Doctrine of Res Judicata: Applied with Reference to the Context
September 6, 2023
September 6, 2023
Previously printed in the LexisNexis Labour Notes Newsletter.
In the recent case of Kurik v. CAS Ventures Ltd, 2023 BCSC 488, the B.C. Supreme Court considered the doctrine of res judicata in the context of related claims – one being pursued in the courts and the other having already been pursued before the B.C. Employment Standards Tribunal. The Court ultimately declined to strike the pleadings on the basis of res judicata, and allowed the civil claim to continue.
The defendant provides contract labour. The employee, Duane Kurik, was hired under an oral employment agreement in January 2019.
The defendant was engaged to provide a support crew to a third-party contractor (the “Contractor”). At all material times, the project with the Contractor was the defendant’s only project.
As an aspect of his work, Mr. Kurik was required to liaise with the Contractor and its employees. On May 25, 2019, the employee was restricted from the worksite by the Contractor. His employment was effectively ended.
The employee asserted that the defendant failed to protect him from bullying and harassment, and failed to return him to the worksite so he could perform his duties. He argued that this amounted to repudiation of the employment agreement, and allowed him to treat his employment as terminated by the defendant. In its defence, the defendant alleged that the employee was dismissed for incompetent performance of his duties and failing to act in accordance with the requirements of the third-party contractor.
On November 15, 2019, the employee initiated a claim before the B.C. Employment Standards Branch under section 74 of the Employment Standards Act, R.S.B.C. 2996, c. 113 (the “ESA”). He claimed lost wages of $93,000 on the basis of a rate of pay of $650 per day. The Director of Employment Standards (the “Director”) found the defendant to owe the plaintiff unpaid gross wages in the amount of $2,965.66.
The central issue before the Director, however, was whether the employee was owed compensation for length of service (termination pay) under section 63 of the ESA. The Director found that the Contractor’s decision to prevent the employee from attending at the worksite was beyond the defendant’s control, and could not have been anticipated. The Director found that the Contractor’s unilateral and unexplained decision to prohibit Mr. Kurik from attending at the job site was an unforeseeable event which made his employment contract impossible to perform. The effect of this finding was that section 65(1)(d) applied and the defendant was discharged of its liability under section 63.
In addition to the ESA claim, the employee commenced a claim for wrongful dismissal in civil court. The defendant applied for a finding that issue estoppel prevented the claim from proceeding on the basis that the same question had already been decided by the Director. The employee took the position that the Director’s analysis was flawed, and the facts did not meet the test of “impossibility” under section 65(1) of the ESA or the doctrine of frustration of contract at common law.
The Court cited the Supreme Court of Canada’s seminal decision in Danyluk v. Ainsworth Technologies, 2001 SCC 44 [Danyluk] in support of the proposition that a litigant is only entitled to one bite at the cherry, and an issue, once decided, should generally not be re-litigated. The Court referenced the following non-exhaustive principles from Danyluk:
- Legislative scheme. In applying the factors from Danyluk, the Court considered the legislative scheme and, in particular, section 118 of the ESA (the right to sue in civil court is preserved). The Court also considered its reasoning in Read v. Rimex Supply Ltd., 2021 BCSC 2157, where it was found that the absence of exclusive jurisdiction weighs against the application of issue estoppel.
- Purpose of the legislation. The Court considered the purposes of the ESA as set out in section 2 of the legislation. It also referenced the decision in Desmarais v. Eat Your Cake Personal Health Delivery Inc., 2022 BCSC 1566 [Desmarais], where the Court found that the purpose of the legislation is to ensure employees receive at least their basic compensation for length of service when an employer dismisses without cause. The Court found that this factor weighed against the application of issue estoppel.
- Availability of an appeal. The Court considered that the ESA provides an avenue for appeal. That was pursued in this case but the employee failed to fully take advantage of the appeal process. The Court found this counted against the employee to a limited extent.
- Procedural safeguards available in the administrative procedure. The Court found the lack of available information and evidence in this case weighed against the application of issue estoppel.
- Expertise of the decision-maker. There was no evidence before the Court regarding the expertise of the decision-maker, and the parties agreed this was a neutral factor.
- Circumstances giving rise to the prior decision. Given the nature of the employee’s claim, the Court found that proceeding in civil court would have been advisable and avoided the issue of res judicata. The Court acknowledged that the employee bore some responsibility for engaging the employment standards process, but found the factor to be neutral in this context.
- Potential injustice. In again considering Danyluk and Desmarais, the Court found significant differences between the ESA proceeding and the civil action. The Court concluded that the application of issue estoppel would prevent the employee from pursuing a claim involving significantly more in damages than he could receive through the employment standards process.
This case relies on reasoning in the Desmarais decision recently issued by the B.C. Supreme Court. In that case, the employer dismissed the employee for just cause. The employee subsequently commenced a civil claim and brought a complaint under the ESA. In the ESA process, the Director concluded that the termination of employment was without cause. The employee brought an application in the civil case to have the defence of just cause struck on the basis of res judicata and the application was granted.
All of this helps to illustrate the discretionary nature of the doctrine of res judicata. Process and the individual circumstances of each case will be relevant. While this allows for flexibility, it also makes it difficult to predict how a parallel proceeding will be addressed. Where there are parallel proceedings, settling one matter on a “without prejudice” basis might be the approach that is most expedient.
 Section 65(1)(d) states there is no liability under s. 63 of the ESA if the employee is “employed under an employment contract that is impossible to perform due to an unforeseeable event or circumstance …”
While every effort has been made to ensure accuracy in this article, you are urged to seek specific advice on matters of concern and not to rely solely on what is contained herein. The article is for general information purposes only and does not constitute legal advice.