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Res Judicata - Discretionary. David v. Loblaw Companies Limited [res judicata as a substantive right]
In David v. Loblaw Companies Limited (Ont CA, 2025) the Ontario Court of Appeal dismissed a second class proceeding certification motion, here where the plaintiff filed "an amended pleading which, in their view, corrected its deficiencies ...".
Here the court considers CPA s.8(3) ['Amendment of certification order'] (and CPA s.12 'Court may determine conduct of proceeding') advanced in an appellant argument to defeat the respondent's res judicata argument:[24] Second, the appellants submit that it follows from the amended pleading now disclosing a cause of action against Maple Leaf that the Certification Order should be amended to remove the reference to it in paragraph 5 of the Certification Order and to add it to the list of Certified Defendants against whom the Certified Claims will proceed. They point out that the lack of a particularized cause of action was the only bar to certification against Maple Leaf at the time of certification, and is now overcome. The appellants submit that the remedial aim of the CPA supports a broad reading of the powers in ss. 8(3) and 12, encompassing the right to amend the Certification Order in these circumstances. They argue that the motion judge took too narrow an approach to his jurisdiction under these provisions.
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ii. The CPA Does Not Provide a Right to Amend in These Circumstances
[41] Sections 8 and 12 of the CPA are also not of assistance to the appellants. Section 8(3) of the CPA provides that “[t]he court, on the motion of a party or class member, may amend an order certifying a proceeding as a class proceeding.” Section 12 of the CPA provides that:[t]he court, on its own initiative or on the motion of a party or class member, may make any order it considers appropriate respecting the conduct of a proceeding under this Act to ensure its fair and expeditious determination and, for the purpose, may impose such terms on the parties as it considers appropriate. [42] Without gainsaying the flexibility of those provisions in other situations, they must always be interpreted in light of their text, context, and purpose, the touchstones of any statutory interpretation: Canada Trustco Mortgage Co. v. Canada, 2005 SCC 54, [2005] 2 S.C.R. 601; Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, at para. 118.
[43] Here, the relevant context and purpose is that “[t]he CPA is a comprehensive procedural statute to provide for and regulate the conduct of class proceedings in Ontario. It neither modifies nor creates substantive rights” (emphasis added): Hislop v. Canada (Attorney General), 2009 ONCA 354, 95 O.R. (3d) 81, at para. 57, leave to appeal refused, [2009] S.C.C.A. No. 264, citing Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, at para. 14; Bisaillon v. Concordia University, 2006 SCC 19, [2006] 1 S.C.R. 666, at para. 17; Ontario New Home Warranty Program v. Chevron Chemical Co. (1999), 1999 CanLII 15098 (ON SC), 46 O.R. (3d) 130 (S.C.), at para. 50; and Western Canadian Shopping Centres Inc. v. Dutton, 2001 SCC 46, [2001] 2 S.C.R. 534, at paras. 27-29; see also Drywall Acoustic, at para. 21.
[44] Maple Leaf’s right to rely on the doctrine of res judicata is a substantive right. It cannot be modified, let alone taken away, by interpreting these sections of the CPA in a manner that would allow for the relitigation of matters that have been finally decided. Put another way, interpreting ss. 8(3) and 12 of the CPA in a way that permits relitigation in the face of the doctrine of res judicata would create a new substantive right for class action plaintiffs, contrary to the context and purpose of the statute read as a whole.
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[45] There exists a discretion not to apply res judicata in a particular case. The discretion exists because there are circumstances in which “the bar against relitigation, either through the doctrine of res judicata or that of abuse of process, would create unfairness”: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 53. However, where the order that gives rise to res judicata was made in court proceedings as opposed to an administrative hearing, the discretion is “very limited”: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, at para. 62, citing G.M. (Canada) v. Naken, 1983 CanLII 19 (SCC), [1983] 1 S.C.R. 72, at p. 101. . David v. Loblaw Companies Limited
In David v. Loblaw Companies Limited (Ont CA, 2025) the Ontario Court of Appeal dismissed a second class proceeding certification motion, here where the plaintiff filed "an amended pleading which, in their view, corrected its deficiencies ...".
Here the court considers the Sagaz-reopening interpretation that the motion judge used to support the respondent's res judicata discretion argument:[25] Third, the appellants submit that the motion judge also erred in applying the “Sagaz test” to determine whether the relief they sought should be granted – an error that led him to view the evidence that the representative plaintiffs submitted through the wrong lens. The point of the new evidence was not, they say, to prove by admissible evidence that Maple Leaf participated in the alleged conspiracy – in other words, that there was merit to the proposed claim in the amended pleading. According to the appellants, the evidence was proffered to show that the amended allegations were responsibly made and to explain their timing.
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iii. The Motion Judge Did Not Err in Refusing to Exercise the Discretion Not to Give Preclusive Effect to Paragraph 5 of the Certification Order
[45] There exists a discretion not to apply res judicata in a particular case. The discretion exists because there are circumstances in which “the bar against relitigation, either through the doctrine of res judicata or that of abuse of process, would create unfairness”: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 53. However, where the order that gives rise to res judicata was made in court proceedings as opposed to an administrative hearing, the discretion is “very limited”: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, at para. 62, citing G.M. (Canada) v. Naken, 1983 CanLII 19 (SCC), [1983] 1 S.C.R. 72, at p. 101.
[46] The appellants various arguments to the effect that the motion judge wrongly prioritized finality over the need for flexibility in a class action are properly characterized as raising a concern about whether the motion judge erred in his approach to the discretion not to apply res judicata. In my view the appellants have not shown a reversible error in the motion judge’s failure to exercise his discretion not to give paragraph 5 of the Certification Order preclusive effect.
[47] The appellants argue that the motion judge should not have used the Sagaz test to guide the exercise of his discretion. In Sagaz, the court was considering a request to re-open a trial for further evidence after reasons for judgment had been released, but before the formal judgment had been entered. The two-prong Sagaz test, focusing on whether the further evidence was discoverable before the trial through the exercise of reasonable diligence and on whether that evidence would probably have changed the result, was particularly geared to that situation. The appellants say this test is inapt where the provision of the Certification Order sought to be revisited (paragraph 5) is an issue to be decided on the basis of the pleadings which are assumed to be true, rather than evidence.
[48] Maple Leaf points out that the Sagaz test has been applied in the certification motion context. In Risorto v. State Farm Mutual Automobile Insurance Co. (2009), 72 C.C.L.I. (4th) 60 (Ont. Div. Ct.), the Divisional Court applied the test to the question of whether a denial of certification based on the insufficiency of evidence about commonality and the suitability of the representative plaintiff could be re-opened for further evidence on those certification criteria before the formal order was issued. In Risorto, at para. 34, Gray J., stated that the two-prong test applies to both trials and motions where the question is whether the matter should be re-opened for the calling of new evidence.[9]
[49] It may have been preferable if the motion judge had articulated the test as whether there were grounds for him to exercise his very limited discretion not to apply res judicata arising from the Certification Order, rather than proceeding directly to the Sagaz test. Nevertheless, in my view the motion judge’s reference to the Sagaz test did not lead to an unreasonable exercise of that discretion, or to any error in principle that would justify setting aside his decision.
[50] First, the cautious approach in Sagaz and Risorto to reopening a matter that has already been heard is animated by principles that are relevant to whether the court should exercise the very limited discretion not to apply res judicata arising from a court order. The Sagaz test is a product of balancing the interests of finality and fairness: Sagaz, at para. 60. It reflects the “strong interest in finality, which should only be departed from in exceptional circumstances”: Risorto, at para. 35.
[51] Res judicata is the court’s ultimate expression of the primacy of finality. As Binnie J. stated in Danyluk, at para. 18: “The law rightly seeks a finality to litigation … A litigant, to use the vernacular, is only entitled to one bite at the cherry.” Finality interests are thus given even greater weight after (as opposed to before, which was the case in Sagaz and Risorto) the formal order has been issued and the avenue for reconsideration of a decision is available by appeal. In Chandler v. Alberta Association of Architects, 1989 CanLII 41 (SCC), [1989] 2 S.C.R. 848, at p. 860, the Supreme Court stated:[t]he general rule [is] that a final decision of a court cannot be reopened … [t]he basis for [that rule] was that the power to rehear was transferred by the Judicature Acts to the appellate division. The rule applied only after the formal judgment had been drawn up, issued and entered, and was subject to two exceptions:
1. where there had been a slip in drawing it up, and,
2. where there was an error in expressing the manifest intention of the court. [52] In other words, the motion judge did not err by taking an approach, which he viewed as reflected in Sagaz and other cases, that finality was important and not to be lightly undone, rather than adopting the appellants’ contention that certification should be viewed as a “fluid and flexible process” that could be periodically revisited.
[53] Second, although Sagaz and Risorto deal with the reopening of evidentiary issues, the appellants overemphasize the distinction from this case. It was only on the initial certification motion that the representative plaintiffs were entitled to have the question of whether they had a cause of action against Maple Leaf assessed on the allegations in their pleading, assumed to be true. Once that question was finally decided against them, making the issue res judicata, they were not entitled to simply present an amended pleading and obtain a different result about certification against Maple Leaf. If they were, there would be no meaning to the principle noted above, endorsed by the Supreme Court, that where the order that gives rise to res judicata was made in court proceedings as opposed to an administrative hearing, the discretion not to apply res judicata is “very limited”: Danyluk, at para. 62, citing Naken, at p. 101.
[54] Here, the appellants proffered evidence, and the question was whether the evidence was capable of bringing the representative plaintiffs within that very limited discretion. The motion judge was entitled to scrutinize that evidence. He found that what was proffered did not consist of admissible evidence that was new or suggestive of an arguably meritorious claim on any standard. Although the appellants claim that this holds them to too high a standard, the alternative they submit is unpersuasive.
[55] On the appellants’ own characterization of their evidence in this court, it shows nothing more than the development of the “legal landscape” and that the more particularized allegations in the amended pleading are responsibly made (as opposed to being true, or revealing on any evidentiary standard, an arguably meritorious case). That kind of evidence falls far short of demonstrating the kind of fundamental unfairness that would justify the exercise of the very limited discretion to permit relitigation of a matter finally decided in a court proceeding.
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