

Statutes - Topic 1201

Interpretation - Construction where meaning is plain - General principles - [See first Crown - Topic 2803 ].

Statutes - Topic 2601

Interpretation - Interpretation of words and phrases - Modern rule (incl. interpretation by context) - General principles - [See second Crown - Topic 2803 ].

Trade Regulation - Topic 6610

Services - Licensing and regulation - Particular services - Independent health facilities - [See first Practice - Topic 5719 ].

Cases Noticed:

Khosa v. Canada (Minister of Citizenship and Immigration), [2009] 1 S.C.R. 339; 385 N.R. 206; 2009 SCC 12, refd to. [para. 50].

Forget v. Sutherland (2000), 134 O.A.C. 117; 188 D.L.R.(4th) 296 (C.A.), appld. [para. 101].

M.F. v. Sutherland - see Forget v. Sutherland.

Statutes Noticed:

Independent Health Facilities Act, R.S.O. 1990, c. I-3, sect. 38.1 [para. 44].

Regulated Health Professions Act, S.O. 1991, c. 18, sect. 36(3) [para. 95].

Counsel:

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.

This appeal was heard on March 28, 2011, before O'Connor, A.C.J.O., Laskin and MacPherson, JJ.A., of the Ontario Court of Appeal. In reasons written by O'Connor, A.C.J.O., the Court of Appeal delivered the following judgment, released on June 22, 2011.