Date: 20070727
Docket: 06-T-76
Docket: T-2140-05
Citation: 2007 FC 789
Ottawa, Ontario, July 27,
2007
PRESENT: The Honourable Mr. Justice Barnes
BETWEEN:
PARRISH
& HEIMBECKER LIMITED
Applicant(s)
and
HER MAJESTY THE QUEEN, in
Right of Canada
as Represented by the MINISTER OF
AGRICULTURE
AND AGRI-FOOD, THE ATTORNEY GENERAL OF
CANADA and THE CANADIAN FOOD INSPECTION AGENCY
Respondent(s)
BETWEEN:
PARRISH &
HEIMBECKER LIMITED
Plaintiff(s)
and
HER MAJESTY THE QUEEN, in Right of Canada
as Represented by the MINISTER OF
AGRICULTURE
AND AGRI-FOOD, THE ATTORNEY GENERAL OF
CANADA and THE CANADIAN FOOD INSPECTION AGENCY
Defendant(s)
REASONS FOR ORDER AND ORDER
[1]
The
Plaintiff in this action argued two motions before the Court at Halifax. The first
of these was a motion under Rule 51 of the Federal Courts Rules to
appeal the Order of Prothonotary Richard Morneau. That Order, made on
September 15, 2006, “suspended” this action until the Plaintiff applied for and
obtained an extension of time to bring an application for judicial review.
Prothonotary Morneau ruled that it was a prerequisite to the prosecution of
this action that the Plaintiff quash the administrative decisions which lay at
the heart of the Plaintiff’s claim to damages as outlined in its Statement of
Claim. Until that form of relief was obtained, this action could not be
sustained.
[2]
The
second of the Plaintiff’s motions was brought under section 18.1(2) of the Federal
Courts Act (Act), R.S., 1985, c. F-7 seeking an extension of time to
initiate an application for judicial review in the event that the Prothonotary’s
Order was upheld on appeal.
Background
[3]
This
proceeding was brought as an action against the Crown for damages allegedly
suffered by the Plaintiff in connection with the revocation of permits for the
importation to Canada of a shipload of Ukrainian feed wheat.
[4]
The
Plaintiff’s Statement of Claim was issued on December 2, 2005. The primary
cause of action was framed in negligence with additional allegations of
interference with economic relations, misfeasance in public office and
misrepresentation. At the core of all of the allegations against the Defendants
was a challenge to the correctness or lawfulness of the decisions to revoke the
import permits previously issued to the Plaintiff along with the subsequent failure
or unwillingness to facilitate the importation and offloading of the wheat in Canada.
[5]
On
January 19, 2006, the Defendants filed a motion to strike out the Statement of
Claim and, in the alternative, seeking an Order to stay the action until such
time as the Plaintiff had successfully challenged the impugned administrative
decisions by way of an application for judicial review. On September 15, 2006,
Prothonotary Morneau issued an Order which suspended the Plaintiff’s action
until such time as the Plaintiff had properly initiated an application for
judicial review which first required an Order to extend time to bring that
application.
[6]
In
his reasons, Prothonotary Morneau summed up the allegations in the Plaintiff’s
Statement of Claim as follows:
[22] However, this whole series of
delicts and the relevant damages that are the basis of the relief ultimately
claimed by the plaintiff depend to a large extent on the invalidity or
unlawfulness – as suggested by the extracts given hereinabove of paragraphs 13
and 14 of the statement of claim – of the revocation of the permits and of the
issuance of the new permit. In my view, it is clear that the alleged invalidity
or unlawfulness of these decisions are at the heart of the claimed damages.
[citation omitted]
[23] It is true, as is argued
forcefully by the plaintiff that, to prove the various heads of damages set out
at paragraphs 15 to 18 of the statement of claim, the plaintiff will have to do
more than show the invalidity or unlawfulness of the decisions in issue.
However, it is difficult to imagine that the setting aside of these decisions
does not constitute the point of departure or an essential element of the
examination of the alleged heads of damages.
Having found that the Plaintiff’s claim to
damages was founded upon a challenge to the lawfulness of a number of administrative
decisions, Prothonotary Morneau held that the action could not proceed until
those decisions had been set aside by way of judicial review. His reasons were
as follows:
[27] Now, as was very clearly
explained by the Federal Court of Appeal in April 2004 in Canada c. Tremblay,
[2004] 4 F.C.R. 165 (leave to appeal to the Supreme Court of Canada denied
December 16, 2004 [2004] S.C.C.A. No. 307) (Tremblay), and subsequently in
October 2005 in Grenier, whenever the Court is asked to set aside, or declare
the unlawfulness of, a decision, this is a challenge that must first be mounted
exclusively by way of an application for judicial review before this Court.
[28] This step-by-step approach
cannot be by-passed in the name of a tangible and pragmatic approach that may
have been expressly or implicitly recognized in the past since, as was
mentioned by the Federal Court of Appeal in Grenier, at paragraphs 18 and 19, a
decision still continues to be effective as long as it has not been set aside.
Now, in the light of principles such as that of the proper functioning of the
legal system (see Tremblay, at paragraph 22) and that of finality of decisions
(see Grenier, at paragraphs 20 et seq.), it is not possible to ignore a
decision of a federal board and let expire the statutory time limit and then,
often a few years later, as in this case and as in Tremblay and Grenier,
challenge it by way of an action claiming damages against the Crown pursuant to
section 17 of the Act.
[29] As the Federal Court of Appeal
has recently observed, such an approach amounts to an application for judicial
review in disguise; in other words, the action claiming damages amounts to a
collateral or indirect challenge of the decision in issue.
[30] In my view, that is exactly
what the plaintiff is seeking to do through this action. As can be seen from
the statement of claim, it is clear and obvious that it is first and foremost
challenging, albeit indirectly, these Decisions.
[31] The invalidity or unlawfulness
(see the wording of paragraph 18.1(3)b) of the Act) of the Decisions will have
to be obtained first and foremost by the plaintiff seeking judicial review,
after, of course, having been granted an extension of the statutory time limit.
Judicial review cannot be by-passed; this is especially true since, as was
noted by the Federal Court of Appeal in Grenier, at paragraph 61, not only the
invalidity of a decision, in itself, does not necessarily give rise to a
finding of fault or negligence but, conversely, the lawfulness of such a
decision [TRANSLATION] « excludes any finding of negligence ».
Appeal from the
Prothonotary’s Order
[7]
The
Court’s jurisdiction under Rule 51 of the Federal Courts Rules to hear
an appeal from a discretionary order of a Prothonotary was described by the
Federal Court of Appeal in Merck & Co., Inc. v. Apotex Inc., [2004]
2 F.C.R. 459, [2003] F.C.J. No. 1925, 2003 FCA 488 at para. 19 as follows:
Discretionary orders of prothonotaries
ought not be disturbed on appeal to a judge unless: (a) the questions raised in
the motion are vital to the final issue of the case, or (b) the orders are
clearly wrong, in the sense that the exercise of discretion by the prothonotary
was based upon a wrong principle or upon a misapprehension of the facts.
[8]
The
parties agree that the decision under review here is “vital to the final issue
of the case” and that the Court must, therefore, decide this appeal de novo.
This means that, absent any errors in the underlying decision, it may
still be set aside or varied if the Court is disposed to exercise its
discretion “differently” on the same record: see Jazz Air LP v. Toronto
Port Authority, [2007] F.C.J. No. 841, 2007 FC 624.
.
[9]
Notwithstanding
the very broad appellate jurisdiction that is enjoyed by this Court under Rule
51, I can find nothing in Prothonotary Morneau’s Reasons which constitute an
error of law or a misapprehension of the facts. Indeed, it seems to me that
the Prothonotary correctly applied the binding authority of the Federal Court
of Appeal in Grenier v. Canada, [2005] F.C.J. No. 1778, 2005 FCA 348 to
the Statement of Claim and, in doing so, had no basis for disposing of the
Crown’s motion in any other way.
[10]
The
Grenier decision was clearly dispositive of the Crown’s motion to
suspend the Plaintiff’s action. That case involved an action for damages by a
federal inmate alleging that he had been unlawfully placed into administrative
segregation. No attempt was made by the inmate to challenge the lawfulness of
the segregation decision by way of judicial review and the action for damages
was initiated some 3 years after the fact. That action was struck out because
it was found to represent a collateral attack on the lawfulness of the decision
which could only be challenged by way of judicial review brought under section
18 of the Federal Courts Act, R.S., 1985, c. F-7. Such a collateral
attack was found to conflict with Parliament’s grant of exclusive jurisdiction
to the Federal Court for reviewing the lawfulness of decisions by federal
agencies. The inherent delays in proceeding by way of an action also gave rise
to a concern about the need for certainty and finality around the execution of
administrative decisions of this sort.
[11]
The
Court went on to quote extensively from its earlier decision in Budisukma Puncak
Sendirian Berhad v. Canada, [2005] F.C.J. No. 1302, 2005 FCA 267 (Berhad).
The Berhad case is particularly instructive because it, too, involved a
claim to damages which was founded upon a challenge to the lawfulness of an
administrative decision – in that case, to seize the plaintiff’s vessel
following a safety inspection. Although the Court’s statements in Berhad
about the need to challenge such decisions by judicial review before seeking
damages were obiter, the decision clearly signalled a desire to clarify the law
on this issue which the Court later confirmed in Grenier, above. The
rationale for requiring judicial review as a prerequisite to an action in cases
like these was explained in the following passages from Berhad:
60 In my view, the most important
reason why a shipowner who is aggrieved by the result of a ship safety
inspection ought to exhaust the statutory remedies before asserting a tort
claim is the public interest in the finality of inspection decisions. The
importance of that public interest is reflected in the relatively short time
limits for the commencement of challenges to administrative decisions -- within
30 days from the date on which the decision is communicated, or such further
time as the Court may allow on a motion for an extension of time. That time
limit is not whimsical. It exists in the public interest, in order to bring
finality to administrative decisions so as to ensure their effective
implementation without delay and to provide security to those who comply with
the decision or enforce compliance with it, often at considerable expense. In
this case, the decision of the Chairman was not challenged until, a year and a
half after it was made, the respondents filed their claim for damages.
[…]
65 The Supreme Court has clearly
indicated that review of all administrative decision-making by a court, whether
by way of judicial review or by appeal, requires the determination of the appropriate
standard of review by means of a pragmatic and functional analysis. It is the
fact that the decision under review originates with an administrative body that
is determinative of the approach required, not the procedure by which the
decision is attacked and reviewed by the courts. Any doubt on this issue was
dispelled by the Supreme Court in its reasons in Dr. Q v. College of Physicians
and Surgeons of British Columbia, [2003] 1 S.C.R. 226, where McLachlin C.J.,
writing for the Court, indicated at paragraphs 21 and 25:
The term "judicial review"
embraces review of administrative decisions by way of both application for
judicial review and statutory rights of appeal. In every case where a statute
delegates power to an administrative decision-maker, the reviewing judge must
begin by determining the standard of review on the pragmatic and functional
approach.
[...]
Review of the conclusions of an
administrative decision-maker must begin by applying the pragmatic and
functional approach.
66 In my view, the same principle
applies when the attack on the decision, as in this instance, takes the form of
an action for damages flowing from the decision rather than an application for
judicial review of the decision. To suggest otherwise would be to increase the
likelihood of attempted collateral attacks as a means of circumventing the
deference which often results from a pragmatic and functional analysis. Such a
result would run directly counter to Parliament's intent and to the message
sent by the Supreme Court in Dr. Q, supra, which was to bring a more nuanced
and contextual approach to the issue of curial deference towards administrative
decision-making. While the courts must maintain the rule of law, their
reviewing power should not be employed unnecessarily: see Dr. Q, supra, at
paragraphs 21 and 26. […]
[12]
I
can find nothing about the pleadings in this case which would justify
distinguishing it from the comments above or from the decision in Grenier,
above. It is obvious that, absent a successful challenge to the decisions to
revoke the Plaintiff’s import permits and, later, to impose new conditions on
the importation of the cargo, no claim to monetary damages can be justified in
this case. Indeed, as can be seen from the following passages from the Plaintiff’s
written submissions to the Court, the importance of those decisions to its
claim to damages was acknowledged:
[…] Their complaint against Canada is that the CFIA, when the
ship was in or near Canadian waters full of its wheat, revoked the import permits
without a reasonable basis for doing so. It is expected that the evidence
will establish that no new information concerning the existence of the pests in
question – dwarf bunt and flag smut – in the Ukraine came to the attention of the CFIA after
the original issuance of the import permits. Rather, that was always something
to be addressed by Parrish & Heimbecker in the importation documentation,
including phytosanitary certificates from the Government of the Ukraine. It is also expected that
the discovery process will show nothing material came to the attention of the
CFIA concerning the existence of those pests in this particular cargo. The
claim then states that, after issuing the original import permits, on which
Parrish & Heimbecker relied to put itself into a position of
vulnerability, and invoking [sic] them without grounds, Canada and its
agents refused to work with Parrish & Heimbecker, to address the problem,
and then allowed the discharge of the “Nobility” only after new Ukraine
phytosanitary certificates were obtained from the Ukraine, and then on terms
requiring the treatment of the grain which were not acceptable to Parrish
& Heimbecker’s customers. Parrish & Heimbecker’s damages arise from
the sum total of this behaviour.
[…]
Here, it is the subsequent behaviour of
the CFIA itself which is stated to belie the representation, that the Import
Permit for the wheat on M/V “Nobility” would not be revoked without a
reasonable basis. Parrish & Heimbecker must show that this
representation was false. However, this is far removed from a judicial review
of the revocation of the permit, the refusal to work with Parrish &
Heimbecker to address the lack of a pest problem after Parrish & Heimbecker
had been put in a position of vulnerability, and the eventual substitution
of the Import Permit with one which contained additional and commercially
problematic conditions.
[Emphasis Added]
[13]
The
fact that the Plaintiff has pleaded a variety of causes of action and relies
upon somewhat artful nuance to advance its argument does not avoid the
essential problem of the claim – if the revocation of the Plaintiff’s import
permits and the later decision to conditionally admit the cargo to Canada were
lawful regulatory decisions, no claim to damages can be sustained.
[14]
In
the result, I find that the Prothonotary’s Order is sound and the Plaintiff’s
appeal from that decision is dismissed with costs payable to the Defendants in
the amount of $1,500.00 inclusive of disbursements.
Motion to Extend Time to
File Application for Judicial Review
[15]
The
Plaintiff also moved, in the alternative, for an order to extend time to bring
an application for judicial review under section 18.1(2) of the Act and, if
successful in that regard, to essentially merge the proceedings into a common
action.
[16]
There
is no doubt that the Plaintiff was well out of time to commence its application
for judicial review when it brought this motion before the Court. Section 18.1(2)
of the Act mandates that such applications be initiated within 30 days. When
the Plaintiff’s action against the Defendants was commenced about 3 years had
elapsed from the decisions which are at the root of its cause of action. Furthermore,
when the Defendants raised the issue of the need to challenge those underlying
decisions by way of judicial review, the Plaintiff did not move immediately for
an extension of time. Instead, it elected to challenge the Defendants’
contention. It was only after Prothonotary Morneau’s decision that the
Plaintiff brought this motion as an adjunct to its appeal from that decision.
In the ordinary course, delays of the magnitude noted above could not be
excused under the discretion conferred by section 18.1(2). The facts of this
situation are, however, far from ordinary and, in my view, the circumstances
are sufficiently extenuating that relief should be granted to the Plaintiff.
[17]
The
leading authority dealing with extensions of time under section 18.1(2) of the
Act is Grewal v. Canada, (Minister of
Employment and Immigration), [1985] F.C.J. No. 144 (F.C.A.), [1985] 2
F.C. 263. There the Court noted that the primary consideration in exercising that
discretion is “to do justice between the parties”. In doing justice, the Court
identified five considerations that will usually be relevant, in some measure,
to such a motion to extend time. In the later case of Jakutavicius v. Canada (Attorney
Genera),
[2004] F.C.J. No. 1488; 2004 FCA 289, the Court summarized those considerations
in the following passages at paras. 15-17:
15 In Grewal v. Minister of
Employment and Immigration, [1985] 2 F.C. 263, Thurlow C.J. identified
considerations that may be relevant in an application to extend time. These
considerations include:
1. whether the
applicant intended to bring the judicial review within the period allowed for
bringing the application and whether that intention was continuous thereafter;
2. the length of the
period of the extension;
3. prejudice to the
opposing party;
4. the explanation for
the delay; and
5. whether there is an
arguable case for quashing the order the applicant wishes to challenge on
judicial review.
16 However, these considerations
are not rules that fetter the discretionary power of the Court. At pages
277-278 of Grewal, Thurlow C.J. states:
But, in the end, whether or not the
explanation justifies the necessary extension must depend on the facts of the
particular case and it would, in my opinion, be wrong to attempt to lay down
rules which would fetter a discretionary power which Parliament has not
fettered.
17 Therefore, it is open to a
motions judge to determine which factors are to be taken into account based on
the facts of a particular case. Also see Council of Canadians v. Canada (Director of Investigation
and Research) (1997), 212 N.R. 254 (F.C.A.) per Hugessen J.A. (as he then was)
at paragraph 2. Once the relevant considerations are selected, sufficient
weight must be given to each of them.
[18]
The
Defendants contend that the Plaintiff’s motion should be dismissed because the
Plaintiff has failed to establish that a continuing “intention to pursue an
application for judicial review existed within the 30 day” limitation and
thereafter. They also assert that the Plaintiff has failed to establish that
they would not be prejudiced by the delay and failed, also, to show a
justification for that delay.
[19]
In
a situation where the requirement for bringing an application for judicial
review is clear and obvious, I accept that an applicant must establish a
continuing intention to seek that relief commencing within the 30-day limit for
so doing. In this situation, though, the state of the law concerning the right
of a party to commence an action against the Crown in circumstances such as
these was not settled until the Grenier decision, above, came down. Indeed,
in Grenier the Court described the prior state of the law as follows:
1 LÉTOURNEAU J.A.:— Should an
inmate directly challenge an institutional head's decision affecting him by way
of judicial review, or may the inmate choose to disregard that procedure and attack
it collaterally by means of an action in damages?
2 As we will see in the course
of these reasons, the question is important, albeit not new. It has been posed
more than once. The replies it has been given were sometimes hesitant,
sometimes divergent, sometimes deferred. In Her Majesty The Queen in the Right
of Canada, B.S. Warna and D.A. Hall v. Budisukma Puncak Sendirian Berhad,
Maritime Consortium Management Sendirian Berhad, [2005] F.C.A. 267, at
paragraph 59 (Berhad), this Court stated that the question was not definitively
resolved and remained open for determination in a subsequent case. The time has
now come to answer it, and positively.
[Emphasis added]
[20]
In
the circumstances of this case, it was not unreasonable for the Plaintiff to
expect that it had the option to prosecute its claim against the Defendants by
way of an action at least to the point in time that the decision in Grenier,
above, was delivered (October 27, 2005). That being the case, so long as the
action was commenced within the applicable limitation period, no presumption of
prejudice to the Defendants would arise. Although there were some earlier
suggestions in cases like Tremblay v. Canada, [2004] F.C.J. No. 787,
2004 FCA 172 and Berhad, above, that an action may not be sustainable in
such circumstances, the Plaintiff should not suffer the loss of a cause of
action where the law on the point was in a state of acknowledged uncertainty.
Indeed, in Grewal, above, the lapse of time owing to a reliance on
subsequently overturned jurisprudence was noted to be a mitigating factor
favouring relief: see page 10. This is not a situation of ignorance of the
law which is rarely, if ever, excused but, rather, one of legal uncertainty and
a reliance upon a practice that had some jurisprudential support.
[21]
After
the Grenier decision was delivered, the requirement for a bifurcated
approach to claims such as this was clearly confirmed. However, if the
Plaintiff had been aware of the Grenier decision and commenced an
application for judicial review instead of an action on December 2, 2005, there
cannot be much doubt that an extension of time of a few days would have been
granted.
[22]
After
the Plaintiff’s action was commenced on December 2, 2005, the Defendants were
clearly on notice of the claim and able to take the steps necessary to protect
their litigation and strategic interests. While it would undoubtedly have been
prudent for the Plaintiff to have moved for an extension of time when the
Defendants put that matter in issue in early 2006, I do not think that its
cause of action should be defeated simply because of its incorrect choice of
process and I do not think that its conduct in that regard can be fairly
described as reckless or indifferent as those terms were used in McGill v.
Minister of National Revenue (1985), unreported F.C.A. A-876-84.
[23]
I
am satisfied that in the particular and unusual circumstances of this case the
Plaintiff has shown the requisite intention to proceed with its claim
throughout the time elapsed. Having regard to the state of the law prior to Grenier,
above, and the initiation of the Plaintiff’s action shortly thereafter, I do
not believe that the Defendants would be unduly prejudiced by the delay –
particularly when weighed against the potential prejudice to the Plaintiff by
the loss of its cause of action. I would also note that the Defendants put no
evidence before the Court of any actual prejudice but relied, instead, on the
presumption of prejudice arising from long delay. While that is an acceptable
approach, the presumption can be rebutted and, in these particular circumstances,
it loses much of its efficacy.
[24]
The
Defendants have not seriously challenged this motion on the ground that the
Plaintiff’s claim lacks arguable merit and, indeed, the Statement of Claim
clearly raises justiciable issues.
[25]
In
the result, the Plaintiff’s motion for an extension of time to bring an
application for judicial review is allowed and it shall have 20 days from the
date of this Order to do so. Given that the decisions challenged here by the
Plaintiff appear to form part of a continuing course of conduct and are
sufficiently connected, this is an appropriate case under Rule 302 to allow all
of those impugned decisions to be reviewed in one application.
[26]
I
do not accept, however, that the Plaintiff’s application for judicial review
ought to be merged with or heard concurrently with its action. Such an
approach would defeat the underlying rationale for requiring a bifurcated
process and would (as counsel for the Crown aptly put it) constitute an “end run”
around Grenier, above. In the result, the Prothonotary’s Order to stay
the Plaintiff’s action shall continue until such time as the Plaintiff’s
application for judicial review has run its course.
[27]
Notwithstanding
the Plaintiff’s success on the principal motion, I do not think that this is an
appropriate case for an award of costs in its favour. No costs are awarded to
either party on that motion. I will award the Defendants’ costs of $500.00 inclusive
of disbursements in connection with the Plaintiff’s failed motion to merge the proposed
application with the action.
ORDER
THIS COURT ORDERS that the Plaintiff’s appeal from Prothonotary
Richard Morneau’s Order dated September 15, 2006 is hereby dismissed with costs
payable to the Defendants in the amount $1,500.00 inclusive of disbursements.
THIS COURT FURTHER ORDERS
that the Plaintiff’s motion for an extension of time to commence an
application for judicial review herein is allowed. The Plaintiff shall have 20
days from the date of this Order to commence its application for judicial
review. No costs are awarded to either party in connection with that motion.
THIS COURT FURTHER
ORDERS that all of the decisions which are the subject of the
Plaintiff’s proposed application for judicial review shall be considered in a
single application.
THIS COURT FURTHER ORDERS
that the Plaintiff’s motion to merge this action against the Defendants
with its proposed application for judicial review is dismissed with costs
payable to the Defendants in the amount of $500.00 inclusive of disbursements
and the Prothonotary’s Order to suspend the Plaintiff’s action shall continue
in full force and effect until the conclusion of the Plaintiff’s proposed
application for judicial review on the merits.
“ R. L. Barnes ”
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