|
Res Judicata - General. Patrick Street Holdings Ltd. v. 11368 NL Inc.
In Patrick Street Holdings Ltd. v. 11368 NL Inc. (SCC, 2026) the Supreme Court of Canada considered 'cause of action estoppel'.
Here the court considers principles of pleading res judicata:(1) Governing Principles
[46] Since the late 1800s, courts have shifted away from the “technical and complex” rules that historically applied to pleadings, under which parties had to plead a specific form of common law action, each with its own pleading rules (L. S. Abrams and K. P. McGuinness, Canadian Civil Procedure Law (2nd ed. 2010), at §10.15). Canadian provinces abolished this form of pleading in favour of “fact pleading” toward the end of the 19th century (J. A. Jolowicz, “‘General ideas’ and the reform of civil procedure” (1983), 3 Legal Stud. 295, at p. 301; see also Abrams and McGuinness, at §10.15). This shift removed the “straight-jacket” of the forms of action approach to pleadings (Jolowicz, at p. 301).
[47] Modern pleadings must contain a statement of the material facts on which a party relies to make out its claim for relief, rather than precisely identify all causes of action or rules of law pleaded (Jolowicz, at p. 301; see also Alberta Rules of Court, Alta. Reg. 124/2010, r. 13.6(2)(a); Court of King’s Bench Rules, Man. Reg. 553/88, r. 25.06; Rules of Civil Procedure, R.R.O. 1990, Reg. 194, r. 25.06; Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D, r. 14.03; Rules of Court, N.B. Reg. 82-73, r. 27.06(1)). This approach to pleadings is functional and favours the substance of what is pleaded over its form (Jolowicz, at p. 301). In this way, pleadings serve to define the points at issue in a proceeding and to give “opposing parties fair notice of the case to meet” (Lax Kw’alaams Indian Band v. Canada (Attorney General), 2011 SCC 56, [2011] 3 S.C.R. 535, at para. 43). The overarching consideration when determining whether a matter has been properly pleaded is thus functional and seeks to ensure that parties are not taken by surprise.
[48] There is an obligation to plead res judicata. One of this Court’s first affirmations of this obligation arose in Davies, where this Court remarked that: .... the plea [of estoppel] should contain suitable averments of what was the precise matter in contestation in such interpleader issue and of what is the precise matter in contestation in the present action so as to raise for adjudication the question of estoppel relied upon by the defendant. [p. 317]
A few years later, in Cooper, this Court reiterated the obligation to plead res judicata, remarking that “res judicata as a defence, or as a reply to a counter claim, must be specially pleaded” (p. 620). [49] The obligation to plead res judicata flows from the principles of civil litigation outlined above. The pleading obligation consists in a requirement to plead the material facts giving rise to the claim of estoppel. A party need not explicitly reference the term “res judicata”. While evidentiary rules, like other rules of law, are generally not pleaded, the requirement to plead res judicata is grounded in the need to ensure that a responding party has notice of the case it must meet and is not taken by surprise by another party’s reliance on the doctrine. The pleading requirement is functional and grounded in the notion of procedural fairness, irrespective of the procedural vehicle — action or application — in which res judicata arises. The inquiry into whether res judicata was properly pleaded should thus remain focused on whether the pleadings were procedurally fair for the parties involved (Anderson v. Township of Ameliasburg (1931), 1931 CanLII 783 (ON CA), 66 O.L.R. 583, at p. 584).
[50] Just as in Davies and Cooper, cases in which the obligation to plead res judicata was considered have generally focused on the applicability of this obligation to defendants to an action or respondents to an application (see, e.g., Baxter v. Derkasz (1929), 1929 CanLII 153 (SK CA), 2 D.L.R. 443 (Sask. C.A.), at p. 449; Bailey v. Guaranty Trust Co. of Canada, 1987 ABCA 95, 39 D.L.R. (4th) 111, at p. 121; Dhillon v. Dhillon, 2006 BCCA 524, 232 B.C.A.C. 249, at para. 21; Canada v. MacDonald, 2021 FCA 6, 456 D.L.R. (4th) 536, at para. 30). There is good reason for this. A defendant or respondent will in most cases become aware of the need to plead res judicata when it receives the plaintiff’s or applicant’s pleadings. Upon receipt of these pleadings, the defendant or respondent will be in a position to plead res judicata in response to the claim alleged against it.
[51] This is not to say that a plaintiff or applicant never has an obligation to plead res judicata. However, and in contrast to a defendant or respondent, a plaintiff or applicant bringing an action or application is not expected to know what defences a defendant or respondent will raise, and whether those defences will give rise to a claim that res judicata applies, when it files its originating process. Typically, “the facts that are pleaded by a party must be material at the time when they are pleaded, which means that a plaintiff should not anticipate possible defences in [the] statement of claim” (Abrams and McGuinness, at §10.17 (emphasis added)).
[52] For this reason, the obligation to plead res judicata has been characterized as an obligation to plead it where there is an opportunity to do so (Brown v. Yates (1877), 1 O.A.R. 367 (Ont. C.A.); Miller v. Weldon (1870), 1870 CanLII 19 (NB SC), 13 N.B.R. 188 (S.C.); Mann v. Mann (1974), 1973 CanLII 652 (ON SC), 1 O.R. (2d) 416 (H.C.J.)). This characterization is particularly important in the context of applications, some of which may not involve a formal exchange of pleadings between the parties and a formal submission of pleadings to the court. In contexts where the parties do not provide written pleadings, or where each party submits only one pleading to the court before the matter is heard, a plaintiff or applicant may not have an opportunity to plead res judicata until the hearing takes place. In such circumstances, the question then becomes whether it raised res judicata at the earliest opportunity, even if the only opportunity to do so was at the hearing of the application.
[53] As a matter of evidence, parties pleading res judicata should put both the decision from the prior proceeding, along with any pleadings exchanged, before the court in the subsequent proceeding in which res judicata is raised. Both the formal judgment and the pleadings may be relevant indicia of the subject matter of a judicial decision and may assist in illuminating the nature of the cause of action for the purposes of cause of action estoppel (Handley, at p. 106). Further, the fact that a party has put the formal judgment or the pleadings before the subsequent court may support a conclusion that a party pleaded res judicata. . Patrick Street Holdings Ltd. v. 11368 NL Inc. [res judicata as a rule of evidence]
In Patrick Street Holdings Ltd. v. 11368 NL Inc. (SCC, 2026) the Supreme Court of Canada considered 'cause of action estoppel'.
Here the court broadly considers res judicata, it's elements of cause of action estoppel and issue estoppel, and the closely-related doctrine of abuse of process by re-litigation:[32] Res judicata is one of several common law doctrines — including the doctrine of collateral attack and the doctrine of abuse of process by relitigation — that exist to prevent abuse of the judicial decision-making process (Danyluk, at para. 20; Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63, [2003] 3 S.C.R. 77, at para. 22). The doctrine provides that a dispute, once decided finally between parties, is not subject to relitigation by those parties (Danyluk, at para. 20; Hoque v. Montreal Trust Co., 1997 NSCA 153, 162 N.S.R. (2d) 321, at para. 21).
[33] There are two branches of res judicata: cause of action estoppel and issue estoppel (Angle v. M.N.R., 1974 CanLII 168 (SCC), [1975] 2 S.C.R. 248, at p. 254; Toronto (City), at para. 23). Cause of action estoppel bars the relitigation of a cause of action by either party, whereas issue estoppel precludes a litigant from rearguing an issue that was “fundamental to the decision arrived at” in a prior proceeding (Angle, at p. 255, citing Hoystead v. Commissioner of Taxation, 1925 CanLII 607 (UK JCPC), [1926] A.C. 155 (P.C.), at p. 165).
[34] Res judicata is and has long been a rule of evidence (S. N. Lederman, M. K. Fuerst and H. C. Stewart, Sopinka, Lederman & Bryant: The Law of Evidence in Canada (6th ed. 2022), at ¶19.86). Historically, when res judicata became part of English law in the 12th century, it was referred to as estoppel by matter of record — that is, estoppel arising from the written record of a court (Angle; W. S. Holdsworth, A History of English Law (3rd ed. 1944), vol. IX, at p. 147; W. Freedman, Res Judicata and Collateral Estoppel: Tools for Plaintiffs and Defendants (1988), at p. 7). Matters “solemnly recorded” by the court had to be “accepted as proof, so that no averment to contradict them [could] be received” (Holdsworth, at p. 147). In this sense, estoppel by matter of record permitted the admission of a court’s decision as proof of the findings contained therein (p. 147). A plea of estoppel involved producing the decision said to give rise to the estoppel in the subsequent proceeding to allow a court to conclude that the matters at issue in the prior proceeding were the same matters at issue in that proceeding (A. Caspersz, Estoppels and the Substantive Law (4th ed. 1915), at p. 460).
[35] While now referred to as res judicata, the doctrine remains a rule of evidence that applies to estop a party from introducing evidence to contradict a result that has been decided in a prior proceeding (Lederman, Fuerst and Stewart, at ¶19.86).
[36] While res judicata is a rule of evidence, it is designed to advance the interests of justice (Danyluk, at para. 19). The doctrine is founded on two overarching principles of public policy: a litigant’s interest in fairness, and society’s interest in the conclusion of disputes and the finality of judicial decisions (Toronto (City), at para. 38; Grandview v. Doering, 1975 CanLII 16 (SCC), [1976] 2 S.C.R. 621, at p. 636, citing Fenerty v. The City of Halifax (1920), 1920 CanLII 389 (NS CA), 50 D.L.R. 435 (N.S.S.C.), at pp. 437-38; K. R. Handley, Spencer Bower and Handley: Res Judicata (5th ed. 2019), at p. 4).
[37] With respect to the first principle, res judicata seeks to prevent the economic and psychological hardship resulting from a litigant being “twice vexed in the same cause” (Toronto (City), at para. 50, citing G. D. Watson, “Duplicative Litigation: Issue Estoppel, Abuse of Process and the Death of Mutuality” (1990), 69 Can. Bar Rev. 623, at p. 633; see also Penner v. Niagara (Regional Police Services Board), 2013 SCC 19, [2013] 2 S.C.R. 125, at para. 28). It is both unreasonable and unjust to permit a claim to be litigated afresh between parties to a dispute where the claim has been finally decided in a prior proceeding (Handley, at p. 4, citing New Brunswick Ry. Co. v. British and French Trust Corporation, [1939] A.C. 1 (H.L.)). In this way, res judicata focuses on the interests of the parties (Toronto (City), at para. 32).
[38] In addition to the individual focus of res judicata, the doctrine plays an important societal function. Our legal system places a high value on the finality of judicial decisions, an objective achieved by limiting the ability of parties to reopen disputes (Danyluk, at para. 18; British Columbia (Workers’ Compensation Board) v. Figliola, 2011 SCC 52, [2011] 3 S.C.R. 422, at para. 34; Tsaoussis (Litigation Guardian of) v. Baetz (1998), 1998 CanLII 5454 (ON CA), 41 O.R. (3d) 257 (C.A.), leave to appeal refused, [1999] 1 S.C.R. xiv). Finality is critical not only for the certainty of the parties, but also for the integrity of the judicial process (Hoque, at para. 77). Res judicata also serves to maintain respect for and public confidence in the administration of justice by guarding against inconsistent results and inconclusive proceedings (Danyluk, at para. 18). Indeed, res judicata gives judicial decisions an authority they would not have if they were subject to constant reassessment and variation (Tsaoussis).
[39] To advance the objective of finality, res judicata “requires litigants to put their best foot forward to establish the truth of their allegations when first called upon to do so” (Danyluk, at para. 18). As I will explain below, in the context of cause of action estoppel, res judicata requires a litigant to have advanced all arguments at the first proceeding that it could have had it exercised reasonable diligence. In this sense, a litigant is entitled only to one kick at the can (para. 18).
[40] Importantly, res judicata advances the objective of finality regardless of the correctness in law or fact of the prior decision that gives rise to the estoppel (Handley, at p. 6). This gives effect to the principle that a judicial decision made by a competent court is final and conclusive unless corrected on appeal (p. 6). For this reason, the correctness of a prior decision is not a relevant factor in determining whether res judicata applies to bar relitigation.
[41] While not its primary purpose, res judicata performs an additional societal function in facilitating access to justice. It does so by preventing duplicative litigation that drains court resources and the resources of the litigants (Danyluk, at para. 18).
[42] Closely related to the doctrine of res judicata is the doctrine of abuse of process by relitigation. Both res judicata and abuse of process by relitigation advance the policy grounds of finality and fairness (Toronto (City), at para. 38). However, abuse of process “transcends the interests of litigants and focuses on the integrity of the entire system” (Ontario v. O.P.S.E.U., 2003 SCC 64, [2003] 3 S.C.R. 149, at para. 12).
[43] The doctrine of abuse of process derives from a court’s inherent jurisdiction to manage its own procedures, and it applies based on a judge’s appreciation of the impact of relitigation on the repute of the administration of justice. Abuse of process by relitigation is often invoked where the strict preconditions to apply one of the branches of res judicata are not met, but where permitting relitigation of an issue or cause of action would nonetheless constitute a misuse of a court’s procedures (Toronto (City), at para. 37). In this sense, while abuse of process is “unencumbered” by the technical requirements of res judicata, it should be applied as a last resort to protect the repute of the administration of justice (para. 37, citing Canam Enterprises Inc. v. Coles (2000), 2000 CanLII 8514 (ON CA), 51 O.R. (3d) 481 (C.A.), at para. 55, per Goudge J.A., dissenting). It is “only when the rules of res judicata run out that it is useful to turn to” the doctrine of abuse of process (A. Zuckerman, Zuckerman on Civil Procedure: Principles of Practice (3rd ed. 2013), at p. 1244).
|
