Lexpert magazine features articles and columns on developments in legal practice management, deals and lawsuits of interest in Canada, the law and business issues of interest to legal professionals and businesses that purchase legal services.
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14 LEXPERT MAGAZINE | OCTOBER 2019 THE CATALYST CAPITAL GROUP INC. V VIMPELCOM LTD. ET. AL., 2019 ONCA 354, AFFIRMING 2018 ONSC2471 DECISION DATE: MAY 2, 2019 In e Catalyst Capital Group Inc. v Vim- pelCom Ltd. et. al. (2019 ONCA 354), the Court of Appeal for Ontario dismissed the appeal of the plaintiff, e Catalyst Capi- tal Group Inc., from the judgment of Jus- tice Glenn Hainey of the Ontario Superior Court of Justice (Commercial List) (2018 ONSC 2471). Catalyst argued on appeal that Justice Hainey had erred in dismissing Catalyst's action as an abuse of process. e Court of Appeal held that Justice Hainey had "rightly concluded" that Catalyst's ac- tion was an abuse of process because it was an attempt to re-litigate findings that had been made in previous proceedings arising from Catalyst's failed efforts to purchase WIND Mobile, a Canadian telecommu- nications company, in September 2014. BACKGROUND OF THE CASE In September 2014, a consortium of in- vestors, led by West Face Capital Inc., purchased WIND from its then-owner, VimpelCom Ltd. e transaction was based on an enterprise value for WIND of $300 million. Shortly thereaer, Catalyst amended its statement of claim in a pre- existing lawsuit against West Face to allege that West Face had misappropriated and misused confidential information belong- ing to Catalyst in order to acquire WIND. Specifically, Catalyst alleged that West Face had solicited and obtained Catalyst's confidential information about its regula- tory strategies for WIND from a former employee of Catalyst who had been hired by West Face, and that but for West Face's alleged misuse of this information, Cata- lyst would have acquired WIND. In March 2016, West Face and its co- investors sold WIND to Shaw Communi- cations for $1.6 billion by Plan of Arrange- ment. Catalyst initially sought to block the sale of WIND to Shaw on the basis that Catalyst had claimed a constructive trust over West Face's interest in WIND; however, Catalyst ultimately abandoned this position aer a hearing in the plan of arrangement proceeding before Justice Frank Newbould, in which Justice New- bould expressed skepticism about Cata- lyst's position. Catalyst instead claimed entitlement to all West Face's net profits from the transactions. Catalyst's first action proceeded to tri- al in June 2016. Six days before the trial commenced, Catalyst launched a second action concerning its failure to acquire WIND. In this second action, Cata- lyst alleged that its efforts to purchase WIND had been thwarted – not because of any leaked confidential information from its former employee, but because the consortium of investors led by West Face had conspired together with Vim- pelCom's financial adviser, UBS Securi- ties Canada Inc., to induce VimpelCom to breach its exclusivity and confiden- tiality obligations to Catalyst. Catalyst later amended this second claim to assert damages of $1.3 billion, which Catalyst asserted was the total net profits to all of the consortium members. Every claim asserted by Catalyst against West Face in the first action was dismissed by Justice Newbould in August 2016 fol- lowing the conclusion of trial (see e Catalyst Capital Group Inc. v Moyse et. al., 2016 ONSC 5271). Justice Newbould also subsequently awarded West Face its costs on a substantial indemnity basis, total- ling $1,239,965 (see e Catalyst Capital Group Inc. v Moyse et. al., 2016 ONSC 6285). In February 2018, the Ontario Court of Appeal dismissed Catalyst's ap- peal of Justice Newbould's decision on the merits, from the bench and without the need for oral submissions from counsel to West Face. e Court of Appeal also sub- sequently dismissed Catalyst's motion for leave to appeal Justice Newbould's costs award, and it awarded West Face a further $200,000 for its costs of the appeal (see e Catalyst Capital Group Inc. v Moyse et. al., 2018 ONCA 283 and e Catalyst Capi- tal Group Inc. v Moyse et. al., 2018 ONCA 447). Catalyst's subsequent application to the Supreme Court of Canada for leave to appeal from the Ontario Court of Ap- peal's decision was dismissed with costs on March 28, 2019. At the same time that Catalyst was pur- suing the appeal of its first action concern- ing WIND, it continued to maintain its right to pursue the second action. MATTER SIGNIFICANCE AND GUIDANCE On April 18, 2018, Justice Hainey deter- mined that this second lawsuit was essen- tially an attempt to re-litigate the same facts and issues that had previously been decided by Justice Newbould in the first such claim between Catalyst and West Face. On this basis, Justice Hainey dismissed the claim against West Face and all of the other de- fendants, relying on the doctrines of issue estoppel, cause of action estoppel and abuse of process. In reaching these conclusions, Justice Hainey noted that Catalyst's second lawsuit was "an attempt to impose a new legal theory of wrongdoing on the same facts," and that Justice Newbould's findings in the first action, including that Catalyst would never have acquired WIND regard- less of what West Face did, were determina- tive of the second action regardless of the al- leged wrongdoing (see e Catalyst Capital Group Inc. v VimpelCom Ltd. et. al., 2018 ONSC 2471). Ontario's Court of Appeal dismisses an appeal by The Catalyst Capital Group Inc. and the country's highest court dismisses the copyright class action brought by Ontario land-surveyors against the online, land-registry system Teranet. BIG SUITS RECENT LITIGATION OF IMPORTANCE LITIGATION SNAPSHOT