Date: 20070925
Docket: T-625-07
Citation: 2007
FC 959
Ottawa, Ontario,
September 25, 2007
PRESENT: The Honourable Mr. Justice Mosley
BETWEEN:
GARY
D. LENKO
Plaintiff
and
HER MAJESTY THE QUEEN
IN RIGHT OF CANADA
Defendant
REASONS FOR ORDER AND ORDER
[1]
This is a
motion by the defendant pursuant to rule 298 (2) of the Federal Courts Rules
SOR\2004-283, s.2, objecting to the jurisdiction of the Court to entertain the
plaintiff's action. The defendant seeks an order to strike the statement of
claim on the ground that it alleges negligent and intentional torts committed
by employees of the City of Winnipeg who are delegates of the Province of
Manitoba and thus does not relate to any alleged wrongdoing by a officer, servant
or agent of the federal Crown to which vicarious liability could attach under
s. 3 of the Crown Liability and Proceedings Act, R. S., 1985, c.C-50,
s.1; 1990, c.8, s. 21.
[2]
The
plaintiff, Mr. Lenko, a resident of Winnipeg,
ably represented himself in these proceedings. In March 2006, he applied for
financing under the Residential Rehabilitation Assistance Program (RRAP), an
initiative to assist low income home owners to improve their residences to a
minimum level of health and safety standards. This program is cost shared
between the federal and provincial governments and is administered in Manitoba by the Manitoba Housing and
Renewal Corporation (MHRC), a provincial Crown corporation.
[3]
According
to the uncontested affidavit of Terry Wotton, acting Executive Director,
Housing Programs, MHRC, the Canada Mortgage and Housing Corporation (CMHC)
makes funding available to MHRC for the RRAP program based on criteria which
MHRC is responsible for fulfilling pursuant to the "CMHC-Manitoba Housing
Renovation Program Agreement" dated May 20, 2005. No CMHC employee, or, to
the best of Mr. Wotton’s knowledge, any other federal official, is involved in
the delivery of the RRAP program such as in the receiving, processing,
evaluation, approval or disapproval of applications for funding or the
implementation or administration of approved applications. MHRC is responsible
for the delivery and administration of the program and may enter into
agreements with agents for such purposes, and has done so with the City of Winnipeg.
[4]
The
statement of claim refers to a series of contacts which Mr. Lenko had between
April 20 and December 13, 2006 with persons at the Winnipeg RRAP office
regarding his application for funding to cover the cost of repairs required for
his home. At the end of that period he was notified that he was denied RRAP
assistance. Mr. Lenko dealt with a Ms. Arline Meadows, an inspector by the name
of Arnie Einarson and Mr. Miles Watts, director responsible for the City of Winnipeg’s RRAP program delivery
pursuant to the agreement between MHRC and the City of Winnipeg. According to Mr. Wotton’s affidavit, they
are all City of Winnipeg employees and Mr Lenko does
not dispute that fact.
[5]
The
statement of claim alleges, in part, as follows:
The
defendant, Her Majesty the Queen, is vicariously liable to the plaintiff and
all members of the public for negligent advice, conduct and intentional torts
committed by her servants and agents in the delivery of federal programs and
benefits to citizens pursuant to s.3 b (i) of the Crown Liability and
Proceedings Act, as represented by the Canadian Mortgage and Housing
Corporation (CMHC) and as represented by the Federal Housing Minister with
respect to the Residential Rehabilitation Assistance Program (RRAP) and the
Affordable Housing Initiative (AHI) under the National Housing Act and
related statutes. CMHC is a federal Crown corporation that is constituted as
an agent of Her Majesty in right of Canada pursuant to s. 5 (1) of the Canadian
Mortgage and Housing Corporation Act, R.S.C. 1985, c.C-7; s.4 of the National
Housing Act, R.S.C. 1985, c.N-11; and Part I of Schedule III and Part X of
the Financial Administration Act, R.S.C. 1985, c. F-11....
The plaintiff
was denied RRAP assistance on December 13, 2006 without just cause. Local RRAP
delivery personnel exceeded their delegated authority by applying unreasonable
conditions to the plaintiff's application as the applied conditions
fundamentally altered the spirit of the federal funding contract and resulted
in the improper denial of financial assistance to an eligible homeowner.
The plaintiff
claims that the RRAP personnel acted in bad faith and that they provided
negligent advice that the plaintiff reasonably relied upon to his detriment. The
plaintiff is without a primary heating source and his principal residence
remains in need of extensive repair. The plaintiff has experienced financial
hardship and emotional distress that has had an impact on his overall physical
and emotional well-being due to the negligent actions and conduct of RRAP
personnel while acting as agents in the delivery of the federal program,
further particulars of which will be adduced at trial.
[6]
The
plaintiff claims general damages in the amount of $16,000, the maximum amount
that he would have been entitled to receive under the RRAP program; exemplary
damages; pre-judgment and post judgment interest; and his costs.
ISSUE:
[7]
The sole
issue on this motion is whether the Federal Court has jurisdiction to entertain
the plaintiff's action.
RELEVANT LEGISLATION:
[8]
The relevant
provisions of the Federal Courts Act are as follows:
|
17.
(1) Except
as otherwise provided in this Act or any other Act of Parliament, the Federal
Court has concurrent original jurisdiction in all cases in which relief is
claimed against the Crown.
(2) Without restricting the
generality of subsection (1), the Federal Court has concurrent original
jurisdiction, except as otherwise provided, in all cases in which
(d)
the claim is for damages under the Crown Liability and Proceedings Act.
(5)
The Federal Court has concurrent original jurisdiction
(b)
in proceedings in which relief is sought against any person for anything done
or omitted to be done in the performance of the duties of that person as an
officer, servant or agent of the Crown.
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17.
(1) Sauf
disposition contraire de la présente loi ou de toute autre loi fédérale, la
Cour fédérale a compétence concurrente, en première instance, dans les cas de
demande de réparation contre la Couronne.
(2) Elle a notamment compétence
concurrente en première instance, sauf disposition contraire, dans les cas de
demande motivés par :
d)
une demande en dommages-intérêts formée au titre de la Loi sur la
responsabilité civile de l’État et le contentieux administratif.
(5)
Elle a compétence concurrente, en première instance, dans les actions en
réparation intentées:
b)
contre un fonctionnaire, préposé ou mandataire de la Couronne pour des faits
— actes ou omissions — survenus dans le cadre de ses fonctions.
|
[9]
Section 3
of the Crown Liability and Proceedings Act provides that:
|
3. The Crown is liable for the
damages for which, if it were a person, it would be liable
(a)
in the Province of Quebec, in respect of
(i)
the damage caused by the fault of a servant of the Crown, or
(ii)
the damage resulting from the act of a thing in the custody of or owned by
the Crown or by the fault of the Crown as custodian or owner; and
(b)
in any other province, in respect of
(i)
a tort committed by a servant of the Crown, or
(ii)
a breach of duty attaching to the ownership, occupation, possession or
control of property.
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3. En matière de
responsabilité, l’État est assimilé à une personne pour :
a)
dans la province de Québec :
(i)
le dommage causé par la faute de ses préposés,
(ii)
le dommage causé par le fait des biens qu’il a sous sa garde ou dont il est
propriétaire ou par sa faute à l’un ou l’autre de ces titres;
b)
dans les autres provinces :
(i)
les délits civils commis par ses préposés,
(ii)
les manquements aux obligations liées à la propriété, à l’occupation, à la
possession ou à la garde de biens.
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[10]
And the Canada
Mortgage and Housing Corporation Act sets out these considerations:
|
5. (1) Except as provided in
section 13, the Corporation is for all purposes an agent of Her Majesty in
right of Canada.
13. (1) The Corporation may on
its own behalf employ such officers and employees for such purposes and on
such terms and conditions as may be determined by the Executive Committee and
such officers and employees are not officers or servants of Her Majesty.
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5. (1) Sauf dans le cadre de
l’article 13, la Société est mandataire de Sa Majesté du chef du Canada.
13. (1) La Société peut
employer, pour son propre compte et aux conditions fixées par le comité de
direction, le personnel nécessaire aux tâches définies par celui-ci. Ces personnes
n’ont pas qualité de préposés de Sa Majesté.
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ARGUMENTS & ANALYSIS:
[11]
Distilled
to its essence, the plaintiff's claim is predicated upon the argument that CMHC
owed him a duty of care to diligently oversee all aspects of the program and to
ensure that the terms of its contract with MHRC were fulfilled. The program
criteria were fixed by CMHC and MHRC had no authority to alter them. Under the
terms of this agreement, MHRC would act as an agent for CMHC to collect any
funds owing to the federal Corporation and the federal Crown due to default on
loan agreements and undertakings. The City of Winnipeg staff were acting as agents of the
federal Crown when they assessed Mr. Lenko’s application.
[12]
The
plaintiff submits that the essential requirements for determining whether
jurisdiction lies with the Federal Court have been satisfied, because the
subject matter, namely, the disbursement of public funds is an exercise of
parliament's authority to legislate in relation to public debt and property
under section 91 (1A) of the Constitution Act, 1867 and the law
governing the contract in this case is federal law. The statutory framework of
the National Housing Act grants CMHC the authority, on behalf of her
Majesty and in place of the Minister, to specify how federal funds will be made
available to eligible participants and the manner by which they are to be
repaid and/or the terms and conditions for their forgiveness and thus governs
all terms of the contract between CMHC and MHRC.
[13]
The
defendant submits that no liability can attach to the federal Crown for the
actions of municipal public servants acting as delegates of the province. It is
clear that none of the actions taken or decisions made by the Winnipeg RRAP
office directly involved CMHC. Responsibility for receiving and assessing
applications had been vested with MHRC, a provincial Crown corporation, which had
in turn delegated those tasks to the City of Winnipeg. The federal Crown cannot be held vicariously
liable for the actions of non-federal Crown public servants. Thus the Federal
Court has no jurisdiction under subsection 17 (5) (b) to entertain a claim in
relation to such persons: Stephens Estate v. Canada [1982] F.C.J. No.
114
[14]
Stephens was a case in which a
taxpayer’s goods were seized pursuant to a writ of fieri facias. The
taxpayer filed suit in the Federal Court against the Crown, certain of its
employees and the sheriff and constable who effected the seizure. The claim was
struck out against the defendants involved in the seizure upon an interlocutory
motion. On appeal, the Federal Court of Appeal noted that the cause of action
against those defendants, to the extent that there was one, lay in tort and
that the only head of Federal Court jurisdiction on which the claims could
conceivably rest was under paragraph 17 (4) (b), as it then read, as
proceedings in which relief is sought against any person for anything done or
omitted to be done in the performance of the duties of that person as an
officer, or servant of the Crown. The sheriff was found to be excluded from
that category as he was not appointed by the Crown in right of Canada, nor employed by it, nor
subject to its ministerial control. The same reasoning applies, the defendant
submits, to the employees of the Winnipeg RRAP office.
[15]
I note that
the current version of this head of jurisdiction, now found in paragraph 17 (5)
(b), includes the words “or agent”. That change does not assist the plaintiff
in my view as he will be unable to establish that the employees of the Winnipeg
RRAP office acted as agents of the federal Crown or that the claim is founded
in federal law.
[16]
CMHC is an
agent of the federal Crown by virtue of subsection 5 (1) of the Canada Mortgage and Housing
Corporation Act,
but its officers and employees are expressly excluded as Crown officers or
servants under subsection 13 (1) of the Act. While CMHC could be sued in its
own right for tortious acts, the Crown is not vicariously liable for the
actions of CMHC employees. Even if CMHC owed the plaintiff a duty of care for
which it might be held liable for the acts of the province’s agents, vicarious
liability for those acts does not extend to the federal Crown.
[17]
In Braybrook
v. Canada, 2005 FC 417, [2005] F.C.J.
No. 519, Hargrave, P. held that an agreement between the federal and British
Columbian governments which allowed the federal government to enter into
contracts for community policing and a provincial statute which deemed such
police to be provincial constables was dispositive of a claim against
individual police officers. Given that the federal Crown could only be vicariously
liable for the action of the officers, the striking of that claim caused the
entire action to be thrown out.
[18]
At most,
the plaintiff’s claim in the present matter is founded upon his belief that
CMHC should have supervised the operations of the RRAP office. I see no basis
for concluding that CMHC owed the plaintiff a duty of care to oversee the
assessment of his application or that liability could attach to the federal
Crown if CMHC failed to observe the alleged duty. Responsibility for the proper
management of the program at the local level rested with the province and with
the municipality to which the task had been delegated by the province. There is
no allegation that CMHC employees were directly involved in the operation of
the Winnipeg RRAP office.
[19]
The notion
that CMHC owed RRAP applicants a duty to ensure that its criteria were observed
at the local level is too remote to be actionable. But if a case could be made
that there is a duty of care, that the risk of harm to the applicant was foreseeable
and that he actually suffered an injury as a result of the failure to observe
the duty, the matter belongs in the provincial courts.
[20]
The test
for determination of Federal Court jurisdiction was established by the Supreme
Court of Canada in ITO-Int. Terminal Operators Ltd. v. Milda Electronics
Inc., [1986] 1 S.C.R. 752 at 766:
1. There must be a statutory
grant of jurisdiction by the federal Parliament;
2. There must be an existing body
of federal law which is essential to the disposition of the case and which
nourishes the statutory grant of jurisdiction; and
3. The law on which the case is
based must be a “law of Canada” as the phrase is used in
s.101 of the Constitution Act, 1867.
[21]
The
argument that the RRAP program stems from federal law as an expression of the National
Housing Act is not sufficient to confer jurisdiction upon the Federal Court
where the cause of action is grounded on the ordinary common law applicable to alleged
tortious acts by non-federal public servants. There is no existing body of
federal law to support the grant of jurisdiction to the Federal Court.
[22]
In Peter
G. White Management Ltd. v. Canada (Minister of Canadian Heritage), 2006
FCA 190, the alleged tortious acts were committed by federal officers in the
context of a detailed federal statutory framework which was found to be necessary
for the determination of the claim. That is not the case in this instance. Rather,
the claims here are founded upon alleged common law torts committed by
municipal servants acting as delegates for the province. Any right to damages
would arise from the ordinary common law and not from such common law as is
necessary to support the statutory jurisdiction of the Federal Court. The
claims belong in the provincial courts.
[23]
The motion
is granted. In the circumstances, there will be no award of costs.
ORDER
THIS COURT ORDERS that the motion is granted. The
Statement of Claim in this application will be struck for want of jurisdiction.
There is no award of costs.
“Richard G. Mosley”
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