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Class Proceeding (Fed) - Issue Estoppel. Canada v. Greenwood
In Canada v. Greenwood (Fed CA, 2023) the Federal Court of Appeal considered issue estoppel, here in a class action certification context:(1) Issue estoppel
[35] Issue estoppel is a common law doctrine that provides that once a judicial proceeding finally decides an issue, neither party can re-litigate that issue. The doctrine rests on the finality principle. As aptly summarized by the Ontario Court of Appeal in Smith Estate v National Money Mart Company, 2008 ONCA 746, 303 DLR (4th) 175 at para. 33: “[o]nce a point has been decided, the winning litigant is entitled to rely on the result, to be assured of peace and to be able to plan the future on the basis of the court’s decision.” The doctrine also exists to preserve scare judicial resources and prevent parties from exposure to additional legal costs, as well as to reduce the risk of undue litigation (Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, [2013] 2 S.C.R. 125 at para. 28).
[36] It is well established that issue estoppel emerges in the presence of three preconditions (Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460 at para. 25 (Danyluk)):(1) the same question has been decided;
(2) the judicial decision which is said to create the estoppel was final; and,
(3) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies. [37] Furthermore, even if all the preconditions are established, a judge will retain a broad discretion to refuse to apply the doctrine of issue estoppel if its application were to create an injustice (Danyluk at para. 33):The first step is to determine whether the moving party … has established the preconditions to the operation of issue estoppel ... If successful, the court must still determine whether, as a matter of discretion, issue estoppel ought to be applied ... [emphasis in original] [38] In the present case, and I agree with the appellant on this point, the certification judge conflated whether the issue at hand was finally resolved with whether the entirety of the claim was finally determined. She did so in a cursory manner, without reference to the relevant case law.
[39] Indeed, there are decisions stating that the doctrine of issue estoppel applies to interlocutory orders (Hawley v. North Shore Mercantile Corp., 2009 ONCA 679, 99 O.R. (3d) 142 at para. 26, leave to appeal to SCC refused, 33440 (April 22 2010), citing Fidelitas Shipping Co. v. V/O Exportchieb, [1965] 2 All E.R. 4 at 10 (CA UK); see also R. v. Duhamel, 1981 ABCA 295 at para. 14, aff’d 1984 CanLII 126 (SCC), [1984] 2 S.C.R. 555). More particularly, in the context of class proceedings, a number of decisions confirm that issue estoppel applies to class certification motions with the understanding that judges retain discretion not to apply it when they are of the view it would lead to an injustice (see Risorto v. State Farm Mutual Automobile Insurance Co., [2009] O.J. No. 820, 72 C.C.L.I. (4th) 60 at para. 49; Pro-Sys Consultants Ltd. v. Microsoft Corporation, 2014 BCSC 1280, 376 D.L.R. (4th) 302 at paras 28–30, 60, 78 (Pro-Sys); Turner v. York University, 2011 ONSC 6151, 209 A.C.W.S. (3d) 228 at paras 63–65; Corless v. Bell Mobility Inc., 2023 ONSC 6227 at paras 51–58 (Corless); Fanshawe College of Applied Arts and Technology v. LG Philips LCD Co., 2016 ONSC 3958, 270 A.C.W.S. (3d) 23 at paras 43–53).
[40] While certification orders do not dispose of the entire proceeding, they may yield final rulings on issues going to the merits of the case, such as class definitions and common questions. As it was put by our Court in Apotex Inc. v. Merck & Co. (C.A.), 2002 FCA 210, [2003] 1 F.C. 242 at para. 27:The decision which is said to give rise to the estoppel need not be a decision which determines the entire subject-matter of the litigation. The test for issue estoppel is a substantive issue test where the decision affects substantive rights of the parties with respect to a matter bearing on the merits of the cause of action. [41] Accordingly, certification orders issued in the context of class proceedings may be subject to issue estoppel. Although Rule 334.19 contemplates the possibility of amending a certification order, it does not displace the doctrine of issue estoppel that exists to prevent re-litigation. Both the rule and the doctrine have to be taken into account and the judge’s discretion has to be exercised consequently and appropriately (Pro-Sys at para. 28). Any other approach would undermine judicial economy (which the doctrine of issue estoppel fundamentally seeks to protect) by allowing litigants to repeatedly and endlessly re-open certification orders.
[42] That being said, there are circumstances where the doctrine of issue estoppel can be set aside, namely in the event of an appeal, a material change in circumstances, or new evidence (Donald J. Lange, The Doctrine of Res Judicata in Canada, 5th ed. (Toronto: LexisNexis, 2021) at 328).
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