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Estoppel - Res Judicata - Exceptions

Abuse of Process - Collateral Attack

Apotex Inc. v. Schering Corporation (Ont CA, 2018)

In this case 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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