The Supreme Court of Canada recently tackled the difficult issue of issue estoppel - again.
There has long existed a tension between a litigant's desire for finality and the often competing requirement that a judge or administrative tribunal exercise its discretion to ensure that no injustice results. In a close (4 to 3) decision, the Supreme Court of Canada came down in favour of permitting the exercise of discretion by decision makers. This decision will undoubtedly result in more litigation and see many more litigants apply for stays of proceedings on the basis of issue estoppel.
In the case of Penner v. Niagara (Regional Police Services Board), Penner was arrested for disruptive behaviour in an Ontario courtroom. He filed a complaint against two police officers under the Police Services Act ("PSA") alleging unlawful arrest and unnecessary use of force. He also started a civil action claiming damages arising out of the same incident.
The Niagara Chief of Police appointed a hearing officer under the PSA who found the police officers not guilty of misconduct and dismissed Penner's complaint. The hearing officer's decision was reversed on appeal by the Ontario Civilian Commission on Police Services on the basis that the arrest was unlawful. On further appeal, the Ontario Divisional Court concluded that the officers had legal authority to make the arrest and restored the hearing officer's decision. The police officers then successfully moved in the Ontario Superior Court of Justice to have Penner's claims in the civil action struck on the basis of issue estoppel.
While finding that several factors weighed against the application of issue estoppel, the Ontario of Appeal concluded that applying the doctrine would not work an injustice in this case and dismissed Penner's appeal.
In allowing Penner's appeal and holding that his civil action could proceed, the majority of the Supreme Court of Canada held as follows:
The doctrine of issue estoppel allows for the exercise of discretion to ensure that no injustice results. There must be a case-by-case review of the circumstances to determine whether it would be unfair or unjust to apply issue estoppel or whether the preconditions for applying it have been met. In the circumstances of this case it was unfair to Penner to apply issue estoppel.
While finality is important to the judicial system unfairness in applying issue estoppel may still arise. In this case there was a significant difference between the purposes, processes or stakes involved in the two proceedings. Where the legislative scheme contemplates multiple proceedings and the purposes of those proceedings are widely divergent, to apply the doctrine might upset the parties legitimate and reasonable expectations and might also undermine the policy goals of the administrative proceedings. This would result in encouraging more formality and protraction in proceedings or discouraging access to the administrative proceedings all together. In each case, the court has to consider the parties' reasonable expectations about what is at stake in the proceedings or the fundamentally different purposes between them.
In this case, nothing in the legislative text gave rise to an expectation that the disciplinary hearing would be conclusive of Penner's legal rights in a civil action: the standards of proof required and the purposes of the two proceedings are significantly different; and unlike a civil action, the disciplinary process provided no remedy or costs for Penner. In short, the Court of Appeal did not take into account important considerations which included the procedural protections afforded to Penner by the administrative process.
Finally, applying issue estoppel had the effect of using the decision of the Chief of Police's designate to exonerate the Chief in the civil action and was therefore a serious affront to basic principles of fairness.
Not surprisingly, the three dissenting judges held that the more important principle in the case was the finality of litigation which in their view assured the fairness of the justice system in Canada. The dissenting judges held that the principles underlying the doctrine of the issue estoppel - that there should be an end to litigation - and that the same party should not be harassed twice for the same cause, are core principles which focus on achieving justice and preventing injustice by preserving the finality of litigation.
The dissenting judges held that in this case, issue estoppel should apply. The difference between the standard of proof required to establish misconduct under the PSA and that required in a civil trial were irrelevant in this case. The hearing office (appointed by the Chief of Police) made unequivocal findings that there was virtually no evidence to support Penner's claims. That means that there was no evidence to support his claims whatever standard of proof was applied and a civil action would inevitably yield the same result.
The dissenting judges referred to the arguments of potentially inconsistent results in re-litigating matters to support their conclusion.