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Date: |
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Docket: |
L010910 |
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Registry: Vancouver |
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IN THE SUPREME COURT OF BRITISH COLUMBIA |
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BETWEEN: |
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HAZEL RUTH WITHLER AND |
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PLAINTIFFS |
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AND: |
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ATTORNEY GENERAL OF CANADA |
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DEFENDANT
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BROUGHT PURSUANT TO THE CLASS
PROCEEDINGS ACT,
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REASONS FOR JUDGMENT |
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Counsel for the plaintiffs |
J. J. Arvay, Q.C.,
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Counsel for the defendant |
D.Sgayias, Q.C.,
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Date and Place of Hearing/Trial: |
May 28-29, 2002 |
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Vancouver, BC |
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Introduction
[1] The plaintiffs, Hazel Withler and Patricia McNaughton, certified to represent the class(“Withler”) in this action, apply to strike out portions of the statement of defence of the Attorney General of Canada on the grounds of res judicata or abuse of process.
[2] In this action Withler claims that the death benefit/life insurance provisions of the Public Service Superannuation Act R.S.C. 1985, c. P-36, Part II, and Regulations discriminate on the basis of age and infringe s. 15 of the Canadian Charter of Rights and Freedoms. Withler also claims damages based on the amount that would have been paid to the class without the alleged discriminatory provisions. These damages are quantified at $1.8 billion.
[3] Withler says that the defendant is estopped from denying the discrimination because in a decision of the Federal Court of Canada, Margolis v. Canada (2001), 201 F.T.R. 55, 2001 FCT 85, the Federal Court decided that the provisions of the Public Service Superannuation Act which are in issue in the Whithler claim were discriminatory. In her claim, Mrs. Margolis was awarded $148,000 in damages but she did not seek any declaratory relief as to the constitutionality of the impugned law.
[4] The issue before the court on this application is whether in the circumstances of this case the doctrine of res judicata ought to apply even though the parties in the two actions are not identical. The plaintiffs also argue that the doctrine of abuse of process should be applied to prevent relitigation of the question determined against the Government of Canada in the Margolis case.
Background
[5] The facts which form the background to this action are not in dispute. It is convenient to quote, with some minor changes, from the brief of the Attorney General of Canada.
A. The Present Action
(1) The present action challenges the constitutional validity of an element of the Supplementary Death Benefit Plan (“the Plan”) under the Public Service Superannuation Act. The Plan provides current and retired public servants with a form of life insurance. The amount of that insurance decreases once the participant in the Plan reaches a specified age, subject always to a guaranteed minimum benefit. The benefit payable under the plan is subject to a reduction of one-tenth for every year of age in excess of 60 attained by a participant. (the “Reduction Provisions”)
(2) The plaintiffs are beneficiaries of participants in the Plan. Under the Plan, the participant may designate as beneficiary the participant’s estate, any person over age 18, or a charitable or similar organization. The plaintiffs are beneficiaries of participants who at the time of their death had passed the age at which the amount payable under the Plan began to decrease.
(3) The plaintiffs allege that the reduction of the amount payable under the Plan upon the participant reaching the specified age is discrimination on the basis of age that infringes s. 15 of the Canadian Charter of Rights and Freedoms. They claim relief, principally:
(a) a declaration pursuant to s. 52 of the Constitution Act, 1982 that the impugned legislative provisions are inconsistent with s. 15 of the Charter; and
(b) an order pursuant to s. 24(1) of the Charter, or under common law or equitable principles, for payment of the difference between the amount paid under the Plan and the amount that would have been paid if the Plan did not provide for the reduction by reason of the age of the Plan participant.
(4) The defendant has joined issue with the plaintiffs both as to the alleged infringement of the Charter and as to the proper remedy, if any.
(5) On consent of the defendant, the present action has been certified as a class proceeding by Order of this court dated November 2, 2001.
B. The Fitzsimonds Action
(6) There is a companion action. Joan Helen Fitzsimonds has brought a similar constitutional challenge to the Canadian Forces Supplementary Death Benefit Plan (“the CF Plan”).
(7) The CF Plan is similar in that it provides for life insurance that decreases once the participant reaches a specified age, subject always to a guaranteed minimum benefit.
(See Canadian Forces Superannuation Act, R.S.C. 1985, c. C-17. Part II.)
(8) The plaintiffs in the Fitzsimonds action allege that the reduction of the amount payable under the CF Plan upon a participant reaching the specified age is discrimination on the basis of age that infringes s. 15 of the Charter. She claims the same sorts of relief under s. 52 of the Constitution Act and s. 24(1) of the Charter, as are claimed in the present action.
(9) The defence of the Fitzsimonds action is identical to that in the present action. The issues include:
(a) whether the use of age in the CF Plan constitutes discrimination within the meaning of s. 15 of the Charter;
(b) alternatively, whether the use of age in the CF Plan is a reasonable limit within the meaning of s. 1 of the Charter;
(c) whether the plaintiff has standing to seek any remedy under s. 24(1) of the Charter;
(d) whether the remedy for any infringement of the Charter lies in s. 52(1) of the Constitution Act, 1982, and not in s. 24(1) of the Charter; and
(e) whether any remedy under s. 52(1) of the Constitution Act, 1982 should expand the benefits under the CF Plan.
(10) On consent of the defendant, and in conjunction with the present action, the Fitzsimonds action has been certified as a class proceeding by order of this court on November 2, 2001.
C. The Margolis Action
(11) The plaintiffs in both the present action and the Fitzsimonds action contend that the defendant should be precluded from defending the actions because of the decision of the Federal Court, Trial Division in Margolis v. Canada.
(12) The Margolis action was brought by Ruth Ann Margolis and the Estate of Leo Margolis. Ruth Ann Margolis was the designated beneficiary of the benefit payable under the Supplementary Death Benefit Plan on the death of Dr. Leo Margolis, a retired public servant. The plaintiffs allege that the reduction in the amount payable under the Plan by reason of Dr. Margolis’ age discriminated against him and also the plaintiffs, contrary to s. 15 of the Charter. As relief, the plaintiffs claimed a sum said to be the difference between an unreduced benefit and the benefit actually paid under the Plan. Apart from interest on that sum, the plaintiffs sought no other remedy.
(13) The defendant Crown joined issue with the Margolis plaintiffs on the issue of discrimination under s. 15 of the Charter. The defendant Crown did not pursue the following issues:
(a) whether the use of age is a reasonable limit within the meaning of s. 1 of the Charter;
(b) whether the plaintiffs had standing to seek a remedy under s. 24(1) of the Charter;
(c) whether the remedy for any infringement of the Charter lay in s. 52(1) of the Constitution Act, 1982, and not in s. 24(1) of the Charter; and
(d) whether any remedy under s. 52(1) of the Constitution Act, 1982 should expand the benefits under the Plan.
(14) Mr. Justice Campbell of the Federal Court, Trial Division concluded that the impugned legislation infringed the rights of the Margolis plaintiff under s. 15 of the Charter. He awarded the plaintiffs damages under s. 24(1) of the Charter.
(15) The defendant Crown filed an appeal against the Order of Campbell J. Subsequent to the commencement of the present action and the Fitzsimonds action, that appeal was discontinued.
D. This Application
(16) The plaintiffs seek an order that, by virtue of the decision in Margolis v. Canada, the defendant is estopped or otherwise barred from defending the present action.
[6] Both parties rely on expert opinions of actuaries as to the consequences to the Plan if this Court grants the relief sought in this action. The expert report of the government actuary, Mr. Hébert, tendered as evidence on this application by the Federal Government, discloses that there is a $1.8 billion surplus in the government accounts allocated to fund the death benefit under the Plan. According to Mr. Hébert the cost to pay the plaintiffs’ claims if they were successful in this case is $1.8 billion. Mr. Hébert expresses the opinion that without the Reduction Provisions, the Plan is not sustainable on an ongoing basis. Mr. Christie, an actuary whose opinion was tendered by the plaintiffs, accepts Mr. Hébert’s calculation of the cost to fund the plaintiffs’ claims. Mr. Christie described various changes that could be made to the Plan so that it would be sustainable on an ongoing basis.
Position of the Parties
[7] I will summarize the main points made by the parties in their able oral and written submissions.
Plaintiffs
[8] The plaintiffs argue that the interests of justice and finality favour the plaintiffs’ application in this matter for the following reasons:
· The doctrine of res judicata does not require that the parties to both actions be the same. Alternatively if mutuality of the parties is a requirement of res judicata, the Withler class and Mrs. Margolis are privies.
· The issue of the constitutionality of the Plan was determined against the federal government and the government should not be able to relitigate the issue. The administration of justice will be brought into disrepute if there is one law for Mrs. Margolis and another law for Mrs. Withler.
· The decision not to run a s. 1 constitutional defence was entirely considered by counsel for the Attorney General and their clients. It was not an inadvertent decision not to defend the Margolis action on the basis of s. 1. The federal government should explain why it decided to forego a s. 1 defence and why it discontinued the appeal.
· If Mrs. Margolis had invoked s. 52 of the Constitution Act the situation would not be different than it is now. Although she didn’t, in her statement of claim, use precise language tracking s. 52, in substance she challenged the constitutionality of the Reduction Provisions in the Plan. She would not otherwise have obtained her remedy under s. 24 if the court had not expressly or impliedly ruled that the law infringed s. 15.
· There is no question that the federal government was aware of the interests that were at stake in the Margolis action.
· The only evidence in support of the claim that justice requires re-litigation is that of Mr. Hébert. Mr. Hébert was available to the government in the Margolis case. What is the purpose of the Hébert Report? Is it to show that there is a s. 1 defence? The plaintiffs say that the purpose of the Hébert Report is to show that the “sky will fall” if the Withler case is not allowed to be re-litigated. Mr. Hébert considers in his report what will happen immediately. He looks into the future by way of crystal ball gazing. The plaintiffs say that Mr. Hébert cannot speak for Parliament. He does not know Parliament what would do with this plan in the event that this litigation is successful.
· The plaintiffs’ expert, Mr. Christie, was asked whether Mr. Hébert had considered all the options. Mr. Christie concluded that there are other options to maintain the existence of the plan without affecting its solvency. The federal government says that the interests of justice require there be litigation of the constitutionality of the Act. However, the plaintiffs say there is no injustice in preventing the government from litigation. There is a surplus in the insurance benefit account of $1.8 billion and the amount required to pay the beneficiaries calculated by Mr. Hébert is $1.8 billion. That is, the cost of curing the unconstitutional behaviour retroactively is the same as a surplus. There is justice in that. Even if all the claimants in the Withler action succeed, the plan can continue into the future, according to Mr. Christie.
Federal Government
[9] The Federal Government argues that neither res judicata nor abuse of process are applicable in the circumstances of this case for the following reasons:
· The parties to the Margolis litigation and the Withler litigation are not the same, therefore the doctrine of res judicata does not apply.
· Even if res judicata does apply,the court retains a residual discretion to refuse to apply it, and in this case ought to exercise that discretion to permit relitigation.
· The Court’s inherent power to prevent abuse of its process may be invoked in cases where the doctrine of res judicata does not apply but the concept is narrower than res judicata and ought not to be invoked in this case because here the interests of justice outweigh the considerations of finality.
· Finality is less important where no personal litigant is being “twice vexed”.
· The defence raises substantial constitutional issues, only one of which was raised in the Margolis action.
· The impact both in terms of dollars, and persons affected, is significant.
· Finality is less of a factor in public law litigation.
· The Fitzsimonds action will not be res judicata even if this action is, and therefore there is the possibility of inconsistent results.
·
Analysis
Definition of res judicata
[10] I begin my analysis of the issues raised on this application with an examination of res judicata, what it is, and when it is applicable. In his decision in Danyluk v. Ainsworth Technologies Inc., [2001] 2 S.C.R. 460, Binnie J. described res judicata at paras. 18 and 20:
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 law has developed a number of techniques to prevent abuse of the decision- making process. One of the oldest is the doctrine of estoppel per rem judicatem with its roots in Roman law, the idea that a dispute once judged with finality is not subject to relitigation. The bar extends both to the cause of action thus adjudicated (variously referred to as claim or cause of action or action estoppel), as well as precluding relitigation of the constituent issues or material facts necessarily embraced therein (usually called issue estoppel):
[11] At para. 24 Binnie J. continued with a definition of issue estoppel:
Issue estoppel was more particularly defined by Middleton J.A. of the Ontario Court of Appeal in McIntosh v. Parent, [1924] 4 D.L.R. 420, at p. 422:
When a question is litigated, the judgment of the Court is a final determination as between the parties and their privies. Any right, question or fact distinctly put in issue and directly determined by a Court of competent jurisdiction as a ground of recovery, or as an answer to a claim set up, cannot be re-tried in a subsequent suit between the same parties or their privies, though for a different cause of action. The right, question, or fact, once determined, must, as between them, be taken to be conclusively established so long as the judgment remains. [emphasis in Danyluk]
Preconditions to the operation of res judicata
[12] Next Binnie J. turned to the preconditions to the application of res judicata. He stated at para. 25:
The preconditions to the operation of issue estoppel were set out by Dickson J. in Angle v. Canada (Minister of National Revenue), [1975] 2 S.C.R. 248.
(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.
[13] Having established the preconditons to res judicata in any given case, Binnie J. explained that there is a second step in which the court must exercise its discretion in order to determine if res judicata ought to be applied.
[14] Applying these concepts to the Withler case, the first step in the analysis is to determine whether the preconditions apply. It is clear that the plaintiffs in the Withler case are not the same as the plaintiff in Margolis. However, the plaintiffs say that Mrs. Withler and Mrs. Margolis are privies, but more fundamentally that it is not always necessary to establish the precondition of mutuality, where the same issue has been decided against a party.
Mutuality or privity of Mrs. Whithler and Mrs. Margolis
[15] I return to the Danyluk case and a review of what Binnie J. said on mutuality.
[16] In the Danykuk case, the question of privity did not arise on the facts, but Binnie J. stated as follows at para’s. 59 and 60:
(c) 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.
This requirement assures mutuality. If the limitation did not exist, a stranger to the earlier proceeding could insist that a party thereto be bound in subsequent litigation by the findings in the earlier litigation even though the stranger, who became a party only to the subsequent litigation, would not be: [citations omitted]. The mutuality requirement was subject to some critical comment by McEachern C.J.B.C. when sitting as a trial judge in Saskatoon Credit Union Ltd. v. Central Park Ent. Ltd. (1988), 22 B.C.L.R. (2d) 89 (S.C.), at p. 96, and has been substantially modified in many jurisdictions in the United States: See Holmested and Watson, supra, at 21 & 24, and G.O. Watson, “Duplicate Litigation: Issue Estoppel, Abuse of Process and the Death of Mutuality: (1990), 69 Can. Bar Rev. 623. [emphasis added]
…
The concept of “privity” of course is somewhat elastic. The learned editors of J. Sopinka, S.N. Lederman and A.W. Bryant in The Law of Evidence in Canada (2nd ed. 1999), at p. 1088 say, somewhat pessimistically, that “[i]t is impossible to be categorical about the degree of interest which will create privity” and that determinations must be made on a case-by-case basis. In this case, the parties are identical and the outer limits of “mutuality” and of the “same parties” requirement need not be further addressed.
[17] The plaintiffs argue that Mrs. Withler and the class she represents are privies of Mrs. Margolis and therefore the plaintiffs say they come within the doctrine of res judicata in its traditional form. The plaintiffs note that Mrs. Margolis would unquestionably be a member of the class in the present proceedings and they are thus properly considered privies. They have a single identity of interest.
[18] I do not agree that Mrs. Margolis and Mrs. Withler are privies. I agree with the Attorney General that the plaintiffs were not parties to the Margolis action, nor are they privies of Ruth Ann Margolis and the Estate of Leo Margolis. The plaintiffs are merely pursuing the same sort of claim as that of the Margolis plaintiffs. They are not asserting any interests of the Margolis plaintiffs just as the Margolis plaintiffs asserted no interest apart from their own. The Margolis plaintiffs brought their action solely on their own behalf. They claimed a monetary award for themselves. They did not seek to proceed by way of a representative or class action. All they have in common is an argument that their rights are similarly infringed by the Reduction Provisions. The Attorney General argues correctly that the present plaintiffs are attempting to retroactively constitute the Margolis action as a class action for the benefit of anyone who could raise questions similar to those raised by the Margolis plaintiffs – they are “wait and see” plaintiffs (Parklane Hosiery Co. v Shore,439 U.S. 322 (1979)). The Federal Government says “It seems doubtful the present plaintiffs, never mind all the other class members who may have never even heard of the Margolis action, would accept being bound, had the Crown succeeded in the Margolis action.” I agree. The categories of relationships that have been found to be privies is somewhat elastic (Danyluk). As noted in Danyluk, Sopinka, Lederman and Bryant in The Law of Evidence in Canada, say at article 19.86:
It is impossible to be categorical about the degree of interest which will create privity. It has been said that “there must be a sufficient degree of identification between the two to make it just to hold that the decision to which one was party should be binding in proceedings to which the other is party.
[19] In my view, it would be incorrect to say that these strangers are privies. The thread which connects them is their common claim to have been discriminated against but they do not represent each other in a way that makes them privies in law. I find they are not privies.
[20] I turn next in the examination of mutuality to the decision in Saskatoon Credit Union Ltd. v. Central Park Enterprises Ltd. (1988), 47 D.L.R. (4th) 431 (B.C.S.C.) which the plaintiffs say is binding on me and supports their contention that in this case mutuality is not a necessary precondition to the operation of res judicata. In other words, the plaintiffs say that even if I find that Mrs. Margolis and Mrs. Withler are not privies, res judicata should still operate based on the reasoning in Saskatoon Credit Union that it is not necessary to establish the precondition of mutuality where the same issue has been decided against a party.
[21] In Saskatoon Credit Union, a creditor of the defendants had obtained judgment in an earlier action setting aside certain transfers on the basis that they were fraudulent. The Saskatoon Credit Union, another creditor of the same defendant, then brought an action to have the same transfer struck out as fraudulent. The defendant defended the action and the plaintiff, Saskatoon Credit Union, moved to strike out parts of the statement of defence on the grounds of res judicata, that is, that the transactions had already been determined to be fraudulent.
[22] McEachern C.J.S.C., (as he then was) examined the doctrine of mutuality. He concluded at p.438 as follows:
Without deciding anything about the question of mutuality, it is my conclusion that, subject to the exceptions I shall mention in a moment, no one can relitigate a cause of action or an issue that has previously been decided against him in the same court or in any equivalent court having jurisdiction in the matter where he has or could have participated in the previous proceedings unless some overriding question of fairness requires a rehearing. (emphasis added)
[23] McEachern C.J.S.C. reviewed at length the principles of mutuality cases. His commentary at p. 435 is instructive:
The principle of res judicata in its various manifestations has become far too complicated. Lord Denning M.R. in McIlenny v. Chief Constable of West Midlands, [1980] 2 W.L.R. 689 at p. 700 (C.A.), explains that estoppel comes from the Norman-French language and means simply that someone is stopped from saying something. Lord Denning M.R. went on to say that from these simple beginnings estoppel has become “… a big house with many rooms”. In Coke’s time there were only three rooms, estoppel by record, by writing or in pais (conduct). But now we have so many rooms we are likely to become confused. Lord Denning refers to estoppel per rem judicatam, issue estoppel, or estoppel by deed, representation, conduct, acquiescence, election, waiver and negligence, as well as promissory estoppel, proprietary estoppel, and “… goodness knows what else”. To this list I could add the principle that estoppel is a shield but not a sword.
In the case before him, Lord Denning M.R. entered a room called estoppel per rem judicatam where he found an alcove called issue estoppel where there were several chairs, one called privity and the other called mutuality. Both were said to be “… a bit rickety”.
At p. 701 Lord Denning M.R. said:
The doctrine of privity says that the only persons who can take advantage of the estoppel or be bound by it are the two parties to the previous proceedings themselves or their privies. No third person can take advantage of it or be bound by it; because he was no party to the previous proceedings. Those proceedings, so far as the third person is concerned, were res inter alios acta.
The doctrine of mutuality says that, in order that there should be an estoppel, it must be such that both of the two parties and their privies must be bound by the estoppel, whichever way it goes. Win or lose, each party must be bound. It is said that, in any contest, that is the only fair thing.
…
The principle which should govern was stated by Lord Denning M.R. in Tebbutt v. Hayes, [1981] 2 All E.R. 238 at p. 242, as follows:
I ventured to suggest this principle: if there has been an issue raised and decided against a party in circumstances in which he has had a full and fair opportunity of dealing with the whole case, then that issue must be taken as being finally and conclusively decided against him. He is not at liberty to reopen it unless circumstances are such as to make it fair and just that it should be reopened.
Even this compendious statement, however, is confusing because the word “reopen” suggests the principle may only apply between the same parties which would not be the case if the word “relitigate” or some such expression had been used. But it must be remembered that Lord Denning considered privity to be a rickety chair and I do not think he was addressing the question of privity in the remarks just quoted.
There is no doubt the traditional approach to estoppel per rem judicatam operates only between the same parties or their privies: Hollington v. Hewthorn, [1943] K.B. 587 (C.A.) (which Lord Denning M.R. said was wrongly decided: McIlenny, supra, at p. 703); Thoday v. Thoday, [1964] 1 All E.R. 341 (C.A.); and Carl Zeuss Stiffung v. Rayoner & Keeler Ltd. (No. 2), [1967] 1 A.C. 853 (H.L.).
More recently, however, a number of English authorities, particularly Lord Denning, have suggested that the principle of abuse of process prevents a party from relitigating a question which has been fairly decided against him. This received grudging approval in the House of Lords in Hunter v. Chief Constable of West Midlands, [1982] A.C. 529 at p. 540.
In the United States, as early as 1927, it was held that no one can have an issue retried unless the original finding was obtained by fraud or some similar ground of invalidity: Eagle, Star & British Dominion Insurance Co. v. Heller, 140 S.E. 314 (1927). Then, in 1971, the United States Supreme Court stated they would not be mechanically bound by rules of mutuality or of mutuality of estoppel but rather that trial courts ought to have a broad discretion to determine whether issue estoppel should be applied. Fairness seems to be the test they applied: Blonder-Tongue Laboratories Inc. v. University of Illinois Foundation 91 S. Ct. 1434 (1971), and Parklane Hosiery Co., Inc. v. Shore, 99 S. Ct. 645 (1979).
In Canada it appears that the quotation about privity cited by Dickson J. in Angle, supra, has not been applied strictly, possibly because, in Angle, the same parties were involved in both the earlier and later litigation, and privity or the lack of it was not an issue in that case.
In Nigro v. Agnew-Surpass Shoe Stores Ltd. (1977), 82 D.L.R. (3d) 302, 18 O.R. (2d) 215, 3 C.P.C. 194 (H.C.); appeal dismissed 84 D.L.R. (3d) 256n, 18 O.R. (2d) 714n, (C.A.), an action for fire damages caused by the negligence of one occupant of a shopping centre was successful. Other occupants then brought similar proceedings and the defendant sought to relitigate the same issue of negligence. In striking out such defence Weatherston J., at p. 305, said:
Because [estoppel] is a rule of public policy, in which the Court exercises its inherent jurisdiction to prevent an abuse of its process, I think I am entitled to take a rather broader view of the matter than by simply applying the doctrine of res judicata in its narrow sense.
The several defendants and the third party have had their day in Court, and as among themselves the issue as to liability for the fire has been determined. It ought not to be open to any of them to have that same issue retried in actions by plaintiffs who suffered damages in the same fire.
And at the bottom of 438:
I decline to decide whether the foregoing conclusion represents the application of a species of estoppel by res judicata or abuse of process as the result is the same. The fact that the plaintiff in this action was not a party to the earlier proceedings is of no consequence. With the defendants participating fully, it was judicially determined at trial by Spencer J. that the lease and transfers between the defendants were fraudulent and that is the end of that issue. The defendants are stopped from saying otherwise.
Lastly, I would decide, if it were necessary so to do, that the doctrine of privity, if it applies at all, is broad enough to embrace both Ms. Gaspari and the present plaintiff within its grasp. Both were creditors of Holdings; both had the same interests in the debtor’s assets; both were damnified by the fraudulent lease and transfers; and both, along with all other creditors, were entitled to share in the results of the earlier litigation each according to his rank as a creditor. Privity would be less than rickety – it would be no chair at all – if it could not sustain the weight of both or all the creditors of a fraudulent transferor.
[24] Saskatoon Credit Union cannot be taken as authority for the proposition that mutuality is not a requirement of res judicata. McEachern C.J.S.C. specifically said that he was not deciding whether his conclusion in the case was an application of res judicata or abuse of process. In any event, Binnie J. in Danyluk, after mentioning Saskatoon Credit Union, maintained the mutuality requirement. In one sense it could be said the question of mutuality is obiter in both cases. In Danyluk it was not in issue, and in my view the proper interpretation of Saskatoon Credit Union is an application of the doctrine of abuse of process, that is, when an issue has been decided against a party. Having said this, I would not suggest that the law on mutuality is other than as stated in Danyluk.
Summary of the operation of res judicata and abuse of process
[25] I take from these cases the following propositions of law:
(a) The three preconditions to the operation of the doctrine of res judicata are still part of the law of Canada and include mutuality. The three preconditions are as follows:
(i) The same question has been decided in earlier proceedings.
(ii) The earlier judicial decision was final.
(iii) The parties or their privies are the same in both proceedings.
(b) If the preconditions to the operation of res judicata are met, as either issue estoppel or action estoppel, the court must then proceed to the second stage of the analysis. In this second stage of the analysis, the court retains a discretion to consider whether justice would be served by application of the doctrine of res judicata. Res judicata will not be applied where to do so would result in a real injustice. The factors which influence the exercise of the court’s discretion are open and depend on the circumstances of the particular case. The onus is on the party asserting the application of the doctrine.
(c) There is a third category of cases (Saskatoon Credit Union and Nigro Agnew-Surpass) which I would describe as abuse of process cases, when an issue has been decided against a party. Mutuality is not a requirement. In abuse of process cases, the party asserting that there is an abuse of process, has the onus of proving that the court should exercise its discretion to apply the doctrine in the particular circumstances of the case.
Application of res judicata to Withler
[26] I have already found that Mrs. Withler and Mrs. Margolis are not privies. I have also determined that mutuality is a necessary precondition for the operation of res judicata. Therefore, I conclude that the three requirements necessary for the operation of res judicata have not been met by Withler and accordingly it is unnecessary to consider the second part of the res judicata analysis.
[27] I turn next to consider the application of the doctrine of abuse of process.
Abuse of process
[28] The concept of abuse of process was discussed in detail in City of Toronto v. Canadian Union of Public Employees, Local 79 (2001), 55 O.R. (3d) 541 (C.A.) (leave to appeal to S.C.C. granted).
[29] In City of Toronto, an employee, Mr. Oliver worked for the City of Toronto as a recreation instructor. Mr. Oliver was charged criminally with sexually assaulting a young boy and was fired by the City of Toronto. Mr. Oliver filed a grievance and in the grievance proceedings the City of Toronto relied on Mr. Oliver’s conviction as conclusive proof that he had sexually assaulted a young child during the course of his employment. Doherty J.A. held that the arbitrator erred in law in permitting Mr. Oliver’s union, CUPE, to relitigate Mr. Oliver’s culpability. The City of Toronto case is not, in the traditional sense, a res judicata case. The case falls more conveniently, in my view, in the Saskatoon Credit Union class of cases, namely abuse of process. These cases, including Nigro Agnew-Surpass, are authority for the proposition that where an issue has finally been decided against a party it ought not to be relitigated. Mutuality is not a requirement.
[30] While Doherty J.A. at para. 101 noted that some academic writers “favour[s] the abandonment of the mutuality requirement for the application of issue estoppel”, he did not go so far as to say that the doctrine of mutuality should be abandoned. He said that the facts of the City of Toronto case “put it at the very edge of that doctrine” (at para. 101). Doherty J.A. further noted that in Danyluk the issue of “mutuality and privies” did not arise. As noted above, Binnie J. said “In this case, the parties are identical and the outer limits of ‘mutuality’ and of the ‘same parties’ requirement, need not be further addressed”. Doherty J.A. said at para. 73:
When a controversy arises over a party’s right to relitigate a decided issue, important principles that are at the core of the due administration of justice clash. Parties who seek to relitigate stress their “right” to a decision on the merits made after they have had a full opportunity to present their case before the tribunal charged with the responsibility of rendering a decision. Those who resist relitigation assert their “right” to rely on this determination. All parties insist that “justice” is achieved by the position they assert …
And at para. 77:
In deciding whether to permit relitigation, a court or tribunal must decide whether finality concerns should outweigh an individual litigant’s claim that the justice of the specific case warrants relitigation. That determination is fact specific and requires that the court or tribunal weigh these competing considerations in context of the facts of the particular case. Not all relitigation compromises finality concerns to the same extent and finality is not as important in some facets of the law as in others. Similarly, a claim that the justice of the individual case requires relitigation is much stronger in some situations than in others.
[31] At footnote 10 to para. 84, Doherty J.A. stated in commenting on the arbitrator’s ruling in the case before him:
In his reasons, the arbitrator suggested that it would be Kafkaesque if Oliver could not maintain his innocence in the arbitration proceedings. In my view, the more appropriate literary allusion is to Dickens’ Mr. Bumble. The inconsistent results achieved in the two proceedings could lead the reasonable person to conclude that Mr. Bumble was correct when he described the law as “an ass” and “an idiot”.
[32] It seems to me that the proposition advanced by McEachern C.J.S.C. that is the ratio in Saskatoon Credit Union is not inconsistent with either Danyluk or City of Toronto. Namely, “no one can relitigate a cause of action or an issue that has previously been decided against him … where he has or could have participated in the previous proceedings, unless some overriding question of fairness requires a rehearing” (McEachern C.J.S.C. at p. 438).
[33] The overriding question of fairness mentioned by McEachern C.J.S.C. was also mentioned by Doherty J. A. when he said at para. 100 of the City of Toronto decision: “justice requires relitigation”, and was mentioned by Binnie J. in Danyluk at para. 67: “[t]he objective is to ensure … the orderly administration of justice but not at the cost of real injustice in the particular case”.
[34] Binnie J. noted at para. 63 that issue estoppel is closely related to abuse of process. Indeed the application of the factors suggested by Binney J. in the second discretionary stage of his res judicata analysis is not dissimilar from the analysis of abuse of process by Doherty J.A. in the City of Toronto case.
[35] Here, in the Withler case, the doctrine of abuse of process could be applied because the issue of discrimination was decided against the federal government. The issue that remains to be decided in this case is whether it is in the interests of justice that it ought to be found that an abuse of process would occur if the constitutionality of the impugned provisions of the Plan were relitigated.
Abuse of process – exercise of discretion
[36] What factors should I apply in exercising my discretion to decide if relitigation is or is not permissible? Mr. Sgayias for the Attorney General of Canada argues that the doctrine of abuse of process is not the doctrine of res judicata absent the mutuality requirement. He says that the relitigation must be found to be offensive in some way, in order for the doctrine of abuse of process to apply. Otherwise, he submits, abuse of process would just “swallow up res judicata”. He says relitigation is not equivalent to abuse of process.
[37] As noted above, the factors which favour the application of the doctrine of abuse of process are not dissimilar from the type of factors which Binnie J. applied in the second stage of his res judicata analysis in Danyluk. (See also Hunter v. Chief Constable of the West Midlands, [1981] A.C. 529 (H.L.)).
[38] The factors which I consider important in deciding whether to exercise my discretion to prevent the relitigation of the issue decided in Margolis are the following:
· Character of the litigation
· Inconsistent results with other litigation
· Whether all issues inherent to the litigation were decided.
[39] In examining the factors which balance the interests of justice in this case, I turn first to the characterization of this litigation.
Character of this litigation
[40] The Withler case is public law litigation. The constitutional validity of legislation is challenged in this case. The law presumes that the public interest is engaged (RJR MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311 at 346.). The question of the applicability of the doctrine of res judicata or abuse of process in public law litigation was examined in the American case of United States v. Mendoza, 464 U.S. 154 (1984). Mr. Mendoza, a Filipino national, filed a petition for naturalization under the Nationality Act of 1940. A naturalization examiner recommended denial of the petition but the Federal District Court granted the petition on the ground that the government was collaterally estopped from litigating the constitutional issue because of an earlier unappealed Federal District Court decision against the government in a case brought by other Filipino nationals on the same grounds. The U.S. Court of Appeals (9th circuit) held that estoppel did not apply. Mr. Justice Rehnquist delivered the unanimous opinion of the United States Supreme Court affirming that decision. At p. 159 he said:
We have long recognized that “the Government is not in a position identical to that of a private litigant,” INS v. Hibi, 414 U.S. 5, 8 (1973) (per curiam), both because of the geographic breadth of Government litigation and also, most importantly, because of the nature of the issues the Government litigates. It is not open to serious dispute that the Government is a party to a far greater number of cases on a nationwide basis than even the most litigious private entity; in 1982, the United States was a party to more than 75,000 of the 206,193 filings in the United States District Courts. Administrative Office of the United States Courts, Annual Report of the Director 98 (1982). In the same year the United States was a party to just under 30% of the civil cases appealed from the District Courts to the Court of Appeals. Id., at 79, 82. Government litigation frequently involves legal questions of substantial public importance; indeed, because the proscriptions of the United States Constitution are so generally directed at governmental action, many constitutional questions can arise only in the context of litigation to which the Government is a party. Because of those facts the Government is more likely than any private party to be involved in lawsuits against different parties which nonetheless involve the same legal issues.
A rule allowing nonmutual collateral estoppel against the Government in such cases would substantially thwart the development of important questions of law by freezing the first final decision rendered on a particular legal issue. Allowing only one final adjudication would deprive this Court of the benefit it receives from permitting several courts of appeals to explore a difficult question before this Court grants certiorari. [citations omitted]
And at the bottom of p. 160:
The Court of Appeals faulted the Government in this case for failing to appeal a decision that it now contends is erroneous. 672 F. 2d, at 1326-1327. But the Government’s litigation conduct in a case is apt to differ from that of a private litigant. Unlike a private litigant who generally does not forgo an appeal if he can prevail, the Solicitor General considers a variety of factors, such as the limited resources of the Government and the crowded dockets of the courts, before authorizing an appeal. The application of nonmutual estoppel against the Government would force the Solicitor General to abandon those prudential concerns and to appeal every adverse decision in order to avoid foreclosing further review.
[41] A critical commentary of the Mendoza decision was published in a Note to the Harvard Law Review, Vol. 99: 847 (1986) entitled Collateral Estoppel and Non-Acquiescence: Precluding Government Relitigation in the Pursuit of Litigant Equality. The authors pointed out the unfairness to impecunious litigants, in particular, when federal agencies refused to abide by decisions of federal courts. The article points out that the Mendoza decision supports a policy of administrative agency non-acquiescence. Notwithstanding a spirited attack on Mendoza, the authors concede that:
Instead courts should assess and balance on a case by case basis, the special needs of the government as defendant and the needs of individual private plaintiffs… For example, a court might be more reluctant to preclude relitigation of constitutional issues. (emphasis added)
[42] Courts have been less inclined to invoke the doctrine of res judicata (and by implication, the doctrine of abuse of process) in public law litigation. In the case of Jhammat v. Canada (Minister of Employment and Immigration) (1988), 6 Imm. L.R. (2d) 166 (Fed. T.D.), Muldoon J. said at p. 177:
The important objects of public law are not to be thwarted by the application of the judge-made law on res judicata, as if the parties were litigating a dispute founded in private law.
(See also International Paper Industries Inc. v. Top Line Industries Inc. (1996), 20 B.C.L.R. (3d) 41 (C.A.).
[43] Mr. Arvay, for Withler, emphasizes that in the Margolis case a Notice of Constitutional Question was filed. That Notice challenged the constitutionality of the reduction provisions of the Plan which are at issue in the within litigation. He points out that the reason for the requirement of service of a constitutional question is obvious. The law being challenged is the product of a democratic will and the Attorney General has a duty to uphold that will. Having done so, but without success in Margolis, Mr. Arvay asks why the federal government should have the opportunity to do it again. The federal government argues that it is in the public interest to allow relitigation in this case. Mr. Arvay says once legislation is struck down it cannot be in the public interest to litigate the same issue again. He says that once the law is declared unconstitutional, that judgment regarding the law is a decision in rem. However, the decision of Coquitlam (City) v. Construction Aggregates Ltd. (1998), 65 B.C.L.R. (3d) 275 (S.C.) held that judgments as to the constitutionality of taxing legislation were not in rem.
[44] At para. 17 Errico J. said:
If a judicial decision deciding the constitutionality of taxing legislation is to be considered as a judgment in rem, the results could be remarkable. If I, as a trial judge, make such a determination and that judgment is not appealed, then it would stand against all persons not privy to the decision and the decision could not thus be later tested at the appellate level. While the definition of a judgment in rem appears straight forward, the determination of whether a judgment is a judgment in rem or in personam is not clear. There has been no decision cited to me by counsel or of which I have been able to locate as to whether a judgment on constitutional issues can be a judgment in rem.
[45] There can be no doubt that the federal government was aware of the potential importance of the Margolis litigation during its pendancy. It is unknown why the government chose neither to defend Margolis on the basis of s. 1 of the Charter or later to appeal the decision. Mr. Sgayias says it is improper to make inquiries about, or to lead evidence as to, the reasons for counsel’s decisions regarding the Margolis case. What is clear, however, is that Margolis concerned a claim for approximately $148,000 and involved one plaintiff whereas the Withler class action involves a claim estimated to be about $1.8 billion and one that affects tens of thousands of persons and moreover might threaten the fund itself.
[46] Mr. Arvay says that the only way the Margolis decision would be of no consequence to the federal government would be if the government ignored the judgment. This is the concept of administrative non-acquiescence discussed in the Harvard Law Review commentary on the Mendoza case. Mr. Arvay says the federal government had to know there were “many Mrs. Margolises out there”.
[47] In my view, the public law nature of the question of the constitutionality of the reduction provisions outweighs the finality concerns.
[48] There is good reason to hold that a judgment as to a constitutional question is not necessarily binding as res judicata, but is only binding as precedent under the doctrine of stare decisis. The policy reasons concerning public law litigation mentioned in Mendoza are also relevant in Canada. Although both the plaintiffs and the defendant in the case before me say that the judgment in Margolis was one based on mixed fact and law, a close examination of the jugment of Campbell J. in Margolis discloses that the finding of discrimination is closer to a finding of law (that the Reduction Provision infringed the Charter) than a finding of fact. There is no finding of fact in the Margolis judgment which is personal to Margolis other than the fact Dr. Margolis, the plan participant, died at the age of 69. This application brings to light the overlapping nature of the doctrine of res judicata (or abuse of process) and the doctrine of stare decisis.
[49] The overlap between res judicata and stare decisis was noted by D.J. Lang in his text The Doctrine of Res Judicata in Canada (Toronto: Butterworths, 2000). At p. 385 the author says that the doctrines have been used interchangeably, and that a court may apply the decisions of one proceeding to another through stare decisis rather than through issue estoppel. He notes that failing to follow a decision of a court of appeal given in the very same matter with which the judge is seized is “not only a breach of the doctrine of stare decisis, but a breach of the doctrine of issue estoppel as well.”
[50] This overlap issue arises often in the circumstances of assessing whether a provision of the Criminal Code found to be unconstitutional in one jurisdiction is also invalid in other jurisdictions. When such an issue of constitutionality arises, “a trial judge … must address his or her own mind to the question and come to a conclusion in the absence of authority binding from above” (per Southin J.A.), R. v. Silbernagel, 2000 B.C.C.A. 251). In R. v. Pete, [1998] B.C.J. No. 653 (Q.L.) (C.A.) the court addressed whether s. 279(3) of the Code, held invalid by the Ontario Court of Appeal in 1985, and by a trial court in Alberta, was still valid for the purposes of a trial in a B.C. court. Esson J.A., citing Wolf v. The Queen (1974), 17 C.C.C. (2d) 425 (S.C.C.), held at para 5:
[Counsel] has his own view that it is wrong, once one court has declared a section invalid, for all courts in Canada to not thereunder treat the section as of no effect unless and until the Supreme Court of Canada rules otherwise. In our view, that simply is not the law, and if it were, would tend to create chaos in our system of courts.
[51] In addition, it is important to note that the development of the law benefits from a number of courts addressing issues, in particular, the constitutional validity of statutes.
[52] It is my view that the nature of this litigation is a factor which weighs in favour of permitting relitigation. The interests at stake in this litigation compared to the Margolis litigation also favour relitigation.
Inconsistent Result with Margolis or Fitzsimonds
[53] The plaintiffs argue that the prospect of inconsistent results between the Margolis case and the Withler litigation should inevitably lead the court to the conclusion that the abuse of process doctrine should be applied in this case.
[54] I agree with Mr. Sgayias when he says, “Within a federal system of fourteen separate superior courts (one in each province and territory, plus the Federal Court), inconsistent results on issues of public law are inevitable.”
[55] It is important to note that the concern for judicial finality has two aspects – one personal and one institutional. The personal aspect is not engaged in the present case. Mrs. Margolis has secured her remedy and has no involvement in the Withler litigation. It is only the issue of institutional finality that is engaged in this case.
[56] Moreover, the Court could come to a result in the Fitzsimonds litigation which is different than the result in Margolis. The Fitzsimonds case is, I am told, based on similar legislation benefiting members of the armed services of Canada. Mr. Arvay argues that that case is not before me and if Fitzimonds does go to trial it will be because there are differences in fact, laws, or regulations. He says it is important that the Withler class and Mrs. Margolis be treated the same. It is not now known if a similar application to the one at bar will be brought in Fitzsimonds litigation. It is not possible to know the result of such an application if it were made. There exists a possibility of an inconsistent result between Margolis and Fitzsimonds.
[57] The spectre of a result inconsistent with Margolis is in this case, at the very least, a neutral factor in the exercise of my discretion.
All Issues Not Decided In Margolis
[58] In his brief the Attorney General says “Unlike in Margolis v. Canada, in the present action there is a claim for declaratory relief under s. 52(1) of the Constitution Act, 1982. The Attorney General says that the declaratory relief claim opens the proper remedial analysis as explained in Schachter v. Canada, [1992] 2 S.C.R. 679. According to Schacter, if the impugned legislative provisions violate s. 15 of the Charter, and cannot be justified under s. 1, the court must consider whether to sever the offending provisions, read in an extension of the benefit, or strike down the provisions with or without temporary suspension of the declaratory relief.
[59] The plaintiffs correctly point to the ‘Rule in Henderson’ which is that the plea of res judicata applies not only to points upon which the court was actually required by the parties to pronounce a judgment, but also to every point which properly belonged to the subject of the litigation, and which the parties with reasonable diligence might have brought forward at the time (Henderson v. Henderson (1843), 67 E.R. 313 (Q.B.); D. J. Lange, The Doctrine of Res Judicata in Canada (supra) at p.50). A strict application of the doctrine of res judicata and the reasoning in the Henderson case leads to the result that the federal government would be precluded from arguing s. 1 and the Schacter analysis. Although in the second stage of the res judicata analysis a court might be persuaded to exercise its discretion not to apply the Rule in Henderson.
[60] The Schachter analysis was not done in the Margolis litigation and although it could be said that it was the responsibility of the Crown to bring the argument to the court’s attention (which was not done), the decision not to advance the analysis may have been made based on the lack of a claim for declaratory relief, as noted above. I conclude that there remain issues which were not decided in Margolis that, in the interest of fairness and justice, and considering the interests at stake in the class action, ought to be or may need to be decided in the Withler case.
Collateral attack
[61] I do not agree with the plaintiff that the statement of defence in this case constitutes a collateral attack on a judgment of the Federal Court of Canada in the Margolis action. The validity of the federal court judgment is not at issue in the present action. I agree with the Attorney General that it is the doctrine of stare decisis, rather than collateral attack or any related doctrine, that applies in the present case. Under the doctrine of stare decisis, the Court is of course not bound by a decision of the Federal Court of Canada.
Conclusion
[62] I am persuaded that I ought not exercise my discretion to apply the doctrine of abuse of process to prevent relitigation of the constitutionality of the Reduction Provisions. The interests at stake, the public as opposed to private law nature of the action, and the potential for inconsistent results in the companion Fitzsimonds litigation weigh in favour of permitting the Withler litigation to go forward to be decided on its merits.
[63] I would have reached the same conclusion even had I found that the plaintiffs were privies with Mrs. Margolis. The second stage of the res judicata analysis (as described in Danyluk) would have led me to the same conclusion regarding the exercise of discretion. That is not to say that the tests are identical. They are not. The onus on a plaintiff to prove abuse of process is greater than the onus on the plaintiff to persuade a court it ought to apply the doctrine of res judicata. Here the plaintiffs could not discharge either burden of proof.
Disposition
[64] The plaintiffs’ application is dismissed.
“N. Garson, J.”
The Honourable Madam Justice N. Garson