Haida Tourism Partnership (West Coast Resorts) v. Canada (Ship-Source Oil Pollution Fund)

Haida Tourism Partnership (West Coast Resorts) v. Canada (Ship-Source Oil Pollution Fund)
Court (s) Database
Federal Court Decisions
Date
2024-03-19
Neutral citation
2024 FC 439
File numbers
T-1374-21
Notes
Digest
Decision Content
Date: 20240319
Docket: T-1374-21
Citation: 2024 FC 439
Ottawa, Ontario, March 19, 2024
PRESENT: The Honourable Mr. Justice Southcott
BETWEEN:
HAIDA TOURISM PARTNERSHIP D.B.A. WEST COAST RESORTS
Plaintiff
and
THE ADMINISTRATOR OF THE SHIP‑SOURCE OIL POLLUTION FUND
Defendant
ORDER AND REASONS
I. Overview [1] This decision addresses an appeal brought by the Plaintiff, Haida Tourism Partnership d.b.a. West Coast Resorts [Haida], under Rule 51 of the Federal Courts Rules, SOR/98-106 [the Rules], from an Order and Reasons dated December 21, 2023 [the Order] of Associate Judge Coughlan [the Associate Judge].
[2] In the within action, Haida seeks recovery from the Defendant, the Administrator of the Ship-Source Oil Pollution Fund [the Administrator], costs that Haida incurred to remediate an oil spill emanating from its vessel. The Order under appeal granted a motion by the Administrator to strike Haida’s action on the basis that Haida had failed to plead a basis in law for the Administrator’s alleged liability. The Associate Judge granted the Administrator’s motion and struck Haida’s Statement of Claim without leave to amend.
[3] As explained in greater detail below, Haida’s motion and appeal are allowed and the Order of the Associate Judge is set aside, because I have found a palpable and overriding error in the Associate Judge’s conclusion that Haida’s action is precluded by the principles of res judicata and, in particular, issue estoppel. As requested by the parties, I have therefore decided the underlying motion to strike and, in the result, will grant Haida leave to amend its Statement of Claim to reflect the cause of action that it has articulated in its submissions in this motion, because I am not satisfied that it is plain and obvious that such cause of action will fail.
II. Background
[4] Haida is a limited partnership registered under the laws of British Columbia and the operator and owner of a sports fishing lodge or barge known as “Tasu I” [the Vessel].
[5] The Ship-Source Oil Pollution Fund [SOPF] and its Administrator are creatures of statute, established under Part 7 of the Marine Liability Act, SC 2001, c 8 [MLA], with (broadly speaking) a mandate to provide statutorily prescribed compensation for costs and losses resulting from ship-source oil pollution.
[6] Haida’s Statement of Claim alleges that on September 8, 2018, the Vessel came loose from its moorings in Alliford Bay, Haida Gwaii and drifted to a grounding point in Bearskin Bay, British Columbia, leaking a mixture of gasoline and diesel [the Grounding]. The Vessel was the only ship involved in the incident. Haida contacted the Canadian Coast Guard to advise them of the incident and made efforts, along with various other agencies, to remediate and minimize the potential oil pollution damage.
[7] Haida alleges that the grounding occurred because of intentional and wilful tampering with the Vessel’s mooring lines by a third party or parties, with intent to cause damage.
[8] On December 27, 2018, Haida submitted a claim to the SOPF for reimbursement of costs incurred in connection with steps taken to repair, remedy or minimize oil pollution and related preventative measures. The claim was initially framed as a claim under paragraph 101(1)(b) of the MLA but was eventually reframed as a claim under subsection 103(1) of the MLA.
[9] These statutory provisions (contained in Part 7 of the MLA) will be identified in somewhat more detail later in these Reasons. For present purposes, I note that subsection 103(1) references other provisions of the MLA (contained in Part 6, which addresses liability and compensation for ship-source pollution) and permits a person who has suffered loss or damage or incurred costs or expenses referred to in those provisions to file a claim with the Administrator. Following receipt of such a claim, subsection 105(1) of the MLA requires the Administrator to investigate and assess the claim and make an offer of compensation to the claimant for whatever portion of it the Administrator finds to be established.
[10] On August 4, 2021, the Administrator issued a decision denying Haida’s claim on the basis that a shipowner is not eligible to make a claim under subsection 103(1) of the MLA for its costs and expenses incurred to prevent, repair, remedy or minimize ship-source oil pollution damage resulting from an incident involving solely its own ship. As permitted by subsection 106(2) of the MLA, Haida brought a statutory appeal of the Administrator’s decision (in Court file no. T-1375-21). Justice Strickland of this Court heard and dismissed that appeal on August 31, 2022, in Haida Tourism Partnership d.b.a. West Coast Resorts v The Administrator of the Ship-source Oil Pollution Fund, 2022 FC 1249 [the Strickland Decision]. Justice Strickland concluded that the Administrator had correctly interpreted subsection 103(1) of the MLA.
[11] Haida filed a Notice of Appeal of the Strickland Decision on September 28, 2022. On May 29, 2023, Haida discontinued that appeal.
[12] The present action, which also arises from the Grounding, was commenced on September 7, 2021 and therefore pre-dates Haida’s statutory appeal, but (along with other litigation not material to the matter now before the Court) it was placed in abeyance pending the outcome of the statutory appeal. Like its claim under subsection 103(1), the present action by Haida against the Administrator claims recovery from the Administrator for the costs Haida incurred to address the pollution that emanated from its Vessel. However, the present action asserts that claim under a different statutory provision, subsection 101(1) of the MLA. (As noted later in these Reasons, Haida’s Statement of Claim does not expressly plead subsection 101(1), but it is common ground between the parties that this is the statutory provision upon which Haida relies.)
[13] On August 22, 2023, the Administrator filed a motion to strike Haida’s Statement of Claim in this proceeding on the basis that it discloses no reasonable cause of action. The Associate Judge’s resulting Order, which granted the Administrator’s motion and struck the Statement of Claim without leave to amend, forms the basis of this Rule 51 appeal.
III. Order under Appeal [14] In the Order, the Associate Judge canvassed the test applicable to a motion to strike a pleading, requiring that it be plain and obvious that the pleading discloses no reasonable cause of action or, in other words, that the action is certain to fail because it contains a radical defect (R v Imperial Tobacco Canada Ltd., 2011 SCC 42 at para 17). The Associate Judge observed that, in order to disclose a reasonable cause of action, a claim must: a) allege facts that are capable of giving rise to a cause of action; b) disclose the nature of the action which is to be founded on those facts; and c) indicate the relief sought, which must be of a type that the action could produce and the Court has jurisdiction to grant (Oleynik v Canada (Attorney General), 2014 FC 896 at para 5).
[15] The Associate Judge also recognized that striking a pleading without leave to amend is a power that must be exercised with caution, such that the threshold for striking a pleading is high, and that the pleading must be read in a manner that permits a novel but arguable claim to proceed to trial (Atlantic Lottery Corp Inc v Babstock, 2020 SCC 19 at para 19).
[16] The Associate Judge first assessed the Statement of Claim to determine if a cause of action was plead. Haida set out the circumstances alleged to have caused the grounding, as well as its efforts to address potential pollution damage as a result, and alleged that it has a complete defence for pollution liability and related costs of cleanup and mitigation. In support of that defence, Haida relied on provisions of the MLA (Article 3, Schedule 8 and/or section 77(3)(b)) that provide a defence to a shipowner against certain claims under the MLA, because the grounding was caused by a third party with intent to cause damage. Haida then alleged that it has a right to claim against the SOPF for reimbursement of all reasonable steps taken to repair, remedy or minimize oil pollution and related preventative measures.
[17] However, the Associate Judge found that Haida had not particularized the material facts or legal foundation for its assertion that it was entitled to reimbursement from the SOPF. The Associate Judge noted that, as explained in the motion, the Administrator understood from discussion between counsel that Haida intends to rely on section 101(1) of the MLA for its entitlement to reimbursement. However, the Associate Judge found that such understanding did not assist Haida, because the pleading in its present form was deficient on this issue and was bereft of particulars to support a claim against the Administrator. While observing that such deficiencies might be remedied through an amendment, the Associate Judge then concluded that it was unnecessary for her to consider that possibility, because she found based on the Strickland Decision that the matter had already been decided and was res judicata.
[18] The Order then explained the finding that Haida’s claim was res judicata or, more specifically, subject to issue estoppel. The Associate Judge observed that a pleading may be struck where it raises an issue that has been finally determined in an earlier proceeding (IMS Incorporated v Toronto Regional Real Estate Board, 2023 FCA 70 at para 44 [IMS Incorporated]; citing Apotex Inc v Pfizer Ireland Pharmaceuticals, 2011 FCA 77; and Apotex Inc v Laboratories Servier, 2007 FCA 350).
[19] The Associate Judge set out the test for issue estoppel, being that: (a) the same question has been decided; (b) the judicial decision that created the estoppel was final; (c) the parties to that decision are the same parties to the proceeding in which the estoppel is raised; and (d) the question out of which the estoppel arises was fundamental to the decision (Hughes Land Co v Manitoba, 1998 CanLII 17673 (MB CA) [Hughes Land], 167 DLR (4th) 652 (Man CA).
[20] The Associate Judge then reviewed the parties’ positions. She noted first the Administrator’s contention that the Strickland Decision represented obiter dicta, in that it dealt with section 103 of the MLA, while the present action purported to be brought under section 101. While also observing that the Administrator was not expressly asserting that the action was res judicata in the form of issue estoppel, the Associate Judge noted the Administrator’s submission: “… the decision in T-1375-21 has not technically decided the issue before this Honourable Court, it is submitted that it can and should be applied, resulting in the dismissal of this action.” In the Associate Judge’s view, this submission represented an invitation to the Court to apply the doctrine of res judicata in the form of issue estoppel.
[21] The Associate Judge noted Haida’s contrasting position that the Strickland Decision was obiter and should not be considered in the motion to strike. Haida argued that Justice Strickland’s analysis of section 101 of the MLA should be given little weight, because it was far removed from the ratio decidendi concerning section 103 of the MLA. Moreover, Haida challenged many of Justice Strickland’s findings regarding section 101, arguing that her interpretation of the overall purpose of section 101 was overly narrow.
[22] The parties also took contrasting positions on the extent to which Justice Strickland had received thorough submissions surrounding section 101, when the claim under appeal before her was based on section 103. As there was no evidence before the Court on the submissions that had been made to Justice Strickland, the Associate Judge explained that the Court was required to assess whether the same issues were determined in the earlier case by comparing what was decided in the earlier case with what is pleaded in the Statement of Claim (IMS Incorporated at para 46).
[23] Although recognizing that the Strickland Decision was primarily focused on whether the Administrator had correctly disallowed Haida’s claim for compensation under Section 103(1) of the MLA, the Associate Judge found that Justice Strickland had undertaken a comprehensive review of Parts 6 and 7 of the MLA and the purpose of the MLA as a whole. The Associate Judge adopted paragraphs 10-25 of the Strickland Decision and then set out the following findings made by Justice Strickland:
The purpose of Parts 6 and 7 of the MLA is to establish shipowner liability for ship‑source oil pollution and provide compensation to persons who suffer such oil pollution damage based on the polluter pays principles: see paras 61-64, 70.
The MLA is not environmental legislation, and the primary purpose of the MLA is not anticipatory protection of the environment: see para 78.
Subsections 101(1) and 103(1) of the MLA operate independently of one another, providing distinct avenues for persons who have incurred ship oil pollution damages to obtain compensation: see paras 79-80, 84-91, 93.
Subsection 101(1) of the MLA is not a mechanism for a claim against the SOPF but rather a backup to a failed action under section 109, which allows the Administrator of the SOPF to intervene to obtain damages on behalf of claimants. If an initial civil claim is unsuccessful and the shipowner avoids liability, then a section 101(1) claim can be made: see para 82.
Subsection 101(1) is aimed at protecting and compensating claimants in the event that a shipowner does not, or is not required to, meet its strict liability obligations with respect to oil pollution: see para 81.
Subsection 101(1) does not allow a shipowner to advance an action against the SOPF because they allege they are not liable for one of the reasons outlined at subsection 77(3) of the MLA: see para 83.
A shipowner cannot advance a claim under section 109 because, as the owner of the polluting vessel, they cannot sue themselves: see para 84.
[24] Recognizing the importance of the doctrine of res judicata, being to promote the finality of proceedings and prevent collateral attacks on judgments (Danyluk v Ainsworth Technologies Inc, 2001 SCC 44 at para 24), the Associate Judge then explained as follows her conclusion that issue estoppel applied (at para 53):
53. The current action represents a collateral attack on Justice Strickland’s findings in Haida #1. Haida has already had the opportunity to appeal Justice Strickland’s decision. As set out above at paragraph 16, Haida alleged that Justice Strickland erred in her interpretation of Parts 6 and 7 and section 101 of the MLA. Although not properly pled, these are the very same provisions said to be at play in this proceeding. The Plaintiff’s discontinuance of Haida #1 renders Justice Strickland’s decision and findings of fact therein final. Further, I am of the view that Justice Strickland’s analysis of the claims scheme found at sections 101-103 of the MLA was fundamental to her decision. She was required to undertake the extensive review of Parts 6 and 7 of the MLA in order to ground her determination of Haida’s statutory appeal. In consequence, her decision in Haida #1 is binding on the current proceeding and issue estoppel arises.
[25] Finally, the Associate Judge observed that nothing turned on the fact that one proceeding was a statutory appeal and the other an action, as ultimately Haida was seeking the same relief: the reimbursement of costs incurred in the remediation of an oil pollution event caused by its Vessel.
[26] In the result, the Order allowed the Administrator’s motion and struck the Statement of Claim without leave to amend.
IV. Issues
[27] Haida raises several arguments in support of its positon that the Associate Judge erred as a matter of law in striking out the action in reliance on the Strickland Decision. Haida also argues that it was deprived of procedural fairness, as the parties had taken the position that the principles of res judicata and issue estoppel did not apply, and the Associate Judge was therefore required to seek submissions on those principles before relying on them to strike the action.
[28] Also, the week before the hearing of this appeal, Haida filed a motion seeking leave to adduce fresh evidence in the appeal. The proposed evidence, which was not before the Associate Judge, relates to communications between counsel, which Haida says is necessary to respond to the Administrator’s position, expressed in its Written Representations in response to this appeal, that the Associate Judge was correct to conclude that Haida’s claim was res judicata. Haida argues that the Administrator’s position is contrary to a prior agreement between the parties as expressed in the evidence it wishes to adduce. The Administrator opposes the fresh evidence motion.
[29] Finally, Haida also takes the position that the Administrator’s motion record itself includes fresh evidence that was not before the Associate Judge, being the parties’ memoranda of fact and law filed in the appeal before Justice Strickland. Haida also notes that the Administrator has not brought a motion to admit this evidence.
[30] Therefore, in total, the parties’ arguments raise the following issues for the Court’s determination:
Should the Court admit the evidence adduced by Haida that was not before the Associate Judge?
Should the Court admit the evidence adduced by the Administrator that was not before the Associate Judge?
Did the Associate Judge err in applying obiter dicta from the Strickland Decision?
Did the Associate Judge err in her application of the plain and obvious test?
Did the Associate Judge err in applying the doctrine of issue estoppel?
Was Haida deprived of procedural fairness?
If the Court identifies a reviewable error in the Order, how should the Administrator’s motion to strike be adjudicated?
V. Standard of Review
[31] The standard of review applicable to an appeal of a discretionary order of an associate judge is palpable and overriding error for questions of fact and questions of mixed fact and law, and correctness for questions of law and questions of mixed fact and law where there is an extricable legal principle at issue (Hospira Healthcare Corporation v Kennedy Institute of Rheumatology, 2016 FCA 215 at paras 64, 66, citing Housen v Nikolaisen, 2002 SCC 33 [Housen] at paras 17-37).
[32] Palpable means an obvious error, while an overriding error is one that affects the decision-maker’s conclusion (Clorox Company of Canada, Ltd v Chloretec SEC, 2020 FCA 76 [Clorox] at para 38). Palpable and overriding error is a highly deferential standard of review, while the correctness standard applies no deference to the underlying decision-maker (Clorox at para 23; Tokai of Canada Ltd v Kingsford Products Company, LLC, 2021 FC 782 at para 22).
[33] Relying on Agnico-Eagle Mines Ltd v Canada, 2016 FCA 130 [Agnico-Eagle] at para 40), Haida argues in its written submissions that a Court commits an error of law, reviewable on the correctness standard, when it incorrectly applies a legal principle. Haida accordingly submits that the issues it raises related to the merits of the Order are all subject to the standard of correctness. The Administrator agreed in its written submissions that the standard of review for the present appeal, based solely on questions of law, should be correctness.
[34] However, at the hearing of this motion, I raised with Haida’s counsel whether it had misinterpreted Agnico-Eagle at paragraph 40. That paragraph does not state that the correctness standard governs review of the incorrect application of a legal principle, but rather that it governs review of the application of an incorrect legal principle. The distinction may appear subtle, but it is important. Agnico-Eagle explains that, where there is an extricable question of law, such as the application of a wrong standard or incorrect legal principle, failure to consider a required element of a legal test or failure to consider a legally relevant factor, the correctness standard applies. However, if the Court is considering the application of a legal principle to a set of facts, this represents a question of mixed fact and law to which the palpable and overriding standard of review applies (Housen at para 36).
[35] I understood Haida’s counsel to accept this distinction, although Haida maintains that there are elements of the Associate Judge’s analysis that represent extricable questions of law that are governed by the correctness standard. In the course of my consideration of Haida’s arguments later in these Reasons, I will apply the principles set out above in selecting the standard of review applicable to the adjudication of each argument.
[36] I agree with the parties that the final issue, which surrounds the procedural fairness of the adjudication of the motion to strike, is governed by the standard of correctness or, more accurately, that the Court is required to consider whether the procedure followed was fair, having regard to all the circumstances (Canadian Pacific Railway Company v Canada (Attorney General), 2018 FCA 69 at para 54).
VI. Legislative Regime
[37] As previously noted, the statutory provisions relevant to this appeal are found in Parts 6 and 7 of the MLA. At the time of the Grounding, the version of the MLA that came into effect on June 8, 2015 and remained in effect until December 12, 2018 was in force. That version applies to this appeal, and the statutory provisions referenced in these Reasons are from that version.
A. Part 6 – Liability and Compensation for Pollution [38] Paragraphs 10 to 22 of the Strickland Decision provide a useful and detailed description of Part 6 of the MLA, entitled “Liability and Compensation for Pollution”, which description I do not understand to be in dispute between the parties. I will not repeat that description in the same level of detail but will borrow liberally from it in summarizing below the principal provisions of Part 6 that figure in this appeal. The provisions themselves are included in Appendix “A” to this Order and Reasons.
[39] Part 6 of the MLA is composed of two Divisions. Division 1 gives the force of law to certain international conventions to which Canada is a contracting state. The three conventions relevant to the present appeal are: (a) the International Convention on Civil Liability for Oil Pollution Damage, 1992 [Civil Liability Convention]; (b) the International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001 [Bunkers Convention]; and (c) the International Convention on the Establishment of an International Fund for Compensation for Oil Pollution Damage, 1992 [Fund Convention], plus the Protocol of 2003 to the Fund Convention [Supplementary Fund Protocol]. Broadly speaking, these conventions, and related statutory provisions in Part 6 that supplement the application of the conventions, govern liability and funding for costs, expenses, losses, and damages resulting from ship-source oil pollution.
[40] Division 2 of Part 6 of the MLA is concerned with liability for ship source oil pollution that is not addressed by the international conventions referenced in Division 1. For purposes of the present appeal, it is not necessary to delve into the detailed differences in the application of the Division 1 conventions and the provisions of Division 2. What is relevant is the fact that two of the three conventions referenced above (the Bunkers Convention and Civil Liability Convention) and Division 2 includes provisions that impose on a shipowner strict liability for pollution damage caused by its ship and, in some cases, costs and expenses incurred in respect of measures taken to prevent, repair, remedy or minimize such damage. Also, those conventions and Division 2 provide certain limited exceptions to the shipowner’s strict liability.
[41] One of those exceptions is where the occurrence or damage was wholly caused by an act or omission of a third party with intent to cause damage. Haida’s position that it is entitled to recovery of its costs and expenses in the within action is based significantly on invoking that exception.
B. Part 7 – Ship-source Oil Pollution Fund [42] Part 7 of the MLA, entitled “Ship-source Oil Pollution Fund”, continues the SOPF and provides for the appointment, by the Governor in Counsel, of its Administrator and Deputy Administrator. The principal provisions of Part 7 that formed the basis of the parties’ arguments in the appeal before Justice Strickland and in the present appeal are included in Appendix “A” to this Order and Reasons. These provisions include section 101, upon which Haida relies in the present action, and section 103 upon which it relied in the claim against the Administrator that was the subject of the Strickland Decision. Both of these sections will be referenced in more detail later in these Reasons.
VII. Analysis A. Should the Court admit the evidence adduced by Haida that was not before the Associate Judge? [43] As an initial point, I note that the Administrator’s response to Haida’s evidentiary motion questions whether there is an applicable Rule or other authority under which Haida can bring the motion. At the hearing, Haida’s counsel acknowledged that there is no Rule directly applicable to the introduction of new evidence in a Rule 51 appeal. However, counsel relies on David Suzuki Foundation v Canada (Minister of Health), 2018 FC 379 [Suzuki] at paragraph 13 to 15, confirming that authority exists by analogy to Rule 351, which governs the admission of new evidence before the Federal Court of Appeal. I accept that authority exists for Haida’s motion.
[44] Haida filed its motion to adduce additional evidence that was not before the Associate Judge in response to the Administrator’s written representations in this appeal. Haida considers certain of those representations to misstate the history of the litigation between the parties and, in particular, an agreement reached between them leading to Haida’s discontinuance of its appeal of the Strickland Decision. Most significantly, Haida wishes to adduce evidence of correspondence between counsel so as to establish that the parties had agreed that the Strickland Decision did not dispose of the present action and that this action is not res judicata.
[45] Haida wishes to adduce this evidence because the Administrator’s written representations in this appeal submitted that the Associate Judge’s finding that Haida’s claim was res judicata was understandable based on the history of the litigation. Haida argues that, as the Administrator’s position in its written representations is inconsistent with the agreement between the parties, Haida should be entitled to adduce evidence of that agreement.
[46] The Administrator responds by explaining that its submission that the Associate Judge’s res judicata finding was understandable was not intended to represent an argument that the Order should be upheld on that basis. The Administrator clarifies that, to the extent there may have been any ambiguity in its written representations, it is not arguing to have the principle of res judicata applied in this appeal. Rather, as was clear from its counsel’s submissions at the hearing of this appeal, the Administrator seeks to sustain the Order on the basis that the Associate Judge engaged in an alternative analysis in which she adopted the reasoning in the Strickland Decision as persuasive jurisprudence and granted the motion to strike because Haida’s claim asserted a cause of action without legal foundation.
[47] Haida’s submissions in support of the evidentiary motion argue that the test the Court should apply, in deciding whether to allow the additional evidence on appeal, is that prescribed by the Supreme Court of Canada in Palmer v The Queen, [1980] 1 SCR 759 [Palmer], requiring it to show that: (a) the evidence could not, by the exercise of due diligence, have been obtained for the proceeding at first instance; (b) the evidence is relevant in that it bears upon a decisive or potentially decisive issue; (c) the evidence is credible in the sense that it is reasonably capable of belief; and (d) the evidence is such that, if believed, it could have affected the result at first instance.
[48] Haida argues that the Palmer test should be preferred to the usual test for adducing evidence on appeal of an associate judge’s order, as set out in Suzuki at paragraph 19, which allows new evidence to be admitted exceptionally in circumstances where: (a) it could not have been made available earlier; (b) it will serve the interests of justice; and (c) it will not seriously prejudice the other side.
[49] There are significant similarities between these tests, including the Palmer focus on the relevance of the new evidence and its potential effect on the result and the Suzuki focus on the interests of justice. It is not necessary for the Court to decide which test to apply, as Haida has failed to satisfy either test. As the Administrator has confirmed that it is not arguing to have the principle of res judicata applied in this appeal, the evidence that Haida wishes to adduce is not relevant and would not affect the result, and its admission is not supported by the interests of justice.
[50] As such, Haida’s motion to adduce the additional evidence is dismissed.
B. Should the Court admit the evidence adduced by the Administrator that was not before the Associate Judge? [51] The Administrator’s motion record in response to this appeal included two documents that were not before the Associate Judge on the motion to strike. These are the parties’ respective memoranda of fact and law filed in the appeal before Justice Strickland. Haida argues that these memoranda are not properly before the Court. The Administrator has not presented a motion in support of the introduction of these documents and did not particularly pursue, or present compelling argument for, their introduction at the hearing of the appeal.
[52] As such, I will not take those memoranda of fact and law into account in my adjudication of this appeal.
C. Did the Associate Judge err in applying obiter dicta from the Strickland Decision? [53] Haida argues that the Associate Judge incorrectly applied the legal principles of ratio decendi and obiter dicta in concluding that the Strickland Decision’s discussion of subsection 101(1) of the MLA was binding. Haida relies on authorities explaining the distinction between ratio and obiter, with only the ratio of a prior court decision binding a subsequent court (Air Canada Pilots Assn v Kelly, 2012 FCA 209 at paras 54-56). Haida submits that the ratio of the Strickland Decision is restricted to whether the Administrator was correct to disallow Haida’s claim for compensation under subsection 103(1) of the MLA. While Justice Strickland provided analysis of subsection 101(1), Haida argues that this analysis represents obiter and emphasizes that both parties’ written representations, while not themselves binding on the Associate Judge, also confirmed the parties’ joint position that such analysis was obiter.
[54] The standard of review applicable to this argument would depend on whether the Court was examining an extricable point of law, such as the Associate Judge’s understanding of the distinction between ratio decendi and obiter dicta (in which case the correctness standard would apply) or the application of those principles to the particular facts (in which case the Court would be reviewing for a palpable and overriding error).
[55] However, in relation to this argument, it is not necessary (or indeed possible) for the Court to select a standard of review, as the Order does not demonstrate that the Associate Judge arrived at a conclusion that the Strickland Decision’s section 101 analysis was binding on her jurisprudentially. That was not the nature of her analysis.
[56] Rather, the Associate Judge stated (at para 53, as quoted above) that the Strickland Decision was binding on the current proceeding and that issue estoppel arose. That finding is made following the Associate Judge’s application of the principles of issue estoppel, including the Associate Judge having concluded that Justice Strickland’s analysis of the claims scheme found at sections 101-103 of the MLA was fundamental to the Strickland Decision. I read that conclusion as part of the Associate Judge’s application of the preconditions to a finding of issue estoppel, which include the question out of which the estoppel arises having been fundamental to the decision that answered that question (Hughes Land).
[57] As Haida expressed at the hearing, there are similarities to, and potentially a relationship between, an analysis whether a particular point forms part of the ratio of a decision and an analysis whether a particular point was decided in and is fundamental to a decision for purposes of an issue estoppel analysis. I agree with this submission, as this Court has held that obiter dicta does not support a finding of issue estoppel (Bell Canada v Canada (Human Rights Commission), 2000 CanLII 16451, [2001] 2 FC 392 (TD) [Bell] at para 56). However, the former analysis is jurisprudential, representing consideration of the potential application of a legal authority, while the latter represents application of a species of res judicata in considering whether a particular set of parties are precluded from litigating a point based on the history of litigation between them. The portion of the Order upon which Haida’s argument relies, in which the Associate Judge referred to the Strickland Decision as binding, represents the latter analysis. The Associate Judge did not conclude that the ratio of the Strickland Decision was binding upon her jurisprudentially.
[58] As observed above, no standard of review applies to the Court’s consideration of this argument, as the argument is based on what I consider to be a misinterpretation of the Associate Judge’s reasoning. This argument therefore raises no reviewable error.
D. Did the Associate Judge err in her application of the plain and obvious test? [59] Next, Haida argues that the Associate Judge erred in failing to apply in full the test applicable to a motion to strike a pleading under that Rule 221(1)(a), which requires that it be plain and obvious, assuming the facts pleaded to be true, that the claim has no reasonable prospect of success (see, e.g., Mudie v Canada (Attorney General), 2021 FC 839 at para 11, citing R v Imperial Tobacco Canada Ltd, 2011 SCC 42). Haida submits that the Associate Judge applied the test for a finding of issue estoppel, rather than applying in full the plain and obvious test applicable to striking a pleading, and thereby committed a category of error of law that occurs when a court applies part, but not all, of a legal test (Housen at para 27).
[60] On the standard of review, I accept that failure to apply the applicable legal test, or incomplete application the test, would represent an error of law reviewable on the correctness standard. I note that the Associate Judge clearly articulated the plain and obvious test (at para 19), in explaining in the Order the legal principles to be applied on a motion to strike. I understand Haida to be advancing two arguments in support of its position that the Associate Judge nevertheless committed an error of law.
[61] First, in its written submissions, Haida argues that the Associate Judge applied the plain and obvious test in part, in finding that its pleading was bereft of particulars that supported a claim against the Administrator of the Fund, but that she then failed to complete the analysis by considering whether the deficiency might be cured by an amendment (at para 42 of the Order).
[62] I find little merit to this argument. The Associate Judge explained that there was no need for her to consider whether the lack of particulars in the Statement of Claim might be cured by an amendment, because of her conclusion that Haida’s action was res judicata. The Associate Judge reasoned that, if the action was precluded by the principles of res judicata, then no amendment to include better particulars could possibly save it. This analysis does not demonstrate incomplete application of the applicable test and does not represent a reviewable error.
[63] Second, at the hearing of this appeal, Haida argued that the Associate Judge erred by applying only the test applicable to issue estoppel without layering upon it the plain and obvious test applicable to a motion to strike. As I understand counsel’s submission, the Associate Judge should have considered not whether Haida’s claim was barred by issue estoppel but rather whether it was plain and obvious that it was barred by that principle.
[64] I agree with the Administrator’s response to this argument that the plain and obvious test does not represent any additional or higher threshold that must be met in conducting the issue estoppel analysis. The Associate Judge made a determination that issue estoppel applied. Such a determination is definitive, and it would not be meaningful to expect an additional analysis or articulation that the determination was also plain and obvious. Put otherwise, once the Associate Judge concluded that issue estoppel applied, it was automatically plain and obvious that the claim had no reasonable prospect of success.
[65] I find no error arising from these arguments.
E. Did the Associate Judge err in applying the doctrine of issue estoppel? [66] The outcome of the motion to strike turned on the Associate Judge’s conclusion that Justice Strickland’s analysis of the claims scheme in sections 101 to 103 of the MLA was fundamental to her decision and gave rise to issue estoppel. Haida argues that the Associate Judge erred by misconstruing or incorrectly applying the legal principle of issue estoppel. Haida submits that the Strickland Decision’s analysis of section 101 was obiter, does not represent answering a question fundamental to that decision and, as such, was not capable of providing the basis for an issue estoppel in the present action.
[67] An unusual feature of this particular issue is the fact that the Administrator does not disagree with Haida’s position. As noted earlier in these Reasons, the Administrator submits that the Order should be sustained on appeal based on analysis provided therein as an alternative to the res judicata or issue estoppel analysis. I will return to that submission. However, the Administrator is not arguing to have the principle of res judicata applied in this appeal. As Haida emphasizes, consistent with Haida’s own position, the Administrator’s written representations before the Associate Judge on the motion to strike characterized the Strickland Decision’s section 101 analysis as obiter dicta, in that it was not dispositive of the issue before Justice Strickland, and agreed that Haida was not estopped from bringing the present action based on section 101 due its appeal of the Administrator’s section 103 decision having been dismissed by Justice Strickland.
[68] The Court is therefore in the unusual situation of assessing the res judicata analysis in the Order for reviewable error, without either litigant arguing in support of that analysis being sound. Of course, this situation does not mean that an error should be found, as I understand the parties to recognize that neither the Associate Judge nor the Court on appeal is bound by their characterization of Justice Strickland’s section 101 analysis as obiter dicta and as not giving rise to issue estoppel. This situation means only that the Court does not have the benefit of adv