Date: 20011220
Docket: 2000-4503-IT-I
BETWEEN:
BERTRAND LEDUC,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor
Judgment
Lamarre, J.T.C.C.
[1]
This is an appeal from an assessment by the Minister of National
Revenue ("Minister") under the Income Tax Act
("Act") for the 1999 taxation year. In that
assessment, the Minister, relying on sections 118.3, 118.4
and 118.8 of the Act, denied the appellant a transfer of
an unused tax credit of $719.61 for severe and prolonged physical
or mental impairment in respect of his spouse,
Ginette Michalk.
[2]
In making his assessment, the Minister took into account the
following facts, which appear in paragraph 14 of the Reply
to the Notice of Appeal:
[TRANSLATION]
(a) The appellant's spouse
appended a duly completed T2201 "Disability Tax Credit
Certificate" form to her income tax return for the
1997 taxation year.
(b) The T2201 form was dated
April 16, 1998, and signed by an authorized physician,
Dr. Louis Trudelle.
(c) On the form,
Dr. Trudelle diagnosed his patient with gluten-sensitive
enteropathy (celiac disease) and stated that his patient's
illness "places severe and permanent dietary restrictions on
her".
(d) The appellant requests that the
transfer of the disability tax credit be allowed on the basis of
the form filed for the 1997 taxation year.
(e) Although, to date, there is
no suitable medication that can cure celiac disease, a strict
special diet can alleviate its symptoms.
(f) Since the appellant's
spouse was diagnosed in October 1997, she has very strictly
adhered to the prescribed diet.
(g) No T2201 "Disability Tax
Credit Certificate" form was filed for the 1999 taxation
year.
(h) The appellant's spouse,
Ginette Michalk, can feed herself, using a device for that
purpose if necessary.
(i) For the 1999 taxation
year, the Minister determined that the ability of the
appellant's spouse to perform the basic activities of daily
living was not markedly restricted by a severe and prolonged
mental or physical impairment.
[3]
The same issue was raised before me by the same appellant for the
1997 taxation year, and I rendered judgment on November 5,
1999,[1] allowing
the appeal and entitling the appellant to claim under
sections 118.3, 118.4 and 118.8 of the Act, in
computing his federal tax for 1997, a transfer of an unused tax
credit of $719.61 for severe and prolonged physical impairment in
respect of his spouse, Ginette Michalk.
[4]
An application for judicial review of that judgment was filed by
the respondent with the Federal Court of Appeal on
December 10, 1999. The reasons given in support of that
application were as follows:
[TRANSLATION]
1. The trial judge
rendered a decision that was incorrect in law in determining that
the individual suffered from a severe and prolonged impairment
and that her ability to perform a basic activity of daily living
was markedly restricted within the meaning of
paragraphs 118.3(1)(a), 118.3(1)(a.1) and
118.4(1)(b) of the Income Tax Act.
2. The trial judge also
rendered a decision that was incorrect in law in misconstruing
the expression "feeding oneself" used in
paragraph 118.4(1)(c) of the Income Tax
Act.
3. Furthermore, the trial
judge rendered a decision based on an incorrect finding of fact
in concluding that the individual had to devote an inordinate
amount of time to performing a basic activity, namely feeding
herself.[2]
[5]
On January 25, 2000, the respondent gave notice to the
Federal Court of Appeal that is was completely withdrawing its
application for judicial review.
[6]
In his notice of appeal in the instant case, the appellant argues
that this Court's judgment of November 5, 1999 is final
and conclusive. Since it was determined in that judgment that
Ms. Michalk's impairment is permanent, the appellant
contends that her situation accordingly cannot have changed since
then. He argues the doctrine of res judicata and respect
for the judicial system in pleading a fin de non-recevoir
to prevent the respondent from each year reopening the same
question, which has been decided by a competent tribunal for a
previous year.
[7]
Before the hearing of this appeal (for 1999), counsel for the
respondent filed with the Court an assessment report signed by
Nicole Doucet, a nutritionist, dietician and communications
and public relations consultant. The report dealt with celiac
disease and the appropriate diet for that illness. It should be
noted that the respondent called no expert witnesses at the
hearing of the appeal for 1997 before me, whereas the appellant
adduced his evidence with the help of two expert witnesses,
namely the attending physician and a dietician.
[8]
Since the appellant pleaded a fin de non-recevoir based on
the concept of res judicata, I asked the parties to
submit their comments on this preliminary question and on the
possible application in Quebec of the equivalent common law
concept of issue estoppel in the specific context of appeals of
successive income tax assessments. For that purpose, I decided to
stay the hearing of evidence on the merits in the instant case.
The parties have presented their comments in writing and this
question will be settled by these reasons.
[9]
Before addressing this point, it is important first to emphasize
that the respondent also claims in her Reply to the Notice of
Appeal that no T2201 Disability Tax Credit Certificate form was
filed for the 1999 taxation year. It is admitted, however, that
the appellant's spouse had appended a duly completed T2201
form to her tax return for 1997. That certificate was dated
April 16, 1998, and signed by Dr. Trudelle, a medical
doctor who meets the requirements set out in
subsection 118.4(2). It falls to be determined whether the
failure by the appellant and his spouse to file such a
certificate for 1999 is a bar to the transfer of the
aforementioned unused credits.
[10]
In Warner v. R., [1998] 4 C.T.C. 2613, Judge Beaubier
faced a situation quite similar to this one. He wrote at
page 2614:
The Appellant had filed with her 1992 Income Tax Return or
possibly her 1993 Income Tax Return a proper medical certificate
dated April 27, 1993, signed by Dr. G.R. Jenkins, which is a
certificate that falls properly within the provisions of the
Income Tax Act and that no other certificate was filed for
1994. Pursuant to s. 118.3(1), paragraph (b), the
Court finds that by that means the Appellant had filed for a
taxation year with the Minister, the certificate described in
paragraph a.2. Once the certificate was on file (and there
was no other certificate on file) the certificate dated April 27,
1993 qualified for the 1994 taxation year within the provisions
of paragraph (b) as quoted. [My emphasis.]
[11]
Paragraphs 118.3(1)(a.2) and (b) read as
follows:
Section 118.3: Credit for mental or physical
impairment
(1) Where
. . .
(a.2) in the case of
(i) a sight impairment, a medical doctor or an
optometrist,
(ii) a hearing impairment, a medical doctor or an
audiologist,
(iii) an impairment with respect to an individual's
ability in feeding and dressing themself, or in walking, a
medical doctor or an occupational therapist,
(iv) an impairment with respect to an individual's ability
in perceiving, thinking and remembering, a medical doctor or a
psychologist, and
(v) an impairment not referred to in any of
subparagraphs (i) to (iv), a medical doctor
has certified in prescribed form that the impairment is a
severe and prolonged mental or physical impairment the effects of
which are such that the individual's ability to perform a
basic activity of daily living is markedly restricted,
(b) the individual has filed for a taxation year with
the Minister the certificate described in
paragraph (a.2) . . .
for the purposes of computing the tax payable under this Part
by the individual for the year, there may be deducted an amount
determined by the formula
A ´ $4,118
where
A is the appropriate percentage for the year.
[12] Thus,
since the appellant and his spouse filed for 1997 a certificate
duly completed by a medical doctor, the requirement of
paragraph 118.3(1)(b) is met for the 1997 and
subsequent taxation years.
Fin de non-recevoirpleaded on the
question of the ability of the appellant's spouse to perform
a basic activity of daily living
[13] Counsel
for the respondent contends that the doctrine of issue estoppel
does not apply in the province of Quebec. He refers to the
decision by the Supreme Court of Canada in National Bank v.
Soucisse et al., [1981] 2 S.C.R. 339, in which
Beetz J. distinguishes the doctrine of estoppel in common
law from that of fin de non-recevoir which exists in
Quebec civil law. On this point, Beetz J. referred to
Mignault J.'s opinion in Grace and Company v.
Perras (1921), 62 S.C.R. 166, where Mignault J.
noted at page 172:
. . . the doctrine of estoppel as it exists in
England and the common law provinces of the Dominion is no part
of the law of the Province of Quebec. This, however, does not
mean that in many cases where a person is held to be estopped in
England, he would not be held liable in the Province of
Quebec.
[14] Counsel
for the respondent cites certain decisions in which, according to
him, Canadian courts have refused to apply the doctrine of issue
estoppel in the province of Quebec (Lafarge Canada
Inc. v. Canada, [2001] F.C.J. No. 372 (F.C.T.D.);
Dufresne Engineering Company Limited c. Le Sous-ministre
du revenu du Québec, [1984] R.D.F. 164 (C.A.Q.);
Alameda Holdings Inc. v. Canada, [1999] T.C.J.
No. 839 (T.C.C.)).
[15] Counsel
thus concludes that the concept of estoppel as applied at common
law is unknown in Quebec civil law.
[16] Counsel
for the respondent moreover argues that, even if the doctrine of
issue estoppel were in effect in the province of Quebec, it would
not apply in the instant case. Indeed, in Carl Zeiss
Stiftung v. Rayner & Keeler Ltd. (No. 2),
[1967] 1 A.C. 853, Lord Guest of the British House of
Lords established certain requirements that must be met in order
for issue estoppel to apply, which requirements were cited by the
Supreme Court of Canada in Angle v. M.N.R., [1975]
2 S.C.R. 248, at page 254:
Lord Guest . . . defined the requirements of issue
estoppel as:
. . . (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 . . .
[17] Counsel
for the respondent contends that the appellant did not prove that
all those requirements were met. Thus, counsel argues that the
judgment of November 5, 1999, did not concern the same
question since the assessment at issue there was made for the
1997 taxation year only. According to counsel, this Court had
jurisdiction to decide the question raised by the assessment for
1997 only, and not any question arising out of assessments for
subsequent years. Counsel relies on the decision by the English
Court of Appeal in The Commissioners of Inland Revenue v.
Sneath (1932), 17 T.C. 149, cited by the Tax Appeal
Board in Kindree v. M.N.R., 70 DTC 1054, in
arguing that a decision on an assessment for a specific taxation
year is final only for that taxation year, even if an identical
question is later raised concerning a subsequent taxation year.
Counsel cites the following remarks by Lord Hanworth M.R.,
in Sneath, at page 163:
I am . . . of opinion that the assessment is final and
conclusive between the parties only in relation to the assessment
for the particular year for which it is made. No doubt, a
decision reached in one year would be a cogent factor in the
determination of a similar point in a following year, but I
cannot think that it is to be treated as an estoppel binding upon
the same party for all years.
[18] Counsel
for the respondent also cites a decision by a common law court
with jurisdiction over property tax, in which that court refused
to apply the doctrine of issue estoppel in respect to a different
taxation year. The decision in question was Quintette Coal
Ltd. v. B.C., etc., [1988] 21 B.C.L.R. (2d) 193
(S.C.), at pages 197-98:
There are a number of very impressive reasons why res judicata
should not apply to successive tax assessment cases, all of which
have been expressed most eloquently in the cases cited. The chief
of these, I suggest, are:
1. An assessor carries out
a statutory duty.
2. An assessment or
valuation is temporary in nature and limited in time.
3.
The jurisdiction of a decision-making tribunal is limited. Its
function begins and ends with determining the assessment of a
defined period.
4. The assessment for a
new year is not "eadem quaestio".
5. No real lis is involved
since the assessor has no self-interest.
[19] Counsel
for the respondent thus argues that the finding of fact in the
judgment of November 5, 1999, concerned
Ms. Michalk's ability to feed herself in 1997. In his
view, Ms. Michalk's physical condition may have changed
since that time, and the situation of fact that existed in 1997
was not necessarily the same as in 1999. For those reasons, he
believes that res judicata does not apply in the instant
case.
[20] The
appellant simply contends that the doctrine of issue estoppel
applies to every federal statute and more particularly to the
Act. According to the appellant, there can be no doubt
that this doctrine is now part of Canadian law (see Angle,
supra), and the fact that the Supreme Court of Canada has
endorsed that rule's presence in Canadian law is sufficient
to conclude that every federal statute is subject to the
application of the doctrine of issue estoppel. He argues that
this doctrine is a rule of natural justice and there is nothing
in Quebec law preventing its application.
[21] The
appellant concludes that requiring a taxpayer to reappear before
a court year after year to substantiate that taxpayer's claim
that the taxpayer's disability is a severe and prolonged
physical impairment that markedly restricts his or her ability to
feed himself or herself undermines the integrity of our judicial
system. He thus asks this Court to declare that there is res
judicata in the instant case.
Analysis
[22] In
response to the respondent's first argument, namely that the
doctrine of issue estoppel does not apply in the province of
Quebec, it is appropriate to begin by underscoring the difference
in common law between estoppel by representation and issue
estoppel.
[23] In
Canadian Superior Oil v. Hambly, [1970] S.C.R. 932,
Martland J. of the Supreme Court of Canada summarized the
essential elements of estoppel by representation (referring to
Greenwood v. Martins Bank, [1933] A.C. 51, 57) as
follows at pages 939-940:
The essential factors giving rise to an estoppel are I
think:
(1) A representation or
conduct amounting to a representation intended to induce a course
of conduct on the part of the person to whom the representation
is made.
(2) An act or
omission resulting from the representation, whether actual or by
conduct, by the person to whom the representation is made.
(3) Detriment to
such person as a consequence of the act or omission.
[24] It is
this doctrine of estoppel by representation that Mignault J.
considered not to be applicable in the province of Quebec in
Grace and Company v. Perras, supra, and his
reasoning was subsequently adopted in National Bank v.
Soucisse et al.,Dufresne Engineering Co.
Ltd.,Alameda Holdings and Lafarge Canada,
supra, on which counsel for the respondent relies.
However, the doctrine of estoppel by representation does not
concern us in the instant case since we are not dealing here with
declarations or statements made between the parties.
[25] Issue
estoppel is quite another concept derived from estoppel per
rem judicatam, which was analyzed and recognized in Canada by
the Supreme Court in Angle, supra. Estoppel per
rem judicatam is thus an estoppel pleaded where a competent
court has rendered a decision on a question which has been raised
again in new judicial proceedings. Estoppel per rem
judicatam may be divided into two forms of estoppel: cause of
action estoppel and issue estoppel.[3]
[26] The first
form, cause of action estoppel, bars one person from bringing an
action against another where the same cause of action has
previously been adjudicated upon by a competent court (see
Angle, supra, page 254).
[27] The
second form of estoppel per rem judicatam, known as issue
estoppel, a term coined in the decision in Hoystead v.
Federal Commissioner of Taxation (1921), 29 C.L.R. 537,
rendered by the High Court of Australia, in which
Higgins J.'s remarks on issue estoppel (which were
confirmed on appeal by the Privy Council in Hoystead v.
Commissioner of Taxation, [1926] A.C. 155) are cited by
Dickson J. in Angle, supra, at
page 254:
I fully recognize the distinction between the doctrine of
res judicata where another action is brought for the same
cause of action as has been the subject of previous adjudication,
and the doctrine of estoppel where, the cause of action being
different, some point or issue of fact has already been decided
(I may call it "issue-estoppel").
Dickson J. goes on to approve the requirements set by
Lord Guest in Carl Zeiss, supra, at
page 254, and cited by counsel for the respondent in his
argument (see paragraph 16 of these reasons).
[28]
Dickson J. adds at page 255:
. . . It will not suffice if the question arose collaterally
or incidentally in the earlier proceedings or is one which must
be inferred by argument from the judgment. . . .
The question out of which estoppel is said to arise must
have been "fundamental to the decision arrived at" in
the earlier proceedings: per Lord Shaw in
Hoystead v. Commissioner of Taxation. The authors of
Spencer Bower and Turner, Doctrine of Res Judicata, 2nd
ed. pp. 181, 182, quoted by Megarry J. in
Spens v. I.R.C.9, at p. 301, set
forth in these words the nature of the enquiry which must be
made:
. . . whether the determination on which it is sought to found
the estoppel is "so fundamental" to the substantive
decision that the latter cannot stand without the former.
Nothing less than this will do. [My emphasis.]
____________________________
9 [1970] 3 All. E.R. 295.
[29] In my
view, issue estoppel is an estoppel which finds a parallel in the
province of Quebec in the autoritéde la
chose jugée (or res judicata). In National
Bank v. Soucisse, supra, Beetz J. refers to
a number of French civil law commentators in describing fins
de non-recevoir, at pages 359 and 360:
The latter definition [Pothier's] is similar to that of
Denisart Collection de décisions, Vol. 8,
Paris, 1789, at p. 638:
[TRANSLATION] A fin de non-recevoir is a kind of
peremptory exception, by which someone defending an action can
have it dismissed, without going into the substance of the
claim.
This is the definition which L.L.F. Lemerle
(Traité des fins de non recevoir, Nantes, 1819, at
pp. 2-3) adopts, for all practical purposes:
[TRANSLATION] Fins de non-recevoir are peremptory
exceptions by which a litigant can have an action dismissed
without discussion of its merit; and peremptory exceptions are
grounds for exclusion of the action so complete that they
extinguish that action.
. . .
. . . Commentators classify as fins de non-recevoir the
most numerous and diverse exceptions, which have nothing in
common but this definition. For example, they include
res judicata . . . .
[My emphasis.]
[30]
The authority of a final judgment (res judicata) is
defined as follows in article 2848 of the Civil Code of
Quebec ("CCQ") (formerly article 1241
of the Civil Code of Lower Canada):
ART. 2848. The authority of a final judgment (res
judicata) is an absolute presumption; it applies only to the
object of the judgment when the demand is based on the same cause
and is between the same parties acting in the same qualities and
the thing applied for is the same.
[31]
In Roberge v. Bolduc, [1991] 1 S.C.R. 374, the
Supreme Court of Canada analyzes res judicata as follows,
per l'Heureux-Dubé, at pages 402 to
404:
Pothier, in Oeuvres de Pothier (1890), t. 2, at
No. 885, p. 469, explains:
[TRANSLATION] The
authority of res judicata means that everything contained
in the judgment is presumed to be true and equitable; and as this
presumption is juris et de jure any evidence to the
contrary is excluded. [Emphasis in original.]
(To the same effect, see Aubry and Rau, Droit civil
français (6th ed. 1958), t. 12, No. 769,
p. 319; Laurent, Principes de droit civil (5th ed.
1893), t. 20, at No. 1, p. 5.)
The rationale
for this irrebuttable legal presumption of validity of judgments
is anchored in public social policy to ensure the security and
stability of relations in society. The converse would be anarchy,
with the possibility of endless trials and contradictory
judgments.
Authors, both
in France and in Quebec, express this view in more or less the
same manner. Planiol and Ripert, in their Traité
pratique de droit civil français (2nd ed. 1954),
t. VII, at No. 1552, p. 1015, observe that:
[TRANSLATION] In reality this legal presumption amounts to a
rule of substance. The judgment once rendered will finally
terminate the proceeding if the rights of appeal were exercised
in vain or if no use was made of them. It is a social necessity
of the first order that legal proceedings should not be started
over and over again on the same matter. Stability in social
relationships requires that decisions of the courts be observed
in the same way as legislation.
. . .
A necessary
consequence of the irrebuttable presumption of the validity of
judgments is that the authority of res judicata exists
even when there is an error in the judgment. The Code of Civil
Procedure expressly provides for recourses to correct errors
in a judgment (Book III, "Remedies Against
Judgments"), which include appeals and the possibility of
retraction of the judgment. If these remedies are not exercised,
however, the judgment, by virtue of art. 1241
C.C.L.C. and the principles which underlie it, must
necessarily have the authority of res judicata.
There is
unanimity on this issue. Laurent, op. cit., discusses the
effect of the principle of res judicata as regards
judicial error, at No. 1, pp. 5-6:
[TRANSLATION] A judge may undoubtedly be mistaken in fact or
in law; but the parties are not allowed to prove such errors, as
the law denies them a court action . . . Why, despite
this possibility of error, and even in a case where authentic
documents establish that the judge erred, does the law not allow
a case that is res judicata to be reopened? The
legislature has taken the possibility of error into account: to
remedy the evil, it has provided two levels of jurisdiction, and
an appellate judge may correct the errors which escaped the trial
judge. However, when the remedies provided by law have been
exhausted there must be an end to the proceedings; if they could
still be re-started on the pretext of error, disputes would
continue indefinitely and the world would be one huge legal
proceeding.
Chauveau, op. cit., adds the following, at No. 36,
p. 33:
[TRANSLATION] What of
judgments which are vitiated by intrinsic defects, of law or
form, which do not, however, undermine their existence?
. . . It is the responsibility of the party concerned
to make use of these nullities at the proper time, using one of
the remedies provided by law: allowing the matter to be reopened
in such circumstances would be to undermine the very foundation
of the whole theory on which the presumption of res
judicata is based.
[32]
However, for the doctrine of res judicata to apply, the
strict conditions set out in article 2848 of the CCQ
must be met. With respect to the conditions pertaining to the
judgment itself, the court must have jurisdiction over the
matter, the judgment must be definitive, and it must have been
rendered in a contentious matter (see Roberge v.
Bolduc, supra, at page 404). As to the conditions
pertaining to identity, article 2848 requires that there be
three identities: identity of parties, identity of object and
identity of cause. In the decision by the Supreme Court of Canada
in Laferrière v. Gariépy (1921),
62 S.C.R. 557, Mignault J. wrote at page 569:
[TRANSLATION]
The
doctrine of res judicata is based on a presumption
juris et de jure and even of public policy that a fact
found by a judge is true: res judicata pro veritate
habetur. Its basis is not the party's
consent, which arises from the circumstance that he did not
appeal the judgment rendered against him, but the
unchallengeable truth of the fact acknowledged by the judgment,
which, when it becomes final, may no longer be questioned. And
this presumption of truth has been allowed in order to prevent
new trials between the same parties on the same question and to
make it impossible for the parties to obtain contradictory
judgments.
For
this to occur, what have been called the three identities must be
present: identity of object, in the sense that, according
to article 1241 C.C., the demand must be "for the same
thing as in the action adjudged upon"; identity of
cause, that is to say, to cite the same article,
"the demand [must be] founded on the same cause";
and identity of persons, that is, the demand must
be "between the same parties acting in the same
qualities." [My emphasis.]
[33]
With respect to identity of object,
L'Heureux-Dubé J. writes as follows in
Roberge v. Bolduc, at pages 414 and 415:
To determine,
then, what is the "object" of an action, it is
necessary to look at the nature of the right sought and at the
remedy or the purpose for which it is sought. This is not to say
that there must be an identical remedy sought or object pursued.
Mignault, op. cit., explains at p. 105:
[TRANSLATION] . . . to complete the rule it must be said that
it is not necessary for the two actions to seek precisely the
same order: there will be res judicata once the object of
the second action is implicitly included in the object of the
first.
Nadeau and Ducharme, op. cit., at No. 577, p. 479,
express a similar view:
[TRANSLATION] It is
therefore not necessary for the two actions to seek identical
orders: it will suffice if the object of the second action is
implicitly included in the object of the
first. . . . [References omitted.]
(See also Royer, op. cit., at No. 795,
pp. 294-95.)
This position
also finds support in jurisprudence. The leading case on the
identity of object is Pesant v. Langevin (1926),
41 Que. K.B. 412, where Rivard J.A. states, at
p. 421:
[TRANSLATION] The object of an action is the benefit to be
obtained in bringing it. Material identity, that is identity of
the same physical thing, is not necessarily required. This
perhaps forces the meaning of "object" somewhat, but an
abstract identity of right is taken to be sufficient.
"This identity of right exists not only when
it is exactly the same right that is claimed over the same thing
or over one of its parts, but also when the right which is
the subject of the new action or the new exception, though not
absolutely identical to that which was the subject of the first
judgment, nevertheless forms a necessary part of it, is
essentially included in it, as by being a subdivision or a
necessary sequel or consequence". In other words, if two
objects are so related that the two arguments carried on about
them raise the same question regarding performance of the same
obligation between the same parties, there is res
judicata. [References omitted.] [My emphasis.]
[34]
As regards identity of cause, L'Heureux-Dubé J.
refers to Rocois Construction v. Québec Ready
Mix, [1990] 2 S.C.R. 440, where Gonthier J. writes
at pages 454 to 456:
. . . The phrases "principal . . .
fact which is the direct . . . basis" for the
right, "legal fact which gave rise to the right
claimed", "origin of or principle giving rise to the
right claimed" or "legal source of the obligation"
are attempts to capture in words the elusive idea of
"cause" . . . .
. . . It would certainly be an error to view a cause
as a rule of law regardless of its application to the facts
considered. Accordingly, the existence of two applicable rules of
law as the basis of the plaintiff's rights does not lead
directly to the conclusion that two causes exist.
Of course,
the existence of two rules of law applicable to a factual
situation in practice gives rise to a duality of causes in the
vast majority of cases, because separate rules generally require
different legal characterizations. However, it is not the fact
that there are two applicable rules which is conclusive in
itself: it is the duality of legal characterizations which may
result therefrom. When the essence of the legal characterization
of the facts alleged is identical under either rule, it must
follow that there is identity of cause.
[35]
As to identity of parties, the wording of article 2848 of
the CCQ is clear: the presumption of res judicata
applies only if the demand is between the same parties acting in
the same qualities.
[36]
Thus it will be noted, for the application both of the doctrine
of res judicata under the Civil Code and of the doctrine
of issue estoppel in common law, that the required conditions are
similar. Donald J. Lange moreover makes that very
observation in The Doctrine of Res Judicata in Canada
(Markham, Ont.: Butterworths, 2000), at page 34:
In the law of Canada, there is compelling support for the
proposition that the common law doctrine of issue estoppel and
the Québec Civil Code doctrine of res judicata are
to be treated as equivalent, interchangeable doctrines.
[37]
Thus, under article 2848 of the CCQ, and as
established by the Supreme Court of Canada, inter alia in
Roberge v. Bolduc,supra, and
Laferrière v. Gariépy, supra,
the necessary conditions for there to be res judicata
regarding a thing applied for are as follows:
(i)
the original judgment must emanate from a competent tribunal, be
final and conclusive;
(ii)
the thing applied for must be the same, that is to say, the
object must be the same;
(iii)
the new demand must be based on the same cause; and
(iv)
that demand must be between the same parties, who must act in the
same capacities.
It is therefore appropriate to examine whether those tests are
met in the instant case.
(i)
The judgment
[38]
My judgment of November 5, 1999, was rendered under the
informal procedure. Section 18.24 of the Tax Court of
Canada Act, R.S.C. 1985, c. T-2, reads as
follows:
18.24 A judgment of the Court on an appeal referred to in
section 18 is final and conclusive and is not open to
question or review in any court except the Federal Court of
Appeal in accordance with section 28 of the Federal Court
Act.
[39]
Since the respondent withdrew on January 25, 2000, her
application to the Federal Court of Appeal for judicial review,
the judgment I rendered on November 5, 1999, became final
and conclusive under section 18.24 of the Tax Court of
Canada Act.
(ii)
Identity of object
[40]
As stated in the analyses of the commentators and in the case law
and as restated by the Supreme Court of Canada in
Roberge v. Bolduc, supra, the object of a
legal action is defined as the benefit a litigant seeks or a
right he wishes to have sanctioned. Moreover, the presumption of
article 2848 of the CCQ does not require that there
be a material identity of the thing applied for. It suffices that
there be an abstract or formal identity of the right sought (see
Jean-Claude Royer, La preuve civile, 2nd ed.
(Cowansville, Qué.: Yvon Blais, 1995),
paragraph 835).
[41]
It should be noted that, in Pesant v. Langevin,
supra, Rivard J.A. stated that this identity of right
exists not only when it is exactly the same right that is claimed
over the same thing, but also when the right which is the subject
of the new action, though not absolutely identical to that which
was the subject of the first judgment, nevertheless forms a
necessary part of it, as by being a necessary sequel or
consequence.
[42]
In the instant case, the appellant claimed for 1997 the transfer
of an unused credit for severe and prolonged physical impairment
in respect of his spouse. For 1999, he claimed the same credit
under the same sections of the
Act—sections 118.3, 118.4 and 118.8, which have
not since been amended—for the same disease affecting his
spouse. In my view, it can thus be said that there is identity of
object.
(iii)
Identity of cause
[43]
As regards this identity, J.C. Royer, in La preuve
civile, supra, observes in paragraph 830, at
pages 495 and 496:
[TRANSLATION]
. . . The cause of an action consists
in the facts alleged in a proceeding which have legal effects. It
includes a material and concrete element, namely
the material facts and legal acts alleged in the written
pleadings, and a formal and abstract element, which is
the legal characterization of those facts. Identity of
cause supposes identity of those two elements. [My
emphasis.]
[44]
In Rocois, supra, Gonthier J. stated that
"the existence of two applicable rules of law as the basis
of the plaintiff's rights does not lead directly to the
conclusion that two causes exist". He added, "When the
essence of the legal characterization of the facts alleged is
identical under either rule, it must follow that there is
identity of cause."
[45]
In the present situation, the Act gives the Minister the
authority to determine a taxpayer's tax for each taxation
year. However, while the legal rule is the same from one year to
the next, the annual authority set out in the Act to
determine that tax does not necessarily mean, in my view, that
there cannot be identity of cause from one year to the next if
the legal characterization of the facts alleged is identical. In
the instant case, it is my opinion that the essence of the legal
characterization of the facts alleged in the judgment of
November 5, 1999, granting the appellant entitlement to the
credit provided for in sections 118.3, 118.4 and 118.8 of
the Act,in accordance with the legal rule
applicable in 1997, is identical under the legal rule applicable
in 1999. It was decided in the judgment of November 5, 1999,
that Ms. Michalk's ability to perform a basic activity
of daily living was markedly restricted. Although that judgment
ruled invalid an assessment for 1997, it was therein found as a
fact that the celiac disease from which Ms. Michalk suffers
is severe and permanent and that there is no known therapy or
medication that can cure it. In her Reply to the Notice of
Appeal, the respondent does not contend that a new therapy or
drug has been found to alleviate this disease. The respondent
merely states that "a strict special diet can alleviate its
symptoms" and enable Ms. Michalk to control the disease
in part. This fact was considered in the judgment of
November 5, 1999 and is not a new fact. The respondent
moreover asserted in her grounds for appealing to the Federal
Court of Appeal that "the trial judge rendered a decision
based on an incorrect finding of fact in concluding that
[Ms. Michalk] had to devote an inordinate amount of time to
performing a basic activity, namely feeding herself". By
withdrawing her application for judicial review, the respondent
has accepted that interpretation, and the judgment, in making
that finding of fact, has thus acquired, under article 2848
of the CCQ, the authority of res judicata (see
Roberge v. Bolduc, supra, at pages 402 to
404). In my view, the respondent accordingly has no grounds for
putting the appellant through a new trial on analogous facts.
[46]
In response to this, counsel for the respondent argues, relying
on Kindree, supra, which was in turn based on the
English Court of Appeal's judgment in Sneath,
supra (two common law decisions), that, in view of the
different taxation years, there cannot be identity of cause
between the judgment of November 5, 1999, and the instant
appeal.
[47]
It is important here to emphasize once again the distinction at
common law between the concept of cause of action estoppel, that
is to say, "the doctrine of res judicata where
another action is brought for the same cause of action as has
been the subject of previous adjudication", and issue
estoppel, "the doctrine of estoppel where, the cause of
action being different, some point or issue of fact has already
been decided" (as defined by Higgins J. of the High
Court of Australia in Hoystead, supra, and approved
by the Supreme Court of Canada in Angle,
supra).
[48]
It appears from a reading of Sneath, cited by counsel for
the respondent, that the court in that case used cause of action
estoppel, one of the forms of estoppel per rem judicatam,
as its sole basis for holding that in tax matters a judicial
decision ruling on an assessment for one taxation year cannot be
pleaded as res judicata against another assessment for
another taxation year. I note that the question of issue estoppel
was not addressed in that judgment, nor was it debated in the
Privy Council's judgment in Caffoor v. Commissioner
of Income Tax, Colombo, [1961] A.C. 584, in which the Privy
Council also refused to apply the doctrine of res judicata
in respect of a judgment ruling on an assessment for a different
taxation year.
[49]
However, in Angle, supra, Laskin J.[4] remarked, relying on
Hoystead, supra, that there may be issue estoppel
where res judicata in its strict identity of cause of
action or of object sense, that is, in the cause of action
estoppel sense, would not apply. The distinction between these
two concepts of estoppel was not observed in Caffoor,
which refers rather to estoppel per rem judicatam, the
generic term which includes cause of action estoppel and issue
estoppel. In discussing that judgment by the House of Lords,
Laskin J. wrote as follows in Angle, at
page 266:
Assuming, as is indicated in Caffoor, that the
principles applied in the tax assessment cases "form a
somewhat anomalous branch of the general law of estoppel per
rem judicatam and are not easily derived from or transferred
to other branches of litigation in which such estoppels have to
be considered" (see [1961] A.C. at pp. 599-600), the
present case does not involve successive tax assessments against
the appellant and hence cannot rest on the indicated anomaly.
Moreover, so far as English cases are concerned, it seems
to me that what was said on issue estoppel in Carl Zeiss
Stiftung v. Rayner and Keeler Ltd. (No. 2) [1967] 1
A.C. 853 makes it unlikely that any anomalous rule, such as that
upon which Caffoor appeared to be based, retains any
survival value. At any rate, I would reject the introduction of
such an anomaly into the law of Canada.
[My emphasis.]
[50]
It is true that the debate in Angle did not involve
successive tax assessments and that Laskin J. acknowledged
that the cause in that case did not rest on the anomaly referred
to in Caffoor. However, he subsequently stated clearly
that, as a result of Carl Zeiss, supra (which
confirms the rules for the application of issue estoppel), it is
unlikely that an anomalous rule, such as that relied on in
Caffoor with respect to successive assessments, can be
followed in future, and, in any event, he would reject any
application of such an anomaly in Canada.
[51]
In the circumstances, counsel for the respondent is probably
right in saying that there is no identity of cause of action or
cause of action estoppel in the strict meaning given to
estoppel per rem judicatam, since one is dealing here with
assessments concerning different taxation years. However, this
does not preclude the possibility of the appellant's pleading
res judicata (as accepted in civil law) in the sense the
common law gives to issue estoppel, to the extent that the
question of fact with regard to the ability of the
appellant's spouse to perform a basic activity of daily
living, that is, feeding herself, has already been decided in a
previous decision, namely in the judgment of November 5,
1999, and to that extent that it is that same question of fact
which is raised once again with respect to another taxation
year.[5]
[52]
The principle is clearly explained by Lord Denning in
Fidelitas Shipping Co. Ltd. v. V/O Exportchleb.,
[1966] 1 Q.B. 630, at page 640:
. . . It is a case of "issue estoppel" as
distinct from "cause of action estoppel" and "fact
estoppel," a distinction which was well explained by Diplock
L.J. in Thoday v. Thoday.10 The law, as I
understand it, is this: if one party brings an action against
another for a particular cause and judgment is given upon it,
there is a strict rule of law that he cannot bring another action
against the same party for the same cause. Transit in rem
judicatam: see King v.
Hoare.11 But within one cause of action, there may
be several issues raised which are necessary for the
determination of the whole case. The rule then is that, once an
issue has been raised and distinctly determined between the
parties, then, as a general rule, neither party can be allowed to
fight that issue all over again. The same issue cannot be raised
by either of them again in the same or subsequent proceedings
except in special circumstances, see Badar Bee v.
Habib Merican Noordin,12 per Lord
Macnaghten.13 And within one issue, there may be
several points available which go to aid one party or the other
in his efforts to secure a determination of the issue in his
favour. The rule then is that each party must use reasonable
diligence to bring forward every point which he thinks would help
him. If he omits to raise any particular point, from negligence,
inadvertence, or even accident (which would or might have decided
the issue in his favour), he may find himself shut out from
raising that point again, at any rate in any case where the
self-same issue arises in the same or subsequent proceedings. But
this again is not an inflexible rule. It can be departed from in
special circumstances: see Henderson v.
Henderson14; Hoystead v. Commissioner of
Taxation15; New Brunswick Railway Co.
v. British & French Trust Co.16;
Connelly v. Director of Public
Prosecutions.17
_________________________
10 [1964] P. 181, 198; [1964] 2
W.L.R. 371, 385; [1964] 1 All E.R. 341, 352, C.A.
11 (1844) 13 M. & W. 494, 504.
12 [1909] A.C. 615.
13 Ibid. 623.
14 (1843) 3 Hare 100, 115.
15 [1926] A.C. 155, 170; 42 T.L.R. 207,
P.C.
16 [1939] A.C. 1; 55 T.L.R. 260; [1938] 4 All
E.R. 747.
17 [1964] A.C. 1254; [1964] 2 W.L.R. 1145;
[1964] 2 All E.R. 401, C.C.A., H.L.(E.).
[53]
It appears from the above passage that it may be pleaded that
issue estoppel does not apply in certain exceptional situations.
Those exceptional circumstances, however, do not include a case
where a party has failed to raise any particular point from
negligence, inadvertence or even accident.
[54]
This is also apparent from Lord Diplock's analysis in
the same judgment (Fidelitas, supra), at
pages 642 and 643:
. . . The determination of the issue between the
parties gives rise to what I ventured to call in
Thoday v. Thoday19 an "issue
estoppel." It operates in subsequent suits between the same
parties in which the same issue arises. . . . The
principle was expressed as long ago as 1843 in the words of
Wigram V.-C. in Henderson
v.Henderson20 which were expressly approved by
the Judicial Committee of the Privy Council in
Hoystead v. Commissioner of
Taxation.21 I would not seek to better them:
"I believe I state the rule of the court correctly when I
say, that where a given matter becomes the subject of litigation
in, and of adjudication by, a court of competent jurisdiction,
the court requires the parties to that litigation to bring
forward their whole case, and will not (except under special
circumstances) permit the same parties to open the same subject
of litigation in respect of matter which might have been brought
forward as part of the subject in contest, but which was not
brought forward, only because they have, from negligence,
inadvertence, or even accident, omitted part of their case. The
plea of res judicata applies, except in special cases, not only
to points upon which the court was actually required by the
parties to form an opinion and pronounce a judgment, but to every
point which properly belonged to the subject of litigation, and
which the parties, exercising reasonable diligence, might have
brought forward at the time."
__________________________
19 [1964] P. 181, 198.
20 (1843) 3 Hare 100, 114.
21 [1926] A.C. 155, 170.
[55]
This principle was cited with approval by the Federal Court of
Appeal in Canada v. Chevron Canada Resources Ltd.,
[1999] 1 F.C. 349, in which Noël J.A. concurs in
the Privy Council's remarks in Thomas v. Trinidad and
Tobago (A.G.) (1991), 115 N.R. 313, at page 316, a
decision in which is cited the rule referred to above that is
stated in Henderson,supra,and
Hoystead, supra. More particularly,
Noël J.A. refers to the following passage from
Trinidad and Tobago, at page 368:
In Greenhalgh v. Mallard, [1947] 2 All E.R.
255, Somervell, L.J., at page 257 said:
"I think that on the authorities to which I will refer it
would be accurate to say that res judicata for this purpose is
not confined to the issues which the court is actually asked to
decide, but that it covers issues or facts which are so clearly
part of the subjectmatter [sic] of the litigation and so
clearly could have been raised that it would be an abuse of
process of the court to allow a new proceeding to be started in
respect of them."
In Yat Tung Co. v. Dao Heng Bank, [1975] A.C. 581,
Lord Kilbrandon, at page 590, in delivering the opinion
of the Board referred to the above quoted passage in the judgment
of Wigram, V.C., and continued:
"The shutting out of a 'subject of
litigation'—a power which no court should exercise but
after a scrupulous examination of all the circumstances—is
limited to cases where reasonable diligence would have caused a
matter to be earlier raised; moreover, although negligence,
inadvertence or even accident will not suffice to excuse,
nevertheless 'special circumstances' are reserved in case
justice should be found to require the nonapplication of the
rule."
[56]
Furthermore, if a party feels that there are special
circumstances justifying the non-application of the doctrine of
res judicata, the onus is on that party to show what those
special circumstances are (see Chevron, supra,
page 371, paragraph 47). According to Phipson,
supra, at page 885, paragraph 33-55, the
test for allowing an exception to the doctrine of issue estoppel
is as follows:
. . . the fresh evidence relied on must fundamentally
change the appearance of the case, and no doubt this
applied no less within the subordinate issues which may give rise
to estoppels. [My emphasis.]
[57]
According to Diplock L.J., in Mills v. Cooper,
[1967] 2 Q.B. 459, 468-69 (C.A.), there can be no
departing from the application of issue estoppel:
. . . unless further material which is relevant to the
correctness or incorrectness of the assertion and could not by
reasonable diligence have been adduced by that
party in the previous proceedings has since become available to
him.* [My emphasis.]
_____________________
* See also D.P.P. v.
Humphrys, [1977] A.C. 1, at p. 39D-E per
Lord Hailsham, at p. 48E-H per
Lord Edmund-Davies; Tebbutt v.Haynes,
[1981] 2 All ER 238 (C.A.).
[58]
In his written argument, counsel for the respondent states that
the judgment of November 5, 1999, was based on a finding of
fact specific to the situation of the appellant's
spouse—that is, her ability to feed herself—in 1997.
He suggests that, since 1997, Ms. Michalk would have
acquired experience in managing all aspects of her diet and that
she probably now devotes less time to that activity of daily
living than in 1997. He also argues that her physical condition
may have changed since 1997. He seems to suggest that the
availability, accessibility and cost of replacement foods were
considered by this Court for 1997, but that the situation in
those respects may also have changed in 1999. To establish this,
the respondent intended to bring different evidence from that
adduced in 1997 and indeed she filed an assessment report by a
nutritionist-dietician on celiac disease and on the appropriate
diet for that disease.
[59]
I will respond to this, first, by reiterating that the judgment
of November 5, 1999, spoke of the disease as being severe
and permanent. I do not see how the respondent can
now argue that Ms. Michalk's physical condition may have
changed since 1997. In her Reply to the Notice of Appeal, the
respondent moreover acknowledges that Ms. Michalk must
adhere to severe and permanent dietary restrictions and that, to
date, there is no suitable medication that can cure celiac
disease.
[60]
Furthermore, the respondent is now trying to prove her point
through the testimony of an expert witness she could very well
have had testify at the hearing of the appeal from the assessment
for 1997. As Noël J.A. approved it in Chevron,
supra, the doctrine of res judicata extends to
questions and facts that are clearly part of the subject matter
of the litigation and which could have been raised at the
appropriate time.
[61]
The judgment of November 5, 1999, establishes that, "in
order to feed herself (that is to say to take all the necessary
steps to prepare meals suitable to her diet), Ms. Michalk
must take much more time than healthy persons are normally
required to devote to this activity" (Leduc v.
Canada, supra, paragraph 16). It is also stated
in that judgment that "[t]he evidence also shows that
Ms. Michalk's ability to feed herself every day is
markedly restricted (Leduc v. Canada, supra,
paragraph 19)."
[62]
I fail to see how Ms. Michalk's ability to feed herself
would be less markedly restricted with the passage of time, if
one compares her situation to that of persons not suffering from
that physical impairment.
[63]
At all events, it seems to me that here the respondent is
attempting to bring evidence (through her expert witness) which
she failed by negligence, inadvertence or accident to adduce at
the hearing of the appeal from the assessment for 1997. In my
opinion, if due diligence had been exercised, this new view of
the respondent's could have been presented at that time.
[64]
In my view, the evidence the respondent wishes to bring again to
convince this Court that the appellant is not entitled to the
transfer of an unused credit for physical impairment for the 1999
taxation year, when he was held to be so entitled for the 1997
taxation year, would not fundamentally alter the outcome of the
debate or the legal characterization of the alleged facts
appearing in the judgment of November 5, 1999.
[65]
It so happens that the question of fact raised in that previous
judgment—that is, whether Ms. Michalk's ability to
perform a basic activity of daily living was markedly restricted
given her severe and prolonged impairment—was fundamentally
important to the decision to allow the credit under the
Act. That same question of fact would have to be answered
again if I heard the appeal on the merits for 1999. In view of
the permanent nature of the disease and the fact that there is no
remedy for it but to follow a strict diet, and given that all
these facts were considered in the judgment of November 5,
1999, I believe the matter is res judicata.[6]
[66]
In the instant case, I do not find that the respondent showed
there were special circumstances (such as the discovery of a
drug, or new material facts which might fundamentally alter the
cause of action, or a legal change made by an appellate court or
by legislative amendment) justifying the non-application of the
doctrine of res judicata. Consequently, in my view, there
is identity of cause in this instance.
(iv)
Identity of the parties
[67]
It is clear that the same parties are involved in this appeal as
were involved in the appeal in respect of which judgment was
rendered for 1997.
Conclusion
[68]
Accordingly, in view of the fact that the conditions to be met in
order for the doctrine of res judicata to apply (i.e.
identity of parties, object and cause), to which the conditions
for issue estoppel are similar, have, in my view, been satisfied,
I find that it is not appropriate for this Court to enter once
again into a discussion of the merits of the question of fact
concerning the ability of the appellant's spouse to perform a
basic activity of daily living. I find that this question is
res judicata.
Decision
[69]
Having found (1) that the question of fact concerning
Ms. Michalk's ability to feed herself on a daily basis,
which is markedly restricted within the meaning of the Act
given her severe and prolonged impairment, is res
judicata, (2) that that question was fundamental to
resolving the issue raised for the 1997 taxation year with
respect to the allowing of the tax credit claimed for physical
impairment under sections 118.3, 118.4 and 118.8 of the
Act, (3) that the same question is fundamental in
this appeal, since the issue concerns the allowing of that same
credit for the 1999 taxation year, and (4) that the other
conditions set out in sections 118.3, 118.4 and 118.8 of the
Act have been satisfied, I conclude that this appeal
should be allowed without it being necessary to proceed with a
hearing on the merits.
[70]
The whole with costs.
Signed at Ottawa, Canada, this 20th day of December 2001.
"Lucie Lamarre"
J.T.C.C.
Translation certified true on this 28th day of February
2002.
[OFFICIAL ENGLISH TRANSLATION]
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
2000-4503(IT)I
BETWEEN:
BERTRAND LEDUC,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
The Honourable Judge Lucie Lamarre
Appearances
For the
Appellant:
The
Appellant himself
Counsel for the Respondent: Michel
Lamarre
JUDGMENT
The
appeal from the assessment made under the Income Tax Act
("Act") for the 1999 taxation year is allowed
with costs, without it being necessary to proceed with a hearing
on the merits, in accordance with the attached Reasons for
Judgment, and the assessment is referred back to the Minister of
National Revenue for reconsideration and reassessment on the
basis that the appellant is entitled to claim under
sections 118.3, 118.4 and 118.8 of the Act, in
computing his federal tax for the 1999 taxation year, a transfer
of an unused tax credit of $719.61 for severe and prolonged
physical impairment in respect of his spouse,
Ginette Michalk.
Signed at Ottawa, Canada, this 20th day of December 2001.
J.T.C.C.
Translation certified true
on this 28th day of February 2002.
Erich Klein, Revisor
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