Supreme Court of Canada: Issue Estoppel Landscape Continually Being Reshaped


Issue Espoppel is being redefined by the Supreme Court of Canada since
Issue Espoppel is being redefined by the Supreme Court of Canada since Danyluk v. Ainsworth Technologies Inc., [2001] 2 S.C.R. 460, 2001 SCC 44 – see: October 27, 2011 British Columbia (Workers’ Compensation Board) v. Figliola and April 5, 2013 Penner v. Niagara (Regional Police Services Board)
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When the Supreme Court of Canada speaks, lawyers listen. But sometimes, it speaks with so many divergent voices that making out the core message gives practising lawyers a major headache.

One dizzying example is a decade-long wrestling match between factions of the court over the doctrine of issue estoppel, an arcane-sounding phrase that is anything but obscure to those in the legal trenches.

Estoppel motions are a vital weapon in a lawyer’s arsenal. Employed successfully, they can prevent a plaintiff from arguing the same issue in multiple legal proceedings.

“The issue is the legal equivalent of not liking the answer you got from mom, so you ask dad the same thing hoping for a different answer,” said Eugene Meehan, a partner with Supreme Advocacy LLP.

In a trilogy of decisions released in 2001, 2011 and 2013, the Supreme Court has catapulted back and forth over the proper use of estoppel. Its erratic meanderings have been both unusual and troubling in that a single vote carried the day in both of the most recent decisions.

The resulting legal “whiplash” has made it extremely difficult for counsel to advise their clients, said Peter Cavanagh, head of the national litigation group at Dentons Canada LLP.

Mr. Cavanagh said adjudicators may go in different directions on issue estoppel applications, depending on their interpretation of the Supreme Court’s mixed messages. This makes it tough for business, unions and organizations that routinely use adjudicative bodies – such as labour boards, human rights tribunals or those adjudicating professional conduct – to settle disputes or anticipate the course of future litigation.

In the first of the three rulings, known as Danyluk, the court was faced with a pay dispute between an employer and employee. Having lost her case before an employment standards officer, the employee set out to try her luck again with a lawsuit against her employer.

In a unanimous decision, the Supreme Court declined to bar her action.

Flash forward to a 2011 decision, Figliola, where a 5-4 majority backtracked on Danyluk.

The court, which included several new judges, said the need for finality overrode the notion of allowing litigation to proceed in multiple forums. Accordingly, it endorsed the use of issue estoppel to prevent a human rights tribunal from answering essentially the same question a workers compensation board had already decided.

Then, this month, the court effectively did a backflip. In a case known as Penner, a 4-3 majority resurrected the principles in Danyluk. They declined to apply estoppel in order to prevent a plaintiff from suing police for damages, notwithstanding the fact that he had already lost a complaint about the same matter at the local police services board.

The goal of allowing flexible fairness in a dispute had trumped bringing finality. But what had changed?

The most important factor was simply that Madam Justice Marie Deschamps, who had voted with the majority in Figliola, had retired. A new judge – Madam Justice Andromache Karakatsanis – united with the Figliola minority; her swing vote propelling them to a majority in Penner.

Conspicuously, the majority opinion, written by Mr. Justice Thomas Cromwell, failed to even mention Figliola. Mr. Cavanagh noted that the minority judges “did not try to conceal their disappointment at the failure of the majority to do so.”

While some may see these gyrations as being par for the course on a nine-judge court, others would like the Supreme Court to apply the notion of finality to its own work, lest businesses be left in confusion about how to tackle a legal issue that arises constantly.

“The failure of our highest court … to accommodate the competing interests at stake is unfortunate and will undoubtedly contribute to continued uncertain and confusion by counsel, administrative tribunals and judges alike,” Mr. Cavanagh said. “The philosophical division within the court, as it is presently constituted, may mean that a clarifying decision will not come soon.”

On a more structural level, the chronology of the cases also highlights the dramatic difference that can result when a case is heard by a bench of seven, rather than nine, judges.

“Because of the way the [bench] on the Penner panel was drawn up, more troops were in Justice Cromwell’s corner,” Mr. Meehan said. “The Supreme Court of Canada – the final court or fairness – is ironically, and by necessity, a numbers game. It all came down to which way Justice Karakatsanis was going to vote.”

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