Which decisions are binding on what court and when? The impact of stare decisis

Countless matters come before Canadian courts each year, resulting in thousands of published decisions that address a wide variety of legal issues. Each decision contributes to the increasingly vast body of case law that constitutes the common law. The proliferation of online databases has improved the accessibility of Canadian case law, resulting in innumerable decisions now being at the fingertips of litigants, lawyers, and the courts. Navigating the overwhelming body of case law requires careful attention to the circumstances in which a particular decision may or will be binding or persuasive if relied upon before another court.

Stare decisis

In Canada, “[c]ommon law courts are bound by authoritative precedent” (R v Comeau, 2018 SCC 15 at para 26, [2018] 1 SCR 342 [Comeau]). This fundamental principle, referred to as stare decisis, promotes predictability and consistency, and is critical “for guaranteeing certainty in the law” (Comeau at para 26). Stare decisis takes two forms: vertical stare decisis and horizontal stare decisis.

Vertical stare decisis

Vertical stare decisis dictates that, “[s]ubject to extraordinary exceptions, a lower court must apply the decisions of higher courts to the facts before it” (Comeau at para 26). This principle is of critical importance. Without it, “the law would be ever in flux — subject to shifting judicial whims or the introduction of new esoteric evidence by litigants dissatisfied by the status quo” (Comeau at para 26). In Saskatchewan, vertical stare decisis requires the Court of King’s Bench to apply decisions of the Court of Appeal, and requires both the Court of King’s Bench and the Court of Appeal to apply decisions of the Supreme Court of Canada.

Horizontal stare decisis

Horizontal stare decisis, on the other hand, “applies to courts of coordinate jurisdiction within a province” (R v Sullivan, 2022 SCC 19 at para 65, 472 DLR (4th) 521 [Sullivan]). As the Court acknowledged in Sullivan at para 65, “[w]hile not strictly binding in the same way as vertical stare decisis, decisions of the same court should be followed as a matter of judicial comity, as well as for the reasons supporting stare decisis generally”. Horizontal stare decisis is closely related to the principle of judicial comity, which requires “that judges treat fellow judges’ decisions with courtesy and consideration” (Sullivan at para 75). Horizontal stare decisis seeks “to balance stability and predictability against correctness and the orderly development of the law” (Sullivan at para 66). Horizontal stare decisis requires a court “to follow prior decisions of the same court in the province” (Sullivan at para 86). Accordingly, horizontal stare decisis and comity requires a judge of the Court of King’s Bench to follow previous decisions rendered by judges of that court.

Exceptions to the application of stare decisis

There are limited exceptions to the application of stare decisis. In Re Hansard Spruce Mills Limited, [1954] 4 DLR 590 (BC SC) [Spruce Mills], the British Columbia Supreme Court considered the circumstances in which a court may depart from a decision made by a court of coordinate jurisdiction in the same province. The circumstances identified in Spruce Mills were considered in Sullivan, where the Supreme Court recounted three circumstances in which a court could depart from an otherwise binding decision rendered by a court of coordinate jurisdiction: Sullivan at para 75. These circumstances are as follows:

1. The rationale of an earlier decision has been undermined by subsequent appellate decisions;
2. The earlier decision was reached per incuriam (“through carelessness” or “by inadvertence”); or
3. The earlier decision was not fully considered, e.g. taken in exigent circumstances.

The Court in Sullivan set out the narrow circumstances in which a court may depart from a binding decision rendered by a court of coordinate jurisdiction, but also noted that “[a] decision may not be binding if it is distinguishable on its facts or the court has no practical way of knowing it existed” (Sullivan at para 86).

The circumstances in which a court may depart from a precedent that is binding by virtue of vertical stare decisis are somewhat more open-ended, but are nevertheless intended to be narrower than those in which a court may not be bound by horizontal stare decisis. In Canada (Attorney General) v Bedford, 2013 SCC 72 at para 42, [2013] 3 SCR 1101 [Bedford], the Supreme Court of Canada held that a binding legal precedent “may be revisited if new legal issues are raised as a consequence of significant developments in the law, or if there is a change in the circumstances or evidence that fundamentally shifts the parameters of the debate”. This threshold is not intended to be “an easy one to reach” (Bedford at para 44).

In Black v Owen, 2017 ONCA 397 at para 46, 137 OR (3d) 334, the Court summarized the impact of stare decisis in the following terms:

[46]    To summarize… a judge of a lower court may not decline to follow a binding precedent of a higher court on the ground that he or she disagrees with it or because, in his or her view, it appears to have been overtaken by subsequent decisions of a lower court in the same jurisdiction, or by jurisprudential developments in another jurisdiction….

Stare decisis is a fundamental principle of the common law. Its application is not easily avoided.

Stare Decisis and Commercial Leases

A fairly recent example illustrates the operation of stare decisis in a dispute arising from a tenant’s breach of a commercial lease.

In The Canada Life Assurance Company et al. v Aphria Inc., 2023 ONSC 6912 [Aphria SC], Callaghan J. of the Ontario Superior Court of Justice was asked to depart from jurisprudence that was binding by virtue of vertical stare decisis.

In June of 2018, Aphria Inc. (the “Tenant”) leased commercial office space in Toronto from the predecessors of Canada Life Assurance Company, I.G Investment Management, Ltd. as trustee for IG Mackenzie Real Property Fund and Optrust Office Inc. (together, the “Landlord”) for a term of ten years. In early 2021, the Tenant repudiated the remainder of its lease and ceased paying rent on December 1, 2021. The Landlord sued the Tenant, seeking judgment for the outstanding rent owed under the lease.

The Landlord applied for summary judgment. The Tenant resisted the application, arguing that the Landlord was required to mitigate. The Tenant also bought its own summary judgment application based on its interpretation of provisions set out in the lease at issue.

The Tenant’s argument concerning mitigation took aim at the Supreme Court of Canada’s decision in Highway Properties Ltd. v Kelly, Douglas and Co. Ltd., [1971] SCR 562 [Highway Properties]. In Aphria SC at para 11, Callaghan J. described the Court’s decision in Highway Properties as follows:

[11]    … the Supreme Court held that a landlord had several options upon the repudiation of a lease by a tenant, including continuing as if the lease were still operational. In such circumstances, the landlord would be owed the rent as it became due and would have no obligation to mitigate….

The Tenant in Aphria SC recognized that if Highway Properties remained the law and its arguments concerning the interpretation of the lease were unsuccessful, “it would be exposed to pay the whole term of the lease, subject to either the Landlord’s voluntary mitigation” or the success of the Tenant’s arguments concerning the interpretation of the contract (Aphria SC at para 11). However, the Tenant argued that Highway Properties needed to be revisited because it “created an anomaly in contract law whereby commercial landlords have the option of ignoring a tenant’s repudiation of a lease and proceed as if the lease continued to operate” (Aphria SC at para 19). Justice Callaghan recognized that even if Highway Properties should be revisited, the preliminary issue was whether it could be revisited due to the operation of vertical stare decisis.

After tracing the development of the law and confirming that Highway Properties and other decisions were binding on the Ontario Superior Court of Justice, Callaghan J. proceeded to consider the impact of stare decisis and whether any exceptions were applicable. Justice Callaghan recognized the high bar associated with departing from precedent binding by virtue of vertical stare decisis. The Court accepted “that the law of mitigation and contract has evolved over the years” (Aphria SC at para 78), but noted that the proposed change was not “an incremental change that ought to be made by a judge at first instance” (Aphria SC at para 80). Justice Callaghan noted that “[t]he change proposed by the Tenant would fundamentally alter the remedies available to a landlord” and observed that “[t]he Supreme Court has made it clear that a lower court rejecting a precedent is an exceptional exercise in judicial power” (Aphria SC at para 81). Justice Callaghan concluded analysis on this point by noting that “a single judgment by a judge of first instance rejecting the principle in Highway Properties would cause uncertainty in the law and instability in the marketplace. It would undermine the certainty and predictability at the heart of the doctrine of stare decisis” (Aphria SC at para 81). Accordingly, the Tenant’s arguments concerning Highway Properties were rejected.

The Court’s decision in Aphria SC was confirmed on appeal: see Canada Life Assurance Company v Aphria Inc., 2024 ONCA 882 [Aphria CA]. On appeal, the Court noted that Callaghan J. “was bound by authoritative jurisprudence to hold that where a landlord refuses to accept a tenant’s repudiation of a commercial lease and insists on performance, there is no duty on the landlord to mitigate” (Aphria CA at para 30). The Court in Aphria CA confirmed that Callaghan J. had “correctly decided that rejection of the principle in Highway Properties would create uncertainty and instability in a manner contrary to the doctrine of stare decisis” (Aphria CA at para 30).

Conclusion

Stare decisis is a fundamental principle of the common law that promotes consistency and predictability. The decisions in Aphria SC and Aphria CA are illustrative examples of the operation of stare decisis. Both decisions underline the high bar associated with circumventing binding precedent and overcoming stare decisis.

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