What if the law changes? Can a party go back and relitigate a matter decided under the old law?

Issue estoppel forbids parties from relitigating a matter that has already been finally decided by the Courts.

There is a limited residual discretion to allow for a revisiting of an issue should justice require but that discretion is very limited and ought to be exercised very sparingly.

One question that was left unclear until today was what happens if the law underlying the decided matter changes? Does that lead to an automatic review?

A sentence from Minott v. O'Shanter Development Co. (1999), 42 O.R. (3d) 321 (C.A. ), at p. 340 says :

"If the decision of a court on a point of law in an earlier proceeding is shown to be wrong by a later judicial decision, issue estoppel will not prevent relitigating that issue in subsequent proceedings."  

That might suggest a revisiting is automatic but today's decision in Smith Estate v. National Money Mart Company, 2008 ONCA 746 clarifies the point and makes it clear that a change in the law does not, in itself, lead to a right to relitigate.

The Court rules:

[41]          I turn to the second stage of the Danyluk test, namely, whether, as a matter of discretion, issue estoppel ought to be applied.  The appellants submit that the change in the law brought on by Dell and Rogers entitles them to avoid the prior determination and to relitigate the stay issue and that the motion judge erred in exercising his discretion against them.  Strong reliance is placed on the following sentence from Minott v. O'Shanter Development Co. (1999), 42 O.R. (3d) 321 ( C.A. ), at p. 340: "If the decision of a court on a point of law in an earlier proceeding is shown to be wrong by a later judicial decision, issue estoppel will not prevent relitigating that issue in subsequent proceedings."  That sentence, however, must be read in the context in which it is found at pp. 340-41:Issue estoppel is a rule of public policy and, as a rule of public policy, it seeks to balance the public interest in the finality of litigation with the private interest in achieving justice between litigants.  Sometimes these two interests will be in conflict, or at least there will be tension between them. Judicial discretion is required to achieve practical justice without undermining the principles on which issue estoppel is founded.  Issue estoppel should be applied flexibly where an unyielding application of it would be unfair to a party who is precluded from relitigating an issue.That the courts have always exercised this discretion is apparent from the authorities.  For example, courts have refused to apply issue estoppel in "special circumstances", which include a change in the law or the availability of further relevant material.  If the decision of a court on a point of law in an earlier proceeding is shown to be wrong by a later judicial decision, issue estoppel will not prevent relitigating that issue in subsequent proceedings.  It would be unfair to do otherwise.  In Arnold v. National Westminster Bank plc, [1991] 3 All E.R. 41 at p. 50 (H.L.), Lord Keith wrote:            . . . there may be an exception to issue estoppel in the special circumstance that there has become available to a party further material relevant to the correct determination of a point involved in the earlier proceedings, whether or not that point was specifically raised and decided, being material which could not by reasonable diligence have been adduced in those proceedings.  One of the purposes of estoppel being to work justice between the parties, it is open to courts to recognise that in special circumstances inflexible application of it may have the opposite result . . . [Emphasis added.]

[42]          Particularly when read in the light of Danyluk, Minott does not lay down an iron-clad guarantee that a litigant who has fought an issue and lost will always be accorded the benefit of a change in the law.  A litigant has no automatic or presumptive right to relitigate an issue on account of a change in the law: the matter rests upon the discretion of the court to ensure that the finality principle is applied in a manner consistent with the interests of justice.  The "special circumstances" qualification on issue estoppel from Minott and Arnold is consistent with Danyluk.  It qualifies the rigorous application of issue estoppel, not with another strict exception, but rather with a discretion to ensure that the interests of justice are met.  
James Morton
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Toronto, Ontario
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