The Supreme Court of Canada (SCC) recently rendered a decision in Penner v Niagara (Regional Police Services Board), 2013 SCC 19, regarding the application of issue estoppel. At issue was whether it was proper to strike a claim in a civil action on the basis of a hearing officer's decision in a police disciplinary proceeding arising from the same incident.
Mr. Wayne Penner (Penner) was arrested for disruptive behaviour in an Ontario courtroom. Following the incident Penner filed a complaint against two police officers under the Police Services Act, RSO 1990, c P15 (the "PSA"). Penner also started a civil action for damages against the two police officers, their Chief of Police, and the Regional Municipality of Niagara Regional Police Services Board (collectively the "Police"), alleging, among other things, unlawful arrest and use of excessive force. Pursuant to the PSA, the Chief of Police appointed the hearing officer for the disciplinary proceedings.
The hearing officer found the officers not guilty of any misconduct and dismissed the complaint. The decision was reversed by the Ontario Civilian Commission as it found the arrest unlawful. On further appeal to the Ontario Divisional Court, the decision was reversed again as it found that the police officers did have legal authority to make the arrest, thus restoring the hearing officer's decision.
Following the Divisional Court decision, the Police applied to
the Superior Court of Justice to have many of the claims in the
civil action struck on the basis of issues estoppel; they argued
that the disciplinary proceedings had finally resolved the issues
underpinning the civil claim. The Police were successful. Penner
appealed to the Ontario Court of Appeal (ONCA) arguing that it was
improper to apply issue estoppel in the circumstances. Exercising
its discretion in the application of issue estoppel the ONCA barred
Penner's civil claim and dismissed the appeal concluding that
the disciplinary hearing had finally resolved the key issues.
Penner appealed to the SCC.
The Majority Decision (McLachlin, C.J., and Fish, Cromwell Karakatsanis JJ)
On the facts the preconditions for applying issues estoppel, as outlined in Danyuk v Ainsworth Technologies, 2001 SCC 44  2 SCR 460., had been met (at page 477): First, the hearing officer's decision was judicial and the hearing fulfilled the requirements of procedural fairness. Second, the decision was final. And third, the parties to the civil action were the same as in the disciplinary hearing. However, the majority supported a flexible approach, giving the Court discretion to refuse to apply issue estoppel if it will work an injustice even where the preconditions for its application have been met. The majority concluded that it would be fundamentally unfair to preclude Penner's civil claim in the circumstances.
With reference to the jurisprudence, the majority identified two main ways in which unfairness may arise when applying issue estoppel: (1) The unfairness of prior proceedings; and (2) The unfairness of using the results of prior proceedings to bar subsequent proceedings (paras. 40-48). The Court focused on the fairness in the second sense as it was obvious that the disciplinary proceedings were conducted fairly.
The majority identified two factors discussed in Danyluk (at pages 494-495) as "highly relevant" to their fairness analysis: the wording and purpose of the legislation from which the power to issue the administrative order derives (at para. 43). Using these two factors the majority concluded that:
- The ONCA erred in its analysis of the significant differences between the purpose and scope of the two proceedings; and
- The ONCA failed to consider the reasonable expectations of the parties about the impact of the proceedings on their broader legal rights.
After reviewing relevant provisions of the PSA, the majority concluded that the "legislation does not intend to foreclose parallel proceedings" and that "[this] would shape the reasonable expectations of the parties and the nature and extent of their participation in the process" (at para. 51). In other words, there was nothing in the PSA that would suggest that the disciplinary hearing would be conclusive of Penner's legal rights in his civil action.
The majority also pointed to additional factors, other than the legislative text, that lead to the same conclusion. (at paras. 56-58): First, the civil action commenced well before the administrative proceedings so the parties were aware of the parallel and overlapping proceedings. Second, the majority pointed to a lower court decision which held that the acquittal of a police officer at a disciplinary proceeding did not give rise to issue estoppel in a subsequent civil action. And third, it is reasonable for someone in Penner's position to think that it is unlikely that a proceeding in which he had no personal or financial stake could preclude a claim for damages in a civil action.
Purpose and Scope of Proceedings
With respect to this branch of the analysis, one of the factors
the majority highlighted was the differing standards of proof
between disciplinary proceedings under the PSA and a civil action:
the former requires that the police misconduct be proved on
'clear and convincing evidence' whereas civil standard of
proof is on the balance or probabilities - a lower standard. The
majority concluded that "[the] prosecutor's failure to
prove the charges by 'clear and convincing evidence' does
not necessarily mean that those same allegations could not be
established on a balance of probabilities. Given the different
standards of proof, there would have been no reason for a
complainant to expect that issue estoppel would apply if the
officers were acquitted" (at para. 60).
The majority also pointed out that applying issue estoppel in this case might actually work to undermine the purpose of the administrative proceedings by attaching undue weight to their results. The risk is that the administrative process may turn into a proxy for the civil action: "[if] it is before the hearing officer, and not the court, that an action for damages is to be won or lost, litigants in Mr. Penner's position will have every incentive to mount a full-scale case, which would tend to defeat the expeditious operation of the disciplinary hearing." (at para. 62).
Further to the above, the majority found that it was unfair to use the decision of the Chief of Police's designate to exonerate the Chief in a subsequent civil action. Although it is not objectionable for the Chief of Police to appoint the investigator, the prosecutor and the hearing officer, applying issue estoppel "had the effect of permitting the Chief of Police to become the judge of his own case" (at para. 66). The majority concluded this is an affront to the basic principles of fairness, but only at the point that the Chief's decision that there was no police misconduct is used to exonerate him from civil liability by means of issue estoppel.
The Minority Decision (LeBel, Abella and Rothstein JJ)
The minority decision focussed on the "twin principles" which underlie issue estoppel: that there should be an end to litigation and that the same party should not be harassed twice for the same cause (at para. 88). The minority contends that these principles focus on achieving fairness and preventing injustice by preserving the finality of litigation. They supported the approach to issue estoppel in the context of prior administrative proceedings articulated in British Columbia (Workers' Compensation Board) v Figliola, 2011 SCC 52,  3 S.C.R. 422, which moved away from the approach in Danyluk that said a wider discretion should be applied to administrative tribunals than applied to courts. For the majority, fairness is linked to finality, and differences in the process and procedures used by administrative bodies should not be used to override the principle of finality (at para. 103).
The doctrine of issue estoppel seeks to protect the finality of litigation by precluding the re-litigation of issues that have been conclusively determined in a prior proceeding. But the doctrine also calls for a case by case review of the circumstances to determine whether its application would be unfair even where the preconditions of its application have been met. The principle underlining this discretion was summarized best in Danyuk (at para. 1): "[a] judicial doctrine developed to serve the ends of justice should not be applied mechanically to work an injustice". For now it seems that a flexible approach to the application of issue estoppel is the correct and preferable approach in Canada.
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