Issue estoppel decision splits top court 4-3

By Cristin Schmitz April 19 2013 issue

In a 4-3 decision on issue estoppel, the Supreme Court has ruled that, in order to preserve fairness, courts retain a broad discretion to revisit issues previously decided by administrative tribunals.

The decision handed down April 5, after 15 months on reserve, permits an man to sue for damages for alleged police brutality, even though a police disciplinary tribunal previously dismissed his allegations: Penner v. Niagara (Regional Police Services Board) [2013] S.C.J. No. 19.

Notably, the seven judges divided deeply over the proper application of the doctrine of issue estoppel, which generally bars the re-litigation of the same issues between the same parties that were conclusively decided in a prior administrative or court proceeding.

On behalf of the four-judge majority, Justices and emphasized that the doctrine of issue estoppel allows courts to exercise discretion to ensure that no injustice results. Therefore, they said the doctrine calls for a case-by-case review of the circumstances to determine whether the application of issue estoppel would be unfair or unjust, even where the preconditions for its application have otherwise been met.

The majority ruled that the proper approach to issue estoppel is still governed by Danyluk v. Ainsworth Technologies Inc. [2001] S.C.J. No. 46, and has not been overtaken by later jurisprudence.

By contrast, the three-judge minority, led by Justices Louis LeBel and , vigorously argued that the courts’ residual discretion to refuse to apply issue estoppel is much narrower than argued by the majority, given that “the ultimate goal of issue estoppel is to protect the fairness of finality in decision-making and the avoidance of the relitigation of issues already decided by a decision-maker with authority to resolve them.”

Backed by Justice , the dissenters urged that the governing approach to issue estoppel was expressed by B.C. Workers Compensation Board v. Figliola [2011] S.C.J. No. 52. For the five judge-majority on that issue in Figliola, Justice Abella ruled that the administrative tribunal in question had limited statutory discretion to proceed with complaints already dealt with by another tribunal — while Justice Cromwell contended for the minority on that point that the tribunal had “flexible discretion” to decide whether to proceed with a complaint, after balancing the demands of finality and fairness.

Penner, the court’s latest pronouncement on issue estoppel, continues what has emerged as a fierce judicial debate, albeit with Justice Cromwell garnering a thin majority this time in favour of greater curial discretion not to apply issue estoppel.

“What the majority reasons in Penner teach us is concepts of fairness, as they inform the final leg of the issue estoppel test, will always be an important consideration,” said Penner’s counsel Julian Falconer of Toronto’s Falconer Charney. “So if the process from which issue estoppel is claimed is weighted unfairly in favour of one party over another, then issue estoppel may well be found to be inapplicable.

“It’s apparent that fairness considerations have to go beyond the factors itemized in Figliola and, in particular, notions of finality. Notions of finality are important, but they can’t be the only, and absolute, consideration,” Falconer said.

Ian Roland of Toronto’s Paliare Roland, counsel for the intervener Canadian Police Association, told The Lawyers Weekly the judgment leaves the law on issue estoppel confused.

Added counsel for the intervener Criminal Lawyers’ Association, Louis Sokolov of Toronto’s Sack Goldblatt Mitchell: “The application of the doctrine of issue estoppel is going to be highly fact-dependent and reviewed on a case-by-case basis.”

The Supreme Court’s majority overturned a 2010 Ontario Court of Appeal decision that threw out Wayne Penner’s civil damages claims against the Niagara police board, its chief of police and others. The Court of Appeal did so because a police disciplinary hearing, presided over by a retired police superintendent appointed under the Police Services Act by the police chief, determined that police had reasonable grounds to arrest Penner for causing a public disturbance in 2004, and did not use unnecessary force in doing so.

The Court of Appeal held that the doctrine of issue estoppel precluded Penner’s civil claims.

But the Supreme Court’s majority, which also included Chief Justice Beverley McLachlin and Justice , ruled that “it was unfair to the appellant to apply issue estoppel to bar his civil action.”

In particular, there was a significant difference between the purpose and scope of the discipline and civil proceedings, and Penner would not have reasonably expected that his damages claims would effectively be determined by the police hearing officer. Moreover, “it is unfair to use the decision of the chief of police’s designate to exonerate the chief in a subsequent civil action,” the majority held.

The dissenters argued that issue estoppel barred Penner’s civil claims. They urged that differences in the processes or procedures used by administrative tribunals and courts “should not be used as an excuse to override the principle of finality.”