Weight given to criminal judgments during civil proceedings
By Paul Russell, AdvocateDaily.com Contributor
While judgments from criminal cases can be considered in related civil matters, they cannot be relied on by themselves to reach a decision, as a full civil trial may be necessary to assess the evidence, says Toronto commercial litigator Christopher Gaytan.
To illustrate his point, Gaytan points to a recent Ontario Court of Appeal decision that overturned a $20-million summary judgment award granted by a motion judge.
According to court documents, a man was convicted of defrauding his former firm out of more than $5,000. The sentencing judge found the appellant’s participation in the fraudulent scheme amounted to a “gross breach of his fiduciary duty.” Relying solely on the criminal verdict and the findings of the sentencing judge, the company moved for summary judgment in its civil action against the man, asking for $20 million.
The motion judge determined that the sentencing judge’s findings were entitled to “very considerable weight” in the civil proceeding, the decision states. He concluded that the appellant was a fiduciary because the sentencing judge described him as such, and accordingly, the motion judge held that the appellant breached his fiduciary duty through his participation in the fraudulent scheme, and granted judgment for $20 million.
“It’s a very interesting decision because a civil summary judgment was overturned when it was based on a criminal conviction, even though the standard of proof required for criminal conviction is beyond reasonable doubt and civil cases are decided on balance of probabilities, which is basically 'more probable than not,'” says Gaytan, an associate with Shibley Righton LLP’s Toronto office.
“Since the burden of proof in criminal proceedings is higher, it may seem the logical thing to allow a summary judgment against him in a related civil action, but this decision shows that is not always the case,” he tells AdvocateDaily.com.
Court documents note the motion judge “erred in principle by failing to consider relevant factors in determining what weight he could give to the sentencing judge’s finding that the appellant was a fiduciary.” Those factors include similarity of the issues to be decided, the identity of the parties, the nature of the earlier proceedings and the opportunity given to the prejudiced party to contest the previous finding.
“That error infected his analysis as to whether there was a genuine issue requiring a trial on the breach of fiduciary duty claim,” the appeal court ruled.
“There wasn’t a submission made to the sentencing judge that directly addressed whether this man exercised a fiduciary duty in the firm,” Gaytan says.
He says this ruling provides an interesting perspective about the weight of the criminal findings in relation to civil proceedings.
“The court held that the criminal findings were admissible, but that it is very important to be careful about the considerations of the weight given to those findings,” Gaytan says.
He says the main lesson is you can’t just rely on a criminal judgment when you’re dealing with a civil action.
While the standard of proof is higher in the criminal court, he says this case shows that you still have to prove your case in civil court.
“This case sets a really strong precedent,” Gaytan says. “Now they have to go back to square one and do the analysis about what constitutes a fiduciary, which is why this case is being sent back to the Ontario Superior Court for a trial.”