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Res Judicata - General. Bryton Capital Corp. GP Ltd. v. CIM Bayview Creek Inc.
In Bryton Capital Corp. GP Ltd. v. CIM Bayview Creek Inc. (Ont CA, 2023) the Court of Appeal considers the doctrine of res judicata, in it's two forms: issue estoppel and cause of action estoppel:2. The Relevant Legal Principles
[41] The doctrine of res judicata is based on the principle that “[a]n issue, once decided, should not generally be re-litigated to the benefit of the losing party and the harassment of the winner”, and that “[d]uplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided”: Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44, [2001] 2 S.C.R. 460, at para. 18.
[42] Res judicata has two main branches: cause of action estoppel and issue estoppel. Cause of action estoppel prohibits a litigant from bringing an action against another party when that same cause of action has been determined in earlier proceedings by a court of competent jurisdiction, and also prevents a party from re-litigating a claim that could have been raised in an earlier proceeding: Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141, 457 D.L.R. (4th) 530, at para. 31. For cause of action estoppel to operate “it is not enough that the cause of action could have been argued in the prior proceeding. It is also necessary that the cause of action properly belonged to the subject of the prior action and should have been brought forward in that action”: Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, 145 O.R. (3d) 759, at para. 50, leave to appeal refused, [2019] S.C.C.A. No. 284.
[43] Issue estoppel is narrower than cause of action estoppel as “[i]t applies to prohibit the re-litigation of an issue that has already been decided in an earlier proceeding, even where the cause of action is different in the two proceedings”: Dosen, at para. 32. For issue estoppel to operate, there are three conditions: (1) the same issue has been decided in an earlier proceeding; (2) the prior judicial decision was final; and (3) the parties to the earlier and subsequent proceedings are the same: Fresco v. Canadian Imperial Bank of Commerce, 2022 ONCA 115, 160 O.R. (3d) 173, at para. 79. Even where the three requirements for issue estoppel are met, the courts retain a residual discretion to refuse to apply the doctrine: Fresco, at para. 81.
[44] An appellate court owes deference to a judge’s application of the tests for cause of action and issue estoppel. Intervention is only warranted if the judge “misdirected himself, came to a decision that is so clearly wrong as to be an injustice, or gave no or insufficient weight to relevant considerations”: Catalyst Capital, at para. 24. . Del Grande v. Toronto Catholic District School Board
In Del Grande v. Toronto Catholic District School Board (Div Court, 2023) the Divisional Court notes that res judicata is prima facie contrary to the concept of administrative reconsideration:[63] In my view, the Board’s conclusion that it was not precluded from reconsidering the First Decision by the principles of res judicata or issue estoppel was reasonable. As discussed above, the Reconsideration Provision authorizes the Board to reconsider its decisions, including in relation to Code of Conduct matters. Where such reconsideration is authorized, “[t]here is no finality to a tribunal’s decision for the purpose of issue estoppel”: D.J. Lange, The Doctrine of Res Judicata in Canada, 5th Ed., Ch. 2.6. . Ryan v. Hebert
In Ryan v. Hebert (Ont CA, 2022) the Court of Appeal dismissed an appeal from the earlier denial of a R21.01(3) motion brought by the defendant in a sexual abuse lawsuit grounded when the plaintiff was a minor. The defendant apparently argued that res judicata applied on the basis of earlier divorce proceedings between him and the plaintiff's mother, but the court dismissed in part on grounds that the plaintiff was not a party to the divorce proceedings and the mother was not her litigation guardian.
. 402 Mulock Investments Inc. v. Wheelhouse Coatings Inc.
In 402 Mulock Investments Inc. v. Wheelhouse Coatings Inc. (Ont CA, 2022) the Court of Appeal nicely summarizes res judicata and its elements:[16] Res judicata prevents the re-litigation of previously adjudicated and finally decided matters. There are two branches of res judicata: cause of action estoppel and issue estoppel: Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company), 2021 ONCA 141, 457 D.L.R. (4th) 530, at para. 31.
[17] Cause of action estoppel precludes the parties from litigating claims that have been determined in a prior action: Dosen, at para. 31. It applies where the basis of the cause of action was argued or could have been argued in the prior action through the exercise of reasonable diligence. The same parties must be involved in the subsequent litigation and the underlying decision must be final: The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, 145 O.R. (3d) 759, at paras. 50-51.
[18] Issue estoppel precludes the re-litigation of issues that have been previously decided in another proceeding: Dosen, at para. 32. Three preconditions are required. First, the same issue must have been decided. Second, the judicial decision giving rise to the estoppel must be final. Third, the parties to the judicial decision must be the same persons as those in the proceeding in which the estoppel is raised, or their privies: Toronto (City), at para. 23. If the criteria are met, the court must determine whether, as a matter of discretion, issue estoppel ought to be applied: Danyluk, at para. 33. . Bagherian v. Aviva Insurance Company
In Bagherian v. Aviva Insurance Company (Div Ct, 2022) the Divisional Court made the useful point that res judicata only applied to final orders, not interim orders:[17] Second, there is no merit to the argument raised in the appellant’s factum that the Tribunal lacked authority to make this order because of the doctrine of res judicata. The decision of Vice Chair White in 2018 that allowed his application to proceed was an interim decision, not a final determination of the issues. Moreover, there had been a significant change of circumstances since her decision. . Fresco v. Canadian Imperial Bank of Commerce
In Fresco v. Canadian Imperial Bank of Commerce (Ont CA, 2022) the Court of Appeal canvassed the law of res judicata:(i) The governing principles for res judicata
[79] The governing principles for the issue estoppel branch of res judicata were prescribed by the Supreme Court in Danyluk v. Ainsworth Technologies Inc.[55] A party is prohibited from re-litigating an issue where (1) the same issue has been previously decided; (2) that judicial decision was final; and, (3) the parties are the same. Binnie J. stated the purpose of the doctrine:The law rightly seeks a finality to litigation. To advance that objective, it requires litigants to put their best foot forward to establish the truth of their allegations when first called upon to do so. A litigant, to use the vernacular, is only entitled to one bite at the cherry.[56] He added: “The underlying purpose [of issue estoppel] is to balance the public interest in the finality of litigation with the public interest in ensuring that justice is done on the facts of a particular case.”[57]
[80] Tulloch J.A. considered the rationale for preventing re-litigation in the context of the abuse of process doctrine in The Catalyst Capital Group Inc. v. VimpelCom Ltd.[58] He noted: “The law… seeks to avoid re-litigation primarily for two reasons: first, to prevent overlap and wasting judicial resources; and second, to avoid the risk of inconsistent findings.”[59]
[81] Even where the three requirements for issue estoppel are met, the courts retain a residual discretion to refuse to apply the doctrine. Finch J.A. stated in British Columbia (Minister of Forests) v. Bugbusters Pest Management Inc.:The doctrine of issue estoppel is designed as an implement of justice, and a protection against injustice. It inevitably calls upon the exercise of a judicial discretion to achieve fairness according to the circumstances of each case.[60] Binnie J. adopted this statement in Danyluk.[61] He commented that “[t]he objective is to ensure that the operation of issue estoppel promotes the orderly administration of justice but not at the cost of real injustice in the particular case.”[62]
[82] This court commented on the judicial discretion to refuse to apply issue estoppel in Schweneke v. Ontario.[63] Doherty and Feldman JJ.A. stated: “In exercising the discretion the court must ask – is there something in the circumstances of this case such that the usual operation of the doctrine of issue estoppel would work an injustice?”[64] More recently, this court discussed the role of discretion in declining to apply res judicata and the related doctrine of abuse of process in Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company).[65]
[83] Because declining to give effect to issue estoppel is a matter of discretion, this court owes deference to a motion judge’s decision and should only intervene “if the motions judge misdirected himself, came to a decision that is so clearly wrong as to be an injustice, or gave no or insufficient weight to relevant considerations.”[66] . Berge v. College of Audiologists
In Berge v. College of Audiologists (Div Ct, 2021) the Divisional Court sets out the doctrine of res judicata:[4] As stated by this court in Ms Berge’s previous attempt to reopen this case, “Rule 59.06 is not an invitation to reargue cases endlessly or an invitation to raise new issues after a decision has been rendered. The rule provides a mechanism for re-opening a hearing under very strict conditions. As this court has previously remarked it is “not a do-over”. (See Massiah v. Justices of the Peace Review Counsel, 2018 ONSC 2179 (Div. Ct.)). As stated in Peoples Trust v. Atas, 2018 ONSC 58, para. 45:It is axiomatic that a thing, once decided, may not be relitigated. This principle is known as res judicata, a Latin phrase that translates as “the thing has been adjudicated”. Res judicata includes “cause of action estoppel” which precludes relitigation of the same issue between the same parties. But the principle against relitigation goes further than this. It also covers claims that were not advanced, but should have been dealt with in prior litigation. . Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company)
In Dosen v. Meloche Monnex Financial Services Inc. (Security National Insurance Company) (Ont CA, 2021) the Court of Appeal considered issue estoppel and cause of action estoppel as components of the doctrine of res judicata, which it relates to the doctrine of abuse of process:(2) Res Judicata
[30] The law recognizes a number of doctrines to prevent the abuse of the decision-making process. One of the doctrines is res judicata. In Danyluk, Binnie J. described the doctrine, at para. 18, as follows:The law rightly seeks a finality to litigation. To advance that objective, it requires litigants to put their best foot forward to establish the truth of their allegations when first called upon to do so. A litigant, to use the vernacular, is only entitled to one bite at the cherry…. An issue, once decided, should not generally be re-litigated to the benefit of the losing party and the harassment of the winner. A person should only be vexed once in the same cause. Duplicative litigation, potential inconsistent results, undue costs, and inconclusive proceedings are to be avoided. [31] Res judicata has two main branches: cause of action estoppel and issue estoppel. Cause of action estoppel prohibits a litigant from bringing an action against another party when that same cause of action has been determined in earlier proceedings by a court of competent jurisdiction. Cause of action estoppel also prevents a party from re-litigating a claim that could have been raised in an earlier proceeding.
[32] Issue estoppel is narrower. It applies to prohibit the re-litigation of an issue that has already been decided in an earlier proceeding, even where the cause of action is different in the two proceedings.
[33] The overall goal of the doctrine of res judicata, and therefore of both cause of action estoppel and issue estoppel, is judicial finality: Minott v. O’Shanter Development Co. (1999), 1999 CanLII 3686 (ON CA), 42 O.R. (3d) 321 (C.A.), at paras. 16-17; Hoque v. Montreal Trust Co. of Canada, 1997 NSCA 153, 162 N.S.R. (2d) 321, leave to appeal refused, [1997] S.C.C.A. No. 656.
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[36] A court may decline to apply res judicata or abuse of process where its application would work an injustice. This might occur where the first proceeding denied a party a full and fair hearing, even though that party exercised reasonable diligence. Additionally, even if the first proceeding was conducted with scrupulous fairness, it might still be unfair to use the results of the first proceeding to preclude re-litigation of an issue.
[37] It may be appropriate to exercise discretion to decline to apply the abuse of process doctrine when (1) the first proceeding is tainted by fraud or dishonesty, (2) fresh, new evidence, previously unavailable, conclusively impeaches the original results, or (3) fairness dictates that the original result should not be binding in the new context: Catalyst, at para. 68. The list of relevant factors to this discretion is not closed. The discretionary factors for whether to decline to apply the abuse of process doctrine may also apply in the context of deciding whether to apply the doctrine of res judicata. . Canada v. MacDonald
In Canada v. MacDonald (Fed CA, 2021) the Federal Court of Appeal (Stratas JA) consider some exceptions to the doctrine of res judicata under the federal rules:[15] If an appeal is brought, the appeal court can interfere with the order or judgment. Thus, an order or judgment under appeal is not final for the purposes of the doctrine of res judicata. But an aspect of finality remains: the court that issued the order or judgment cannot reconsider, suspend, set aside or vary it.
[16] That is the general rule. But narrow, often time-limited exceptions exist to it. As we shall see, sometimes a party can invoke these exceptions to mitigate finality and, in so doing, avoid the sort of thing that happened in this case.
[17] In the Federal Courts system, the exceptions are found in the Federal Courts Rules:Rule 397: the power to reconsider orders and judgments in order to deal with any mistakes, omissions, or matters overlooked. This is much narrower than it sounds. Under this rule, the Court cannot rethink the matter and reverse itself: Bell Helicopters Textron Canada Limitée v. Eurocopter, 2013 FCA 261, 116 C.P.R. (4th) 161. This power is available in the ten days after judgment and only the judge or two of three judges on the panel that made the order or judgment can act: Rule 397(1); Federal Courts Act, s. 45.
Rule 398: the power to stay an order or judgment of the Court.
Rule 399: the power to set aside or vary an order or judgment of the Court. Ex parte orders are subject to later review when all affected parties come before the Court. Otherwise, this power is almost never available. It is triggered by matters that strike at the root of the order or judgment such as fraud, procedural defects of grave significance, or significant matters that could not have been discovered earlier.
Rule 403: the power to give directions supplementing the content of a costs award in an order or judgment. The power is available for thirty days after judgment and it can be exercised only by the judge(s) who participated in the order or judgment. [18] Rule 105 of the Federal Courts Rules supplies another vital tool for the management of multiple proceedings: the consolidation or hearing together of multiple proceedings. When this is done, each proceeding remains separate and in the end a separate judgment for each is made. But because the Court deals with all of the issues and makes the judgments at the same time, no issue is left behind and barred by the principle of finality or the doctrine against relitigation.
[19] Finally, on occasion, multiple proceedings can be managed informally by telling the panel hearing the first proceeding about any related proceeding. When this is done, the panel can craft its order or judgment to preserve the parties’ ability to litigate the other proceeding. Or the panel can act on its own motion and consolidate or hear the proceedings together: Coote v. Lawyers’ Professional Indemnity Company, 2013 FCA 143 at para. 6; Montana Band v. Canada (1989), 1999 CanLII 8902 (FC), 182 F.T.R. 161 (T.D.). . Apotex Inc. v. Schering Corporation
In Apotex Inc. v. Schering Corporation (Ont CA, 2018) the Court of Appeal decides not to apply the doctrine of issue estoppel on the facts of the case, and draws a parallel with the doctrine of issue estoppel and that of abuse of process:IV: Analysis
[19] I would note, at the outset, that the scope of the “special circumstances” exception to issue estoppel constitutes a question of law. The standard of review is thus one of correctness: Housen v. Nikolaisen, 2002 SCC 33 (CanLII), [2002] 2 S.C.R. 235, at para. 8.
[20] The requirements of, and purpose behind, the doctrine of res judicata were thoroughly canvassed in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (CanLII), [2001] 2 S.C.R. 460. In that decision, Binnie J. reviewed the historical development of the doctrine and its component parts: cause of action estoppel and issue estoppel. He also reviewed the development of the doctrine of collateral attack.
[21] As set out in Danyluk at para. 25, the preconditions to the operation of issue estoppel are: (i) that the same question has been decided; (ii) that the judicial decision which is said to create the estoppel was final; and, (iii) that 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. It is clear that those three preconditions are met in this case.
[22] However, Binnie J. went on in Danyluk to point out that the court retained a discretion not to apply the doctrine where to do so would work an injustice. More specifically, Binnie J. adopted the observation in British Columbia (Minister of Forests) v. Bugbusters Pest Management Inc. (1998), 1998 CanLII 6467 (BC CA), 159 D.L.R. (4th) 50 (B.C.C.A.) where Finch J.A. said, at para. 32:It must always be remembered that although the three requirements for issue estoppel must be satisfied before it can apply, the fact that they may be satisfied does not automatically give rise to its application. Issue estoppel is an equitable doctrine, and as can be seen from the cases, is closely related to abuse of process. The doctrine of issue estoppel is designed as an implement of justice, and a protection against injustice. It inevitably calls upon the exercise of a judicial discretion to achieve fairness according to the circumstances of each case. [23] Binnie J. added, at para. 67:The objective is to ensure that the operation of issue estoppel promotes the orderly administration of justice but not at the cost of real injustice in the particular case. [24] Finally, Binnie J. concluded with a statement of what he said was the most important factor in deciding whether issue estoppel ought to be applied in any given case. He said, at para. 80:As a final and most important factor, the Court should stand back and, taking into account the entirety of the circumstances, consider whether application of issue estoppel in the particular case would work an injustice. [25] The exercise of the discretion to apply issue estoppel was also the subject of the decision of this court in Minott v. O'Shanter Development Co. (1999), 1999 CanLII 3686 (ON CA), 42 O.R. (3d) 321 (C.A.). Of particular importance, for the purposes of this case, is the observation of Laskin J.A. at para. 51 where he said:If the decision of a court on a point of law in an earlier proceeding is shown to be wrong by a later judicial decision, issue estoppel will not prevent relitigating that issue in subsequent proceedings. It would be unfair to do otherwise. ....
[38] For the reasons set out above, the appellants’ proposed amendments are also not barred by the doctrine of collateral attack. In Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63 (CanLII), [2003] 3 S.C.R. 77, the Supreme Court of Canada described issue estoppel and collateral attack as “particular applications of a broader doctrine of abuse of process” (at para. 22). Though not entirely interchangeable, the Supreme Court went on to hold the following, at para. 53:The discretionary factors that apply to prevent the doctrine of issue estoppel from operating in an unjust or unfair way are equally available to prevent the doctrine of abuse of process from achieving a similar undesirable result. As the application of collateral attack in this case would work the same injustice as issue estoppel, it should not be applied to block the proposed pleadings.
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