Simon's Megalomaniacal Legal Resources

Estoppel - Cause of Action Estoppel

. 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, which include cause of action estoppel:

[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.

. 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 stated the test for cause of action estoppel:

[13] The motion judge applied the test for cause of action estoppel set out recently by this court in The Catalyst Capital Group Inc. v. VimpelCom Ltd., 2019 ONCA 354, 145 O.R. (3d) 759, leave to appeal refused, [2019] S.C.C.A. No. 284. She stated:

There is a specific test that has to be met to establish this type of estoppel and it has four requirements to it as follows:

There is a final decision of a court of competent jurisdiction in a prior action. This is conceded by the responding parties and is not at issue here;

The second requirement is the parties to the subsequent litigation were parties to, or in privy with the parties to the prior action;

The third requirement, the cause of action in the prior action is not separate and distinct and;

Fourthly, the basis of the cause of the action and the subsequent action was argued or could have been argued in the prior action, if the parties had exercised reasonable diligence. [Emphasis in original.]

. The Catalyst Capital Group Inc. v. VimpelCom Ltd.

In The Catalyst Capital Group Inc. v. VimpelCom Ltd. (Ont CA, 2019) the Court of Appeal the court states as follows on the doctrine of cause of action estoppel:

[49] The purpose of cause of action estoppel is to prevent the re-litigation of claims that have already been decided. As expressed by Vice Chancellor Wigram in Henderson v. Henderson (1843), 67 E.R. 313, at p. 319, it requires parties to “bring forward their whole case.” The court thus has the power to prevent parties from re-litigating matters by advancing a point in subsequent proceedings which “properly belonged to the subject of the [previous] litigation”.

[50] For cause of action estoppel to apply, the basis of the cause of action and the subsequent action either must have been argued or could have been argued in the prior action if the party in question had exercised reasonable diligence: Grandview v. Doering, 1975 CanLII 16 (SCC), [1976] 2 S.C.R. 621, at p. 638. That said, I accept Catalyst’s submission that 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: Hoque v. Montreal Trust Co. of Canada, 1997 CanLII 1465 (NS CA), 1997 NSCA 153, 162 N.S.R. (2d) 321, at para. 37, leave to appeal refused, [1997] S.C.C.A. No. 656; Pennyfeather v. Timminco Ltd., 2017 ONCA 369 (CanLII), at para. 128, leave to appeal refused, [2017] S.C.C.A. No. 279.

[51] Like issue estoppel, cause of action estoppel also requires a final judicial decision and that the parties to that decision were the same persons or the privies to the parties to the present proceeding: Pennyfeather, at para. 128; Canam Enterprises Inc. v. Coles (2000), 2000 CanLII 8514 (ON CA), 51 O.R. (3d) 481 (C.A.), at para. 21, rev’d on other grounds, 2002 SCC 63 (CanLII), [2002] 3 S.C.R. 307. As these requirements were not seriously contested before us, I will not discuss them further.

....

[55] ... In Hoque, at para. 37, Cromwell J.A. (as he was then) outlined several factors that are relevant to whether a matter should have been raised in a prior proceeding. These include the following:

1) Whether the second proceeding is a collateral attack against the earlier judgment;

2) Whether the second proceeding relies on evidence that could have been discovered in the past proceeding with reasonable diligence; and

3) Whether the second proceeding relies on a new legal theory that could have been advanced in the past proceeding.

....

[58] Nor am I persuaded that the different legal claims Catalyst has advanced in this action bar the operation of cause of action estoppel. I acknowledge that the existence of a “separate and distinct” cause of action is a factor that might weigh against applying cause of action estoppel: Hoque, at para. 37. However, as Sharpe J. (as he was then) held in Las Vegas Strip Ltd. v. Toronto (City) (1996), 1996 CanLII 8037 (ON SC), 30 O.R. (3d) 286 (Gen. Div.), at p. 297, aff’d (1997), 1997 CanLII 3841 (ON CA), 32 O.R. (3d) 651 (C.A.), the law does not permit the manipulation of the underlying facts to advance a new legal theory. Similarly, this court has held that cause of action estoppel bars “a subsequent lawsuit relating to the same loss being advanced on a different cause of action”: Lawyers’ Professional Indemnity Co. v. Rodriguez, 2018 ONCA 171 (CanLII), 139 O.R. (3d) 641, at para. 47, leave to appeal refused, [2018] S.C.C.A. No. 128 (Emphasis added).