Are British litigants bound by Ontario judgments? When issue estoppel isn't the issue

Rules of Engagement: what
every trial lawyer must know
It all seems a long time ago now, and the IPKat could have forgotten about this entirely -- but for the fact that it touches on estoppel.  There are various species of estoppel. Some effectively prevent an action from succeeding, while others can even prevent an action being heard on the merits.  The IPKat's thoughts on the subject were awakened by the recent ruling of the Court of Appeal for England and Wales in Merck Canada v Sigma [an unusual case on whether, inter alia, the owner of a patent and a supplementary protection certificate was estopped by its own inertia from subsequently bringing infringement proceedings: see this post from yesterday's The SPC Blog]. It was then that this Kat remembered that he had earmarked another estoppel case for the weblog -- this time on issue estoppel -- in the form of Seven Arts Entertainment Ltd v Content Media Corporation Plc & Others [2013] EWHC 588 (Ch) .Seven Arts is a Chancery Division, High Court for England and Wales, decision of Mr Justice Sales which dates back to 13 March.  Sales J is not a regular IP judge, but nor is he a stranger to this weblog. Back in March 2008, as a mere QC sitting as a Deputy Judge of the same court, he presided over the slightly mysterious Dr Snuggles case.

What happened here was that two groups of companies -- the Hoffman group and the Canwest group -- had worked together to produce motion picture films which included An American Rhapsody, The Believer and Rules of Engagement.  Since 2002 there had been extensive litigation in Canada and the United States arising from a contractual dispute between the two groups. In 2005, the Canwest companies assigned their rights in the films to the defendant in this action, Content Media. In 2011 the companies in the Hoffman group obtained summary judgment in Ontario, Canada, against various Canwest companies, plus a declaration that they owned the US copyright to the films. The Hoffman companies assigned their rights in respect of the films to the claimant in these proceedings, Seven Arts, which then declared itself to be the owner of the copyright.

In an action for copyright infringement in which it applied for summary judgment, Seven Arts submitted that it was entitled to rely upon the doctrine of issue estoppel because there was privity of title or estate between Content Media and the Canwest companies against whom the Ontario judgment was given, and that Content Media was bound by the Ontario judgment unless it could show that it qualified as Equity's darling and had no notice of the litigation affecting the title to the films at the time of the assignment. Alternatively, said Seven Arts, there was privity of interest between Content Media and those companies in relation to the subject matter of the Ontario proceedings.

Sales J refused the application for summary judgment. Why?

* For an issue estoppel to arise in the English courts by reference to a judgment of a court in another jurisdiction, the claimant had to show not only that the requirements to establish an issue estoppel according to the English law were satisfied, but also that the issue in question would be treated as res judicata according to the law of the foreign jurisdiction.  But here Content Media had a good arguable case that the Ontario judgment would not be treated as res judicata against it even under the law of Ontario. Where an issue of foreign law arose in English proceedings, the court had to have regard to expert evidence both as to the general principles or legal framework governing the case under foreign law and as to how a court in that foreign jurisdiction would apply those principles or framework. This meant that a trial would be necessary so that the differences between the views of expert witnesses could be explored in detail before the trial court could decide whether that defence was established.

* Issue estoppel was not applicable on the grounds of privity of title or estate between Content Media and the Canwest companies against whom the Ontario judgment had been given. It was common ground that a person taking a purported assignment of property, whether real or personal, was bound by an earlier judgment of a relevant court which established that the assignor did not have title to assign. However, the question here was whether the assignee would also be bound where there was no judgment against the assignor, but merely pending legal proceedings in relation to his right to the property, it being established that, in relation to assignments of personal property, as compared with real property, an assignee would not be bound by any later judgment obtained against the defendant in those proceedings.

* The doctrine of issue estoppel was not governed only by equitable principles --it was a doctrine common to the courts of law and equity. Accordingly Content Media did not need to show that it qualified as Equity's darling and had no notice of the litigation affecting the title to the films at the time of the assignment in order to escape being bound by the Ontario judgment. A person who claimed title to property in issue in such litigation had available a simple way of seeking to bind the assignee by a judgment in those proceedings, by joining him as a party in the litigation.

* There was no privity of estate or interest between the Canwest companies which had been sued in the Ontario action and Content Media in relation to the Ontario judgment. This was because the principle of issue estoppel between persons who were not parties to the previous litigation applied only on exceptional facts which did not exist in this case.

* Nor had Seven Arts succeeded in showing that there was a relevant identity of issue between the matters determined in the Ontario judgment and the claims it asserted in the English and Welsh proceedings.

One thing about this judgment, says the IPKat, is that it reminds us that, however competent we are in the field of IP law, disputes and actions may be effectively disposed of by reference to issues of general law, of which issue estoppel and privity of estate are but two.  Merpel says, it's good to be able to spell 'Hoffman' with just one 'n' and not get that sinking feeling of having mis-spelled it ...

Lord Hoffmann on the IPKat here
An American Rhapsody here
Bohemian Rhapsody here and, if you admire Liverpool FC, here
Bohemian Rhapsody sung by cats here
Swedish Rhapsody here (earworm warning)
Are British litigants bound by Ontario judgments? When issue estoppel isn't the issue Are British litigants bound by Ontario judgments? When issue estoppel isn't the issue Reviewed by Jeremy on Tuesday, April 23, 2013 Rating: 5

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