Small Claims Court

Claim No. SCCH 442822

The Small Claims Court of Nova Scotia

                        Cite as: Manzoni v. Stelee Developments Ltd., 2016 NSSM 4

 

 

Between

 

Sergio Manzoni                                                 Claimant

 

 

 

                                                                                 

-and-

 

 

 

 

Stelee Developments Limited                           First Defendant

 

 

 

 

-and-

 

 

 

 

Septics R Us                                                       Second Defendant

 

 

 

 

 

 

Heard: February 9, 2016

                                                    Decision: March 23, 2016

Adjudicator: David TR Parker QC

 

 

 

 

 

 

 

 Consent Order-Res Judicata-Estoppel by res judicata, either issue estoppel or cause of action estoppel-applicability of Section 15 of The Small Claims Court Act

 

 

 

 

 

 

Counsel: The Claimant was represented by Counsel, William Russell

                The Defendants were represented by Counsel, Chris Robinson

 

 

 

 

 

DECISION

 

 

 

1. A Notice of Claim was commenced by the Claimant against the Defendants on August 31, 2015. The claim was subsequently amended by the Claimant and filed on September 3, 2015 with the Small Claims Court.

 

2.  A defence of the Defendants was filed with the Small Claims Court on October 15, 2015.

 

 

3. Prior to hearing the claim, Counsel for the first Defendant, Stelee Developments Limited [“Stelee”] brought forward a Motion, seeking a stay/dismissal of the claim.

 

4. The Defendant Stelee requested that the court stay or dismiss the claim as it is an abuse of process based on;

 

a.                   “Estoppel by res judicata-the subject of the claim has been finally settled by agreement and consent judicial dismissal and Manzoni[the Claimant] is therefore barred from litigating a second claim which arises from the same facts and involves the same issues and parties.”

 

b.                  “Small Claims Court Act, s.15-the subject matter of the claim has already been litigated before the Supreme Court of Nova Scotia, and was determined and dismissed on consent of the parties pursuant to an agreement, therefore the Small Claims Court has no jurisdiction to now hear a claim on the same facts regarding the same issues.”                               

 

 

 

5. The Parties agreed  to an  Agreed Statement of Facts, as follows:   

 

1.      On September 14, 2012, Stelee Developments Limited ("Stelee") registered a builder's lien property at 67 Sarah Ingraham Drive, Williamswood, Nova Scotia (the "Property").

 

2.      On November 30, 2012, Stelee commenced an action on the lien .

 

 

3.      On December 21, 2012, the owners of the Property, Sergio Manzoni ("Manzoni") and Carl Mills ("Mills") filed a Statement of Defence and Counterclaim.

 

4.      On October 11, 2013, Don Reid prepared a report for Manzoni and Mills on their septic system that identified various deficiencies.

 

 

5.      On April 14, 2014, Manzoni wrote Nova Scotia Environment ("NSE") with respect to the alleged deficiencies

 

6.      On May 1, 2014, NSE responded to Manzoni's April 14, 2014 letter but took no further action.

 

 

7.      On September 2, 2014, Manzoni and Mills filed their pre-trial brief.

 

8.      On September 8, 2014 Stelee filed its pretrial brief.

 

9.      On September 22, 2014 the parties signed an agreement in support of consent order.

 

10.  On September 26, 2014 the court issued an order dismissing the Stelee’s claim and Manzoni’s and Mills ‘counterclaim.

 

11.  On June 15, 2015, NSE Issued an Inspection Report and Environmental Act Directive to Manzoni with respect to his septic system.

 

 

12.  On July 25, 2015 Don Reid prepared a report on the septic system.

 

13.  On September 3, 2015, NSE issued an Inspection Report Compliance Update and Environment Act Directive requiring Manzoni to repair or replace his septic system.

 

 

6. The Supreme Court of Nova Scotia Statement of Claim was by the Stelee Developments Limited as Plaintiff against the Defendants Sergio Manzoni and Carol Mills.[ Hfx No. 409751. In the claim the Plaintiff alleged that it had furnished materials to the lands of the Defendants to the value of $13,093.29 and the Plaintiff claimed that amount against the Defendants. The action was commenced on November 30, 2012.

 

7.   In the Statement of Defence of the Defendants Manzoni and Mills stated they bought property from the Plaintiff and that included work to be done by the Plaintiff and the cost of the work to be done was included in the purchase price of the property.

 

8. The defence went on to state that the Defendants contracted with the Plaintiff for the installation of a C2 to septic system on the property as part of the work to be done under the contract. This contract according to the defence was breached when the Plaintiff instead installed a C1 septic system.

 

9. The Defendants then counterclaimed for the difference in value between a C2 and a C1 septic system in the approximate amount of $7400.00 plus tax. The Defendants also counterclaimed for the cost of remedying the Plaintiff’s defective work performed by the Plaintiff under the contract.

 

10. Following the commencement of the action and the conclusion of the pleadings the Claimant Manzoni hired a professional engineer, Don Reid to address the concerns of the septic system.

 

11. On October 11, 2013 Mr. Reid wrote the Claimant in this action and Defendant/counter claimant in the Supreme Court action and noted that his inspection showed that there were five concerns with respect to the septic system and its installation. Mr. Reid pointed out that these concerns relating to ground covering of the septic system, backfill, depth of cover over geotextile’s, vertical separation of the crushed rock in the trench in the water table and the filling used did not meet on-site sewage disposal guidelines for the installation of C1 raised septic system.

 

12. A letter dated April 14, 2014 from Sergio Manzoni to Scott Robertson Inspector with the Nova Scotia Environment department referenced Mr. Robertson’s visit to the septic site on January 21, 2014. In the letter Mr. Manzoni outlined the issues raised in Don Reid’s P. Eng. Inspection of October 11, 2013 and asked the department to determine if the septic system was illegally installed.

 

13. The department responded via correspondence to Mr. Manzoni on May 1, 2014 and said that the system was installed by qualified persons who verified that it complied with On-Site Sewage Disposal Systems Regulations and that the Nova Scotia Environment department did not conduct an audit as the qualified person and licensed installer submitted documentation stating that the day the system was completed the installation complied with the On-Site Sewage Disposal System Regulations.

 

14. The May 1, 2014 correspondence also stated: “NSE received a report from Mr. Don Reid P. Eng, On-Site Environmental Consulting, dated October 11, 2013. The report details similar concerns that you have. Also NSE understands that you and Mr. Reid conducted an intrusive assessment of the system to verify the installation. NSE was not encouraged to participate in the assessment nor did NSE witness the assessment by Mr. Reid.”

 

15. Briefs were submitted by counsel for Sergio Manzoni and Carol Mills, the Defendants in the Supreme Court action, and Plaintiffs by Counterclaim and were followed by the Plaintiff Stelee’s brief as the matter headed towards trial.

 

16. A settlement was reached prior to trial and a Consent Order ensued:

 

AGREEMENT IN SUPPORT OF CONSENT ORDER

 

WHEREAS the parties, Stelee Developments Limited ("Plaintiff"), Sergio Manzoni and Carol Mills ("Defendants") have reached a settlement of their differences which were the subject of an Action before the Supreme Court of Nova Scotia, Hfx No. 409751;

 

AND WHEREAS the parties shall execute a Consent Order dismissing their respective claims and counterclaims, concurrent with this Agreement;

 

THEREFORE the parties hereby agree to the following terms in support of the aforementioned Consent Order:

 

1.                  The Defendants shall pay to the Plaintiff the sum of $5,800.00 on or before the 26th day of September, 2014:

 

[This Italicized Paragraph was penciled out out of the Agreement]The Plaintiff will guarantee to the Defendants the performance of the septic system, and will repair or replace any part of the septic system, as necessary, provided the system has been used for the purpose for which it was designed, for a period of two years from the date of this Agreement;

 

2.      the claim and counterclaim shall be dismissed, the lien discharged, and the party shall bear their own costs

 

Signed at Halifax, this 22^nd day of September 2014

 

17. The Order before Mr. Justice Moir dismissed the Plaintiff, Stelee Developments Limited claim and the Defendants, Sergio Manzoni and Carol Mills counterclaim as well as vacating the Plaintiff’s claim for lien. The Order was by consented between the parties and issued by the court on September 26, 2014.

 

18. An inspection report dated June 15, 2015 was prepared by the Nova Scotia Environment. In that report under the heading overview of inspection it stated: “on June 15 inspector Mazzocco and myself [Scott Robertson] arrived at Mr. Sergio Manzoni’s property as requested by Mr. Manzoni. We met with Mr. Don Reid QB1 and Paul Sinclair to P2 as well as Mr. Manzoni. We discussed the construction of the on-site sewage system. Mr. Manzoni showed us test pits he dug in the system down to the geotextile. Observing these tests pits revealed large boulders sitting on the geotextile and gravel which does not meet specifications standards. Also Mr. Don Reid took elevation shots on top of the gravel trench which indicated a considerable slope towards the water. Also the depth of fill varied in depth. This would indicate that the gravel trench is sloped incorrectly which also would be in noncompliance of the specifications as approved.

 

19. As a result of this inspection the department of Nova Scotia Environment issued a Compliance Update and a Directive dated September 3, 2015 requiring Mr. Manzoni to either repair the existing system so that it complies with the On-Site Sewage Disposal Systems Regulations or install the new system that has recently been improved.

 

20. In order to do this The Nova Scotia Environment required Mr. Manzoni to “hire a qualified person recognized by Nova Scotia Environment to assess and report on the current conditions of the existing sewage disposal system on your property and provide written recommendations to replace, alter or repair the system. The report and an application to carry out the recommended work must be submitted to the inspector noted below by the date specified on this directive.” The actions that were to be completed according to the Department of environment would be October 15, 2015.

 

21. Don Reid, professional engineer prepared an on-site sewage disposal system site assessment and design report dated July 25, 2015 and his recommendations were: “considering the inferior workmanship, the blatant violation of the guidelines and regulations noted, and the type of violations, you will be necessary to replace the total disposal system to ensure that all components of the system meet the requirements of the regulations and guidelines. Any attempt to repair the noted violations would not provide that insurance. Based on this recommendation the following sections of this report provide a design of a replacement system.”

 

22. The recommendation of Don Reid is to put in a C2 septic system.  

 

23. There are two issues with respect to this motion for stay or dismissal of the claim before the Small Claims Court. The first is estoppel by res judicata     in the second issue deals with section 15 of the Small Claims Court Act.

 

24. The present state of the law on Res Judicata is found in the case Williams v. Kameka [2009] NSJ No. 470 (NSCA) Doctrine of res judicata

 

“12     The respondent is correct to acknowledge the significance of the doctrine of res judicata. It is a common law principle dating back hundreds of years. As G. Spencer Bower observed in his original text, The Doctrine of Res Judicata (London: Butterworth & Co., 1924) at 218 et seq, it is a doctrine that, if not founded upon Roman law, is fortified and illustrated by it. The doctrine's long-standing existence was commented on by Binnie J., in giving the judgment of the court in, Danyluk v. Ainsworth Technologies Inc., 2001 SCC 44:

 

     [20] The law has developed a number of techniques to prevent abuse of the decision-making process. One of the oldest is the doctrine estoppel per rem judicatem with its roots in Roman law, the idea that a dispute once judged with finality is not subject to relitigation: Farwell v. The Queen (1894), 22 S.C.R. 553, at p. 558; Angle v. Minister of National Revenue, [1975] 2 S.C.R. 248, at pp. 267-68. The bar extends both to the cause of action thus adjudicated (variously referred to as claim or cause of action or action estoppel), as well as precluding relitigation of the constituent issues or material facts necessarily embraced therein (usually called issue estoppel): G.S. Holmested and G.D. Watson, Ontario Civil Procedure (loose-leaf), vol. 3 Supp., at 21 s. 17 et seq. Another aspect of the judicial policy favouring finality is the rule against collateral attack, i.e., that a judicial order pronounced by a court of competent jurisdiction should not be brought into question in subsequent proceedings except those provided by law for the express purpose of attacking it: Wilson v. The Queen, [1983] 2 S.C.R. 594; R. v. Litchfield, [1993] 4 S.C.R. 333; R. v. Sarson, [1996] 2 S.C.R. 223.

 

13     Detailed statements can be found of the constituent elements necessary to establish that the doctrine of res judicata is applicable (see for example George Spencer Bower and Sir Alexander Turner, The Doctrine of Res Judicata, 2nd ed. (London: Butterworths, 1969) at para. 19). These were compressed by the Alberta Court of Appeal in 420093 Bc Ltd. v.Bank of Montreal, [1995] A.J. No. 862 where O'Leary J.A. wrote:

 

       [18] A prior judicial decision will not raise an estoppel by res judicata, either issue estoppel or cause of action estoppel, unless (i) it was a final decision pronounced by a court of competent jurisdiction over the parties and the subject-matter; (ii) the decision was, or involved, a determination of the same issue or cause of action as that sought to be controverted or advanced in the present litigation; and (iii) the parties to the prior judicial proceeding or their privies are the same persons as the parties to the present action or their privies.

 

14     Once a res judicata has been established, its effects must be considered. Where there have been previous proceedings between the parties or their privies, it is open to either or both of the litigants to claim that any subsequent proceedings are governed in whole or in part by the decision from the previous proceeding. Every judicial decision that meets the criteria of res judicata operates both as an estoppel, preventing any party from disputing matters already determined, and as a merger. In the latter case, no further claim may be brought upon the same cause of action (G. Spencer Bower and Turner, ibid., at para. 2-4). This is sometimes referred to as cause of action estoppel (see Thoday v. Thoday, [1964] 1 All E.R. 341 per Diplock L.J. at p. 352).

 

15     The distinction between a res judicata and its effects is well explained in Phipson on Evidence, 14th ed. as follows (pp. 862-3):

 

      There is a distinction to be drawn between a res judicata and its effects. A judgment which fulfils the criteria set out above is properly called a res judicata, but it operates both positively and negatively. First, it prevents the successful party from bringing a fresh suit on the same cause of action. This is the doctrine of merger, whereby the Plaintiff's cause of action is transmuted into the judgment he obtains. Secondly, it debars the unsuccessful party from challenging the correctness of that decision, in subsequent proceedings. This is a true estoppel, estoppel per rem judicatam.

 

        Unfortunately the term "cause of action estoppel" is sometimes applied to both these different aspects of judgment. It would be more satisfactory if it were reserved for the second type of effect that a res judicata may have. As some of the cases mentioned in this chapter show, the terminological confusion has caused confused substantive results. Moreover, the development of "issue estoppel" can be understood only if it is seen as an aspect of cause of action estoppel used in this second sense.

 

 

        In practice, there is now no difference analytically between issue estoppel and cause of action estoppel used in the sense mentioned here. It is only the relative importance of the issue to which the estoppel relates which determines its proper title. For obvious reasons, the development of the law of estoppel has not been paralleled by a similar extension of the law of merger, and it is convenient to deal with merger before turning to the much larger body of authority dealing with estoppel.

 

            Where a suit is brought upon a particular cause of action, judgment in favour of   the Claimant extinguishes all rights arising from that cause of action: transit in rem judicatam --the Claimant's rights all flow from the judgment in substitution for the rights flowing from the cause of action.

 

        The parties are by this rule, in general, estopped as to their whole case, and will not be permitted to reopen the same subject-matter of litigation merely because they have from negligence, inadvertence, or even accident, omitted a part of their case. For this reason, the principle is also sometimes referred to as the doctrine of former recovery. Its rationale is that if an issue could and should have been raised in particular litigation, it is vexatious, having let it go by, to seek to raise it in subsequent proceedings. Thus Plaintiffs may not split their cause of action; nor their relief, nor set up facts which were available for them under any of the issues tried in the former action.

 

16     It was once considered settled that the doctrine of res judicata was quite rigid in its application. One of the oft quoted statements of the applicability of the doctrine is that of Wigram, V.C. in Henderson v. Henderson (1843), 3 Hare 100, 67 E.R. 313, [1843-60] All E.R. Rep. 378:

 

        In trying this question, 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 event accident, omitted part of their case. The plea of res judicata applies, except in special case, 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.

 

17     Cromwell J.A., as he then was, reviewed the apparent inflexibility of the doctrine of res judicata in Hoque v. Montreal Trust Co. of Canada, [1997] N.S.J. No. 430. Dr. Hoque and companies controlled by him, granted mortgages and entered into related agreements with Montreal Trust. Hoque defaulted on these contracts and made an assignment in bankruptcy. Montreal Trust then commenced foreclosure actions on the mortgages. The trustee in bankruptcy did not defend and final orders of foreclosure issued. After being discharged from bankruptcy, Dr. Hoque commenced an action against Montreal Trust alleging breach of fiduciary duty, contract, improper disclosure of confidential financial information, and having acted in an abusive and oppressive manner. Montreal Trust applied for dismissal of the action on the basis that the issues raised in it could have been dealt with in the foreclosure actions. The Chambers judge refused, [1997] N.S.J. No. 37.

 

18     On appeal, the court held that the Chambers judge erred in law and should have struck all of the Statement of Claim with the exception of claims that were not inconsistent with the orders of foreclosure, namely breach of the duty to keep and maintain confidential information, and that Montreal Trust acted in an abusive and disrespectful manner. Cromwell J.A. expressed the view that the doctrine res judicata required a more nuanced approach than an automatic bar to all matters that could have been raised in a previous proceeding. He wrote:

 

        [64] My review of these authorities shows that while there are some very broad statements that all matters which could have been raised are barred under the principle of cause of action estoppel, none of the cases actually demonstrates this broad principle. In each case, the issue was whether the party should have raised the point now asserted in the second action. That turns on a number of considerations, including whether the new allegations are inconsistent with matters actually decided in the earlier case, whether it relates to the same or a distinct cause of action, whether there is an attempt to rely on new facts which could have been discovered with reasonable diligence in the earlier case, whether the second action is simply an attempt to impose a new legal conception on the same facts or whether the present action constitutes an abuse of process.

 

19     Even though the foreclosure proceedings were in the hands of the trustee, and the Plaintiff therefore had no effective control over the previous proceedings, the doctrine of res judicata applied to bar the allegations the trustee did not make in the foreclosure proceedings.

 

20     The need for some degree of flexibility was also recognized by the Supreme Court of Canada in Danyluk v. Ainsworth Technologies Inc., supra. in relation to issue estoppel. The appellant said she had been fired from her position as an employee with the respondent. She claimed that her employer owed her approximately $300,000 in unpaid commissions. Negotiations failed. She applied under the Employment Standards Act of Ontario for her unpaid wages and commissions. The employment standards officer investigated her complaint. While investigation was outstanding, the appellant also started an action for wrongful dismissal that included a claim for unpaid wages and commissions. The respondent provided documents and a response to the employment standards officer. These were never provided to the appellant. The officer dismissed the claim for unpaid commissions. The appellant did not pursue the statutory appeal route. The Ontario courts held that the appellant's action for unpaid commissions was barred by issue estoppel. Binnie J., for a unanimous court, disagreed.

 

21     The respondent did not argue cause of action estoppel, only issue estoppel. Binnie J. wrote that the rules governing issue estoppel should not be mechanically applied, in light of the underlying purpose of balancing the public interest in finality of litigation with the public interest in ensuring justice is done on the facts of a particular case. Binnie J. found that the preconditions to establishing issue estoppel had been met. The appellant nonetheless argued that the court should exercise its discretion to refuse to apply the doctrine. Binnie J. agreed that there can be no doubt that the court has such discretion. It is to be exercised to ensure that the proper operation of issue estoppel is not at the cost of real justice in the particular case. He set out seven factors that were relevant to the exercise of the court's discretion in the context of an issue having been resolved in a prior earlier administrative tribunal proceeding. Binnie J. reflected that the final and most important factor was to consider if, given the entirety of the circumstances, the application of the doctrine would work an injustice. He found it would, in light of what he termed "the stubborn fact" the appellant's claim for commissions worth $300,000 had never been properly considered and adjudicated.”

 

Application of these principles

 

22     How and if the doctrine of estoppel by res judicata might apply to prevent the respondent from again suing the appellant Kameka depends on whether the present suit is in relation to the same or a different cause of action (there is certainly no suggestion it is an entirely new cause of action). If it is a different cause of action, consideration would have to be given to whether the party should have raised it in the earlier proceeding. However, if the suit is based on the same cause of action, it has become merged into the judgment the respondent obtained in the Small Claims Court.

 

25. I also reference Canadian Imperial Bank of Commerce v. Partners Management Development Inc. [2016] NSJ No. 4 where Justice Duncan provided his analysis of Res Judicata.

“Analysis

 

Res Judicata

 

113     In Hoque v. Montreal Trust Co. of Canada 1997 NSCA 153, Cromwell J.A. writing on behalf of the court described the plea of res judicata:

 

        19 This appeal involves the interplay between two fundamental legal principles: first, that the courts should be reluctant to deprive a litigant of the opportunity to have his or her case adjudicated on the merits; and, second, that a party should not, to use the language of some of the older authorities, be twice vexed for the same cause. ...

 

        20 Res judicata has two main branches: cause of action estoppel and issue estoppel. They were explained by Dickson, J. (as he then was) in Angle v. Minister of National Revenue (1974), 47 D.L.R. (3d) 544 (S.C.C.) at 555:

 

            ... The first, "cause of action estoppel", precludes a person from bringing an action against another when that same cause of action has been determined in earlier proceedings by a Court of competent jurisdiction. ... The second species of estoppel per rem judicatam is known as "issue estoppel", a phrase coined by Higgins, J., of the High Court of Australia in Hoysted et al. v. Federal Commissioner of Taxation (1921), 29 C.L.R. 537 at pp. 560-1:

 

                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").

 

        21 Res judicata is mainly concerned with two principles. First, there is a principle that "... prevents the contradiction of that which was determined in the previous litigation, by prohibiting the relitigation of issues already actually addressed.": see Sopinka, Lederman and Bryant, The Law of Evidence in Canada (1991) at p. 997. The second principle is that parties must bring forward all of the claims and defences with respect to the cause of action at issue in the first proceeding and that, if they fail to do so, they will be barred from asserting them in a subsequent action. This "...prevents fragmentation of litigation by prohibiting the litigation of matters that were never actually addressed in the previous litigation, but which properly belonged to it.": ibid at 998. Cause of action estoppel is usually concerned with the application of this second principle because its operation bars all of the issues properly belonging to the earlier litigation.

 

        ...

 

        30 The submission that all claims that could have been dealt with in the main action are barred is not borne out by the Canadian cases. With respect to matters not actually raised and decided, the test appears to me to be that the party should have raised the matter and, in deciding whether the party should have done so, a number of factors are considered.

 

        ...

 

        38 Although many of these authorities cite with approval the broad language of Henderson v. Henderson, supra, to the effect that any matter which the parties had the opportunity to raise will be barred, I think, however, that this language is somewhat too wide. The better principle is that those issues which the parties had the opportunity to raise and, in all the circumstances, should have raised, will be barred. In determining whether the matter should have been raised, a court will consider whether the proceeding constitutes a collateral attack on the earlier findings, whether it simply asserts a new legal conception of facts previously litigated, whether it relies on "new" evidence that could have been discovered in the earlier proceeding with reasonable diligence, whether the two proceedings relate to separate and distinct causes of action and whether, in all the circumstances, the second proceeding constitutes an abuse of process.

 

        ...

 

        65 My review of these authorities shows that while there are some very broad statements that all matters which could have been raised are barred under the principle of cause of action estoppel, none of the cases actually demonstrates this broad principle. In each case, the issue was whether the party should have raised the point now asserted in the second action. That turns on a number of considerations, including whether the new allegations are inconsistent with matters actually decided in the earlier case, whether it relates to the same or a distinct cause of action, whether there is an attempt to rely on new facts which could have been discovered with reasonable diligence in the earlier case, whether the second action is simply an attempt to impose a new legal conception on the same facts or whether the present action constitutes an abuse of process.

 

        69 At the core of cause of action estoppel is the notion that final judgments are conclusive as to all of the essential findings necessary to support them. This is seen in the cases concerned with collateral attack, supra, and is reflected in the restrictive approach to res judicata founded on default judgments.

 

114     Hoque, supra has been cited with approval repeatedly. See, Can-Euro Investments Ltd. v. Industrial Alliance Insurance and Financial Services Inc., 2013 NSCA 76; Ross v. Bank of Montreal, 2013 NSCA 70; Kameka v. Williams, 2009 NSCA 107, at para 18 (and para 90, concurring reasons); Saulnier v. Bain, 2009 NSCA 51, para 6. See also, Danyluk v. Ainsworth Technologies Inc., [2001] 2 S.C.R. 460, at paras 20-24, per Binnie, J. for the Court.

 

115     "Cause of action estoppel" precludes a person from bringing an action against another when that same cause of action has been determined in earlier proceedings by a court of competent jurisdiction.

 

116     Bryant, Lederman and Fuerst, in their text The Law of Evidence in Canada (3rd. ed.) (LexisNexis, 2009) list the constituent elements of estoppel by res judicata in civil cases, at page 1285:

 

        (i)

        That the alleged judicial decision was what in law is deemed such;

 

        (ii)

        That the particular judicial decision relied upon was in fact pronounced, as alleged;

 

        (iii)

        That the judicial tribunal pronouncing the decision had competent jurisdiction in that behalf;

 

        (iv)

        That the judicial decision was final;

 

        (vi)

        That the judicial decision was, or involved, a determination of the same question as that sought to be controverted in the litigation in which the estoppel is raised;

 

        (vii)

        That the parties to the judicial decision, or their privies, were the same persons as the parties to the proceeding in which the estoppel is raised, or their privies, or that the decision was conclusive in rem.

 

26. The Supreme Court of Nova Scotia claim (contract) and the counterclaim (contract) was dismissed by the Consent Order. This was a contractual dispute not one of the unintentional tort of negligence. Further the performance of the septic system was not part of the Consent Order and in fact was struck from the consent order by the parties.

 

27. It is easy to get caught up with the allegation by the Claimant in the Small Claims action that a C2 system should now be installed. However the real issue is not whether there was a contract for a C2 septic system but rather whether the Defendants were negligent in installing the system that was installed on the Claimant’s property.

 

28. The other issue is whether the Defendant Stelee was negligent in putting the system where it should have never been.

 

29. The next question that I dealt with was whether the issue of negligence against the Defendant Stelee in the Supreme Court of Nova Scotia action should have been pleaded in the counterclaim. In reviewing the statement of defence in the Supreme Court of action paragraphs 8 and 10 and in the counterclaim paragraph 16, 17, 18, and 19, I would characterize these as statements dealing with breach of contract. Further it was the report of Don Reid of July 2015 after digging test pits and investigating the site, the matter was brought into the realm of negligence.

 

30. The Small Claims Court action against the Defendant Stelee and vicariously through to the Septics R Us is framed in negligence and in particular the element of duty of care and breach of that duty of care.

                                                                                                     

31. The next issue that I considered was whether negligence should have been pleaded in the Supreme Court of Nova Scotia action.

 

32. It is clear from the agreed statement of facts and the pleadings of the Claimant in the Small Claims Court action that the issue of negligence never arose until after the commencement of the Supreme Court of Nova Scotia action and after the consent order was filed with the Supreme Court of Nova Scotia. Focus in the by the counterclaimant at the time of the Supreme Court action was on breach of contract and government regulations 

 

33. I will now deal with section 15 of the Small Claims Court Act to determine whether that section bars of this court from hearing the current Small Claims Court claim.

 

34. Section 15 the Act states:

 

 Claim before other court

15 The Court does not have jurisdiction in respect of a claim where the issues in dispute are already before another court unless that proceeding is withdrawn, abandoned, struck out or transferred in accordance with Section 19.  R.S., c. 430, s. 15; 1992, c. 16, s. 118.

 

 

 

35. The purpose of section 15 is to prevent duplicity of actions involving the same issues which are already before another court. The issue before the Supreme Court of Nova Scotia in this situation was one of breach of contracts. The issue before the Small Claims Court now involves a separate area of law, specifically tort law. I already considered whether the issue of negligence should have been before the Supreme Court and certainly if it should have been and there had been a Supreme Court action ongoing at the same time as a Small Claims Court action with the same parties but dealing with these two issues but in separate courts then this I would consider unnecessary duplicity and should not be continued in the Small Claims Court. This however was not the case. The Supreme Court action dealt with breach of contracts and the matter of negligence did not arise until much later when the claimant decided to start his action in negligence in the Small Claims Court.

 

36. The legislature also described specific instances where issues are already before another court, in this case the Supreme Court and when they cannot end up in the Small Claims Court. The legislature did not use the word dismissed by the Supreme Court, instead the words used are withdrawn, abandoned, struck out or transferred. When those particular things happen it allows for the matter to be transferred to the Small Claims Court provided it is within the court’s jurisdiction. It may well be the legislature decided not to include the word dismissed as it was not necessary due to the principle of Res Judicata.

 

37. While this court may have the discretion to not consider res judicata and to allow the process to continue, in this case it is for all the above reasons that this is not a situation of res judicata and therefore I shall dismiss the motion for res judicata by the Defendant Stelee. While the second Defendant Septics R Us were not part of this motion nor were they part of the first Supreme Court of Nova Scotia action, the action against them in the Small Claims Court will also continue.

 

38. This court does have jurisdiction and it is not taken away by section 15 of the Small Claims Court Act in this instance.

 

39. I would ask that Counsel for the parties contact the clerk of the Small Claims Court to obtain dates satisfactory to the court and themselves and their clients for a continuation of the Small Claims Court claim #442822.

 

 

 

Dated at Halifax this 23^rd day of March 2016