Date: 20080918
Docket: T-2040-07
Citation: 2008 FC 1049
Toronto, Ontario, September 18,
2008
PRESENT: The Honourable Mr. Justice Hughes
BETWEEN:
CHRYSLER CANADA INC.
Respondent [Applicant]
and
HER MAJESTY THE QUEEN IN RIGHT
OF CANADA, THE MINISTER OF NATIONAL
REVENUE, AND THE CANADA REVENUE AGENCY
Applicants [Respondents]
REASONS FOR ORDER AND ORDER
[1]
The
Applicants on this motion, Respondents in these proceedings, Her Majesty the
Queen et al. (Crown), appeal from a decision of Prothonotary Aalto dated June
10, 2008 wherein he dismissed the Crown’s motion to strike out these
proceedings. For the reasons that follow, I find that the appeal is dismissed
with costs.
[2]
These
proceedings were commenced by the Applicant, Chrysler Canada Inc. (CCI) by way
of an application. No evidence has yet been filed. For the purposes of the
motion to strike brought before the Prothonotary the parties stated that they
were content to accept the factual recitals set out in the Notice of
Application as accurate.
[3]
The
test to be applied in considering appeals from a decision of a Prothonotary has
been stated by the Federal Court of Appeal in Merck & Co. v. Apotex Inc.,
[2004] 2 F.C.R. 459 at paragraph 19 as follows:
19 To
avoid the confusion which we have seen from time to time arising from the
wording used by MacGuigan J.A., I think it is appropriate to slightly
reformulate the test for the standard of review. I will use the occasion to
reverse the sequence of the propositions as originally set out, for the
practical reason that a judge should logically determine first whether the
questions are vital to the final issue: it is only when they are not that the
judge effectively needs to engage in the process of determining whether the
orders are clearly wrong. The test would now read:
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.
[4]
Where
a prothonotary has struck out a proceeding such a decision is, of course, one
vital to the final issue of the case. Where, however in circumstances such as
the present case, the Prothonotary has not struck out the proceeding, that
decision is not finally determinative of any issue vital to the case, thus the
decision presently under consideration is to be reviewed on appeal on the
second ground set out in Merck, supra, namely, is the decision clearly
wrong as being based on a wrong principle or misapprehension of the facts. As
Hugessen J. said in Peter G. White Management Ltd. v. Canada, 2007 FC
686 at paragraph 2:
2 Because I am in
agreement with the prothonotary, not only with his conclusion but also with the
reasons he gave in support thereof, it is not necessary that I go in any detail
into the standard of review applicable to appeals to a judge from a decision of
a prothonotary. I would only note, however, that with respect and contrary to
the submission that was made to me by Crown counsel, the mere fact that what
was sought before the prothonotary might have been determinative of the final
issues in the case does not result in the judge hearing the matter entirely de
novo. A reading of the decisions, and particularly the key decision of the
Court of Appeal in the case of Canada v. Aqua-Gem Investments Ltd., [1993] 2
F.C. 425 (C.A.), makes it quite clear that
it is not what was sought but what was ordered by the prothonotary which must
be determinative of the final issues in order for the judge to be required to
undertake de novo review. I would add to that, that while I am of course aware
of the recent decision of the Court of Appeal in the case of Merck & Co.
Inc. v. Apotex Inc. [2003]
F.C.J. No. 1925 (C.A.) (QL), where Justice
Décary in reformulating the rule spoke of "the questions raised in the
motion", but I am quite sure that he did not mean by that the motion which
was before the prothonotary but rather the motion (see Rule 51) which was
before the judge on appeal from the prothonotary. Put briefly, barring
extraordinary circumstances, a decision of a prothonotary not to strike out a
statement of claim is not determinative of any final issue in the case. In
determining the standard of review the focus is on the Order as it was
pronounced, not on what it might have been.
[5]
There
is a further matter to be taken into consideration, namely, that the nature of
the present proceedings is that of an application and not an action. While
there may be merit in seeking an early termination of an action upon a motion
to strike there is less reason to do so, except in the clearest of cases, where
the proceedings are brought by way of an application. Much of the argument
expended on a motion to strike is simply duplicative of arguments that can be
raised at the hearing of the application itself. To expend the Court’s
resources on a motion to strike, particularly on an appeal from a decision of a
Prothonotary not to strike, means that the Court is obliged in many cases, to
hear the matter twice, on the motion by way of appeal, and on the merits of the
application itself. Only where, to use the words of the Court of Appeal in Merck,
supra, the Prothonotary can be demonstrated to have been “clearly wrong”
should an appeal from a refusal to strike be considered. The Federal Court of
Appeal in David Bull Laboratories (Canada) Inc. v.
Pharmacia Inc., [1995] 1 F.C. 588 per Strayer JA. put the matter clearly
at paragraph 10:
10 The basic explanation
for the lack of a provision in the Federal Court Rules for striking out notices
of motion can be found in the differences between actions and other
proceedings. An action involves, once the pleadings are filed, discovery of
documents, examinations for discovery, and then trials with viva voce evidence.
It is obviously important that parties not be put to the delay and expense
involved in taking a matter to trial if it is "plain and obvious"
(the test for striking out pleadings) that the pleading in question cannot
amount to a cause of action or a defence to a cause of action. Even though it
is important both to the parties and the Court that futile claims or defences
not be carried forward to trial, it is still the rare case where a judge is
prepared to strike out a pleading under Rule 419. Further, the process of
striking out is much more feasible in the case of actions because there are
numerous rules which require precise pleadings as to the nature of the claim or
the defence and the facts upon which it is based. There are no comparable rules
with respect to notices of motion. Both Rule 319(1), the general provision with
respect to applications to the Court, and Rule 1602(2), the relevant Rule in
the present case which involves an application for judicial review, merely
require that the notice of motion identify "the precise relief" being
sought, and "the grounds intended to be argued". The lack of
requirements for precise allegations of fact in notices of motion would make it
far more risky for a court to strike such documents. Further, the disposition
of an application commenced by originating notice of motion does not involve
discovery and trial, matters which can be avoided in actions by a decision to
strike. In fact, the disposition of an originating notice proceeds in much the
same way that an application to strike the notice of motion would proceed: on
the basis of affidavit evidence and argument before a single judge of the
Court. Thus, the direct and proper way to contest an originating notice of
motion which the respondent thinks to be without merit is to appear and argue
at the hearing of the motion itself. This case well illustrates the waste of
resources and time in adding on to what is supposed to be a summary judicial review
proceeding the process of an interlocutory motion to strike. This motion to
strike has involved a hearing before a trial judge and over one half day before
the Court of Appeal, the latter involving the filing of several hundred pages
of material, all to no avail. The originating notice of motion itself can and
will be dealt with definitively on its merits at a hearing before a judge of
the Trial Division now fixed for January 17, 1995.
[6]
The
same situation arose in a case before me recently, Sanofi-Aventis Canada
Inc. v. Canada, 2008 FC 129, where I found that controversial matters
raised in the context of an application should not be resolved on an appeal
from a Prothonotary who refused to strike an application but should be left to
the hearing of the application itself. In this way, there would not be an
unnecessary waste of the Court’s resources.
[7]
In
the present case, I have carefully reviewed the reasons for decision of the
Prothonotary and read the memoranda of the parties and heard Counsel in oral
argument before me. Undoubtedly there are controversial matters raised in this
application including, in particular, the jurisdiction of this Court to hear
and determine the matters sought to be raised by CCI. These matters are
sufficiently controversial such that it would not be proper to deal with them
on an appeal from a refusal to strike. The Prothonotary was not clearly wrong
in refusing the motion to strike. The energies of the parties and resources of
the Court should be directed to a determination of these issues at the hearing
of the application itself.
[8]
At
the return of the hearing of this motion on Thursday, September 18, 2008 the
parties discussed amendments to the Notice of Application. Chrysler’s counsel
appears to want to make amendments of one kind, the Crown’s counsel wanted a
different kind. The parties are reminded that a Notice of Application is not
subject to the same strictness as a Statement of Claim and a Respondent is not
required to file any responsive pleading, only an Appearance. The parties then
exchange evidence, produce documents if requested, exchange memoranda of
argument and set the matter down for hearing. By that time the issues should be
clear to the parties. There is already an outstanding Order of the Court that
this matter is to be managed by Prothonotary Aalto should difficulties arise. I
will permit Chrysler to amend its Notice of Application without directing any
particular amendments. The point is that the parties get on with the matter and
make their substantive arguments at the hearing of the application itself and
not waste more of the Court’s resources at this time.
[9]
The
Crown’s motion, by way of an appeal from the decision of Prothonotary Aalto
dated June 10, 2008, is dismissed with costs.
ORDER
For the
Reasons above:
THIS COURT
ORDERS that:
1.
This
motion brought by way of an appeal from the decision of Prothonotary Aalto
dated June 10, 2008, is dismissed;
2.
The
Applicant Chrysler Canada Inc. is given leave to amend its Notice of
Application, if so advised, provided such amended document is filed and served
by the close of the Court Registry in Toronto on Friday, September 26, 2008;
and
3.
The
Applicant (Respondent on the motion) Chrysler Canada Inc. is entitled to costs
this motion at the middle of Column III.
"Roger T. Hughes"
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