Danyluk v. Ainsworth Technologies Inc.,  2 S.C.R. 460,
2001 SCC 44
Mary Danyluk Appellant
Ainsworth Technologies Inc., Ainsworth Electric Co. Limited,
F. Jack Purchase, Paul S. Gooderham, Jack A. Taylor,
Ross A. Pool, Donald W. Roberts, Timothy I. Pryor,
Clifford J. Ainsworth, John F. Ainsworth,
Kenneth D. Ainsworth, Melville O’Donohue,
Donald J. Hawthorne,
William I. Welsh and Joseph McBride Watson Respondents
Indexed as: Danyluk v. Ainsworth Technologies Inc.
Neutral citation: 2001 SCC 44.
File No.: 27118.
2000: October 31; 2001: July 12.
Present: McLachlin C.J. and Iacobucci, Major, Bastarache, Binnie,
Arbour and LeBel JJ.
on appeal from the court of appeal for ontario
Administrative law – Issue estoppel – Employee filing complaint against employer under
Employment Standards Act seeking unpaid wages and commissions – Employee
subsequently commencing court action against employer for wrongful dismissal
and unpaid wages and commissions – Employment standards officer dismissing employee’s complaint –
Employer arguing that employee’s claim for unpaid wages and commissions before
court barred by issue estoppel – Whether officer’s failure to observe procedural fairness in
deciding employee’s complaint preventing application of issue estoppel – Whether preconditions to
application of issue estoppel satisfied – If so, whether this Court should exercise its discretion and refuse
to apply issue estoppel.
In 1993, an employee became involved in a dispute
with her employer over unpaid commissions. No agreement was reached, and the
employee filed a complaint under the Employment Standards Act (“ESA”)
seeking unpaid wages, including commissions. The employer rejected the claim
for commissions and eventually took the position that the employee had
resigned. An employment standards officer spoke with the employee by telephone
and met with her for about an hour. Before the decision was made, the employee
commenced a court action claiming damages for wrongful dismissal and the unpaid
wages and commissions. The ESA proceedings continued, but the employee was not
made aware of the employer’s submissions in the ESA claim or given an
opportunity to respond to them. The ESA officer rejected the employee’s claim
and ordered the employer to pay her $2,354.55, representing two weeks’ pay in
lieu of notice. She advised the employer of her decision and, 10 days later,
notified the employee. Although she had no appeal as of right, the employee
was entitled to apply under the ESA for a statutory review of this decision.
She elected not to do so and carried on with her wrongful dismissal action. The
employer moved to strike the part of the statement of claim that overlapped the
ESA proceeding. The motions judge considered the ESA decision to be final and
concluded that the claim for unpaid wages and commissions was barred by issue
estoppel. The Court of Appeal affirmed the decision.
Held: The appeal should be allowed.
Although, in general, issue estoppel is available to preclude an
unsuccessful party from relitigating in the courts what has already been
litigated before an administrative tribunal, this is not a proper case for its
application. Finality is a compelling consideration and judicial decisions
should generally be conclusive of the issues decided unless and until reversed
on appeal. However, estoppel is a public policy doctrine designed to advance
the interests of justice. Where, as here, its application bars the courthouse
door against a claim because of an administrative decision made in a manifestly
improper and unfair manner, a re-examination of some basic principles is
The preconditions to the operation of issue estoppel are threefold:
(1) that the same question has been decided in earlier proceedings; (2) that
the earlier judicial decision was final; and (3) that the parties to that
decision or their privies are the same in both the proceedings. If the moving
party successfully establishes these preconditions, a court must still
determine whether, as a matter of discretion, issue estoppel ought to be
The preconditions require the prior proceeding to be judicial. Here,
the ESA decision was judicial. First, the administrative authority issuing the
decision is capable of receiving and exercising adjudicative authority. Second,
as a matter of law, the decision was required to be made in a judicial manner.
While the ESA officers utilize procedures more flexible than those that apply
in the courts, their adjudicative decisions must be based on findings of fact
and the application of an objective legal standard to those facts.
The appellant denies the applicability of issue estoppel because, as
found by the Court of Appeal, the ESA decision was taken without proper notice
to the appellant and she was not given an opportunity to meet the employer’s
case. It is clear that an administrative decision which is made without
jurisdiction from the outset cannot form the basis of an estoppel. Where an
administrative officer or tribunal initially possessed the jurisdiction to make
a decision in a judicial manner but erred in the exercise of that jurisdiction,
the resulting decision is nevertheless capable of forming the basis of an
estoppel. Alleged errors in carrying out the mandate are matters to be
considered by the court in the exercise of its discretion. This result makes
the principle governing estoppel consistent with the law governing judicial
review in Harelkin and collateral attack in Maybrun.
In this case, the pre-conditions for issue estoppel have been met: the
same issue is raised in both proceedings, the decision of the ESA officer was
final for the purposes of the Act since neither the employer nor the employee
took advantage of the internal review procedure, and the parties are
identical. The Court must therefore decide whether to refuse to apply estoppel
as a matter of discretion. Here this Court is entitled to intervene because
the lower courts committed an error of principle in failing to address the
issue of the discretion. The list of factors to be considered with respect to
its exercise is open. The objective is to ensure that the operation of issue
estoppel promotes the orderly administration of justice, but not at the cost of
real injustice in the particular case. The factors relevant to this case
include the wording of the statute from which the power to issue the
administrative order derives, the purpose of the legislation, the availability
of an appeal, the safeguards available to the parties in the administrative
procedure, the expertise of the administrative decision maker, the
circumstances giving rise to the prior administrative proceeding and, the most
important factor, the potential injustice. On considering the cumulative
effect of the foregoing factors, the Court in its discretion should refuse to
apply issue estoppel in this case. The stubborn fact remains that the employee’s
claim to commissions worth $300,000 has simply never been properly considered
v. Minister of National Revenue,  2 S.C.R. 248; disapproved in
part: Rasanen v. Rosemount Instruments Ltd. (1994), 17 O.R. (3d)
267; referred to: Re Downing and Graydon (1978), 21 O.R. (2d)
292; Farwell v. The Queen (1894), 22 S.C.R. 553; Wilson v. The Queen,
 2 S.C.R. 594; R. v. Litchfield,  4 S.C.R. 333; R. v.
Sarson,  2 S.C.R. 223; Robinson v. McQuaid (1854), 1 P.E.I.R.
103; Bell v. Miller (1862), 9 Gr. 385; Raison v. Fenwick
(1981), 120 D.L.R. (3d) 622; Wong v. Shell Canada Ltd. (1995), 15
C.C.E.L. (2d) 182; Machin v. Tomlinson (2000), 194 D.L.R. (4th) 326; Hamelin
v. Davis (1996), 18 B.C.L.R. (3d) 112; Thrasyvoulou v. Environment
Secretary,  2 A.C. 273; R. v. Consolidated Maybrun Mines Ltd.,
 1 S.C.R. 706; McIntosh v. Parent,  4 D.L.R. 420; British
Columbia (Minister of Forests) v. Bugbusters Pest Management Inc. (1998),
50 B.C.L.R. (3d) 1; Schweneke v. Ontario (2000), 47 O.R. (3d) 97; Braithwaite
v. Nova Scotia Public Service Long Term Disability Plan
Trust Fund (1999), 176 N.S.R. (2d) 173; Guay v. Lafleur,  S.C.R.
12; Thoday v. Thoday,  P. 181; Machado v. Pratt & Whitney
Canada Inc. (1995), 12 C.C.E.L. (2d) 132; Randhawa v. Everest &
Jennings Canadian Ltd. (1996), 22 C.C.E.L. (2d) 19; Heynen v. Frito-Lay
Canada Ltd. (1997), 32 C.C.E.L. (2d) 183; Perez v. GE Capital Technology
Management Services Canada Inc. (1999), 47 C.C.E.L. (2d) 145; Munyal v.
Sears Canada Inc. (1997), 29 C.C.E.L. (2d) 58; Alderman v. North Shore
Studio Management Ltd.,  5 W.W.R. 535; R. v. Nat Bell Liquors Ltd.,
 2 A.C. 128; Harelkin v. University of Regina,  2 S.C.R.
561; Poucher v. Wilkins (1915), 33 O.L.R. 125; Minott v. O’Shanter
Development Co. (1999), 42 O.R. (3d) 321; Saskatoon Credit Union Ltd. v.
Central Park Ent. Ltd. (1988), 22 B.C.L.R. (2d) 89; General Motors of
Canada Ltd. v. Naken,  1 S.C.R. 72; Arnold v. National Westminster
Bank plc,  3 All E.R. 41; Susan Shoe Industries Ltd. v. Ricciardi
(1994), 18 O.R. (3d) 660; Iron v. Saskatchewan (Minister of the Environment
& Public Safety),  6 W.W.R. 1.
Statutes and Regulations Cited
Courts of Justice Act,
R.S.O. 1990, c. C.43, s. 23(1).
Employment Standards Act, R.S.O. 1990, c. E.14, ss. 1 “wages”, 2(2), 6, 65(1)(a), (b),
(c) [rep. & sub. 1991, c. 16 (Supp.), s. 9(1)], (7) [ad. idem,
s. 9(2)] 67(1) [am. idem, s. 10(1)], (2) [rep. & sub. idem,
s. 10(2)], (3) [ad. idem], (5) [idem], (7) [idem],
68(1) [am. idem, s. 11(1); am. 1991, c. 5, s. 16; am. 1993,
c. 27, sch.], (3) [rep. & sub. 1991, c. 16 (Supp.),
s. 11(2)], (7).
Improvement Act, 1996, S.O. 1996, c. 23,
O. Reg. 626/00, s. 1(1).
American Law Institute. Restatement
of the Law, Second: Judgments 2d, vol. 2. St. Paul, Minn.: American
Law Institute Publishers, 1982.
Brown, Donald J. M., and John M.
Evans. Judicial Review of Administrative Action in Canada, vol. 2.
Toronto: Canvasback, 1998 (loose-leaf updated 2001, release 2).
Handley, K. R. “Res Judicata:
General Principles and Recent Developments” (1999), 18 Aust. Bar Rev. 214.
Holmested, George Smith, and Garry
D. Watson. Ontario Civil Procedure, vol. 3 Supp. Toronto:
Carswell, 1984 (loose-leaf updated 2000, release 3).
Lange, Donald J. The Doctrine
of Res Judicata in Canada. Markham, Ont.: Butterworths, 2000.
Sopinka, John, Sidney N. Lederman,
and Alan W. Bryant. The Law of Evidence in Canada, 2nd ed. Toronto:
Spencer Bower, George, and Sir
Alexander Kingcome Turner. The Doctrine of Res Judicata, 3rd ed. by K.
R. Handley. London, U.K.: Butterworths, 1996.
Watson, Garry D. “Duplicative
Litigation: Issue Estoppel, Abuse of Process and the Death of Mutuality”
(1990), 69 Can. Bar Rev. 623.
APPEAL from a judgment of the Ontario Court of Appeal
(1998), 42 O.R. (3d) 235, 167 D.L.R. (4th) 385, 116 O.A.C. 225, 12 Admin. L.R.
(3d) 1, 41 C.C.E.L. (2d) 19, 27 C.P.C. (4th) 91,  O.J. No. 5047 (QL),
dismissing the appellant’s appeal from a decision of the Ontario Court (General
Division) rendered on June 10, 1996. Appeal allowed.
Howard A. Levitt and J.
Michael Mulroy, for the appellant.
John E. Brooks and Rita
M. Samson, for the respondents.
The judgment of the Court was delivered by
Binnie J. – The appellant
claims that she was fired from her position as an account executive with the
respondent Ainsworth Technologies Inc. on October 12, 1993. She says that at
the time of her dismissal she was owed by her employer some $300,000 in unpaid
commissions. The courts in Ontario have held that she is “estopped” from
having her day in court on this issue because of an earlier failed attempt to
claim the same unpaid monies under the Employment Standards Act, R.S.O.
1990, c. E.14 (“ESA” or “Act”). An employment standards officer, adopting a
procedure which the Ontario Court of Appeal held to be improper and unfair,
denied the claim. I agree that in general issue estoppel is available to
preclude an unsuccessful party from relitigating in the courts what has already
been unsuccessfully litigated before an administrative tribunal, but in my view
this was not a proper case for its application. A judicial doctrine developed
to serve the ends of justice should not be applied mechanically to work an
injustice. I would allow the appeal.
In the fall of 1993, the appellant became involved in a dispute with her
employer, the respondent Ainsworth Technologies Inc., over unpaid commissions.
The appellant met with her superiors and sent various letters to them outlining
her position. These letters were generally copied to her lawyer, Mr. Howard A.
Levitt. Her principal complaint concerned an alleged entitlement to
commissions of about $200,000 in respect of a project known as the CIBC Lan
project, plus other commissions which brought the total to about $300,000.
The appellant rejected a proposed settlement from the employer. On
October 4, 1993, she filed a complaint under the ESA seeking unpaid wages,
including commissions. It is not clear on the record whether she had legal
advice on this aspect of the matter. On October 5, the employer wrote to the
appellant rejecting her claim for commissions and eventually took the position
that she had resigned and physically escorted her off the premises.
An employment standards officer, Ms. Caroline Burke, was assigned to
investigate the appellant’s complaint. She spoke with the appellant by
telephone and on or about January 30, 1994 met with her for about an hour. The
appellant gave Ms. Burke various documents including her correspondence with
the employer. They had no further meetings.
On March 21, 1994, more than six months after filing her claim under the
Act, but as yet without an ESA decision, the appellant, through Mr. Levitt,
commenced a court action in which she claimed damages for wrongful dismissal.
She also claimed the unpaid wages and commissions that were already the
subject-matter of her ESA claim.
On June 1, 1994, solicitors for the employer wrote to Ms. Burke
responding to the appellant’s claim. The employer’s letter included a number
of documents to substantiate its position. None of this was copied to the
appellant. Nor did Ms. Burke provide the appellant with information about the
employer’s position; nor did she give the appellant the opportunity to respond
to whatever the appellant may have assumed to be the position the employer was
likely to take. The appellant, in short, was left out of the loop.
On September 23, 1994, the ESA officer advised the respondent employer
(but not the appellant) that she had rejected the appellant’s claim for unpaid
commissions. At the same time she ordered the employer to pay the appellant
$2,354.55, representing two weeks’ pay in lieu of notice. Ten days later, by
letter dated October 3, 1994, Ms. Burke for the first time advised the
appellant of the order made against the employer for two weeks’ termination pay
and the rejection of her claim for the commissions. The letter stated in
part: “[w]ith respect to your claim for unpaid wages, the investigation
revealed there is no entitlement to $300,000.00 commission as claimed by you”.
The letter went on to explain that the appellant could apply to the Director of
Employment Standards for a review of this decision. Ms. Burke repeated this
advice in a subsequent telephone conversation with the appellant. The
appellant did not apply to the Director for a review of Ms. Burke’s decision;
instead, she decided to carry on with her wrongful dismissal action in the
The respondents contended that the claim for unpaid wages and
commissions was barred by issue estoppel. They brought a motion in the
appellant’s civil action to strike the relevant paragraphs from the statement
of claim. On June 10, 1996, McCombs J. of the Ontario Court (General Division)
granted the respondents’ motion. Only her claim for damages for wrongful
dismissal was allowed to proceed. On December 2, 1998, the appellant’s appeal
was dismissed by the Court of Appeal for Ontario.
Court (General Division) (June 10, 1996)
The issue before McCombs J. was whether the doctrine of issue estoppel
applied in the present case. Following Rasanen v. Rosemount Instruments
Ltd. (1994), 17 O.R. (3d) 267 (C.A.), he concluded that issue estoppel
could apply to issues previously determined by an administrative officer or
tribunal. In his view, the sole issue to be determined was whether the ESA
officer’s decision was a final determination. The motions judge noted that the
appellant did not seek to appeal or review the ESA officer’s decision under s.
67(2) of the Act, as she was entitled to do if she wished to contest that
decision. He considered the ESA decision to be final. The criteria for the
application of issue estoppel were therefore met. The paragraphs relating to
the appellant’s claim for unpaid wages and commissions were struck from her
statement of claim.
of Appeal for Ontario (1998), 42 O.R. (3d) 235
After reviewing the facts of the case, Rosenberg J.A. for the court
identified, at pp. 239-40, the issues raised by the appellant’s appeal:
This case concerns the second requirement of issue
estoppel, that the decision which is said to create the estoppel be a final
judicial decision. The appellant submits that the decision of an employment
standards officer is neither judicial nor final. She also submits that, in any
event, the process followed by Ms. Burke in this particular case was unfair and
therefore her decision should not create an estoppel. Specifically, the
appellant argues she was not treated fairly as she was not provided with a copy
of the submissions made by the employer and thus not given an opportunity to
respond to those submissions.
In rejecting these submissions, Rosenberg J.A. grouped them under three
headings: whether the ESA officer’s decision was final; whether the ESA
officer’s decision was judicial; and the effect of procedural unfairness on the
application of the doctrine of issue estoppel.
In his view, the decision of the officer in the present case was final
because neither party exercised the right of internal appeal under s. 67(2) of
the Act. Moreover, while not all administrative decisions that finally
determine the rights of parties will be “judicial” for purposes of issue
estoppel, Rosenberg J.A. found that the statutory procedure set out in the Act
satisfied the requirements. He considered Re Downing and Graydon
(1978), 21 O.R. (2d) 292 (C.A.), to be “determinative of this issue” (p. 249).
Lastly, Rosenberg J.A. addressed the issue of whether failure by the ESA
officer to observe procedural fairness affected the application of the doctrine
of issue estoppel in this case. He agreed that the ESA officer had in fact
failed to observe procedural fairness in deciding upon the appellant’s
complaint. Nevertheless, this failure did not prevent the operation of issue
estoppel (at p. 252):
The officer was required to give the appellant access to, and an
opportunity to refute, any information gathered by the officer in the course of
her investigation that was prejudicial to the appellant’s claim. At a minimum,
the appellant was entitled to a copy of the June 1, 1994 letter and a summary
of any other information gathered in the course of the investigation that was
prejudicial to her claim. She was also entitled to a fair opportunity to
consider and reply to that information. The appellant was denied the
opportunity to know the case against her and have an opportunity to meet it:
Ms. Burke failed to act judicially. In this particular case, this failure does
not, however, affect the operation of issue estoppel.
In Rosenberg J.A.’s view, although ESA officers are obliged to act
judicially, failure to do so in a particular case, at least if there is a
possibility of appeal, will not preclude the operation of issue estoppel. This
conclusion is based on the policy considerations underlying two rules of
administrative law (at p. 252):
These two rules are: (1) that the discretionary remedies of judicial
review will be refused where an adequate alternative remedy exists; and (2) the
rule against collateral attack. These rules, in effect, require that the
parties pursue their remedies through the administrative process established by
the legislature. Where an appeal route is available the parties will not be
permitted to ignore it in favour of the court process.
Rosenberg J.A. noted that if the appellant had applied, under s. 67(3)
of the Act for a review of the ESA officer’s decision, the adjudicator
conducting such a review would have been required to hold a hearing. This
supported his view that the review process provided by the Act is an adequate
alternative remedy. Rosenberg J.A. concluded, at p. 256:
In summary, Ms. Burke did not accord this appellant
natural justice. The appellant’s recourse was to seek review of Ms. Burke’s
decision. She failed to do so. That decision is binding upon her and her
The court thus applied the doctrine of issue estoppel and dismissed the
Employment Standards Act, R.S.O. 1990, c. E.14
1. In this Act,
. . .
“wages” means any monetary remuneration payable by an employer to an
employee under the terms of a contract of employment, oral or written, express
or implied, any payment to be made by an employer to an employee under this Act
and any allowances for room or board as prescribed in the regulations or under
an agreement or arrangement therefor but does not include,
(a) tips and other gratuities,
(b) any sums paid as gifts or bonuses that
are dependent on the discretion of the employer and are not related to hours,
production or efficiency,
(c) travelling allowances or expenses,
(d) contributions made by an employer to a
fund, plan or arrangement to which Part X of this Act applies; (“salaire”)
. . .
6. – (1) No civil remedy of an employee
against his or her employer is suspended or affected by this Act.
(2) Where an employee initiates a civil proceeding
against his or her employer under this Act, notice of the proceeding shall be
served on the Director in the prescribed form on the same date the civil
proceeding is set down for trial.
65. – (1) Where an employment standards
officer finds that an employee is entitled to any wages from an employer, the
(a) arrange with the employer that the
employer pay directly to the employee the wages to which the employee is
(b) receive from the employer on behalf of
the employee any wages to be paid to the employee as the result of a compromise
or settlement; or
(c) issue an order in writing to the
employer to pay forthwith to the Director in trust any wages to which an employee
is entitled and in addition such order shall provide for payment, by the
employer to the Director, of administration costs in the amount of 10 per cent
of the wages or $100, whichever is the greater.
. . .
(7) If an employer fails to apply under section 68
for a review of an order issued by an employment standards officer, the order
becomes final and binding against the employer even though a review hearing is
held to determine another person’s liability under this Act.
. . .
67. – (1) Where, following a complaint in
writing by an employee, an employment standards officer finds that an employer
has paid the wages to which an employee is entitled or has found that the
employee has no other entitlements or that there are no actions which the
employer is to do or is to refrain from doing in order to be in compliance with
this Act, the officer may refuse to issue an order to an employer and upon
refusing to do so shall advise the employee of the refusal by prepaid letter
addressed to the employee at his or her last known address.
(2) An employee who considers himself or herself
aggrieved by the refusal to issue an order to an employer or by the issuance of
an order that in his or her view does not include all of the wages or other
entitlements to which he or she is entitled may apply to the Director in
writing within fifteen days of the date of the mailing of the letter mentioned
in subsection (1) or the date of the issue of the order or such longer period
as the Director may for special reasons allow for a review of the refusal or of
the amount of the order.
(3) Upon receipt of an application for review, the
Director may appoint an adjudicator who shall hold a hearing.
. . .
(5) The adjudicator who is conducting the hearing
may with necessary modifications exercise the powers conferred on an employment
standards officer under this Act and may make an order with respect to the
refusal or an order to amend, rescind or affirm the order of the employment
. . .
(7) The order of the adjudicator is not subject to
a review under section 68 and is final and binding on the parties.
68. – (1) An employer who considers
themself aggrieved by an order made under section 45, 48, 51, 56.2, 58.22 or
65, upon paying the wages ordered to be paid and the penalty thereon, if any,
may, within a period of fifteen days after the date of delivery or service of
the order, or such longer period as the Director may for special reasons allow
and provided that the wages have not been paid out under subsection 72 (2),
apply for a review of the order by way of a hearing.
. . .
(3) The Director shall select a referee from the
panel of referees to hear the review.
. . .
(7) A decision of the referee under this section
is final and binding upon the parties thereto and such other parties as the
referee may specify.
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 appellant
chose the ESA as her forum. She lost. An issue, once decided, should not
generally be re-litigated to the benefit of the losing party and the harassment
of the winner. A person should only be vexed once in the same cause.
Duplicative litigation, potential inconsistent results, undue costs, and inconclusive
proceedings are to be avoided.
Finality is thus a compelling consideration and judicial decisions
should generally be conclusive of the issues decided unless and until reversed
on appeal. However, estoppel is a doctrine of public policy that is
designed to advance the interests of justice. Where as here, its application
bars the courthouse door against the appellant’s $300,000 claim because of an
administrative decision taken in a manner which was manifestly improper and
unfair (as found by the Court of Appeal itself), a re-examination of some basic
principles is warranted.
The law has developed a number of techniques to prevent abuse of the
decision-making process. One of the oldest is the doctrine estoppel per rem
judicatem with its roots in Roman law, the idea that a dispute once judged
with finality is not subject to relitigation: Farwell v. The Queen (1894),
22 S.C.R. 553, at p. 558; Angle v. Minister of National Revenue,
 2 S.C.R. 248, at pp. 267-68. 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): G. S. Holmested and G. D. Watson, Ontario
Civil Procedure (loose-leaf), vol. 3 Supp., at 21§17 et seq.
Another aspect of the judicial policy favouring finality is the rule against
collateral attack, i.e., that a judicial order pronounced by a court of
competent jurisdiction should not be brought into question in subsequent
proceedings except those provided by law for the express purpose of attacking
it: Wilson v. The Queen,  2 S.C.R. 594; R. v.
Litchfield,  4 S.C.R. 333; R. v. Sarson,  2
These rules were initially developed in the context of prior court
proceedings. They have since been extended, with some necessary modifications,
to decisions classified as being of a judicial or quasi-judicial nature
pronounced by administrative officers and tribunals. In that context the more
specific objective is to balance fairness to the parties with the protection of
the administrative decision-making process, whose integrity would be undermined
by too readily permitting collateral attack or relitigation of issues once
The extension of the doctrine of issue estoppel in Canada to
administrative agencies is traced back to cases in the mid-1800s by D. J.
Lange in The Doctrine of Res Judicata in Canada (2000), at p. 94 et
seq., including Robinson v. McQuaid (1854), 1 P.E.I.R.
103 (S.C.), at pp. 104-5, and Bell v. Miller (1862), 9 Gr. 385
(U.C. Ch.), at p. 386. The modern cases at the appellate level
include Raison v. Fenwick (1981), 120 D.L.R. (3d) 622 (B.C.C.A.);
Rasanen, supra; Wong v. Shell Canada Ltd. (1995), 15
C.C.E.L. (2d) 182 (Alta. C.A.); Machin v. Tomlinson (2000), 194 D.L.R.
(4th) 326 (Ont. C.A.); and Hamelin v. Davis (1996), 18 B.C.L.R.
(3d) 112 (C.A.). See also Thrasyvoulou v. Environment Secretary, 
2 A.C. 273 (H.L.). Modifications were necessary because of the “major differences
that can exist between [administrative orders and court orders] in relation, inter
alia, to their legal nature and the position within the state structure of
the institutions that issue them”: R. v. Consolidated Maybrun Mines Ltd.,
 1 S.C.R. 706, at para. 4. There is generally no dispute that
court orders are judicial orders; the same cannot be said of the myriad of
orders that are issued across the range of administrative tribunals.
In this appeal the parties have not argued “cause of action” estoppel,
apparently taking the view that the statutory framework of the ESA claim
sufficiently distinguishes it from the common law framework of the court case.
I therefore say no more about it. They have however, joined issue on the application
of issue estoppel and the relevance of the rule against collateral attack.
Issue estoppel was more particularly defined by Middleton J.A. of the
Ontario Court of Appeal in McIntosh v. Parent,  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 added.]
was adopted by Laskin J. (later C.J.), dissenting in Angle, supra,
at pp. 267-68. This description of the issues subject to estoppel (“[a]ny
right, question or fact distinctly put in issue and directly determined”) is
more stringent than the formulation in some of the older cases for cause of
action estoppel (e.g., “all matters which were, or might properly have been,
brought into litigation”, Farwell, supra, at p. 558).
Dickson J. (later C.J.), speaking for the majority in Angle, supra,
at p. 255, subscribed to the more stringent definition for the purpose of
issue estoppel. “It will not suffice” he said, “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 the
estoppel is said to arise must have been “fundamental to the decision arrived
at” in the earlier proceeding. In other words, as discussed below, the
estoppel extends to the material facts and the conclusions of law or of mixed
fact and law (“the questions”) that were necessarily (even if not explicitly)
determined in the earlier proceedings.
The preconditions to the operation of issue estoppel were set out by
Dickson J. in Angle, supra, at p. 254:
(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.
The appellant’s argument is that even though the ESA officer was
required to make a decision in a judicial manner, she failed to do so.
Although she had jurisdiction under the ESA to deal with the claim, the ESA
officer lost jurisdiction when she failed to disclose to the appellant the case
the appellant had to meet and to give the appellant the opportunity to be heard
in answer to the case put against her. The ESA officer therefore never made a
“judicial decision” as required. The appellant also says that her own failure
to exercise her right to seek internal administrative review of the decision
should not be given the conclusive effect adopted by the Ontario Court of
Appeal. Even if the conditions precedent to issue estoppel were present, she
says, the court had a discretion to relieve against the harsh effects of
estoppel per rem judicatem in the circumstances of this
case, and erred in failing to do so.
1. The Employment Standards Officer
The ESA applies to “every contract of employment, oral or written,
express or implied” in Ontario (s. 2(2)) subject to certain exceptions
under the regulations, and establishes a number of minimum employment standards
for the protection of employees. These include hours of work, minimum wages,
overtime pay, benefit plans, public holidays and vacation with pay. More
specifically, the Act provides a summary procedure under which aggrieved
employees can seek redress with respect to an employer’s alleged failure to
comply with these standards. The objective is to make redress available, where
it is appropriate at all, expeditiously and cheaply. In the first instance, the
dispute is referred to an employment standards officer. ESA officers are
public servants in the Ministry of Labour. They are generally not legally
trained, but have some experience in labour relations. The statute does not
set out any particular procedure that must be followed in disposing of claims.
ESA officers are given wide powers to enter premises, inspect and remove
documents and make other relevant inquiries. If liability is found, ESA officers
have broad powers of enforcement (s. 65).
On receipt of an employee demand, generally speaking, the ESA officer
contacts the employer to ascertain whether in fact wages are unpaid and if so
for what reason. Although in this case there was a one-hour meeting between
the ESA officer and the appellant, there is no requirement for such a
face-to-face meeting, and clearly there is no contemplation of any sort of oral
hearing in which both parties are present. It is a rough-and-ready procedure
that is wholly inappropriate, one might think, to the definitive resolution of
a contractual claim of some legal and factual complexity.
There are many advantages to the employee in such a forum. The services
of the ESA officer are supplied free of charge. Legal representation is
unnecessary. The process moves more rapidly than could realistically be expected
in the courts. There are corresponding disadvantages. The ESA officer is
likely not to have legal training and has neither the time nor the resources to
deal with a contract claim in a manner comparable to the courtroom setting. At
the time of these proceedings a double standard was applied to an appeal (or,
as it is called, a “review”). The employer was entitled as of right to a
review (s. 68) but, as discussed below, the employee could ask for one but
the request could be refused by the Director (s. 67(3)). At the time, as
well, there was no monetary limit on the ESA officer’s jurisdiction. The Act
has since been amended to provide an upper limit on claims of $10,000 (S.O.
1996, c. 23, s. 19(1)). Had the ESA officer’s determination
gone the other way, the employer could have been saddled with a $300,000
liability arising out of a deeply flawed decision unless reversed on an
administrative review or quashed by a supervising court.
2. The Review Process
The employee, as stated, has no appeal as of right. Section 67(2) of
the Act provides that an employee dissatisfied with the decision at first
instance may apply to the Director for an administrative review in writing
within 15 days of the date of the mailing of the employment standards officer’s
decision. Under s. 67(3), “the Director may appoint an adjudicator
who shall hold a hearing” (emphasis added). The word “may” grants the Director
a discretion to hold or not to hold a hearing. The Ontario Court of Appeal
noted this point, but said the parties had attached little importance to it.
It seems clear the legislature did not intend to confer an appeal as of
right. Where the Director does appoint an adjudicator a hearing is mandated by
the Act. Further delay and expense to the Ministry and the parties would
follow as a matter of course. The juxtaposition in s. 67(3) of “may” and
“shall” (and in the French text, the instruction that the Director “peut
nommer un arbitre de griefs pour tenir une audience” (emphasis
added)) puts the matter beyond doubt. The Ontario legislature intended
the Director to have a discretion to decline to refer a matter to an
adjudicator which, in his or her opinion, is simply not justified. Even the
adjudicators hearing a review under s. 67(3) of the Act are not by statute
required to be legally trained. It was likely considered undesirable by the
Ontario legislature to give each and every dissatisfied employee a review as of
right, particularly where the amounts in issue are often relatively modest.
The discretion must be exercised according to proper principles, of course, but
a discretion it remains.
If an internal review were ordered, an adjudicator would then have
looked at the appellant’s claim de novo and would undoubtedly have
shared the employer documents with the appellant and given her every
opportunity to respond and comment. I agree that under the scheme of the Act
procedural defects at the ESA officer level, including a failure to provide
proper notice and an opportunity to be heard in response to the opposing case,
can be rectified on review. The respondent says the appellant, having elected
to proceed under the Act, was required to seek an internal review if she was
dissatisfied with the initial outcome. Not having done so, she is estopped
from pursuing her $300,000 claim. The appellant says that the ESA procedure
was so deeply flawed that she was entitled to walk away from it.
Applicability of Issue Estoppel
1. Issue Estoppel: A Two-Step Analysis
The rules governing issue estoppel should not be mechanically applied.
The underlying purpose is to balance the public interest in the finality of
litigation with the public interest in ensuring that justice is done on the
facts of a particular case. (There are corresponding private interests.) The
first step is to determine whether the moving party (in this case the
respondent) has established the preconditions to the operation of issue
estoppel set out by Dickson J. in Angle, supra. If successful,
the court must still determine whether, as a matter of discretion, issue
estoppel ought to be applied: British Columbia (Minister of Forests)
v. Bugbusters Pest Management Inc. (1998), 50 B.C.L.R. (3d) 1 (C.A.), at
para. 32; Schweneke v. Ontario (2000), 47 O.R. (3d) 97 (C.A.), at paras.
38-39; Braithwaite v. Nova Scotia Public Service Long Term Disability Plan
Trust Fund (1999), 176 N.S.R. (2d) 173 (C.A.), at para. 56.
The appellant was quite entitled, in the first instance, to invoke the
jurisdiction of the Ontario superior court to deal with her various monetary
claims. The respondent was not entitled as of right to the imposition of an
estoppel. It was up to the court to decide whether, in the exercise of its
discretion, it would decline to hear aspects of the claims that were previously
the subject of ESA administrative proceedings.
2. The Judicial Nature of the Decision
A common element of the preconditions to issue estoppel set out by
Dickson J. in Angle, supra, is the fundamental requirement that
the decision in the prior proceeding be a judicial decision. According
to the authorities (see e.g., G. Spencer Bower,
A. K. Turner and K. R. Handley, The Doctrine of Res
Judicata (3rd ed. 1996), paras. 18-20), there are three elements that may
be taken into account. First is to examine the nature of the administrative
authority issuing the decision. Is it an institution that is capable of
receiving and exercising adjudicative authority? Secondly, as a matter of law,
is the particular decision one that was required to be made in a judicial
manner? Thirdly, as a mixed question of law and fact, was the decision
made in a judicial manner? These are distinct requirements:
It is of no avail to prove that the alleged res judicata
was a decision, or that it was pronounced according to judicial principles,
unless it emanated from such a tribunal in the exercise of its adjudicative
functions; nor is it sufficient that it was pronounced by such a tribunal
unless it was a judicial decision on the merits. It is important, therefore,
at the outset to have a proper understanding of what constitutes a judicial tribunal
and a judicial decision for present purposes.
(Spencer Bower, Turner and Handley, supra, para. 20)
As to the third aspect, whether or not the particular decision in
question was actually made in accordance with judicial requirements, I note the
recent ex curia statement of Handley J. (the current editor of The
Doctrine of Res Judicata) that:
The prior decision judicial, arbitral, or
administrative, must have been made within jurisdiction before it can give rise
to res judicata estoppels.
(“Res Judicata: General Principles and Recent Developments” (1999), 18
Aust. Bar Rev. 214, at p. 215)
The main controversy in this case is directed to this third aspect,
i.e., is a decision taken without regard to requirements of notice and an
opportunity to be heard capable of supporting an issue estoppel? In my
opinion, the answer to this question is yes.
(a) The Institutional Framework
The decision relied on by Rosenberg J.A. in this respect relates to the
generic role and function of the ESA officer: Re Downing and Graydon, supra,
per Blair J.A., at p. 305:
In the present case, the employment standards
officers have the power to adjudicate as well as to investigate. Their
investigation is made for the purpose of providing them with information on
which to base the decision they must make. The duties of the employment
standards officers embrace all the important indicia of the exercise of
a judicial power including the ascertainment of facts, the application of the
law to those facts and the making of a decision which is binding upon the
did not dispute that ESA officials could properly be given adjudicative responsibilities
to be discharged in a judicial manner. An earlier legislative limit of $4,000
on unpaid wages (excluding severance pay and benefits payable under pregnancy
and parental provisions) was eliminated in 1991 by S.O. 1991, c. 16,
s. 9(1), but subsequent to the ESA decision in the present case a new
limit of $10,000 was imposed. This is the same limit as is imposed on
the Small Claims Court by the Courts of Justice Act, R.S.O. 1990,
c. C.43, s. 23(1), and O. Reg. 626/00, s. 1(1).
(b) The Nature of ESA Decisions Under Section 65(1)
An administrative tribunal may have judicial as well as administrative
or ministerial functions. So may an administrative officer.
One distinction between administrative and judicial decisions lies in
differentiating adjudicative from investigative functions. In the latter mode
the ESA officer is taking the initiative to gather information. The ESA
officer acts as a self-starting investigator who is not confined within the
limits of the adversarial process. The distinction between investigative and
adjudicative powers is discussed in Guay v. Lafleur,  S.C.R. 12,
at pp. 17-18. The inapplicability of issue estoppel to investigations is noted
by Diplock L.J. in Thoday v. Thoday,  P. 181 (Eng. C.A.), at p.
Although ESA officers may have non-adjudicative functions, they
must exercise their adjudicative functions in a judicial manner. While they
utilize procedures more flexible than those that apply in the courts, their
decisions must be based on findings of fact and the application of an objective
legal standard to those facts. This is characteristic of a judicial function:
D. J. M. Brown and J. M. Evans, Judicial Review of
Administrative Action in Canada (1998), vol. 2, § 7:1310,
The adjudication of the claim, once the relevant information had been
gathered, is of a judicial nature.
(c) Particulars of the Decision in Question
The Ontario Court of Appeal concluded that the decision of the ESA
officer in this case was in fact reached contrary to the principles of natural
justice. The appellant had neither notice of the employer’s case nor an
opportunity to respond.
The appellant contends that it is not enough to say the decision ought
to have been reached in a judicial manner. The question is: Was it decided in
a judicial manner in this case? There is some support for this view in Rasanen,
supra, per Abella J.A., at p. 280:
As long as the hearing process in the tribunal
provides parties with an opportunity to know and meet the case against them,
and so long as the decision is within the tribunal’s jurisdiction, then
regardless of how closely the process mirrors a trial or its procedural
antecedents, I can see no principled basis for exempting issues adjudicated by
tribunals from the operation of issue estoppel in a subsequent action.
Trial level decisions in Ontario subsequently adopted this approach: Machado
v. Pratt & Whitney Canada Inc. (1995), 12 C.C.E.L. (2d) 132 (Ont. Ct.
(Gen. Div.)); Randhawa v. Everest & Jennings Canadian Ltd. (1996),
22 C.C.E.L. (2d) 19 (Ont. Ct. (Gen. Div.)); Heynen v. Frito-Lay Canada Ltd. (1997),
32 C.C.E.L. (2d) 183 (Ont. Ct. (Gen. Div.)); Perez v. GE Capital Technology
Management Services Canada Inc. (1999), 47 C.C.E.L. (2d) 145 (Ont.
S.C.J.). The statement of Métivier J. in Munyal v. Sears Canada Inc.
(1997), 29 C.C.E.L. (2d) 58 (Ont. Ct. (Gen. Div.)), at p. 60, reflects
The plaintiff relies on [Rasanen] and other
similar decisions to assert that the principle of issue estoppel should apply
to administrative decisions. This is true only where the decision is the
result of a fair, unbiased adjudicative process where “the hearing process
provides parties with an opportunity to know and meet the case against them”.
In Wong, supra, the Alberta Court of Appeal rejected an
attack on the decision of an employment standards review officer and held that
the ESA decision was adequate to create an estoppel as long as “the appellant
knew of the case against him and was given an opportunity to state his
position” (para. 20). See also Alderman v. North Shore Studio Management
Ltd.,  5 W.W.R. 535 (B.C.S.C.).
In my view, with respect, the theory that a denial of natural justice
deprives the ESA decision of its character as a “judicial” decision rests on a
misconception. Flawed the decision may be, but “judicial” (as distinguished
from administrative or legislative) it remains. Once it is determined that the
decision maker was capable of receiving and exercising adjudicative authority
and that the particular decision was one that was required to be made in a
judicial manner, the decision does not cease to have that character
(“judicial”) because the decision maker erred in carrying out his or her
functions. As early as R. v. Nat Bell Liquors Ltd.,  2 A.C. 128
(H.L.), it was held that a conviction entered by an Alberta magistrate could
not be quashed for lack of jurisdiction on the grounds that the depositions
showed that there was no evidence to support the conviction or that the
magistrate misdirected himself in considering the evidence. The jurisdiction
to try the charges was distinguished from alleged errors in “the observance of
the law in the course of its exercise” (p. 156). If the conditions precedent
to the exercise of a judicial jurisdiction are satisfied (as here), subsequent
errors in its exercise, including violations of natural justice, render the
decision voidable, not void: Harelkin v. University of Regina,  2
S.C.R. 561, at pp. 584-85. The decision remains a “judicial decision”,
although seriously flawed by the want of proper notice and the denial of the
opportunity to be heard.
I mentioned at the outset that estoppel per rem judicatem is
closely linked to the rule against collateral attack, and indeed to the
principles of judicial review. If the appellant had gone to court to seek
judicial review of the ESA officer’s decision without first following the
internal administrative review route, she would have been confronted with the
decision of this Court in Harelkin, supra. In that case a
university student failed in his judicial review application to quash the
decision of a faculty committee of the University of Regina which found his
academic performance to be unsatisfactory. The faculty committee was required
to act in a judicial manner but failed, as here, to give proper notice and an
opportunity to be heard. It was held that the failure did not deprive the
faculty committee of its adjudicative jurisdiction. Its decision was subject
to judicial review, but this was refused in the exercise of the Court’s
discretion. Adoption of the appellant’s theory in this case would create an
anomalous result. If she is correct that the ESA officer stepped outside her
judicial role and lost jurisdiction for all purposes, including issue estoppel,
the Harelkin barrier to judicial review would be neatly sidestepped.
She would have no need to seek judicial review to set aside the ESA decision.
She would be, on her theory, entitled as of right to have it ignored in her
The appellant’s position would also create an anomalous situation under
the rule against collateral attack. As noted by the respondent, the rejection
of issue estoppel in this case would constitute, in a sense, a successful
collateral attack on the ESA decision, which has been impeached neither by
administrative review nor judicial review. On the appellant’s theory, an
excess of jurisdiction in the course of the ESA proceeding would prevent issue
estoppel, even though Maybrun, supra, says that an act in
excess of a jurisdiction which the decision maker initially possessed does not
necessarily open the decision to collateral attack. It depends, according to Maybrun,
on which forum the legislature intended the jurisdictional attack to be made
in, the administrative review forum or the court (para. 49).
It seems to me that the unsuccessful litigant in administrative
proceedings should be encouraged to pursue whatever administrative remedy is
available. Here, it is worth repeating, she elected the ESA forum. Employers
and employees should be able to rely on ESA determinations unless steps are
taken promptly to set them aside. One major legislative objective of the ESA
scheme is to facilitate a quick resolution of termination benefits so that both
employee and employer can get on to other things. Where, as here, the ESA
issues are determined within a year, a contract claim could nevertheless still
be commenced thereafter in Ontario within six years of the alleged breach,
producing a lingering five years of uncertainty. This is to be discouraged.
In summary, it is clear that an administrative decision which is made
without jurisdiction from the outset cannot form the basis of an estoppel. The
conditions precedent to the adjudicative jurisdiction must be satisfied. Where
arguments can be made that an administrative officer or tribunal initially
possessed the jurisdiction to make a decision in a judicial manner but erred in
the exercise of that jurisdiction, the resulting decision is nevertheless
capable of forming the basis of an estoppel. Alleged errors in carrying out
the mandate are matters to be considered by the court in the exercise of its
discretion. This result makes the principle governing estoppel consistent with
the law governing judicial review in Harelkin, supra, and
collateral attack in Maybrun, supra.
Where I differ from the Ontario Court of Appeal in this case is in its
conclusion that the failure of the appellant to seek such an administrative
review of the ESA officer’s flawed decision was fatal to her position. In my
view, with respect, the refusal of the ESA officer to afford the appellant
proper notice and the opportunity to be heard are matters of great importance
in the exercise of the court’s discretion, as will be seen.
I turn now to the three preconditions to issue estoppel set out by
Dickson J. in Angle, supra, at p. 254.
3. Issue Estoppel: Applying the Tests
(a) That the Same Question Has Been Decided
A cause of action has traditionally been defined as comprising every
fact which it would be necessary for the plaintiff to prove, if disputed, in
order to support his or her right to the judgment of the court: Poucher v.
Wilkins (1915), 33 O.L.R. 125 (C.A.). Establishing each such fact
(sometimes referred to as material facts) constitutes a precondition to
success. It is apparent that different causes of action may have one or more
material facts in common. In this case, for example, the existence of an
employment contract is a material fact common to both the ESA proceeding and to
the appellant’s wrongful dismissal claim in court. Issue estoppel simply means
that once a material fact such as a valid employment contract is found to exist
(or not to exist) by a court or tribunal of competent jurisdiction, whether on
the basis of evidence or admissions, the same issue cannot be relitigated in
subsequent proceedings between the same parties. The estoppel, in other words,
extends to the issues of fact, law, and mixed fact and law that are necessarily
bound up with the determination of that “issue” in the prior proceeding.
The parties are agreed here that the “same issue” requirement is
satisfied. In the appellant’s wrongful dismissal action, she is claiming
$300,000 in unpaid commissions. This puts in issue the same entitlement as was
refused her in the ESA proceeding. One or more of the factual or legal issues
essential to this entitlement were necessarily determined against her in the
earlier ESA proceeding. If issue estoppel applies, it prevents her from asserting
that these adverse findings ought now to be found in her favour.
(b) That the Judicial Decision Which Is Said
to Create the Estoppel Was Final
As already discussed, the requirement that the prior decision be
“judicial” (as opposed to administrative or legislative) is satisfied in this
Further, I agree with the Ontario Court of Appeal that the employee not
having taken advantage of the internal review procedure, the decision of the
ESA officer was final for the purposes of the Act and therefore capable in the
normal course of events of giving rise to an estoppel.
I have already noted that in this case, unlike Harelkin, supra,
the appellant had no right of appeal. She could merely make a request to
the ESA Director for a review by an ESA adjudicator. While this may be a
factor in the exercise of the discretion to deny issue estoppel, it does not
affect the finality of the ESA decision. The appellant could fairly argue on a
judicial review application that unlike Harelkin she had no “adequate
alternative remedy” available to her as of right. The ESA decision must
nevertheless be treated as final for present purposes.
(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: Machin, supra; Minott v. O’Shanter Development Co.
(1999), 42 O.R. (3d) 321 (C.A.), per Laskin J.A., at pp. 339-40.
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. D. Watson, “Duplicative Litigation: Issue Estoppel, Abuse
of Process and the Death of Mutuality” (1990), 69 Can. Bar Rev. 623.
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
I conclude that the preconditions to issue estoppel are met in this
4. The Exercise of the Discretion
The appellant submitted that the Court should nevertheless refuse to
apply estoppel as a matter of discretion. There is no doubt that such a
discretion exists. In General Motors of Canada Ltd. v. Naken,
 1 S.C.R. 72, Estey J. noted, at p. 101, that in the context of court
proceedings “such a discretion must be very limited in application”. In my
view the discretion is necessarily broader in relation to the prior decisions
of administrative tribunals because of the enormous range and diversity of the
structures, mandates and procedures of administrative decision makers.
In Bugbusters, supra, Finch J.A. (now C.J.B.C.) observed,
at para. 32:
It must always be remembered that although the
three requirements for issue estoppel must be satisfied before it can apply,
the fact that they may be satisfied does not automatically give rise to its
application. Issue estoppel is an equitable doctrine, and as can be seen from
the cases, is closely related to abuse of process. The doctrine of issue
estoppel is designed as an implement of justice, and a protection against
injustice. It inevitably calls upon the exercise of a judicial discretion to
achieve fairness according to the circumstances of each case.
noting parenthetically that estoppel per rem judicatem is generally
considered a common law doctrine (unlike promissory estoppel which is clearly
equitable in origin), I think this is a correct statement of the law. Finch
J.A.’s dictum was adopted and applied by the Ontario Court of Appeal in
Schweneke, supra, at paras. 38 and 43:
The discretion to refuse to give effect to issue
estoppel becomes relevant only where the three prerequisites to the operation
of the doctrine exist. . . . The exercise of the discretion is
necessarily case specific and depends on the entirety of the circumstances. In
exercising the discretion the court must ask – is there something in the
circumstances of this case such that the usual operation of the doctrine of
issue estoppel would work an injustice?
. . .
. . . The discretion must respond to the realities of each
case and not to abstract concerns that arise in virtually every case where the
finding relied on to support the doctrine was made by a tribunal and not a
See also Braithwaite,
supra, at para. 56.
Courts elsewhere in the Commonwealth apply similar principles. In Arnold
v. National Westminster Bank plc,  3 All E.R. 41, the House of Lords
exercised its discretion against the application of issue estoppel arising out
of an earlier arbitration, per Lord Keith of Kinkel, at p. 50:
One of the purposes of estoppel being to work justice between the parties,
it is open to courts to recognise that in special circumstances inflexible
application of it may have the opposite result . . . .
In the present case Rosenberg J.A. noted in passing at pp. 248-49 the
possible existence of a potential discretion but, with respect, he gave it
short shrift. There was no discussion or analysis of the merits of its
exercise. He simply concluded, at p. 256:
In summary, Ms. Burke did not accord this appellant
natural justice. The appellant’s recourse was to seek review of Ms. Burke’s
decision. She failed to do so. That decision is binding upon her and her
In my view it was an error of principle not to address the factors for
and against the exercise of the discretion which the court clearly possessed.
This is not a situation where this Court is being asked by an appellant to
substitute its opinion for that of the motions judge or the Court of Appeal.
The appellant is entitled at some stage to appropriate consideration of the
discretionary factors and to date this has not happened.
The list of factors is open. They include many of the same factors
listed in Maybrun in connection with the rule against collateral
attack. A similarly helpful list was proposed by Laskin J.A. in Minott,
supra. The objective is to ensure that the operation of issue estoppel
promotes the orderly administration of justice but not at the cost of real
injustice in the particular case. Seven factors, discussed below, are relevant
in this case.
(a) The Wording of the
Statute from which the Power to Issue the Administrative Order Derives
In this case the ESA includes s. 6(1) which provides that:
No civil remedy of an employee against his or her
employer is suspended or affected by this Act. [Emphasis added.]
This provision suggests that at the time the Ontario legislature did not
intend ESA proceedings to become an exclusive forum. (Recent amendments to the
Act now require an employee to elect either the ESA procedure or the court.
Even prior to the new amendments, however, a court could properly conclude that
relitigation of an issue would be an abuse: Rasanen, supra, per
Morden A.C.J.O., at p. 293, Carthy J.A., at p. 288.)
While it is generally reasonable for defendants to expect to be able to
move on with their lives once one set of proceedings – including any available
appeals – has ended in a rejection of liability, here, the appellant commenced
her civil action against the respondents before the ESA officer reached a
decision (as was clearly authorized by the statute at that time). Thus, the
respondents were well aware, in law and in fact, that they were expected to
respond to parallel and to some extent overlapping proceedings.
(b) The Purpose of the Legislation
The focus of an earlier administrative proceeding might be entirely
different from that of the subsequent litigation, even though one or more of
the same issues might be implicated. In Bugbusters, supra, a
forestry company was compulsorily recruited to help fight a forest fire in
British Columbia. It subsequently sought reimbursement for its expenses under
the B.C. Forest Act, R.S.B.C. 1979, c. 140. The expense claim was
allowed despite an allegation that the fire had been started by a
Bugbusters employee who carelessly discarded his cigarette. (This, if proved,
would have disentitled Bugbusters to reimbursement.) The Crown later started a
$5 million negligence claim against Bugbusters, for losses occasioned by the
forest fire. Bugbusters invoked issue estoppel. The court, in the exercise of
its discretion, denied relief. One reason, per Finch J.A., at para. 30,
a final decision on the Crown’s right to recover its losses was not
within the reasonable expectation of either party at the time of those
[reimbursement] proceedings [under the Forest Act].
point was made in Rasanen, supra, by Carthy J.A., at p. 290:
It would be unfair to an employee who sought out
immediate and limited relief of $4,000, forsaking discovery and representation
in doing so, to then say that he is bound to the result as it affects a claim
for ten times that amount.
qualification is made in the American Restatement of the Law, Second:
Judgments 2d (1982), vol. 2 § 83(2)(e), which refers to
procedural elements as may be necessary to constitute
the proceeding a sufficient means of conclusively determining the matter in
question, having regard for the magnitude and complexity of the matter in
question, the urgency with which the matter must be resolved, and the
opportunity of the parties to obtain evidence and formulate legal contentions.
I am mindful, of course, that here the appellant chose the ESA forum.
Counsel for the respondent justly observed, with some exasperation:
As the record makes clear, Danyluk was represented by legal counsel
prior to, at the time of, and subsequent to the cessation of her employment.
Danyluk and her counsel were well aware of the fact that Danyluk had an initial
choice of forums with respect to her claim for unpaid commissions and wages.
. . .
Nevertheless, the purpose of the ESA is to provide a relatively quick
and cheap means of resolving employment disputes. Putting excessive weight on
the ESA decision in terms of issue estoppel would likely compel the parties in
such cases to mount a full-scale trial-type offence and defence, thus tending
to defeat the expeditious operation of the ESA scheme as a whole. This would
undermine fulfilment of the purpose of the legislation.
(c) The Availability of an Appeal
This factor corresponds to the “adequate alternative remedy” issue in
judicial review: Harelkin, supra, at p. 592. Here the employee
had no right of appeal, but the existence of a potential administrative
review and her failure to take advantage of it must be counted against her: Susan
Shoe Industries Ltd. v. Ricciardi (1994), 18 O.R. (3d) 660 (C.A.), at
(d) The Safeguards Available to the Parties
in the Administrative Procedure
As already mentioned, quick and expeditious procedures suitable to
accomplish the objectives of the ESA scheme may simply be inadequate to deal
with complex issues of fact or law. Administrative bodies, being masters of
their own procedures, may exclude evidence the court thinks probative, or act
on evidence the court considers less than reliable. If it has done so, this
may be a factor in the exercise of the court’s discretion. Here the breach of
natural justice is a key factor in the appellant’s favour.
Morden A.C.J.O. pointed out in his concurring judgment in Rasanen,
supra, at p. 295: “I do not exclude the possibility that
deficiencies in the procedure relating to the first decision could properly be
a factor in deciding whether or not to apply issue estoppel.” Laskin J.A. made
a similar point in Minott, supra, at pp. 341-42.
(e) The Expertise of the Administrative Decision
In this case the ESA officer was a non-legally trained individual asked
to decide a potentially complex issue of contract law. The rough-and-ready
approach suitable to getting things done in the vast majority of ESA claims is
not the expertise required here. A similar factor operates with respect to the
rule against collateral attack (Maybrun, supra, at para.
. . . where an attack on an order is based on considerations
which are foreign to an administrative appeal tribunal’s expertise or raison
d’être, this suggests, although it is not conclusive in itself, that the
legislature did not intend to reserve the exclusive authority to rule on the
validity of the order to that tribunal.
(f) The Circumstances Giving Rise to the
Prior Administrative Proceedings
In the appellant’s favour, it may be said that she invoked the ESA
procedure at a time of personal vulnerability with her dismissal looming. It
is unlikely the legislature intended a summary procedure for smallish claims to
become a barrier to closer consideration of more substantial claims. (The
legislature’s subsequent reduction of the monetary limit of an ESA claim to
$10,000 is consistent with this view.) As Laskin J.A. pointed out in Minott,
supra, at pp. 341-42:
. . . employees apply for benefits when they are most
vulnerable, immediately after losing their job. The urgency with which they
must invariably seek relief compromises their ability to adequately put forward
their case for benefits or to respond to the case against them
. . . .
On the other hand, in this particular case it must be said that the
appellant with or without legal advice, included in her ESA claim the $300,000
commissions, and she must shoulder at least part of the responsibility for her
(g) The Potential Injustice
As a final and most important factor, the Court should stand back and,
taking into account the entirety of the circumstances, consider whether
application of issue estoppel in the particular case would work an injustice.
Rosenberg J.A. concluded that the appellant had received neither notice of the
respondent’s allegation nor an opportunity to respond. He was thus confronted
with the problem identified by Jackson J.A., dissenting, in Iron v.
Saskatchewan (Minister of the Environment & Public Safety),  6
W.W.R. 1 (Sask. C.A.), at p. 21:
The doctrine of res judicata, being a means of doing justice between
the parties in the context of the adversarial system, carries within its tenets
the seeds of injustice, particularly in relation to issues of allowing parties
to be heard.
appellant’s various procedural mistakes in this case, the stubborn fact remains
that her claim to commissions worth $300,000 has simply never been properly
considered and adjudicated.
On considering the cumulative effect of the foregoing factors it is my
view that the Court in its discretion should refuse to apply issue estoppel in
I would therefore allow the appeal with costs throughout.
Appeal allowed with costs.
Solicitors for the appellant: Lang Michener, Toronto.
Solicitors for the respondents: Heenan Blaikie, Toronto.