Regrettably, Canadian courts have not always done an adequate job of distinguishing between the two discrete branches of res judicata — i.e., (i) issue estoppel and (ii) cause of action estoppel – nor in aligning those two forms of res judicata with the related but separate doctrine of (iii) abuse of process.
Helpfully, the recent ruling in Erschbamer v. Wallster, 2013 BCCA 76, not only provides a clear and succinct overview of the three doctrines, but also clarifies several under-developed aspects of the law.
The Court of Appeal commenced with a useful summary of the essential nature of each of the three doctrines (emphasis added):
[12] …The [res judicata] doctrine has two aspects, issue estoppel and cause of action estoppel. In brief terms, issue estoppel prevents a litigant from raising an issue that has already been decided in a previous proceeding. Cause of action estoppel prevents a litigant from pursuing a matter that was or should have been the subject of a previous proceeding. If the technical requirements of issue estoppel or cause of action estoppel are not met, it may be possible to invoke the doctrine of abuse of process to prevent relitigation of matters.
The issue for the Court was whether one or more of these doctrines justified striking out portions of the defence in the current proceeding, based on the outcome of an earlier proceeding involving the same parties.
Both actions involved neighbouring landowners:
- In the earlier action, Ms W (as plaintiff) had sued Ms E (as defendant), seeking the cancellation of an easement and restrictive covenant over Ms W’s property. Ms W was wholly unsuccessful in this first proceeding, both at trial and on appeal.
- In the second (and current) action, the previous defendant, Ms E, sued Ms W to enforce the same easement and restrictive covenant, which Ms W was now violating. In her defence to the second proceeding, Ms W raised several arguments which — it was alleged — had or could have been raised by her (as plaintiff) in the first action. On this basis, the trial judge struck out those aspects of Ms W’s defence.
The Court of Appeal affirmed the trial judge’s decision to strike out one of Ms W’s defences, but not a second, and would have justified both results on the basis of either cause of action estoppel or abuse of process. Issue estoppel, however, was found to be inapplicable.
In rejecting the relevance of issue estoppel, Tysoe J.A. noted that the doctrine requires:
- that the same question has been decided;
- that the judicial decision which is said to create the estoppel was final; and
- that the parties to the earlier decision (or their privies) are the same persons as the current parties (or their privies).
In the present case, the parties were the same, and the earlier decision was final, but it could not be said that the very issue of fact, or of law, or of fact and law, which was now raised by Ms W in her defence had been clearly determined in the first proceeding.
In contrast, the Court confirmed that the separate doctrine of cause of action estoppel is triggered where:
- there is a final decision of a court of competent jurisdiction in the prior action;
- the parties to the subsequent litigation were parties to, or are in privity with the parties to, the prior action;
- the cause of action in the prior action is not separate and distinct; and
- the basis of the cause of action and the subsequent action was argued or could have been argued in the prior action if the parties had exercised reasonable diligence.
Thus, in contrast to issue estoppel, cause of action estoppel will apply not only where a matter was previously determined, but also where it could reasonably have been determined (had the parties raised it) in the earlier proceeding. Unlike issue estoppel, however, a single overlapping issue will be insufficient to trigger cause of action estoppel. What must have been actually (or potentially) determined in the earlier proceeding is an entire “cause of action.”
As the British Columbia Court of Appeal noted, the very name “cause of action estoppel” is potentially misleading, as it suggests that the doctrine only prevents a plaintiff from relitigating a cause of action previously determined. As the Court noted, the doctrine is equally applicable to a party who was previously, or is currently, a defendant. Although the Court acknowledged that it was aware of no cases like the present one, it concluded that Ms W (as plaintiff in the earlier proceeding) was now prevented by cause of action estoppel from raising a defence (as defendant in the current proceeding):
[17] Hence, cause of action estoppel can apply in situations where the estopped litigant is the defendant in the first proceeding and the plaintiff in the second proceeding…. [or]…. where the estopped litigant is the plaintiff (or petitioner) in the first proceeding and the defendant in the second proceeding. …. A defendant should not be permitted to raise, as a defence, an issue which could have and should have been raised in a previous proceeding between the same parties…
The Court was prepared to construe the concept of ”cause of action” broadly, and found that an estoppel arose because of the extensively overlapping legal and factual issues common to the two proceedings.
For this reason, one of Ms W’s defences (which she could and should have raised as part of her claim in the first proceeding) was struck out. A second defence was permitted to remain, however, on the grounds that it was based on matters that post-dated the conclusion of the first proceeding.
In closing, and in obiter, the Court confirmed that it would, in any event, have reached the same conclusion by applying the doctrine of abuse of process. As Justice Tysoe noted, this latter doctrine was available to the court in circumstances where either issue estoppel or cause of action estoppel might otherwise have been applied, but was inapplicable because of a failure to satisfy one or more of the technical requirements of those branches of res judicata.
The McCarthy Tétrault Opinions Group consists of members of the firm’s litigation department whose practices focus on written advocacy and the provision of strategic advice and opinions in the context of complex business disputes and transactions. The members of the Opinions Group are Anthony Alexander, Martin Boodman, Brandon Kain, Hovsep Afarian and Kirsten Thompson.
