It is now easier for Parliament to enact legislation to override judicial decisions that it does not like. The Supreme Court has held that declaratory legislation –i.e. legislation that “clarifies” already existing legislation– can apply retroactively and can circumvent the binding directives of an appellate court. In Régie des rentes du Québec v. Canada Bread Company Ltd., 2013 SCC 46, the majority of the Supreme Court has begun to water down the principles of res judicata.
The appellant, Régies des rentes du Québec (“Régie”), is a government agency responsible for applying Quebec’s Supplemental Pension Plans Act, R.S.Q., c. R-15.1 (“SPPA”). The respondents, various companies collectively referred to in this blog post as “Multi-Marques”, are the contributing employers of a pension fund (the “Fund”). When Multi-Marked joined the Fund, the trustees granted pension credits to Multi-Marques employees to reflect the years of service they accumulated before joining the Fund. Multi-Marque was to make payments over a 15-year period to remedy the deficit. Before the 15-year time frame elapsed, Multi-Marques closed two divisions, leaving a solvency deficiency in the Fund. The Fund rules provided that the benefits paid to the employees could be reduced if extrinsic factors led to Multi-Marques being unable to make employer contributions.
The Régie convened a review committee to determine if these rules were compatible with the SPPA. The Régie found that the Rules were incompatible with the SPPA and therefore had no application. This decision was upheld by the Administrative Tribunal of Quebec, the Quebec Superior Court, but was ultimately rejected by the Quebec Court of Appeal. The Court of Appeal, in holding that the Fund rules were compatible with the SPPA, remitted the matter back to the Régie to calculate the appropriate pension. The Régie appealed the decision of the Court of Appeal to the Supreme Court but was denied leave.
The day that the Court of Appeal rendered its decision, the government of Quebec introduced declaratory legislation to clarify certain provisions of the SPPA. The new legislation made it clear that no provisions of a pension plan could reduce the obligations of an employer towards the plan. Essentially, the declaratory legislation was designed to overcome the interpretation of the Court of Appeal.
When the matter was remitted back to the Régie, it did not follow the Court of Appeal’s approach and applied the new provisions of the SPPA. Multi-Marques appealed this decision all the way to the Supreme Court.
The Supreme Court of Canada was ultimately divided on the issue, with Wagner JJ. writing for the majority and McLachlin C.J. writing for the dissent.
The majority and the dissent agreed on the following legal propositions:
- Declaratory legislation applies retrospectively to the date that the legislation the declaration seeks to modify came into force. Essentially, the modified legislation is deemed to have always included the modifying provision.
- Principles of res judicata apply. A decision of the court is binding on parties even if the legislature has changed the law retroactively and the final judgment contains an error of law.
- It is settled law that declaratory provisions have an immediate effect on pending cases.
Thus, the case turned on whether the decision of the Court of Appeal was a final determination of the rights of the parties.
The Majority held that since the Court of Appeal remitted the matter back to the Régie, the rights of the party were not definitively determined.
According to Wagner J., the doctrine of res judicata means that declaratory legislation cannot reopen decided cases, but the doctrine of res judicata does not mean a court cannot reopen decided issues in the face of new declaratory legislation. The Majority went on to explain that stare decisis would apply in this case. An administrative tribunal must follow the directions of a reviewing court, but only if the directions remain good law. Accordingly, declaratory legislation would become the new binding precedent. Therefore, given that there was no ultimate resolution to the dispute, the Régie was required to reopen the previously decided issue and apply the declaratory legislation.
McLachlin C.J, on the other hand, held that the decision of the Court of Appeal was final and the Régie could not disregard a final judgment. The matter was only remitted back to the Régie as the Court of Appeal could not compute the actual monetary liability of Multi-Marques. According to McLachlin C.J., given that the only matter left for the Régie were clerical, computation tasks, the decision of the Court of Appeal was a final determination of the issue. Legislating the extinguishment of a judgment is an extraordinary measure and one that requires the clearest of Parliamentary intent.
This case is significant because it erodes the principle of res judicata and opens up the possibility for Parliament to interfere with binding decisions. The decision also opens the door for administrative tribunals and lower courts to “second-guess” the directions of appellate courts.
The Majority has defined a “pending case” as one that is “currently before a competent tribunal and [is] awaiting a final and irrevocable determination on the merits”. (at para 32) So long as there is no “final” determination on the merits, there is no finality on any issue.
There is now an incentive for a losing party to stall proceedings once a matter has been remitted back to the court of first instance in the hopes that a new legislation, or a new binding precedent, will come along to eviscerate a final determination of an appellate court.
SCC Court File 34505
Date of Decision: September 13, 2013