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Estoppel - Issue Estoppel

. Kazen v. Whitten & Lublin Professional Corporation

In Kazen v. Whitten & Lublin Professional Corporation (Ont CA, 2020) the Court of Appeal sets out the test for issue estoppel:
[5] As the motion judge set out, relying on Angle v. Minister of National Revenue, 1974 CanLII 168 (SCC), [1975] 2 S.C.R. 248, the test for issue estoppel consists of three parts:
i. the same question has been decided;

ii. the judicial decision which is said to create the estoppel was final; and

iii. 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.
. Victoria University (Board of Regents) v. GE Canada Real

In Victoria University (Board of Regents) v. GE Canada Real (Ont CA, 2016) the Court of Appeal canvasses principles applicable to the application of issue estoppel:
(2) Issue Estoppel

[95] Under the heading of issue estoppel, I will first describe the applicable legal principles. Then I will address Revenue Properties #1 analysis of the freehold/leasehold distinction and the treatment accorded that issue by the Appeal Judge and the Majority. Next, I will consider whether the Appeal Judge was correct in concluding that the Majority erred in departing from Revenue Properties #1 by considering a potential freehold condominium project in the FMV. Lastly, I will address the treatment accorded to special circumstances.

(a) Legal Principles

[96] As Binnie J. explained in Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (CanLII), [2001] 2 S.C.R. 460, at para. 25, the three preconditions to the operation of issue estoppel are the following:
(1) that the same question is being decided;

(2) that the judicial decision which is said to create the estoppel was final; and

(3) that the parties to the judicial decision are the same persons as the parties to the proceedings in which the estoppel is raised or their privies.
[97] One of the key objectives of issue estoppel is judicial finality: “[t]he doctrine prevents an encore, and reflects the law’s refusal to tolerate needless litigation” (per Laskin J.A. in Minott, quoting from Holmstead and Watson, Ontario Civil Procedure, loose-leaf, vol. II, at s. 21. § 17[3]). More recently, the Supreme Court discussed issue estoppel in Penner v. Niagara (Regional Police Services Board), 2013 SCC 19 (CanLII), [2013] 2 S.C.R. 125, stating as follows, at para. 29:
The one relevant [doctrine] on this appeal is the doctrine of issue estoppel. It balances judicial finality and economy and other considerations such as fairness to the parties. It holds that a party may not relitigate an issue that was finally decided in prior judicial proceedings between the same parties or those who stand in their place. However, even if these elements are present, the court retains discretion to not apply issue estoppel when its application would work an injustice.
[98] However, as noted by Laskin J.A. in Minott, at p. 340, courts have not mechanically applied the doctrine every time the preconditions for its application have been satisfied:
That the courts have always exercised this discretion is apparent from the authorities. For example, courts have refused to apply issue estoppel in "special circumstances", which include a change in the law or the availability of further relevant material. 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.
. Lilydale Cooperative Limited v. Meyn Canada Inc.

In Lilydale Cooperative Limited v. Meyn Canada Inc. (Ont CA, 2019) the Court of Appeal expounded on the elements of issue estoppel:
(1) Did the motion judge err by applying the doctrine of issue estoppel?

[22] Issue estoppel is a branch of res judicata (the other branch being cause of action estoppel) which precludes the relitigation of issues previously decided in court in another proceeding: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63 (CanLII), [2003] 3 S.C.R. 77, at para. 23. There are three preconditions to invoking the doctrine of issue estoppel:
1) The issue must be the same as the one decided in the prior decision;

2) the prior judicial decision must have been final; and

3) the parties to both proceedings must be the same, or their privies: C.U.P.E. at para. 23, quoting from Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (CanLII), [2001] 2 S.C.R. 460, at para. 25.
[23] In C.U.P.E., an employee of the City of Toronto who worked as a playground supervisor was convicted of sexual assault of a boy under his supervision. When the employee grieved his dismissal by the City, the arbitrator determined that he was not bound by the findings of the criminal trial judge that formed the basis for the conviction and ordered the employee re-instated on the basis that he had not committed the sexual assault.

[24] One of the issues on the appeal was whether the doctrine of issue estoppel applied to preclude the arbitrator from making a different finding than the one made at the criminal trial. The stumbling block for applying issue estoppel was the third requirement: that the parties to both proceedings must be the same, or their privies, as the Crown and the City are not the same party nor is the City a privy of the Crown.

[25] In that context, the Supreme Court considered, and rejected dispensing with the third requirement of issue estoppel, known as “mutuality”, as has been done in some other jurisdictions, in order to be able to apply the doctrine. Arbour J. examined the rationales for and the consequences of abandoning the mutuality requirement in the United States. She concluded at para. 29:
What emerges from the American experience with the abandonment of mutuality is a twofold concern: (1) the application of the estoppel must be sufficiently principled and predictable to promote efficiency; and (2) it must contain sufficient flexibility to prevent unfairness. In my view, this is what the doctrine of abuse of process offers, particularly, as here, where the issue involves a conviction in a criminal court for a serious crime.
[26] Arbour J. observed that because the primary concern in that case was with the integrity of the criminal process rather than the traditional issue estoppel concerns such as costs and multiple vexatious proceedings, she was satisfied that issue estoppel did not apply. She stated at para. 32: “[f]or these reasons, I see no need to reverse or relax the long-standing application of the mutuality requirement in this case and I would conclude that issue estoppel has no application.”
. The Catalyst Capital Group Inc. v. VimpelCom Ltd.

In The Catalyst Capital Group Inc. v. VimpelCom Ltd. (Ont CA, 2019) the Court of Appeal stated this on issue estoppel:
[25] In Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (CanLII), [2001] 2 S.C.R. 460, at para. 25, the Supreme Court outlined the three requirements for issue estoppel:
1) The same question has been decided;

2) The judicial decision said to give rise to the estoppel is final; and

3) The parties to the judicial decision or their privies were the same persons as the parties to the proceeding in which the estoppel is raised or their privies.
Even if all three requirements are met, however, the court still has a residual discretion not to apply issue estoppel when its application would work an injustice: Danyluk, at paras. 62-63.
[26] The second and third of these requirements were not seriously contested in this court. Catalyst’s only argument on the third requirement is that parties can only be privies if the same question is involved in both proceedings. Catalyst does not argue that, should this court find that the same question is involved in both proceedings, the US Investors and Globalive were insufficiently connected to West Face to be its privies. Accordingly, the focus of these reasons is on the first requirement, that the question decided in the two proceedings be the same, as well as on the residual discretion.

[27] Different causes of action may have one or more material facts in common. Issue estoppel prevents re-litigation of the material facts that the cause of action in the prior action embraces: Danyluk, at para. 54. However, the question out of which the estoppel arises must be “fundamental to the decision arrived at” in the prior proceedings: Angle v. M.N.R., 1974 CanLII 168 (SCC), [1975] 2 S.C.R. 248, at p. 255. Accordingly, the question must be “necessarily bound up” with the determination of the issue in the prior proceeding for issue estoppel to apply: Danyluk, at paras. 24, 54.

....

[32] Canadian courts have consistently rejected the argument that a judicial finding is merely dictum or collateral because there was another sufficient basis for the judge’s decision. In Stuart v. Bank of Montreal (1909), 1909 CanLII 3 (SCC), 41 S.C.R. 516, the Supreme Court rejected the argument that a judicial finding that is “a distinct and sufficient ground for its decision [is] a mere dictum because there is another ground upon which, standing alone, the case might have been determined”: p. 534, per Duff J. (Fitzpatrick C.J. concurring), pp. 539-540, per Anglin J., quoting New South Wales Taxation Commissioners v. Palmer, [1907] A.C. 179 (P.C.), at p. 184. More recently, the Federal Court of Appeal held that a judge’s finding on one necessary element of a claim gave rise to issue estoppel even though the judge had earlier in his reasons reached a conclusion on another element that was sufficient to dispose of the claim: Pharmascience Inc. v. Canada (Health), 2007 FCA 140 (CanLII), 282 D.L.R. (4th) 145, at paras. 34-35.

....

[46] Catalyst argues that the motions judge erred in not exercising his residual discretion to permit Catalyst’s action to proceed. Relying on Danyluk, Catalyst argues that the motions judge’s analysis was cursory and that he erred in principle by failing to address the factors for and against the exercise of the discretion. Catalyst submits that applying issue estoppel results in an injustice to Catalyst because there has been no discovery of VimpelCom or UBS regarding the circumstances surrounding the sale of VimpelCom’s shares of Wind.

[47] I would not accept this argument. The court does have residual discretion, but its exercise is more limited in nature in this case because the Moyse Action was a court proceeding, not an administrative proceeding as in Danyluk: Danyluk, at para. 62. The passage in the motions judge’s reasons where he explicitly referred to residual discretion was brief. However, his conclusion, at para. 75, that Catalyst failed to put its “best foot forward” and is not entitled to a “second bite at the cherry” was reasonable. It must be read in light of the motions judge’s extensive reasons addressing Catalyst’s failure to advance its current claims in the Moyse Action and its attempt to re-litigate Newbould J.’s findings in the Moyse Action.

[48] Finally, I am not convinced that the application of issue estoppel in these circumstances would work an injustice. In Danyluk, the court found such an injustice because the appellant’s claim to employment commissions was never properly adjudicated due to procedural unfairness in the administrative proceedings the appellant pursued before commencing a civil action: para. 80. In contrast, in this case, Catalyst received a procedurally fair trial, the result of which this court upheld on appeal. While issue estoppel bars Catalyst from eliciting evidence and advancing new theories of liability against West Face, this is not a manifest injustice since Catalyst could have elicited that evidence and advanced those theories in the Moyse Action.
. Salasel v Cuthbertson

In Salasel v Cuthbertson (Ont CA, 2015) an issue was whether a plaintiff was precluded from claiming actual legal costs of a prior proceeding (to the extent that the earlier court had not awarded them) as damages in a subsequent proceeding. The lower court held that the earlier court's cost award set up an issue estoppel against such a claim. On issue estoppel generally the Court of Appeal stated:
[11] To invoke issue estoppel, a party must meet three pre-conditions: (i) the issue in the proceeding must be the same as the one decided in the prior decision; (ii) the prior judicial decision must have been final; and, (iii) the parties to both proceedings must be the same or their privies: Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63 (CanLII), [2003] 3 S.C.R. 77, at para. 23. The appellants acknowledge that the decision of the Supreme Court of Canada in the Prior Proceedings was a final one, and they accept that for purposes of their claim for legal fees as damages that the parties in the Prior Proceedings and the present action were the same or privies.

.....

[18] The appellants argue that the cost awards in the Prior Proceedings were not fundamental to the injunctive relief granted to Mr. Rasouli and therefore it is open to them to bring an action to recover legal costs as damages. In my view, the appellants’ position is incorrect and, instead, the following portions of the motion judge’s reasons accurately state the law on this point:
[27] An award of costs may not be the very subject matter of the litigation, but it is not incidental in the sense that the prior court did not specifically turn its mind to the issue … [T]he costs rulings form part of the conclusions “that were necessarily…determined in the earlier proceedings”: Danyluk v Ainsworth Technologies Inc., 2001 SCC 44 (CanLII), [2001] 2 SCR 460, at para 24.



[30] I agree with the authors of Clerk and Lindsell on Torts (20th ed.), 28-130, where they state definitively that, “[a] successful claimant cannot bring a fresh action against the defendant in order to recover as damages his ‘extra costs’, that is, the difference between the costs which the defendant was ordered to pay and the costs actually incurred…”. Courts across Canada have come to similar conclusions: See Humble v Vancouver Municipal & Regional Employees Union, 1989 CarswellBC 1299, at paras 86, 92, aff’d [1991] BCJ No 2995 (BCCA). This issue was addressed squarely by the Manitoba Court of Queen’s Bench in P&G Cleaners Ltd. v Johnson, [1996] MJ No 566 (Man QB), at para 17, which concluded that issue estoppel applies:
On the previous proceedings related to dispensing with Mr. Johnson’s consent, the issue arose as to whether he was entitled to solicitor and client costs of those proceedings based on the wording of Clause 5(a) above. I held that he was not entitled to solicitor and client costs. That is the precise issue which the respondent is seeking to re-litigate in these proceedings and is res judicata.
....

[20] Finally, the appellants submit that the motion judge erred by failing to consider whether he should exercise his residual discretion not to apply the doctrine of issue estoppel to the appellants’ claim for “extra costs”. As recalled by the Supreme Court of Canada in Penner v. Niagara Regional Police Services Board, 2013 SCC 19 (CanLII), [2013] 2 S.C.R. 125, at para. 35, even where the pre-conditions for issue estoppel are established, courts retain the discretion not to apply issue estoppel to ensure that no injustice results. Applying issue estoppel may work an injustice if the prior proceedings were unfair to a party or, even where they were not, if significant differences existed in the purpose, process and stakes of the two proceedings. The discussion in Penner took place in the context of whether any such significant differences existed between prior administrative proceedings and subsequent civil court proceedings such that it would work an injustice to apply the result of the former to the latter.
. College of Traditional Chinese Medicine Practitioners and Acupuncturists of Ontario v. Federation of Ontario Traditional Chinese Medicine Association (Committee of Traditional Chinese Medicine Practitioners & Acupuncturists of Ontario)

In College of Traditional Chinese Medicine Practitioners and Acupuncturists of Ontario v. Federation of Ontario Traditional Chinese Medicine Association (Committee of Traditional Chinese Medicine Practitioners & Acupuncturists of Ontario) (Ont CA, 2015) the Court of Appeal briefly set out the elements required for issue estoppel to apply to bar the re-arguing of an issue, and some useful comments on when parties are the 'same parties' for this purpose:
[3] In our view, the application judge did not err by refusing to entertain the appellants’ constitutional argument on the ground that it had been conclusively and finally determined against them in the prior proceeding. We agree with his conclusion that the required elements of issue estoppel were made out.

[4] The three preconditions for issue estoppel are:

1) the issue must be the same as the one decided in the prior decision;

2) the prior judicial decision must have been final; and

3) the parties to both proceedings must be the same or their privies.

See Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44 (CanLII), [2001] 2 S.C.R. 460, at para. 25.

....

[6] .... The applicable principle is that “litigation is conclusive upon issues actually brought before the court and upon any issues which the parties, exercising reasonable diligence, should have brought forward on that occasion”: Las Vegas Strip Ltd. v. Toronto (City) (1996), 1996 CanLII 8037 (ON SC), 30 O.R. (3d) 286 (Gen. Div.), aff’d (1997), 1997 CanLII 3841 (ON CA), 32 O.R. (3d) 651 (C.A.).

....

(3) Same parties

[9] The two individual appellants were parties to the Divisional Court proceeding as was the Federation of Ontario Traditional Chinese Medicine Association. All corporate appellants, except Committee of Certified Acupuncturists of Ontario, share the same registered address and they all share many of the same directors and officers, including the two individual appellants. In the context of these proceedings, this constitutes a sufficient degree of identification among the parties “to make it just to hold that the decision to which one was a party should be binding in the proceedings to which the other is a party”: Re EnerNorth Industries Inc., 2009 ONCA 536 (CanLII), 96 O.R. (3d) 1, at para. 62. In any event, even if the same parties requirement for issue estoppel is not strictly met, permitting the appellants to re-litigate the issue that was determined by the Divisional Court would amount to an abuse of process: see Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63 (CanLII), [2003] 3 S.C.R. 77, at para. 37.
. R v Dieckmann

In the criminal case of R. v. Dieckmann (Ont CA, 2017) the Court of Appeal sets out the basics for the doctrine of issue estoppel, and clarifies that it can operate not only with respect to fact-findings made in prior proceedings, but with respect to prior consent judgments:
[32] The trial judge described the applicable test for issue estoppel:

1) the same question was decided in the prior proceeding;

2) the judicial decision said to create the estoppel is final; and

3) the parties to the prior decision are the same persons as the parties to the proceedings in which the estoppel is raised.

She noted that if the preconditions were established, a court still had to determine whether, as a matter of discretion, issue estoppel ought to be applied.

[33] The trial judge dismissed the application on the basis that the consent judgment was not a decision on the merits and it was unclear that the issues in the two proceedings were the same.

[34] Ms. Dieckmann argues that the trial judge erred in finding that the test for issue estoppel was not met.

[35] Contrary to the trial judge’s conclusion, a consent judgment may be the basis for issue estoppel: Hardy Lumber Co. v. Pickerel River Improvement Co. (1898), 1898 CanLII 16 (SCC), 29 S.C.R. 211; and Re Ontario Sugar Co. (1911), 24 O.L.R. 332 (C.A.), leave to appeal to S.C.C. refused (1911), 1911 CanLII 8 (SCC), 44 S.C.R. 659.


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