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The Doctrine of Issue Estoppel

Nemo debet bis vexari pro una et eadem causa and interest rei publicaeutfinislitium sit as famously mentioned under the English law and religiously followed in the Indian procedural court, no one should be disturbed twice in the same matter and it is in the public interest that law suits should have an end.

This maxim refers to the doctrine of Res Judicata which is quiteoften confused with issue estoppel after the final judgement of the necessary case, another suit or action cannot be filed by the same parties or their lawyers for litigating the similar issue again whereas under the Issue estoppel, an issue that has been previously litigated and decided between the similar parties or their predecessors in the title, can arise again if the issue formed the backbone of the case.

The issue need not be an important subject matter for both sides but it could be a powerful subject matter for one case and it can still arise if it forming a necessary ingredient in a cause of action though it has been litigated and decided and the subject is between the similar parties, involving a different cause of action to which the same issue is relevant.[1]

Issue or cause of action estoppel comes from the English case of 1983 where the appellant landlords had let offices in 1976 to the respondents for 32 years, with rent reviews in 1983 and every five years thereafter. The review of 1983 proved troublesome. On appeal from the arbitrator, Walton J. held that the rent should be assessed without regard to the fact that the lease contained rent review clauses.

The effect of the judge closing his eyes to this factor was to raise the rent by a fifth compared with the level of rent assessed without disregarding this factor. Practitioners were amazed by this decision. After the Court of Appeal chose to take the other path in a similar case, it became clear that Walton J.'s decision was wrong. However, the tenants could not challenge that decision by appealing out of time, since the Arbitration Act 1979 precluded this like it was prohibited in India. Therefore  cause of action  estoppel governed the 1983 review and the tenant had to wait until the next review for an opportunity to re-argue the point.

When the tenants sought to re-open the question in 1988 (in respect of the next slice of the tenancy), they were met by the landlord's argument that the matter was closed under the doctrine of issue estoppel. If that argument were correct, it would cost the tenants thousands, perhaps millions, of pounds until the tenancy expired in 2008.

That seemed harsh in the extreme. Browne- Wilkinson V.-C,[2] and the Court of Appeal[3] and the House of Lords all agreed that the present facts were an example of  special circumstances  which justified the tenant in re-opening the criteria for assessing rent at the second review.[4]

The decision prevented abuse of power but could be easily be misused, therefore, certain limitations were also given against such misuse of power starting with Lord Lowry's statement that it is not enough that the new point arises as a new argument or the uncovering of a previous authority: it should take the form of a new decision.

Secondly, the new decision should indefinitely render the previous point covered in issue estoppel “plainly wrong”. I the point is merely wrong on an argument basis, it cannot be reopened on the context that it wrong

Later, a third limit arose through the coming of cases, which involved an implied rejection of Staughton L.J.'s dictum in the Court of Appeal, where he suggested that a party need not point to a subsequent precedent-making decision in order to show that an issue estoppel is open to challenge on the ground of legal error. No doubt he had in mind a decision which by communisopinio is judged to be wrong in law.

However, this dictum cannot now stand with the House of Lords' decision, which was clearly based on the material fact that a subsequent decision had changed or at least clarified the law. A sinister route can also be taken by the parties to their benefit. Hence, in such cases there will be a real temptation for an unscrupulous party to try to induce the other party to collude in obtaining a favorable precedent-making decision. It is to be hoped that judicial intuition and professional ethics will protect the system against such abuse.

This concept of discretion in issue estoppel is a remedy, where a court may decline to apply it even where each element is present to prevent abuse of power. This was widely discussed and given consideration in the case of Danyluk v. Ainsworth Technologies Inc.[5] in the Supreme Court of Canada. To discuss the main case, I would first discuss certain previous cases to give a better understanding. This concept of discretionary jurisprudence was not given independence or the importance it deserved like in the English case of Winter v. J.A. Dewar Co. Ltd.[6], the British Columbia Court of Appeal stated that the doctrine must be given effect in all proper cases, even where it would work an injustice.

Similarly, in his dissenting judgment in Angle v. Minister of National Revenue[7],Laskin J. concluded that there was  no reason to introduce any anomalies or exceptions  to the application of the doctrine if  the facts call for it.

Perhaps most explicitly, in Naken v. General Motors of Canada Ltd.[8], the Supreme Court of Canada ruled that the scope of the discretion was very limited and noted that the harsh results which may flow from an assertion of resjudicata had not been viewed as a pertinent consideration. In the 1990s, however, the discretionary aspect of issue estoppel was the subject of much more extensive judicial commentary, particularly in the context of wrongful dismissal litigation. In a trilogy of cases[9] the Ontario Court of Appeal considered the circumstances which may justify a decision not to apply issue estoppel.

In Rasanen, the Court of Appeal held that the trial judge had properly dismissed an action for constructive dismissal on the basis of issue estoppel because the central issue of whether the plaintiff had been offered reasonable alternative employment had already been conclusively determined by an employment standards referee. Although the focus on discretion was cursory, each of the three separate judgments shed some light on the question.

According to Abella J.A., there was:
no principled basis for exempting issues adjudicated by tribunals from the operation of issue estoppel in a subsequent action where the party against whom the doctrine is invoked had an opportunity to know and meet the case against it, and the decision was within the jurisdiction of the tribunal.

In a concurring judgment, Morden A.C.J.O. stated:
in obiter that procedural deficiencies in the first decision could properly be taken into account in deciding whether or not to apply issue estoppel in a subsequent proceeding.

Carthy J.A. suggested:
also in obiter, that the absence of discovery and representation by counsel in an employment standards proceeding, as well as the more modest financial stakes, could make it unfair to bind a plaintiff in a subsequent wrongful dismissal action.

In Minott[10], the Court of Appeal held that a trial judge had properly refused to strike out a wrongful dismissal claim on the basis of an issue estoppel alleged to have been created by the prior decision of an employment insurance board of referees. Discussing the principles governing issue estoppel, Laskin J.A. identified discretion as the primary vehicle for ensuring that justice is served.

Laskin J.A. listed certain grounds on which he would, in any event, have declined to apply the doctrine:

  1. First, the statutory scheme governing employment insurance contemplated that claims will be  adjudicated quickly, inexpensively and summarily.  The application of issue estoppel would undermine this legislative aim, since employers and employees would be tempted to over-litigate such proceedings in an effort to avoid an adverse ruling that could influence a subsequent civil action. an adverse ruling that could influence a subsequent civil action.
     
  2. Second, an individual normally applies for employment insurance benefits immediately after losing his or her job. The claimant's vulnerability, combined with the urgency of the situation, compromises his or her ability to defend allegations of disentitling behaviour. The application of issue estoppel in these circumstances could therefore lead to injustice.
     
  3. Third, the financial stakes of an employment insurance claim are typically insignificant compared to those of an action for wrongful dismissal.
     
  4. Finally, Laskin J.A. held that a board of referees under the Act lacks the expertise to decide a wrongful dismissal action. The context in which the board adjudicates allegations of misconduct is a claim for benefits rather than a bipartite dispute relating to an employee's summary dismissal.

The test for misconduct under the Act is not the same as the requirement for just cause at common law.

In Schweneke, the third case in the trilogy, the Ontario Court of Appeal upheld a judge's decision to strike out a wrongful dismissal action on the basis that findings of fact on the central issue had already been made by an employment insurance adjudicator. Recognizing the procedural limitations inherent in some administrative proceedings, the Court cautioned against the mechanical application of issue estoppel.

Coming to the main decision of Danyluk, the Supreme Court of Canada held, that the underlying purpose of issue estoppel is to balance the public interest in the finality of litigation against the corresponding public interest in ensuring that justice is done.

The Court set out a two-step approach for determining whether issue estoppel should be applied in a given case:

  1. First, the party invoking estoppel must establish the constituent elements of the doctrine.

  2. Second, the court must determine whether, as a matter of discretion, issue estoppel ought to be applied. The primary issues here were whether the officer's decision was sufficiently judicial, and whether the circumstances justified the Court in exercising its discretion not to apply issue estoppel. Talking about the discretionary factors, the court identified seven factors to determine what is relevant to the exercise of discretion. Starting with, wording of the statute, to check if it suspends or affect any civil remedy etc., secondly, purpose of the legislation, Where an employee has forsaken the right to discovery and representation by counsel in pursuit of limited relief by way of employment standards proceedings, it would be unfair to bind him or her to a decision made in the course of those proceedings in a subsequent civil action involving, perhaps, ten times the amount of money.

  3. Availability of an appeal, being the third one, in the context of the Harelkin principle, which prevents a party from seeking judicial review where there exists a satisfactory alternative remedy.
     
  4. Fourthly, procedural strategies, A court must also consider the procedural safeguards available to the parties in the prior administrative proceeding. Streamlined, expeditious procedures, though suitable in the employment standards forum, may be inadequate to deal with complex issues of fact or law.
     
  5. Fifthly, expertise of the decision maker which is that it should be thoroughly fair and reasonable in front of the court of law.
     
  6. Sixth being, circumstances giving rise to the prior proceeding, In Binnie J.'s view, it was unlikely that the legislature intended  a summary procedure for smallish claims to become a barrier to closer consideration of more substantial claims.
     
  7. Finally, and most importantly, a court must assess whether, in all the circumstances, the application of issue estoppel would cause an injustice, particularly with respect to the denial of a party's right to be heard.
Therefore, in recognizing the relevance of discretionary factors such as the summary nature of employment standards proceedings, as well as the financial and emotional vulnerability of those seeking statutory benefits, the Court significantly lessened the risk to employees of filing employment standards or employment insurance claims.

However, Danyluk was decided in the context of an initial rejection of a claim by an employment standards officer. The result may be different where an employee appeals a denial of benefits and receives a full hearing, including the right to present evidence, obtain disclosure, and cross-examine witnesses.

Issue estoppel as concept is used in Criminal cases as well as in civil cases though mentioned in different sections of the Evidence act and civil procedure code. There is distinction between doctrine of  res judicata  principle of 'issue estoppel' and 'rule estoppel' under section 115 Of the Evidence Act. Doctrine of res judicata creates legal embargo on hands of the court to a judicial determination of deciding the same question over again even though earlier determination may be demonstrated erroneous.

The doctrine of res judicata is based on rule of procedure. However, doctrine of mere estoppel under section 115 Of the Evidence Act, there is embargo on the party to plead or prove particular facts whereas in case of res judicata, the prohibition is operative against the court to deal with the same kind of issue again and again.[11]

The principle of issue-estoppel is entirely a creature of judicial decisions and has not been embodied in any codified book. The essentials of the rule of issue-estoppel are, one, the parties in the two proceedings must be the same; secondly, the issue that was decided earlier must be identical with that which is sought to be re-agitated. The issue-estoppel applies only when both the earlier and the present proceedings are civil cases. In order to invoke the rule of issue estoppel, not only the parties in the two trials should be the same but also, the fact in issue, proved or not, as present in the earlier trial, must be identical to what is sought to be re-agitated in the subsequent trial.

A concept that is linked with the Issue estoppels is Mutuality of estoppels, in the prime case of Hollington v. Hewthorn[12] there was a motor vehicle accident involving Hollington and Hewthom. Hewthom was charged and convicted of careless driving, contrary to the Road Traffic Act, 1930.

The estate of Hollington then commenced a civil action against Hewthorn claiming damages. Counsel for the estate of Hollington was Mr. Denning, later Master of the Rolls. He argued that the conviction of Hewthorn in the prior summary criminal proceedings was admissible evidence of negligence against Hewthorn in the civil proceedings.

The parties to the summary criminal proceedings were the Crown as prosecutor and Hewthom as defendant; the parties to the civil proceeding were the estate of Hollington as plaintiff and Hewthom as defendant.

The question for the Court of Appeal was:
  • whether issue estoppel, or some variant thereof, could be applied where there was no identicality of parties in the two proceedings;
  • that is, would the English courts insist upon the requirement of mutuality of estoppel?
The Court of Appeal decided that issue estoppel did not apply, and that evidence of the prior criminal proceedings was inadmissible. The decision has been roundly criticized and the reasoning is, at best, mechanical and clearly riddled with numerous fallacies. Lord Denning's analysis and choice of the doctrine of issue estoppel seems apt.

The doctrine of abuse of process is an inherent jurisdiction that courts have exercised to ensure that they can control their own process and that litigants do not abuse access to and the process of the court.

For example, the court will stay or dismiss frivolous proceedings, vexatious and oppressive proceedings, proceedings that are duplicative of proceedings pending in another forum or jurisdiction, and proceedings that do not raise any triable legal issue. Admittedly, the principle of res judicata was developed to deal with and eliminate abuse, but the doctrines of cause of action and issue estoppel have now matured and strengthened to the point where they can properly and fully deal with the particular kind of abuse in issue.[13]

In conclusion, discretionary power of the court in every country holds the core of the issue estoppels which in my opinion is the core to be followed by every judge's instinct the on a case to case basis. Issues estoppels as a doctrine is comparatively fresh perspective in India which should use more. Though more prevalent in criminal proceedings, civil procedural code also uses the same for its cases if not codified in the civil procedure code, it has through precedents been used in various case laws.

End-Notes:
  1. Inc. US Legal, Issue Estoppel Law and Legal Definition | USLegal, Inc. Definitions.uslegal.com (2019),https://definitions.uslegal.com/i/issue-estoppel/. (last visited Oct 10, 2019)
  2. ([1989] Ch. 63)
  3. ([1990] 2 W.L.R. 304)
  4. ISSUE ESTOPPEL AND CHANGE IN PRECEDENT, (2019), https://www.jstor.org/stable/pdf/4507576.pdf?ab_segments=0%2Fbasic_SYC-4693%2Ftest&refreqid=search%3A81423720de47965390f9775cf435f1db. (last visited Oct 10, 2019)
  5. (2001). 201 D.L.R. (4th) 193 (S.C.C.)
  6. (1929). 41 B.C.R. 336 (C.A.), at p. 340
  7. Angle v. Minister of National Revenue (1974), [1975] 2 S.C.R. 248, 47 D.L.R. (3d) 544
  8. [1983] 1 S.C.R. 72, 144 D.L.R. (2d) 385
  9. Rasanen v. Rosemount Instruments Ltd. (1994), 17 O.R. (3d) 267, 112 D.L.R. (4th) 683 (C.A.)
  10. Minott v. 0 'Shanter Development Co. Ltd. (1999), 42 O.R. (3d) 321, 168 D.L.R. (4th) 270 (C.A.)
  11. YamunabaiPurushottamDeogirikar v. MathurabhaiNilkanthChoudhari, AIR 2010 (NOC) 109 (Bom)
  12. [1943] K.B. 587, [1943] 2 All E.R. 35 (C.A.)
  13. Bluebook 20th ed. Michael J. Herman; Gerald F. Jr. Hayden, Issue Estoppel: Mutuality of Parties Reconsidered, 64 Can. B. Rev. 437 (1986)

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