Res Judicata OR Stare Decisis? – Doctrines Explained

Tuccaro v Canada, 2014 FCA 184

This was an appeal and cross-appeal from the TCC decision to allow a motion to strike certain parts of the taxpayer’s Notice of Appeal.   In determining the appeal, the FCA explained the doctrines of Res Judicata and Stare Decisis, and explained their different applications when using case law.   The distinction between the two and the uses that may be made of them is important for any litigator.

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Res Judicata vs Stare Decisis

In dealing with the propriety of the TCC’s striking of the taxpayer’s Treaty 8 claims on the basis of being “bound by established law regarding the legal effect of Treaty 8”, the court dealt with the difference between stare decisis and res judicata.  The FCA held that although the TCC used the phrase “res judicata” in rendering the decision, the true doctrine relied on was stare decisis (paras 12, 18).

Res Judicata encompasses two distinct doctrines of estoppel.  The SCC in Angle v. Minister of National Revenue, [1975] 2 SCR 248, described the two branches as: (1) “cause of action estoppel” which “precludes a person from bringing an action against another when the same cause of action has been determined in earlier proceedings by a court of competent jurisdiction”; and (2) “estoppel per rem judicatem also known as ‘issue estoppel’ [that applies] when some point or issue of fact has already been decided”.  (See also Genpharm Inc. v. The Minister of Health, Procter & Gamble Pharmaceuticals Canada, Inc. and the Procter & Gamble Company, 2002 FCA 290).

The requirements to establish either estoppel are essentially the same (para 13; see also 420093 B.C. Ltd. v. Bank of Montreal, 1995 ABCA 328).

Issue Estoppel is a discretionary doctrine that may grant relief but first requires proof that (1) the same question has been decided; (2) the judicial decision which is said to create the estoppel was FINAL; and (3) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raises or their privies (para 14; See also Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), [1967] 1 A.C. 853 at p. 935).  Issue estoppel extends to “the material facts and the conclusions of law or of mixed fact and law … that were necessarily (even if not explicitly) determined in the earlier proceedings” (Danyluk v. Ainsworth Technologies Inc,  2001 SCC 44).  It is linked to, and informed by, the need for finality to litigation.  Even if the conditions for res judicata are satisfied, the court must still consider whether the exercise of discretion in granting a remedy is appropriate. This involves balancing the public interest in the finality of litigation with the public interest in ensuring that justice is done on the facts of a particular case (para 27; see also Danyluk).

Stare Decisis, on the other hand, is a mandatory doctrine that binds lower courts to “particular findings of law made by a higher court to which the decisions of that lower court could be appealed, directly or indirectly” (para 18).  It applies only to questions of law, and not to questions of fact or mixed fact and law.

[NOTE: A great explanation of the law on stare decisi is in AG Canada v Carter, 2013 BCCA 435, paragraphs 54 to 60: Lower courts are bound to apply and follow the decisions of higher courts of the same jurisdiction on same or substantially similar issues so as to promote consistency in the law and application of law. This requires a distinction between ratio decidendi and obiter dicta to be made in a higher court’s decision: see also R. v. Henry, 2005 SCC 76. Where the lower court thinks that the higher court decision is wrong, the lower court must apply the higher court decision but find additional facts to assist reconsideration by a higher court:point by a higher court, if an appeal to that court should be pursued. This approach finds support in Canada v. Craig, 2012 SCC 43]

In seeking to apply either doctrine, litigants must first look to prior decisions and determine “what was actually decided” in the prior decision (para 19).

Conclusion

In this case, the prior FCA decisions relied on by the TCC made only findings of fact (insufficient evidence to prove entitlement, not a lack of entitlement), and therefore could not serve as the basis of stare decisis. Given that the parties (or privies) were different, res judicata would also not lie.  The TCC relied on the wrong doctrine, thereby making an error of law (para 22).

Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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