Res Judicata

Table of Contents



res judicata applied to Crown attempt to enhance costs award when its appeal was allowed

On the taxpayer’s appeal in the Tax Court (“TCC”), regarding the recognition of income account losses, being allowed, he was awarded costs on the usual scale, and then successfully brought a motion to increase such costs award based on a settlement offer that he had made, which costs award was appealed by the Crown but with such appeal subject to a stay order. The TCC judgment on the loss recognition issue was then reversed in the Federal Court of Appeal (“FCA”), whose award of costs on the usual scale to the Crown was left undisturbed as a result of the taxpayer’s appeal to the Supreme Court (the “SCC”) being dismissed.

Now before the FCA was the Crown's appeal of the enhanced costs award in the TCC proceedings because the Crown's settlement offer, that it had made, was not accepted. Stratas JA found that the Crown’s appeal should be dismissed for two reasons:

  • Since the SCC dismissed the appeal from the FCA judgment, it left that judgment to stand, including its award of costs for the TCC proceedings. Since the entitlement for costs in the TCC proceedings had been decided, it could not now be relitigated in the current appeal by virtue of the res judicata doctrine.
  • Since the TCC’s enhanced cost order (under Rule 147(7)) was wholly contingent on the order it made in the underlying action, when the FCA "issued a judgment allowing the Crown’s appeal and setting aside the Tax Court’s judgment (including its costs award), the entire basis for the Tax Court’s Rule 147(7) order in the second matter fell away, with the result that it no longer had legal effect” (para. 10). Thus, the FCA judgment “rendered both the Tax Court’s judgment (including its costs award) and the Tax Court’s Rule 147(7) order a nullity” (para. 11).
Words and Phrases
res judicata
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Tax Court of Canada Rules (General Procedure) - Section 147 - Subsection 147(7) reversal of the related action rendered a Rule 147(7) costs award a nullity 193

Mailloux v. Canada, 2013 DTC 5162 [at 6401], 2012 FCA 331

consent judgment

In finding that the Tax Court had not erred in dismissing an appeal against a consent judgment entered into freely by the taxpayer after receiving tax advice, Blais CJ stated (at para. 8):

This Court has consistently held that when a person consents to an agreement that is later confirmed by a judgment, there is res judicata, and, barring exceptional circumstances, there can be no new intervention.

Goodfellow v. Canada, 2010 DTC 5026 [at 6619], 2010 FCA 23

The taxpayer was estopped from appealing assessments by the Minister of his 1991 to 1999 taxation years given that the Tax Court had issued consent judgments respecting those years - notwithstanding that the consent judgments did not extend to all the issues that were raised by the taxpayer in his appeal. The Court adopted the following passage on res judicata from Thomas v. Trinidad and Tobago (Attorney General) (1990), 115 N.R. 313 (P.C.) at p. 316-17:

The principle applies not only where the remedy sought and the grounds therefore are the same in the second action as the first but also where, the subject matter of the two actions being the same, it is sought to raise in the second action matters of fact or law directly related to the subject matter which could have been but were not raised in the first action.

LJP Sales Agency Inc. v. Canada (Minister of National Revenue), 2006 DTC 6442, 2006 FC 735

After finding against the taxpayer on other grounds, MacTavish J. went on to state (at 6447):

"LJP's submission that it should be allowed to argue that, based upon the principles of res judicata or issue estoppel, the decision of the Tax Court in relation to the 1995, 1996 and 1997 taxation years should be applied to the 1998 and 1999 tax years is similarly bereft of any chance of success. The Federal Court of Appeal was categorical in Sherway that res judicata does not arise in relation to the assessment of different taxation years.

Armstrong v. Canada (Attorney General), 2006 DTC 6310, 2006 FCA 119

At a time when appeals for the taxpayer's 1991 and 1993 taxation years had been heard, the appeal for his 1993 taxation year had been dismissed by the Tax Court and the appeal for his 1991 year had been held in abeyance pending the result of the 1993 appeal and an appeal to the Federal Court of Appeal for judicial review of the dismissal of the appeal for his 1993 year had been launched, the taxpayer filed an amended 1993 return in which, for the first time, he sought to deduct previously unclaimed rental losses and carry them back to 1991.

The Tax Court judge had been correct in finding that the taxpayer should have raised this issue of 1993 rental losses before the conclusion of the Tax Court appeals for 1991 and 1993 and that the doctrine of res judicata justified quashing the appeals for both years. [carry back to 1991]

Ross v. The Queen, 2003 DTC 5569 (FCTD)

Before going on to find on a clear set of facts that the doctrine of res judicata applied to the action of the taxpayer, Hargrave P. stated (at p. 5573):

"Key is that the doctrine of res judicata, except in special circumstances, applies not only to what a court, in the initial proceedings, is required to decide, but to all points in issue which properly belong to or should have been a part of that litigation and which a reasonable diligent party might have brought forward in the earlier proceeding."

Boehm v. The Queen, 96 DTC 6087 (FCTD)

The Court struck out the taxpayer's statement of claim assessing him tax for unreported income in respect of which there had been a successful criminal prosecution, on the basis that all the tests for issue estoppel were satisfied.

594872 Ontario Inc. v. The Queen, 92 DTC 6298, [1992] 1 CTC 344 (FCTD)

In rejecting a submission that a previous dismissal of a motion of the Crown by a motions judge rendered a further motion of the Crown res judicata, Reed J. stated (p.6300):

"I am not convinced that a decision on a motion for directions is the kind of issue which is final so as to make any further decision with respect thereto res judicata."

Van Rooy v. MNR, 88 DTC 6323, [1988] 2 CTC 78 (FCA)

Issue estoppel did not lie, following the conviction of the taxpayer for suppressing income in the amount of $60,000 for his 1973 taxation year, in an appeal from an assessment for that taxation year in which $60,000 was added to his income. An examination of the reasons of the judge in the criminal proceeding indicated that he was in doubt as to the quantum of income suppressed. There accordingly was a lack of identity of issue in the two proceedings.

Rans Construction (1966) Ltd. v. The Queen, 87 DTC 5415, [1987] 2 CTC 206 (FCTD)

Although issues resolved in criminal courts as final decisions may not be revived in civil courts provided the issues are the same, here the subject matters of the criminal and civil litigation were not identical.

Doyle v. The Queen, 80 DTC 6260, [1980] CTC 330 (FCTD)

"The right to appeal a reassessment ensuing upon a judgment is not a right to have issues, decided by that judgment, retried." Since a Supreme Court of Canada judgment had decided that a receipt of $2,090,000 was income of the taxpayer, the Minister was entitled to reassess on that basis (and the taxpayer was not entitled to appeal that basis of reassessment) notwithstanding an inconsistent Federal Court decision that 1/2 of that receipt also was income of another taxpayer.

Angle v. M.N.R., 74 DTC 6278, [1975] 2 S.C.R. 248

In an earlier action the Exchequer Court held that Mrs. Angle had received a shareholder benefit when a corporation ("Transworld") of which she was a shareholder built a pool house on her land. Sheppard, D.J. in so holding found that Mrs. Angle, in depositing the proceeds of a bank loan with Transworld, had not thereby paid for the pool house. The Crown was not precluded by issue estoppel from obtaining a writ of extent of the third degree respecting an amount alleged to be owing by Mrs. Angle to Transworld since "a finding of no liability by Mrs. Angle to Transworld was not legally indispensable to the judgment on the income tax appeal or a necessary finding to support that judgment. A tax assessment in respect of a benefit or advantage received is not inconsistent with an obligation to pay for the benefit or advantage where, for example, there is no apparent intention to honour the obligation."

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) no intent to honour obligation 64

See Also

Canadian Imperial Bank of Commerce v. The Queen, 2022 TCC 26

issue estoppel will rarely apply respecting transactions carried out in different taxation years

After President's Choice Bank (the “2009 Decision”) determined that services supplied by a subsidiary of Loblaw (“PC Bank”) to another bank (“CIBC”) were exempt arranging-for “financial services” under para. (l) of the ETA definition. The definition was then retroactively amended (through the addition of paras. (r.4) and (r.5)) to narrow its scope. CIBC nonetheless applied for a refund of GST that PC Bank had commenced charging to it on the basis that the supplies made continued to be exempt. In connection with its appeal of the denial of its rebate claims (and PC Bank’s appeal of assessments of other periods for its failure to charge GST on such supplies) CIBC brought this motion that its appeal be allowed on the basis that the substance of the supply was already determined in the 2009 Decision (or an order precluding the Respondent from introducing evidence inconsistent with the 2009 Decision regarding the substance of the supply).

Before dismissing the motion, Hogan J first found (at para. 19) that cause of action estoppel could not apply as:

[C]ause of action estoppel does not apply to an appeal of a tax assessment arising from two different taxation years even if the facts, parties and issues are substantially the same.

Regarding application of the three-part test under Angle for determining whether issue estoppel applied, the third requirement of “mutuality of the parties and their privies” was established as CIBC was a privy of PC Bank given that PC Bank had been reassessed for failure to collect GST from the CIBC and remit it on CIBC’s behalf (para. 33).

Furthermore, the “same issue” test was not satisfied since the scope of the exemption had “been narrowed by virtue of these new exclusions” in paras. (r.4) and (r.5). Hogan J stated (at para. 49):

I fail to see how the doctrine of res judicata can apply when the provision of the law previously considered in an earlier decision no longer applies.

He further stated (at paras. 64, 66):

[T]he doctrines of issue estoppel and abuse of process will rarely find application with respect to transactions or arrangements carried out in different taxation years. This is particularly true when a provision of the law has been amended in an attempt to nullify the impact of a precedent which the government has taken issue with. Income and value added taxes are imposed in respect of a tax period. The circumstances surrounding the parties’ agreement often change when key agreements have been amended.

… I [also] do not believe it is in the public interest that I decide on an issue without hearing evidence that is relevant to the determination as to whether or not the exclusions apply. While some may view retroactive legislation as being manifestly unfair, it is not the court’s role to limit Parliament’s legislative authority to adopt retroactive legislation that is validly enacted.

Words and Phrases
issue estoppel
Locations of other summaries Wordcount
Tax Topics - Excise Tax Act - Section 123 - Subsection 123(1) - Financial Service - Paragraph (r.4) the continued correctness of PC Bank “now hangs by a thread” because of the addition of (r.4) 239

Yourkin v. The Queen, 2014 DTC 1071 [at 3032], 2014 TCC 48 (Informal Procedure)

taxpayer's seventh collateral attack on the same consent judgment

The taxpayer argued that he was not bound by a consent judgment divorce settlement because he had not signed the underlying minutes of settlement, nor authorized his counsel to do the same. Masse DJ stated (at paras. 17-18):

This is not the first time Mr. Yourkin has been before this Court on this very same issue. He unsuccessfully challenged his assessments for his 2001, 2002, 2003, 2005, 2006 and 2009 taxation years. In all these prior appeals, the parties were the same, the issues were exactly the same, and the facts relied upon were the same except for the taxation years and perhaps the amount in dispute. ...

Whether one looks at this situation through the lens of res judicata or issue estoppel, the result is the same. ... The matter has been finally decided.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Estoppel taxpayer's seventh collateral attack on the same consent judgment 137

McIntyre v. The Queen, 2014 DTC 1116 [at 3258], 2014 TCC 111

criminal convictions establish only a floor on tax liability; plea bargains aren't dispositive

The taxpayers were a corporation and its two 50% shareholders ("Grant and Lorraine"). Following an audit, the Minister laid income tax evasion charges against the taxpayers for their 2002 to 2007 years, resulting in a plea bargain based upon an agreed statement of facts. Lorraine and the corporation were convicted. The taxpayers appealed the Minister's subsequent income tax reassessments, which were for larger amounts than in the agreed facts as well as GST reassessments of the corporation. They moved under Rule 58 for a determination of the question of whether doctrines of issue estoppel and abuse of process applied to prevent the Minister from asserting the larger amounts.

Following Angle, Campbell J treated issue estoppel as a branch of res judicata (para. 15).

Before dismissing the application for a Rule 58 determination in light of the extent of issues that would still need to be resolved at trial, Campbell J found that issue estoppel did not apply. She noted that convictions based on plea bargains are not dispositive in civil proceedings, but are rather prima facie proof (paras. 31, 35), and that there was insufficient identity of issues between the current and prior proceedings – for example, the agreed facts did not deal with Grant's tax matters or the corporation's GST appeal. Campbell J further noted that "amounts dealt with in criminal proceedings are minimum amounts with respect to the civil proceedings" (para. 44).

Locations of other summaries Wordcount
Tax Topics - General Concepts - Abuse of Process confining the Minister to a prior plea bargain would be an abuse 141

Congiu v. The Queen, 2013 TCC 271, aff'd 2014 FCA 73

not res judicata where two different government litigants

The appellant was appealing an assessment made by Revenue Quebec on behalf of the (federal) Minister under s. 270(4) of the Excise Tax Act in respect of a debt of a corporation of which she had been a receiver. Angers J noted (at para. 4) that (TaxInterpretations translation):

The issues before me are essentially the same as those put before Justice Lareau of the Court of Quebec and on which he has already pronounced. Only the legislative provisions on which the assessments rest are different….[T]he decision…which dismissed the appeals, is under appeal before the Quebec Court of Appeal….

There was an agreed statement of facts based on the findings of Lareau J.

In finding that the issues before him were not res judicata, and after noting that both cases dealt with a sale of assets without a clearance certificate, Angers J stated (at para. 8):

It is more difficult for me to conclude that the provincial and federal assessments have the same subject. Their amounts and legal basis are different. Finally…there is not an identity of the parties, as the federal and Quebec governments are not the same person.

However, it would constitute an abuse of process to consider the issues in the present appeal given their similarity to those disposed of by Lareau J. A different outcome in this appeal would be viewed as contradictory to the earlier decision (para. 13), whereas the objective instead was that "judgments on the same question be coherent" (para. 16).

Locations of other summaries Wordcount
Tax Topics - General Concepts - Abuse of Process judicial comity re Quebec decision 299
Tax Topics - General Concepts - Stare Decisis 266
Tax Topics - General Concepts - Judicial Comity judicial comity re Quebec decision 221

Kreuz v. The Queen, 2012 DTC 1201 [at 3514], 2012 TCC 238 (Informal Procedure)

The taxpayer had succeeded in an appeal from a prior taxation year, in which the taxpayer's motor vehicle expenses were deductible under s. 8(1)(h.1) in respect of his substitute teaching job. D'Auray J. found that neither the res judicata doctrine nor issue estoppel could block the Minister from denying the taxpayer's s. 8(1)(h.1) deductions in subsequent years. Res judicata cannot apply between appeals involving different taxation years because each taxation year is a different cause of action.

Issue estoppel did not apply because the Minister had new evidence (a witness for the school board). D'Auray J. noted that, "since in income tax appeals we often deal with recurring issues," it would be inappropriate to apply issue estoppel to prevent the Minister (or the taxpayer) from introducing new evidence simply because a deduction was allowed or disallowed previously (para. 80).

General Electric Canada Company v. The Queen, 2012 DTC 1045 [at 2702], 2011 TCC 564

The Minister disallowed the deduction by the taxpayer of guarantee fees paid by it to its US parent. The taxpayer appealed, and moved to have parts of the Minister's response struck on the basis that the Court of Appeal had already decided that the same guarantee fees were deductible when paid by one of the taxpayer's three predecessors before amalgamation (see General Electric Canada Company Inc.).

Campbell J. dismissed the motion. The res judicata doctrine did not apply. This was clearly not a case of action estoppel, as the appeal concerned different taxation years than the prior decision. The taxpayer did not discharge its burden to make out issue estoppel either. Issue estoppel requires either that the parties in the present matter be the same parties, or privies of the same parties, in the prior decision. There was insufficient evidence to conclude that the three predecessors were "alter-egos" of one-another (para. 27). Moreover, there was insufficient evidence that the guarantee agreement in the present case was similar enough to the prior guarantee agreement to establish that the same question was being tried.

741290 Ontario Inc. v. The Queen, 2011 DTC 1089 [at 489], 2011 TCC 91, aff'd 2012 DTC 5025 [at 6665], 2011 FCA 361

In a prior decision, the Tax Court had found that the taxpayer's directors were protected from liability for unremitted source deductions under s. 227.1(1) because they had a due diligence defence under s. 227.1(3). The question in the present case was whether the taxpayer would be liable under s. 227(9)(b). The taxpayer argued that its reassessment should be barred, because the question of source deduction liability on the present facts had already been settled by the prior Tax Court decision.

Bowie J. found that the Minister's reassessment was not barred by issue estoppel. In issue estoppel, the case must involve the same parties and the same issue. The present case engaged a different party (the taxpayer rather than its directors) and a different issue (s. 227(9) liability rather than s. 227.1(1) liability). Neither did the doctrine of res judicata bar the Minister's reassessment - the change in issues and parties meant that the present case could not be construed as a relitigation of the prior decision.

Locations of other summaries Wordcount
Tax Topics - General Concepts - Estoppel 168

Coutre v. The Queen, 2009 DTC 1719, 2009 TCC 456

After the Tax Court issued a judgement allowing the taxpayer's appeal in respect of an assessment on him of an s. 15(1) benefit on the basis that the fair market value of the property transfers giving rise to the benefit were lower than assessed, the taxpayer launched a fresh appeal to the Tax Court on the basis that the amount of the benefit to him should be reduced by balances in his shareholder's loan account with the corporation. In finding that the doctrine of res judicata barred this second appeal, McArthur, J. noted (at para. 20) that the taxpayer "could have brought forward the argument offsetting his shareholder loans against the benefit during the first appeal."

Mcfadyen v. The Queen, 2008 DTC 4513, 2008 TCC 441

The taxpayer was assessed in 2003 to give effect to a judgment of the Federal Court of Appeal finding that he was resident in Canada for the three taxation years in question. After the Ontario Ministry of Finance agreed that the taxpayer was not resident in Ontario, the taxpayer was reassessed in 2006 to give effect to this agreement and to reassess the taxpayer for further interest. The taxpayer filed a Notice of Appeal to the 2006 reassessments.

Rip, C.J. found that cause of action estoppel (and issue estoppel) precluded the taxpayer from re-raising the issue of his residency in the 2006 Notice of Appeal. Although there was discretion in the Court where there was new evidence that was practically conclusive of the matter, the determination by the Ontario Ministry of Finance of the taxpayer's provincial residency was not this type of evidence.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 169 113

Adams v. The Queen, 96 DTC 1733, [1996] 3 CTC 2585, [1996] 3 CTC 2592 (TCC) (Informal Procedure)

see also 96 DTC 1737

Amounts which Bowman TCJ. would have found on the evidence before him not to be income to the taxpayers, nonetheless were required to be included in their income because of convictions in prior tax evasion proceedings in the Provincial Court. Bowman TCJ., after reviewing various authorities on issue estoppel, stated (at p. 1735):

"On the basis of these authorities, even though on the face of the judgment of the earlier decision it is not obvious that the precise points now put in issue were specifically put to or considered by the judge in the prior proceeding, if they were essential to the determination reached by him a later court cannot retry the issue. I am compelled to conclude that the taxability of the four amounts had to have formed an integral and essential part of the finding of guilt and I am therefore precluded from deciding afresh the issue."

Pezzelato v. The Queen, 96 DTC 1285 (TCC)

A consent judgment allowing an appeal by the taxpayer from a reassessment of its 1988 taxation year was based on a representation by him that interest on a loan made to him by his employer was paid before the end of January 1989 (with the result that he was not taxable under s. 80.4(1) for that year). The doctrine of estoppel per rem judicatam precluded him from arguing, with respect to an assessment under s. 6 for his 1989 taxation year, that the 1988 interest had not been paid by him until February 4, 1989 (with the result that the 1988 interest was includable in his income pursuant to s. 80.4(1) in his 1988 taxation year, rather than being included in his 1989 taxation year as a result of his employer reimbursing him for such amounts).

212535 Oil & Gas Ltd. v. MNR, 96 DTC 1263, [1996] 1 CTC 2416 (TCC)

Rip TCJ. found (at p. 1266) that "where the parties to the litigation are different there is no res judicata, even when the facts are identical". Accordingly, the taxpayers, who were members of a group that had purchased interests in a resource property were not precluded from raising the same arguments that had been previously rejected by the Tax Court and the Federal Court of Appeal in an appeal by another member of the same purchasing group.


Joel A. Nitikman, "Res Judicata and Statutory Provisions: A Case Comment", Tax Litigation, Vol. V, No. 1, 1996, p. 286.