Date: 20011220
Docket: 2000-4503-IT-I
BETWEEN:
BERTRAND LEDUC,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
Reasonsfor Judgment
Lamarre, J.T.C.C.
[1] This is an appeal from an assessment by the Minister of National Revenue ("Minister") under the Income Tax Act ("Act") for the 1999 taxation year. In that assessment, the Minister, relying on sections 118.3, 118.4 and 118.8 of the Act, denied the appellant a transfer of an unused tax credit of $719.61 for severe and prolonged physical or mental impairment in respect of his spouse, Ginette Michalk.
[2] In making his assessment, the Minister took into account the following facts, which appear in paragraph 14 of the Reply to the Notice of Appeal:
[TRANSLATION]
(a) The appellant's spouse appended a duly completed T2201 "Disability Tax Credit Certificate" form to her income tax return for the 1997 taxation year.
(b) The T2201 form was dated April 16, 1998, and signed by an authorized physician, Dr. Louis Trudelle.
(c) On the form, Dr. Trudelle diagnosed his patient with gluten-sensitive enteropathy (celiac disease) and stated that his patient's illness "places severe and permanent dietary restrictions on her".
(d) The appellant requests that the transfer of the disability tax credit be allowed on the basis of the form filed for the 1997 taxation year.
(e) Although, to date, there is no suitable medication that can cure celiac disease, a strict special diet can alleviate its symptoms.
(f) Since the appellant's spouse was diagnosed in October 1997, she has very strictly adhered to the prescribed diet.
(g) No T2201 "Disability Tax Credit Certificate" form was filed for the 1999 taxation year.
(h) The appellant's spouse, Ginette Michalk, can feed herself, using a device for that purpose if necessary.
(i) For the 1999 taxation year, the Minister determined that the ability of the appellant's spouse to perform the basic activities of daily living was not markedly restricted by a severe and prolonged mental or physical impairment.
[3] The same issue was raised before me by the same appellant for the 1997 taxation year, and I rendered judgment on November 5, 1999,[1] allowing the appeal and entitling the appellant to claim under sections 118.3, 118.4 and 118.8 of the Act, in computing his federal tax for 1997, a transfer of an unused tax credit of $719.61 for severe and prolonged physical impairment in respect of his spouse, Ginette Michalk.
[4] An application for judicial review of that judgment was filed by the respondent with the Federal Court of Appeal on December 10, 1999. The reasons given in support of that application were as follows:
[TRANSLATION]
1. The trial judge rendered a decision that was incorrect in law in determining that the individual suffered from a severe and prolonged impairment and that her ability to perform a basic activity of daily living was markedly restricted within the meaning of paragraphs 118.3(1)(a), 118.3(1)(a.1) and 118.4(1)(b) of the Income Tax Act.
2. The trial judge also rendered a decision that was incorrect in law in misconstruing the expression "feeding oneself" used in paragraph 118.4(1)(c) of the Income Tax Act.
3. Furthermore, the trial judge rendered a decision based on an incorrect finding of fact in concluding that the individual had to devote an inordinate amount of time to performing a basic activity, namely feeding herself.[2]
[5] On January 25, 2000, the respondent gave notice to the Federal Court of Appeal that is was completely withdrawing its application for judicial review.
[6] In his notice of appeal in the instant case, the appellant argues that this Court's judgment of November 5, 1999 is final and conclusive. Since it was determined in that judgment that Ms. Michalk's impairment is permanent, the appellant contends that her situation accordingly cannot have changed since then. He argues the doctrine of res judicata and respect for the judicial system in pleading a fin de non-recevoir to prevent the respondent from each year reopening the same question, which has been decided by a competent tribunal for a previous year.
[7] Before the hearing of this appeal (for 1999), counsel for the respondent filed with the Court an assessment report signed by Nicole Doucet, a nutritionist, dietician and communications and public relations consultant. The report dealt with celiac disease and the appropriate diet for that illness. It should be noted that the respondent called no expert witnesses at the hearing of the appeal for 1997 before me, whereas the appellant adduced his evidence with the help of two expert witnesses, namely the attending physician and a dietician.
[8] Since the appellant pleaded a fin de non-recevoir based on the concept of res judicata, I asked the parties to submit their comments on this preliminary question and on the possible application in Quebec of the equivalent common law concept of issue estoppel in the specific context of appeals of successive income tax assessments. For that purpose, I decided to stay the hearing of evidence on the merits in the instant case. The parties have presented their comments in writing and this question will be settled by these reasons.
[9] Before addressing this point, it is important first to emphasize that the respondent also claims in her Reply to the Notice of Appeal that no T2201 Disability Tax Credit Certificate form was filed for the 1999 taxation year. It is admitted, however, that the appellant's spouse had appended a duly completed T2201 form to her tax return for 1997. That certificate was dated April 16, 1998, and signed by Dr. Trudelle, a medical doctor who meets the requirements set out in subsection 118.4(2). It falls to be determined whether the failure by the appellant and his spouse to file such a certificate for 1999 is a bar to the transfer of the aforementioned unused credits.
[10] In Warner v. R., [1998] 4 C.T.C. 2613, Judge Beaubier faced a situation quite similar to this one. He wrote at page 2614:
The Appellant had filed with her 1992 Income Tax Return or possibly her 1993 Income Tax Return a proper medical certificate dated April 27, 1993, signed by Dr. G.R. Jenkins, which is a certificate that falls properly within the provisions of the Income Tax Act and that no other certificate was filed for 1994. Pursuant to s. 118.3(1), paragraph (b), the Court finds that by that means the Appellant had filed for a taxation year with the Minister, the certificate described in paragraph a.2. Once the certificate was on file (and there was no other certificate on file) the certificate dated April 27, 1993 qualified for the 1994 taxation year within the provisions of paragraph (b) as quoted. [My emphasis.]
[11] Paragraphs 118.3(1)(a.2) and (b) read as follows:
Section 118.3: Credit for mental or physical impairment
(1) Where
. . .
(a.2) in the case of
(i) a sight impairment, a medical doctor or an optometrist,
(ii) a hearing impairment, a medical doctor or an audiologist,
(iii) an impairment with respect to an individual's ability in feeding and dressing themself, or in walking, a medical doctor or an occupational therapist,
(iv) an impairment with respect to an individual's ability in perceiving, thinking and remembering, a medical doctor or a psychologist, and
(v) an impairment not referred to in any of subparagraphs (i) to (iv), a medical doctor
has certified in prescribed form that the impairment is a severe and prolonged mental or physical impairment the effects of which are such that the individual's ability to perform a basic activity of daily living is markedly restricted,
(b) the individual has filed for a taxation year with the Minister the certificate described in paragraph (a.2) . . .
for the purposes of computing the tax payable under this Part by the individual for the year, there may be deducted an amount determined by the formula
A ´ $4,118
where
A is the appropriate percentage for the year.
[12] Thus, since the appellant and his spouse filed for 1997 a certificate duly completed by a medical doctor, the requirement of paragraph 118.3(1)(b) is met for the 1997 and subsequent taxation years.
Fin de non-recevoirpleaded on the question of the ability of the appellant's spouse to perform a basic activity of daily living
[13] Counsel for the respondent contends that the doctrine of issue estoppel does not apply in the province of Quebec. He refers to the decision by the Supreme Court of Canada in National Bank v. Soucisse et al., [1981] 2 S.C.R. 339, in which Beetz J. distinguishes the doctrine of estoppel in common law from that of fin de non-recevoir which exists in Quebec civil law. On this point, Beetz J. referred to Mignault J.'s opinion in Grace and Company v. Perras (1921), 62 S.C.R. 166, where Mignault J. noted at page 172:
. . . the doctrine of estoppel as it exists in England and the common law provinces of the Dominion is no part of the law of the Province of Quebec. This, however, does not mean that in many cases where a person is held to be estopped in England, he would not be held liable in the Province of Quebec.
[14] Counsel for the respondent cites certain decisions in which, according to him, Canadian courts have refused to apply the doctrine of issue estoppel in the province of Quebec (Lafarge Canada Inc. v. Canada, [2001] F.C.J. No. 372 (F.C.T.D.); Dufresne Engineering Company Limited c. Le Sous-ministre du revenu du Québec, [1984] R.D.F. 164 (C.A.Q.); Alameda Holdings Inc. v. Canada, [1999] T.C.J. No. 839 (T.C.C.)).
[15] Counsel thus concludes that the concept of estoppel as applied at common law is unknown in Quebec civil law.
[16] Counsel for the respondent moreover argues that, even if the doctrine of issue estoppel were in effect in the province of Quebec, it would not apply in the instant case. Indeed, in Carl Zeiss Stiftung v. Rayner & Keeler Ltd. (No. 2), [1967] 1 A.C. 853, Lord Guest of the British House of Lords established certain requirements that must be met in order for issue estoppel to apply, which requirements were cited by the Supreme Court of Canada in Angle v. M.N.R., [1975] 2 S.C.R. 248, at page 254:
Lord Guest . . . defined the requirements of issue estoppel as:
. . . (1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies . . .
[17] Counsel for the respondent contends that the appellant did not prove that all those requirements were met. Thus, counsel argues that the judgment of November 5, 1999, did not concern the same question since the assessment at issue there was made for the 1997 taxation year only. According to counsel, this Court had jurisdiction to decide the question raised by the assessment for 1997 only, and not any question arising out of assessments for subsequent years. Counsel relies on the decision by the English Court of Appeal in The Commissioners of Inland Revenue v. Sneath (1932), 17 T.C. 149, cited by the Tax Appeal Board in Kindree v. M.N.R., 70 DTC 1054, in arguing that a decision on an assessment for a specific taxation year is final only for that taxation year, even if an identical question is later raised concerning a subsequent taxation year. Counsel cites the following remarks by Lord Hanworth M.R., in Sneath, at page 163:
I am . . . of opinion that the assessment is final and conclusive between the parties only in relation to the assessment for the particular year for which it is made. No doubt, a decision reached in one year would be a cogent factor in the determination of a similar point in a following year, but I cannot think that it is to be treated as an estoppel binding upon the same party for all years.
[18] Counsel for the respondent also cites a decision by a common law court with jurisdiction over property tax, in which that court refused to apply the doctrine of issue estoppel in respect to a different taxation year. The decision in question was Quintette Coal Ltd. v. B.C., etc., [1988] 21 B.C.L.R. (2d) 193 (S.C.), at pages 197-98:
There are a number of very impressive reasons why res judicata should not apply to successive tax assessment cases, all of which have been expressed most eloquently in the cases cited. The chief of these, I suggest, are:
1. An assessor carries out a statutory duty.
2. An assessment or valuation is temporary in nature and limited in time.
3. The jurisdiction of a decision-making tribunal is limited. Its function begins and ends with determining the assessment of a defined period.
4. The assessment for a new year is not "eadem quaestio".
5. No real lis is involved since the assessor has no self-interest.
[19] Counsel for the respondent thus argues that the finding of fact in the judgment of November 5, 1999, concerned Ms. Michalk's ability to feed herself in 1997. In his view, Ms. Michalk's physical condition may have changed since that time, and the situation of fact that existed in 1997 was not necessarily the same as in 1999. For those reasons, he believes that res judicata does not apply in the instant case.
[20] The appellant simply contends that the doctrine of issue estoppel applies to every federal statute and more particularly to the Act. According to the appellant, there can be no doubt that this doctrine is now part of Canadian law (see Angle, supra), and the fact that the Supreme Court of Canada has endorsed that rule's presence in Canadian law is sufficient to conclude that every federal statute is subject to the application of the doctrine of issue estoppel. He argues that this doctrine is a rule of natural justice and there is nothing in Quebec law preventing its application.
[21] The appellant concludes that requiring a taxpayer to reappear before a court year after year to substantiate that taxpayer's claim that the taxpayer's disability is a severe and prolonged physical impairment that markedly restricts his or her ability to feed himself or herself undermines the integrity of our judicial system. He thus asks this Court to declare that there is res judicata in the instant case.
Analysis
[22] In response to the respondent's first argument, namely that the doctrine of issue estoppel does not apply in the province of Quebec, it is appropriate to begin by underscoring the difference in common law between estoppel by representation and issue estoppel.
[23] In Canadian Superior Oil v. Hambly, [1970] S.C.R. 932, Martland J. of the Supreme Court of Canada summarized the essential elements of estoppel by representation (referring to Greenwood v. Martins Bank, [1933] A.C. 51, 57) as follows at pages 939-940:
The essential factors giving rise to an estoppel are I think:
(1) A representation or conduct amounting to a representation intended to induce a course of conduct on the part of the person to whom the representation is made.
(2) An act or omission resulting from the representation, whether actual or by conduct, by the person to whom the representation is made.
(3) Detriment to such person as a consequence of the act or omission.
[24] It is this doctrine of estoppel by representation that Mignault J. considered not to be applicable in the province of Quebec in Grace and Company v. Perras, supra, and his reasoning was subsequently adopted in National Bank v. Soucisse et al.,Dufresne Engineering Co. Ltd.,Alameda Holdings and Lafarge Canada, supra, on which counsel for the respondent relies. However, the doctrine of estoppel by representation does not concern us in the instant case since we are not dealing here with declarations or statements made between the parties.
[25] Issue estoppel is quite another concept derived from estoppel per rem judicatam, which was analyzed and recognized in Canada by the Supreme Court in Angle, supra. Estoppel per rem judicatam is thus an estoppel pleaded where a competent court has rendered a decision on a question which has been raised again in new judicial proceedings. Estoppel per rem judicatam may be divided into two forms of estoppel: cause of action estoppel and issue estoppel.[3]
[26] The first form, cause of action estoppel, bars one person from bringing an action against another where the same cause of action has previously been adjudicated upon by a competent court (see Angle, supra, page 254).
[27] The second form of estoppel per rem judicatam, known as issue estoppel, a term coined in the decision in Hoystead v. Federal Commissioner of Taxation (1921), 29 C.L.R. 537, rendered by the High Court of Australia, in which Higgins J.'s remarks on issue estoppel (which were confirmed on appeal by the Privy Council in Hoystead v. Commissioner of Taxation, [1926] A.C. 155) are cited by Dickson J. in Angle, supra, at page 254:
I fully recognize the distinction between the doctrine of res judicata where another action is brought for the same cause of action as has been the subject of previous adjudication, and the doctrine of estoppel where, the cause of action being different, some point or issue of fact has already been decided (I may call it "issue-estoppel").
Dickson J. goes on to approve the requirements set by Lord Guest in Carl Zeiss, supra, at page 254, and cited by counsel for the respondent in his argument (see paragraph 16 of these reasons).
[28] Dickson J. adds at page 255:
. . . It will not suffice if the question arose collaterally or incidentally in the earlier proceedings or is one which must be inferred by argument from the judgment. . . . The question out of which estoppel is said to arise must have been "fundamental to the decision arrived at" in the earlier proceedings: per Lord Shaw in Hoystead v. Commissioner of Taxation. The authors of Spencer Bower and Turner, Doctrine of Res Judicata, 2nd ed. pp. 181, 182, quoted by Megarry J. in Spens v. I.R.C.9, at p. 301, set forth in these words the nature of the enquiry which must be made:
. . . whether the determination on which it is sought to found the estoppel is "so fundamental" to the substantive decision that the latter cannot stand without the former. Nothing less than this will do. [My emphasis.]
____________________________
9 [1970] 3 All. E.R. 295.
[29] In my view, issue estoppel is an estoppel which finds a parallel in the province of Quebec in the autoritéde la chose jugée (or res judicata). In National Bank v. Soucisse, supra, Beetz J. refers to a number of French civil law commentators in describing fins de non-recevoir, at pages 359 and 360:
The latter definition [Pothier's] is similar to that of Denisart Collection de décisions, Vol. 8, Paris, 1789, at p. 638:
[TRANSLATION] A fin de non-recevoir is a kind of peremptory exception, by which someone defending an action can have it dismissed, without going into the substance of the claim.
This is the definition which L.L.F. Lemerle (Traité des fins de non recevoir, Nantes, 1819, at pp. 2-3) adopts, for all practical purposes:
[TRANSLATION] Fins de non-recevoir are peremptory exceptions by which a litigant can have an action dismissed without discussion of its merit; and peremptory exceptions are grounds for exclusion of the action so complete that they extinguish that action.
. . .
. . . Commentators classify as fins de non-recevoir the most numerous and diverse exceptions, which have nothing in common but this definition. For example, they include res judicata . . . .
[My emphasis.]
[30] The authority of a final judgment (res judicata) is defined as follows in article 2848 of the Civil Code of Quebec ("CCQ") (formerly article 1241 of the Civil Code of Lower Canada):
ART. 2848. The authority of a final judgment (res judicata) is an absolute presumption; it applies only to the object of the judgment when the demand is based on the same cause and is between the same parties acting in the same qualities and the thing applied for is the same.
[31] In Roberge v. Bolduc, [1991] 1 S.C.R. 374, the Supreme Court of Canada analyzes res judicata as follows, per l'Heureux-Dubé, at pages 402 to 404:
Pothier, in Oeuvres de Pothier (1890), t. 2, at No. 885, p. 469, explains:
[TRANSLATION] The authority of res judicata means that everything contained in the judgment is presumed to be true and equitable; and as this presumption is juris et de jure any evidence to the contrary is excluded. [Emphasis in original.]
(To the same effect, see Aubry and Rau, Droit civil français (6th ed. 1958), t. 12, No. 769, p. 319; Laurent, Principes de droit civil (5th ed. 1893), t. 20, at No. 1, p. 5.)
The rationale for this irrebuttable legal presumption of validity of judgments is anchored in public social policy to ensure the security and stability of relations in society. The converse would be anarchy, with the possibility of endless trials and contradictory judgments.
Authors, both in France and in Quebec, express this view in more or less the same manner. Planiol and Ripert, in their Traité pratique de droit civil français (2nd ed. 1954), t. VII, at No. 1552, p. 1015, observe that:
[TRANSLATION] In reality this legal presumption amounts to a rule of substance. The judgment once rendered will finally terminate the proceeding if the rights of appeal were exercised in vain or if no use was made of them. It is a social necessity of the first order that legal proceedings should not be started over and over again on the same matter. Stability in social relationships requires that decisions of the courts be observed in the same way as legislation.
. . .
A necessary consequence of the irrebuttable presumption of the validity of judgments is that the authority of res judicata exists even when there is an error in the judgment. The Code of Civil Procedure expressly provides for recourses to correct errors in a judgment (Book III, "Remedies Against Judgments"), which include appeals and the possibility of retraction of the judgment. If these remedies are not exercised, however, the judgment, by virtue of art. 1241 C.C.L.C. and the principles which underlie it, must necessarily have the authority of res judicata.
There is unanimity on this issue. Laurent, op. cit., discusses the effect of the principle of res judicata as regards judicial error, at No. 1, pp. 5-6:
[TRANSLATION] A judge may undoubtedly be mistaken in fact or in law; but the parties are not allowed to prove such errors, as the law denies them a court action . . . Why, despite this possibility of error, and even in a case where authentic documents establish that the judge erred, does the law not allow a case that is res judicata to be reopened? The legislature has taken the possibility of error into account: to remedy the evil, it has provided two levels of jurisdiction, and an appellate judge may correct the errors which escaped the trial judge. However, when the remedies provided by law have been exhausted there must be an end to the proceedings; if they could still be re-started on the pretext of error, disputes would continue indefinitely and the world would be one huge legal proceeding.
Chauveau, op. cit., adds the following, at No. 36, p. 33:
[TRANSLATION] What of judgments which are vitiated by intrinsic defects, of law or form, which do not, however, undermine their existence? . . . It is the responsibility of the party concerned to make use of these nullities at the proper time, using one of the remedies provided by law: allowing the matter to be reopened in such circumstances would be to undermine the very foundation of the whole theory on which the presumption of res judicata is based.
[32] However, for the doctrine of res judicata to apply, the strict conditions set out in article 2848 of the CCQ must be met. With respect to the conditions pertaining to the judgment itself, the court must have jurisdiction over the matter, the judgment must be definitive, and it must have been rendered in a contentious matter (see Roberge v. Bolduc, supra, at page 404). As to the conditions pertaining to identity, article 2848 requires that there be three identities: identity of parties, identity of object and identity of cause. In the decision by the Supreme Court of Canada in Laferrière v. Gariépy (1921), 62 S.C.R. 557, Mignault J. wrote at page 569:
[TRANSLATION]
The doctrine of res judicata is based on a presumption juris et de jure and even of public policy that a fact found by a judge is true: res judicata pro veritate habetur. Its basis is not the party's consent, which arises from the circumstance that he did not appeal the judgment rendered against him, but the unchallengeable truth of the fact acknowledged by the judgment, which, when it becomes final, may no longer be questioned. And this presumption of truth has been allowed in order to prevent new trials between the same parties on the same question and to make it impossible for the parties to obtain contradictory judgments.
For this to occur, what have been called the three identities must be present: identity of object, in the sense that, according to article 1241 C.C., the demand must be "for the same thing as in the action adjudged upon"; identity of cause, that is to say, to cite the same article, "the demand [must be] founded on the same cause"; and identity of persons, that is, the demand must be "between the same parties acting in the same qualities." [My emphasis.]
[33] With respect to identity of object, L'Heureux-Dubé J. writes as follows in Roberge v. Bolduc, at pages 414 and 415:
To determine, then, what is the "object" of an action, it is necessary to look at the nature of the right sought and at the remedy or the purpose for which it is sought. This is not to say that there must be an identical remedy sought or object pursued. Mignault, op. cit., explains at p. 105:
[TRANSLATION] . . . to complete the rule it must be said that it is not necessary for the two actions to seek precisely the same order: there will be res judicata once the object of the second action is implicitly included in the object of the first.
Nadeau and Ducharme, op. cit., at No. 577, p. 479, express a similar view:
[TRANSLATION] It is therefore not necessary for the two actions to seek identical orders: it will suffice if the object of the second action is implicitly included in the object of the first. . . . [References omitted.]
(See also Royer, op. cit., at No. 795, pp. 294-95.)
This position also finds support in jurisprudence. The leading case on the identity of object is Pesant v. Langevin (1926), 41 Que. K.B. 412, where Rivard J.A. states, at p. 421:
[TRANSLATION] The object of an action is the benefit to be obtained in bringing it. Material identity, that is identity of the same physical thing, is not necessarily required. This perhaps forces the meaning of "object" somewhat, but an abstract identity of right is taken to be sufficient. "This identity of right exists not only when it is exactly the same right that is claimed over the same thing or over one of its parts, but also when the right which is the subject of the new action or the new exception, though not absolutely identical to that which was the subject of the first judgment, nevertheless forms a necessary part of it, is essentially included in it, as by being a subdivision or a necessary sequel or consequence". In other words, if two objects are so related that the two arguments carried on about them raise the same question regarding performance of the same obligation between the same parties, there is res judicata. [References omitted.] [My emphasis.]
[34] As regards identity of cause, L'Heureux-Dubé J. refers to Rocois Construction v. Québec Ready Mix, [1990] 2 S.C.R. 440, where Gonthier J. writes at pages 454 to 456:
. . . The phrases "principal . . . fact which is the direct . . . basis" for the right, "legal fact which gave rise to the right claimed", "origin of or principle giving rise to the right claimed" or "legal source of the obligation" are attempts to capture in words the elusive idea of "cause" . . . .
. . . It would certainly be an error to view a cause as a rule of law regardless of its application to the facts considered. Accordingly, the existence of two applicable rules of law as the basis of the plaintiff's rights does not lead directly to the conclusion that two causes exist.
Of course, the existence of two rules of law applicable to a factual situation in practice gives rise to a duality of causes in the vast majority of cases, because separate rules generally require different legal characterizations. However, it is not the fact that there are two applicable rules which is conclusive in itself: it is the duality of legal characterizations which may result therefrom. When the essence of the legal characterization of the facts alleged is identical under either rule, it must follow that there is identity of cause.
[35] As to identity of parties, the wording of article 2848 of the CCQ is clear: the presumption of res judicata applies only if the demand is between the same parties acting in the same qualities.
[36] Thus it will be noted, for the application both of the doctrine of res judicata under the Civil Code and of the doctrine of issue estoppel in common law, that the required conditions are similar. Donald J. Lange moreover makes that very observation in The Doctrine of Res Judicata in Canada (Markham, Ont.: Butterworths, 2000), at page 34:
In the law of Canada, there is compelling support for the proposition that the common law doctrine of issue estoppel and the Québec Civil Code doctrine of res judicata are to be treated as equivalent, interchangeable doctrines.
[37] Thus, under article 2848 of the CCQ, and as established by the Supreme Court of Canada, inter alia in Roberge v. Bolduc,supra, and Laferrière v. Gariépy, supra, the necessary conditions for there to be res judicata regarding a thing applied for are as follows:
(i) the original judgment must emanate from a competent tribunal, be final and conclusive;
(ii) the thing applied for must be the same, that is to say, the object must be the same;
(iii) the new demand must be based on the same cause; and
(iv) that demand must be between the same parties, who must act in the same capacities.
It is therefore appropriate to examine whether those tests are met in the instant case.
(i) The judgment
[38] My judgment of November 5, 1999, was rendered under the informal procedure. Section 18.24 of the Tax Court of Canada Act, R.S.C. 1985, c. T-2, reads as follows:
18.24 A judgment of the Court on an appeal referred to in section 18 is final and conclusive and is not open to question or review in any court except the Federal Court of Appeal in accordance with section 28 of the Federal Court Act.
[39] Since the respondent withdrew on January 25, 2000, her application to the Federal Court of Appeal for judicial review, the judgment I rendered on November 5, 1999, became final and conclusive under section 18.24 of the Tax Court of Canada Act.
(ii) Identity of object
[40] As stated in the analyses of the commentators and in the case law and as restated by the Supreme Court of Canada in Roberge v. Bolduc, supra, the object of a legal action is defined as the benefit a litigant seeks or a right he wishes to have sanctioned. Moreover, the presumption of article 2848 of the CCQ does not require that there be a material identity of the thing applied for. It suffices that there be an abstract or formal identity of the right sought (see Jean-Claude Royer, La preuve civile, 2nd ed. (Cowansville, Qué.: Yvon Blais, 1995), paragraph 835).
[41] It should be noted that, in Pesant v. Langevin, supra, Rivard J.A. stated that this identity of right exists not only when it is exactly the same right that is claimed over the same thing, but also when the right which is the subject of the new action, though not absolutely identical to that which was the subject of the first judgment, nevertheless forms a necessary part of it, as by being a necessary sequel or consequence.
[42] In the instant case, the appellant claimed for 1997 the transfer of an unused credit for severe and prolonged physical impairment in respect of his spouse. For 1999, he claimed the same credit under the same sections of the Act—sections 118.3, 118.4 and 118.8, which have not since been amended—for the same disease affecting his spouse. In my view, it can thus be said that there is identity of object.
(iii) Identity of cause
[43] As regards this identity, J.C. Royer, in La preuve civile, supra, observes in paragraph 830, at pages 495 and 496:
[TRANSLATION]
. . . The cause of an action consists in the facts alleged in a proceeding which have legal effects. It includes a material and concrete element, namely the material facts and legal acts alleged in the written pleadings, and a formal and abstract element, which is the legal characterization of those facts. Identity of cause supposes identity of those two elements. [My emphasis.]
[44] In Rocois, supra, Gonthier J. stated that "the existence of two applicable rules of law as the basis of the plaintiff's rights does not lead directly to the conclusion that two causes exist". He added, "When the essence of the legal characterization of the facts alleged is identical under either rule, it must follow that there is identity of cause."
[45] In the present situation, the Act gives the Minister the authority to determine a taxpayer's tax for each taxation year. However, while the legal rule is the same from one year to the next, the annual authority set out in the Act to determine that tax does not necessarily mean, in my view, that there cannot be identity of cause from one year to the next if the legal characterization of the facts alleged is identical. In the instant case, it is my opinion that the essence of the legal characterization of the facts alleged in the judgment of November 5, 1999, granting the appellant entitlement to the credit provided for in sections 118.3, 118.4 and 118.8 of the Act,in accordance with the legal rule applicable in 1997, is identical under the legal rule applicable in 1999. It was decided in the judgment of November 5, 1999, that Ms. Michalk's ability to perform a basic activity of daily living was markedly restricted. Although that judgment ruled invalid an assessment for 1997, it was therein found as a fact that the celiac disease from which Ms. Michalk suffers is severe and permanent and that there is no known therapy or medication that can cure it. In her Reply to the Notice of Appeal, the respondent does not contend that a new therapy or drug has been found to alleviate this disease. The respondent merely states that "a strict special diet can alleviate its symptoms" and enable Ms. Michalk to control the disease in part. This fact was considered in the judgment of November 5, 1999 and is not a new fact. The respondent moreover asserted in her grounds for appealing to the Federal Court of Appeal that "the trial judge rendered a decision based on an incorrect finding of fact in concluding that [Ms. Michalk] had to devote an inordinate amount of time to performing a basic activity, namely feeding herself". By withdrawing her application for judicial review, the respondent has accepted that interpretation, and the judgment, in making that finding of fact, has thus acquired, under article 2848 of the CCQ, the authority of res judicata (see Roberge v. Bolduc, supra, at pages 402 to 404). In my view, the respondent accordingly has no grounds for putting the appellant through a new trial on analogous facts.
[46] In response to this, counsel for the respondent argues, relying on Kindree, supra, which was in turn based on the English Court of Appeal's judgment in Sneath, supra (two common law decisions), that, in view of the different taxation years, there cannot be identity of cause between the judgment of November 5, 1999, and the instant appeal.
[47] It is important here to emphasize once again the distinction at common law between the concept of cause of action estoppel, that is to say, "the doctrine of res judicata where another action is brought for the same cause of action as has been the subject of previous adjudication", and issue estoppel, "the doctrine of estoppel where, the cause of action being different, some point or issue of fact has already been decided" (as defined by Higgins J. of the High Court of Australia in Hoystead, supra, and approved by the Supreme Court of Canada in Angle, supra).
[48] It appears from a reading of Sneath, cited by counsel for the respondent, that the court in that case used cause of action estoppel, one of the forms of estoppel per rem judicatam, as its sole basis for holding that in tax matters a judicial decision ruling on an assessment for one taxation year cannot be pleaded as res judicata against another assessment for another taxation year. I note that the question of issue estoppel was not addressed in that judgment, nor was it debated in the Privy Council's judgment in Caffoor v. Commissioner of Income Tax, Colombo, [1961] A.C. 584, in which the Privy Council also refused to apply the doctrine of res judicata in respect of a judgment ruling on an assessment for a different taxation year.
[49] However, in Angle, supra, Laskin J.[4] remarked, relying on Hoystead, supra, that there may be issue estoppel where res judicata in its strict identity of cause of action or of object sense, that is, in the cause of action estoppel sense, would not apply. The distinction between these two concepts of estoppel was not observed in Caffoor, which refers rather to estoppel per rem judicatam, the generic term which includes cause of action estoppel and issue estoppel. In discussing that judgment by the House of Lords, Laskin J. wrote as follows in Angle, at page 266:
Assuming, as is indicated in Caffoor, that the principles applied in the tax assessment cases "form a somewhat anomalous branch of the general law of estoppel per rem judicatam and are not easily derived from or transferred to other branches of litigation in which such estoppels have to be considered" (see [1961] A.C. at pp. 599-600), the present case does not involve successive tax assessments against the appellant and hence cannot rest on the indicated anomaly. Moreover, so far as English cases are concerned, it seems to me that what was said on issue estoppel in Carl Zeiss Stiftung v. Rayner and Keeler Ltd. (No. 2) [1967] 1 A.C. 853 makes it unlikely that any anomalous rule, such as that upon which Caffoor appeared to be based, retains any survival value. At any rate, I would reject the introduction of such an anomaly into the law of Canada.
[My emphasis.]
[50] It is true that the debate in Angle did not involve successive tax assessments and that Laskin J. acknowledged that the cause in that case did not rest on the anomaly referred to in Caffoor. However, he subsequently stated clearly that, as a result of Carl Zeiss, supra (which confirms the rules for the application of issue estoppel), it is unlikely that an anomalous rule, such as that relied on in Caffoor with respect to successive assessments, can be followed in future, and, in any event, he would reject any application of such an anomaly in Canada.
[51] In the circumstances, counsel for the respondent is probably right in saying that there is no identity of cause of action or cause of action estoppel in the strict meaning given to estoppel per rem judicatam, since one is dealing here with assessments concerning different taxation years. However, this does not preclude the possibility of the appellant's pleading res judicata (as accepted in civil law) in the sense the common law gives to issue estoppel, to the extent that the question of fact with regard to the ability of the appellant's spouse to perform a basic activity of daily living, that is, feeding herself, has already been decided in a previous decision, namely in the judgment of November 5, 1999, and to that extent that it is that same question of fact which is raised once again with respect to another taxation year.[5]
[52] The principle is clearly explained by Lord Denning in Fidelitas Shipping Co. Ltd. v. V/O Exportchleb., [1966] 1 Q.B. 630, at page 640:
. . . It is a case of "issue estoppel" as distinct from "cause of action estoppel" and "fact estoppel," a distinction which was well explained by Diplock L.J. in Thoday v. Thoday.10 The law, as I understand it, is this: if one party brings an action against another for a particular cause and judgment is given upon it, there is a strict rule of law that he cannot bring another action against the same party for the same cause. Transit in rem judicatam: see King v. Hoare.11 But within one cause of action, there may be several issues raised which are necessary for the determination of the whole case. The rule then is that, once an issue has been raised and distinctly determined between the parties, then, as a general rule, neither party can be allowed to fight that issue all over again. The same issue cannot be raised by either of them again in the same or subsequent proceedings except in special circumstances, see Badar Bee v. Habib Merican Noordin,12 per Lord Macnaghten.13 And within one issue, there may be several points available which go to aid one party or the other in his efforts to secure a determination of the issue in his favour. The rule then is that each party must use reasonable diligence to bring forward every point which he thinks would help him. If he omits to raise any particular point, from negligence, inadvertence, or even accident (which would or might have decided the issue in his favour), he may find himself shut out from raising that point again, at any rate in any case where the self-same issue arises in the same or subsequent proceedings. But this again is not an inflexible rule. It can be departed from in special circumstances: see Henderson v. Henderson14; Hoystead v. Commissioner of Taxation15; New Brunswick Railway Co. v. British & French Trust Co.16; Connelly v. Director of Public Prosecutions.17
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10 [1964] P. 181, 198; [1964] 2 W.L.R. 371, 385; [1964] 1 All E.R. 341, 352, C.A.
11 (1844) 13 M. & W. 494, 504.
12 [1909] A.C. 615.
13 Ibid. 623.
14 (1843) 3 Hare 100, 115.
15 [1926] A.C. 155, 170; 42 T.L.R. 207, P.C.
16 [1939] A.C. 1; 55 T.L.R. 260; [1938] 4 All E.R. 747.
17 [1964] A.C. 1254; [1964] 2 W.L.R. 1145; [1964] 2 All E.R. 401, C.C.A., H.L.(E.).
[53] It appears from the above passage that it may be pleaded that issue estoppel does not apply in certain exceptional situations. Those exceptional circumstances, however, do not include a case where a party has failed to raise any particular point from negligence, inadvertence or even accident.
[54] This is also apparent from Lord Diplock's analysis in the same judgment (Fidelitas, supra), at pages 642 and 643:
. . . The determination of the issue between the parties gives rise to what I ventured to call in Thoday v. Thoday19 an "issue estoppel." It operates in subsequent suits between the same parties in which the same issue arises. . . . The principle was expressed as long ago as 1843 in the words of Wigram V.-C. in Henderson v.Henderson20 which were expressly approved by the Judicial Committee of the Privy Council in Hoystead v. Commissioner of Taxation.21 I would not seek to better them: "I believe I state the rule of the court correctly when I say, that where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time."
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19 [1964] P. 181, 198.
20 (1843) 3 Hare 100, 114.
21 [1926] A.C. 155, 170.
[55] This principle was cited with approval by the Federal Court of Appeal in Canada v. Chevron Canada Resources Ltd., [1999] 1 F.C. 349, in which Noël J.A. concurs in the Privy Council's remarks in Thomas v. Trinidad and Tobago (A.G.) (1991), 115 N.R. 313, at page 316, a decision in which is cited the rule referred to above that is stated in Henderson,supra,and Hoystead, supra. More particularly, Noël J.A. refers to the following passage from Trinidad and Tobago, at page 368:
In Greenhalgh v. Mallard, [1947] 2 All E.R. 255, Somervell, L.J., at page 257 said:
"I think that on the authorities to which I will refer it would be accurate to say that res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but that it covers issues or facts which are so clearly part of the subjectmatter [sic] of the litigation and so clearly could have been raised that it would be an abuse of process of the court to allow a new proceeding to be started in respect of them."
In Yat Tung Co. v. Dao Heng Bank, [1975] A.C. 581, Lord Kilbrandon, at page 590, in delivering the opinion of the Board referred to the above quoted passage in the judgment of Wigram, V.C., and continued:
"The shutting out of a 'subject of litigation'—a power which no court should exercise but after a scrupulous examination of all the circumstances—is limited to cases where reasonable diligence would have caused a matter to be earlier raised; moreover, although negligence, inadvertence or even accident will not suffice to excuse, nevertheless 'special circumstances' are reserved in case justice should be found to require the nonapplication of the rule."
[56] Furthermore, if a party feels that there are special circumstances justifying the non-application of the doctrine of res judicata, the onus is on that party to show what those special circumstances are (see Chevron, supra, page 371, paragraph 47). According to Phipson, supra, at page 885, paragraph 33-55, the test for allowing an exception to the doctrine of issue estoppel is as follows:
. . . the fresh evidence relied on must fundamentally change the appearance of the case, and no doubt this applied no less within the subordinate issues which may give rise to estoppels. [My emphasis.]
[57] According to Diplock L.J., in Mills v. Cooper, [1967] 2 Q.B. 459, 468-69 (C.A.), there can be no departing from the application of issue estoppel:
. . . unless further material which is relevant to the correctness or incorrectness of the assertion and could not by reasonable diligence have been adduced by that party in the previous proceedings has since become available to him.* [My emphasis.]
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* See also D.P.P. v. Humphrys, [1977] A.C. 1, at p. 39D-E per Lord Hailsham, at p. 48E-H per Lord Edmund-Davies; Tebbutt v.Haynes, [1981] 2 All ER 238 (C.A.).
[58] In his written argument, counsel for the respondent states that the judgment of November 5, 1999, was based on a finding of fact specific to the situation of the appellant's spouse—that is, her ability to feed herself—in 1997. He suggests that, since 1997, Ms. Michalk would have acquired experience in managing all aspects of her diet and that she probably now devotes less time to that activity of daily living than in 1997. He also argues that her physical condition may have changed since 1997. He seems to suggest that the availability, accessibility and cost of replacement foods were considered by this Court for 1997, but that the situation in those respects may also have changed in 1999. To establish this, the respondent intended to bring different evidence from that adduced in 1997 and indeed she filed an assessment report by a nutritionist-dietician on celiac disease and on the appropriate diet for that disease.
[59] I will respond to this, first, by reiterating that the judgment of November 5, 1999, spoke of the disease as being severe and permanent. I do not see how the respondent can now argue that Ms. Michalk's physical condition may have changed since 1997. In her Reply to the Notice of Appeal, the respondent moreover acknowledges that Ms. Michalk must adhere to severe and permanent dietary restrictions and that, to date, there is no suitable medication that can cure celiac disease.
[60] Furthermore, the respondent is now trying to prove her point through the testimony of an expert witness she could very well have had testify at the hearing of the appeal from the assessment for 1997. As Noël J.A. approved it in Chevron, supra, the doctrine of res judicata extends to questions and facts that are clearly part of the subject matter of the litigation and which could have been raised at the appropriate time.
[61] The judgment of November 5, 1999, establishes that, "in order to feed herself (that is to say to take all the necessary steps to prepare meals suitable to her diet), Ms. Michalk must take much more time than healthy persons are normally required to devote to this activity" (Leduc v. Canada, supra, paragraph 16). It is also stated in that judgment that "[t]he evidence also shows that Ms. Michalk's ability to feed herself every day is markedly restricted (Leduc v. Canada, supra, paragraph 19)."
[62] I fail to see how Ms. Michalk's ability to feed herself would be less markedly restricted with the passage of time, if one compares her situation to that of persons not suffering from that physical impairment.
[63] At all events, it seems to me that here the respondent is attempting to bring evidence (through her expert witness) which she failed by negligence, inadvertence or accident to adduce at the hearing of the appeal from the assessment for 1997. In my opinion, if due diligence had been exercised, this new view of the respondent's could have been presented at that time.
[64] In my view, the evidence the respondent wishes to bring again to convince this Court that the appellant is not entitled to the transfer of an unused credit for physical impairment for the 1999 taxation year, when he was held to be so entitled for the 1997 taxation year, would not fundamentally alter the outcome of the debate or the legal characterization of the alleged facts appearing in the judgment of November 5, 1999.
[65] It so happens that the question of fact raised in that previous judgment—that is, whether Ms. Michalk's ability to perform a basic activity of daily living was markedly restricted given her severe and prolonged impairment—was fundamentally important to the decision to allow the credit under the Act. That same question of fact would have to be answered again if I heard the appeal on the merits for 1999. In view of the permanent nature of the disease and the fact that there is no remedy for it but to follow a strict diet, and given that all these facts were considered in the judgment of November 5, 1999, I believe the matter is res judicata.[6]
[66] In the instant case, I do not find that the respondent showed there were special circumstances (such as the discovery of a drug, or new material facts which might fundamentally alter the cause of action, or a legal change made by an appellate court or by legislative amendment) justifying the non-application of the doctrine of res judicata. Consequently, in my view, there is identity of cause in this instance.
(iv) Identity of the parties
[67] It is clear that the same parties are involved in this appeal as were involved in the appeal in respect of which judgment was rendered for 1997.
Conclusion
[68] Accordingly, in view of the fact that the conditions to be met in order for the doctrine of res judicata to apply (i.e. identity of parties, object and cause), to which the conditions for issue estoppel are similar, have, in my view, been satisfied, I find that it is not appropriate for this Court to enter once again into a discussion of the merits of the question of fact concerning the ability of the appellant's spouse to perform a basic activity of daily living. I find that this question is res judicata.
Decision
[69] Having found (1) that the question of fact concerning Ms. Michalk's ability to feed herself on a daily basis, which is markedly restricted within the meaning of the Act given her severe and prolonged impairment, is res judicata, (2) that that question was fundamental to resolving the issue raised for the 1997 taxation year with respect to the allowing of the tax credit claimed for physical impairment under sections 118.3, 118.4 and 118.8 of the Act, (3) that the same question is fundamental in this appeal, since the issue concerns the allowing of that same credit for the 1999 taxation year, and (4) that the other conditions set out in sections 118.3, 118.4 and 118.8 of the Act have been satisfied, I conclude that this appeal should be allowed without it being necessary to proceed with a hearing on the merits.
[70] The whole with costs.
Signed at Ottawa, Canada, this 20th day of December 2001.
"Lucie Lamarre"
J.T.C.C.
Translation certified true on this 28th day of February 2002.
[OFFICIAL ENGLISH TRANSLATION]
Erich Klein, Revisor
[OFFICIAL ENGLISH TRANSLATION]
2000-4503(IT)I
BETWEEN:
BERTRAND LEDUC,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
The Honourable Judge Lucie Lamarre
Appearances
For the Appellant: The Appellant himself
Counsel for the Respondent: Michel Lamarre
JUDGMENT
The appeal from the assessment made under the Income Tax Act ("Act") for the 1999 taxation year is allowed with costs, without it being necessary to proceed with a hearing on the merits, in accordance with the attached Reasons for Judgment, and the assessment is referred back to the Minister of National Revenue for reconsideration and reassessment on the basis that the appellant is entitled to claim under sections 118.3, 118.4 and 118.8 of the Act, in computing his federal tax for the 1999 taxation year, a transfer of an unused tax credit of $719.61 for severe and prolonged physical impairment in respect of his spouse, Ginette Michalk.
Signed at Ottawa, Canada, this 20th day of December 2001.
|
"Lucie Lamarre" |
J.T.C.C.
Translation certified true
on this 28th day of February 2002.
Erich Klein, Revisor
[1] See Bertrand Leduc v. Canada, [1999] T.C.J. No. 765 (Q.L.).
[2] See Tax Court of Canada file 98-2444(IT)I.
[3] M.N. Howard, P. Crane & D.A. Hochberg, Phipson on Evidence, 14th ed., London, Sweet & Maxwell, 1990, at page 882, paragraph 33-52 [hereinafter Phipson].
[4] It should be noted that Laskin J. dissented as regards the outcome in that case, but not as to the existence and recognition as such of the principle of issue estoppel in Canada, on which the judges were unanimous.
[5] See for comparison purposes the decision rendered by the Federal Court of Appeal in Wierbicki v. Canada, [2000] F.C.J. No. 413 (Q.L.), in which that Court accepted the application of the doctrine of res judicata in a tax matter in the case of a judgment by this Court ruling that there were no residual losses in a taxation year that could be carried forward as was sought to be done.
[6] In this respect, I believe that the cases cited by counsel for the respondent respecting property taxes do not apply here. The facts relating to property assessment are not permanent in nature, unlike those involved here.