“The scope of the principle of res judicata, which prevents the re-litigation of issues previously and finally decided, was set out over 150 years ago in the leading British case of Henderson v. Henderson (1843), 3 Hare 100, 67 E.R. 313 (Eng. V.-C.) at 319. In that decision, which was adopted into Canadian law by our Supreme Court (see, for example, Maynard v. Maynard (1950), [1951] S.C.R. 346 (S.C.C.); Doering v. Grandview (Town) (1975), [1976] 2 S.C.R. 621, Vice-Chancellor Wigram stated at p. 115:
I believe I state the rule of the Court correctly when I say that, where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward only because they have from negligence, inadvertence or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.
(as cited in Grandview v. Doering, at p. 634)
The breadth of the principle of issue estoppel and its relationship to res judicata is set out by Laskin J.A., writing for the Court of Appeal for Ontario in Minott v. O’Shanter Development Co. (1999), 42 O.R. (3d) 321 (Ont. C.A.), at paras. 16-17, as follows:
16 I will first discuss the general principles underlying issue estoppel and then apply them to this case. Issue estoppel prevents the relitigation of an issue that a court or tribunal has decided in a previous proceeding. In this sense issue estoppel forms part of the broader principle of res judicata. Res judicata itself is a form of estoppel and embraces both cause of action estoppel and issue estoppel. Cause of action estoppel prevents a party from relitigating a claim that was decided or could have been raised in an earlier proceeding…. Issue estoppel is narrower than cause of action estoppel. It prevents a party from relitigating an issue already decided in an earlier proceeding, even if the causes of action in the two proceedings differ.
17 The overall goal of the doctrine of res judicata, and therefore of both cause of action estoppel and issue estoppel, is judicial finality. “The doctrine prevents an encore, and reflects the law’s refusal to tolerate needless litigation.”
[Footnotes omitted]
The rationale for the application of the principle of issue estoppel was pithily described by Binnie J., writing for the Supreme Court of Canada in Danyluk v. Ainsworth Technologies Inc., [2001] 2 S.C.R. 460 (S.C.C.), at para. 18, as follows:
18 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.
The three-part test for the application of issue estoppel was adopted by the majority of the Supreme Court of Canada in Angle v. Minister of National Revenue, [1976] 2 S.C.R. 248 (S.C.C.), at p. 254. The Angle test was originally set out in the decision of Lord Guest of the British House of Lords in Carl-Zeiss-Stiftung v. Rayner & Keeler Ltd., [1967] 1 A.C. 853 (Eng. H.L.), at p. 935, as:
(1) that the same question has been decided;
(2) that the judicial decision which is said to create the estoppel was final; and,
(3) 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….
(See also Danyluk v. Ainsworth Technologies Inc., , at para 25.)
The nine following additional principles, derived from further authorities, are relevant to the consideration of issue estoppel in this case:
- The issue out of which the estoppel is said to arise must have been “‘fundamental” to the decision arrived at in the earlier proceedings (Angle v. Minister of National Revenue, at pp. 255, 265-66).
- The breadth of issue estoppel “…extends to the material facts and the conclusions of law or of mixed fact and law (‘the questions’) that were necessarily (even if not explicitly) determined in the earlier proceedings” (Danyluk v. Ainsworth Technologies Inc., at para. 24).
- Issue estoppel encompasses “issues which, although not expressly raised in the previous case, are necessarily assumed in it or negatived by it” (Allen v. Morrison (2006), 139 C.R.R. (2d) 324(Ont. S.C.J.), at para. 21, citing Sopinka, Lederman and Bryant, The Law of Evidence in Canada, 2nd ed. (Toronto: Butterworths, 1999), at p. 1084-85)).
- Issue estoppel applies with equal effect to consent judgments (R. v. Dieckmann, 2017 ONCA 575, 355 C.C.C. (3d) 216(Ont. C.A.), at para. 35, citing Hardy Lumber Co. v. Pickerel River Improvement Co. (1898), 29 S.C.R. 211(S.C.C.); and Ontario Sugar Co., Re (1911), 24 O.L.R. 332 (Ont. C.A.), leave to appeal refused, (1911), 44 S.C.R. 659 (S.C.C.); Arslan v. Sekerbank T.A.S., 2016 SKCA 77, 480 Sask. R. 235 (Sask. C.A.), at para. 100).
- “The issue that is estopped may be an unstated premise underlying the consent to judgment where that premise is a prerequisite to the conclusion reached by the parties in the consent” (Arslan v. Sekerbank T.A.S., at para. 100, citing Donald L. Lange, The Doctrine of Res Judicata in Canada, 3d ed (Toronto: LexisNexis, 2010), at p. 359)).
- The court has the discretion to refuse to apply issue estoppel when to do so would cause unfairness or work an injustice (Minott v. O’Shanter Development Co., at para 49; Danyluk, at para. 33). In doing so, 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” (Danyluk, at para. 80).
- But that discretion must be “very limited in application” (Naken v. General Motors of Canada Ltd., [1983] 1 S.C.R. 72(S.C.C.), at p. 101, speaking of the discretion regarding res judicata).
- When a party claims that newly discovered facts or materials, create special circumstances that overcome the application of issue estoppel, the court will look to the exercise of due diligence. The person seeking to relitigate an issue must demonstrate that the new fact or materials could not have been ascertained by the exercise of reasonable diligence at the time of the first action. (Grandview v. Doering, at pp. 626, 635-39; Minott v. O’Shanter Development Co., at para. 51).
- Issue estoppel applies to decisions of arbitrators and administrative tribunals (Sopinka, Lederman and Bryant, The Law of Evidence in Canada, 5th ed., (Toronto: Butterworths, 2018) at p. 1416, para. 19.70; Minott v. O’Shanter Development Co., at para. 18; Rasanen v. Rosemount Instruments Ltd. (1994), 17 O.R. (3d) 267(Ont. C.A.)). As Abella J.A., as she then was, wrote for the court in Rasanen v. Rosemount Instruments Ltd., at para. 37:
[T]he policy objectives underlying issue estoppel, such as avoiding duplicative litigation, inconsistent results, undue costs, and inconclusive proceedings, are enhanced in appropriate circumstances by acknowledging as binding the integrity of tribunal decisions.
- Issue estoppel can even apply to interlocutory orders in the same proceeding. In Earley-Kendall v. Sirard, 2007 ONCA 468, 225 O.A.C. 246(Ont. C.A.), McFarland J.A., writing for the court, adopted this statement by E. Macdonald J. in Ward v. Dana G. Colson Management Ltd. (1994), 24 C.P.C. (3d) 211(Ont. Gen. Div.) at 218, aff’d. [1994] O.J. No. 2792 (Ont. C.A.):
A decision in an interlocutory application is binding on the parties, at least with respect to other proceedings in the same action. I agree with the submission that the general principle is that it is not open for the court, in a case of the same question arising between the same parties, to review a previous decision not open to appeal. If the decision was wrong, it ought to have been appealed within the appropriate time-frames. This principle is not affected by the fact that the first decision was pronounced in the course of the same action. See Diamond v. Western Realty Co., [1924] S.C.R. 308.”
Spadacini-Kelava v. Kelava, 2020 ONSC 7907 (CanLII) at 102-106