Docket: T-1692-14
Citation:
2015 FC 963
Toronto, Ontario, August 11, 2015
PRESENT: The
Honourable Mr. Justice Diner
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BETWEEN:
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CHERYL ANNE
SWARATH
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JEROME MARIO
SWARATH
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CAROLE LOVERNE
SHELDON
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JODY BAXMEYER
AND NORTHREGENTRX
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Applicants
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and
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ATTORNEY
GENERAL OF CANADA
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Respondent
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JUDGMENT AND REASONS
I.
Overview
[1]
The Public Servants Disclosure Protection Act
(SC 2005, c 46) [PSDPA, Act] is a disclosure regime designed to ensure
that Canadians are protected by a lawful, transparent and uncorrupted public
service. The preamble to the Act reinforces this purpose, stating “it is in the public interest to maintain and enhance public
confidence in the integrity of public servants” and “confidence in public institutions can be enhanced by
establishing effective procedures for the disclosure of wrongdoings and for
protecting public servants who disclose wrongdoings, and by establishing a code
of conduct for the public sector.”
[2]
On July 2, 2014, the Public Safety Integrity
Commissioner of Canada [Commissioner] declined to commence an investigation
into the alleged misconduct of employees of Health Canada [Decision]. The
misconduct, characterized by sections 8(a), (c) and (e) of the PSDPA,
related to five allegations of wrongdoing. The Commissioner determined that
four of these allegations fell outside the scope of his jurisdiction as they
occurred prior to April 15, 2007, the date the PSDPA came into effect,
and dismissed the remaining allegation on account of insufficient evidence to
support that a wrongdoing had been committed. This is the judicial review of
that Decision.
II.
Facts
[3]
NorthRegentRx is a Canadian company operated by
the self-represented Applicants before this Court: Cheryl Anne Swarath, Jerome
Mario Swarath, Carol Loverne Sheldon and Jody Baxmeyer. In 2004, the Applicants
obtained the distribution rights in Canada and the Caribbean to Libidus, an
herbal supplement intended to aid blood circulation. Libidus was purchased by
NorthRegentRx as a finished product in blister sealed capsules, with ten to a
box, and subsequently wholesaled to health and nutritional supplement stores.
[4]
The Applicants testify that on July 13, 2006,
they were contacted by Mr. Gustafson, a Health Canada Food Branch Inspectorate
[HCFBI] Officer, who was following up on a health warning issued by the United
States Food and Drug Administration [US FDA] which claimed that Libidus
improperly contained acetildenafil, a substance analogous to Viagra. The
Applicants provided the HCFBI Officer with test results of their product from
private laboratories that disputed the US FDA’s statement, but the HCFBI
Officer still decided to send the product to a Health Canada laboratory for
further testing.
[5]
On July 27, 2006, the HCFBI Officer called the
Applicants to inform them that Health Canada’s preliminary tests showed that
the product did not contain acetildenafil, but would be further examined.
[6]
On August 25, 2006, the Applicants received a
letter from the Canada Border Services Agency [CBSA], informing them that it
had confiscated 450 units of Libidus that were in transit to NorthRegentRx.
[7]
On September 14, 2006, NorthRegentRx received a
letter from the HCFBI Officer issuing a recall of Libidus. The Applicants
depose that NorthRegentRx consequently lost $600,000 in sales from September
2006 to January 2007 and suffered a loss of goodwill and trust from their
customers as a result of its impugned credibility.
[8]
The Applicants further allege that on September
22, 2006, the HCFBI Officer instructed an employee of Health Canada, Val Huzel,
to sign out the confiscated units of Libidus that had been seized on August 25,
2006 and were in the possession of a courier company, only to return them three
hours later. The Applicants speculate that the product could have been tainted
by Ms. Huzel during this disruption in the chain of custody.
[9]
On September 29, 2006, the HCFBI Officer mailed
a letter communicating the results of the Libidus product testing performed by
Health Canada. The Applicants disputed this report with the HCFBI Officer,
arguing that Health Canada’s evidence “looked
suspiciously like two photographs from text books.”
[10]
Further details were provided in a March 2007
lab report and a July 12, 2007 letter from the HCFBI Officer concluding that
the “Laboratory analysis conducted by Health Canada
determined that samples of Libidus…contained piperdino vardenafil as an
undeclared ingredient.” These documents were also contested (Applicant’s
Record [AR], p 56). The July 12, 2007 letter further advised the Applicants
that Health Canada had seized control of the 450 units of Libidus already
confiscated by the CBSA due to NorthRegentRx’s alleged violations of the Food
and Drugs Act (RSC, 1985, c F-27) [FDA], and the Food and Drug
Regulations, (CRC, c 870) [AR, p 58].
[11]
In March 2008, the Applicants reached out to J.
David Graham, a former drug chemist with Health Canada who concluded, contrary
to Health Canada’s reports, that “the testing failed to
prove the presence of piperidenafil and the determination of the amount of
piperidenafil is flawed” (AR, p 161). The Applicants also obtained the
assistance of their Member of Parliament in January 2009, who wrote a letter to
the Minister of Health in an effort to recapture the regulatory approval for
Libidus.
[12]
After a failure to come to terms with the
representatives of Health Canada, including a meeting in April 2010 that was
postponed by the Applicants to allow them time to acquire further evidence
related to their scientific evaluation and business loss valuation, a statement
of claim for damages was filed in Federal Court.
[13]
Justice Mosley struck the statement of claim for
failing to disclose a reasonable cause of action in Swarath v Canada,
2014 FC 75, concluding that:
[29]… there is no proximity in the
relationship of the parties that would make it reasonable to impose a duty of
care on the defendants to ensure that their examination of the products and
administration of the regulatory scheme does not result in economic damage to
the plaintiffs.
[14]
On March 31, 2014, the Applicants filed a
disclosure of wrongdoing with the Office of the Public Sector Integrity
Commissioner of Canada. The Commissioner synthesized the Applicants’
submissions into five allegations of wrongdoing, conducted by various Health
Canada employees (Respondent’s Record [RR], p. 10):
1. A failure to rescind a direction to halt the sale of Libidus, even
though the Applicants had shown that the product was not contaminated with a
prescription drug;
2. A failure to follow the proper sampling procedures in the testing of
Libidus;
3. Gross mismanagement, as a result of relying on “flawed science” to establish the presence of an
undeclared prescription drug in Libidus;
4. Recalling Libidus based on the private interests of the HCFBI
Officer, who went to work for a direct competitor of the Applicants for a two
year period after the completion of the Libidus investigation in July 2007. The
Officer eventually returned to Health Canada, which the Applicants allege
creates a perception that there was a conflict of interest;
5. The destruction of 450 boxes of Libidus on July 12, 2007 without the
Applicants’ consent.
[15]
In his Decision dated July 2, 2014, the
Commissioner declined to investigate the allegations noted in the disclosure,
concluding that allegations #1-4 listed above pre-dated April 15, 2007, the
date the PSDPA came into force. Thus, the Commissioner found that he
lacked the jurisdiction to address the first four allegations.
[16]
The Commissioner therefore only made a
substantive ruling with respect to the final allegation. Regarding this fifth
allegation, the Commissioner found that there was inconclusive evidence that
450 units of the seized product had been destroyed. In any event, even if these
units were destroyed, he found that the consent of the courier company, UPS,
which had been in possession of the boxes since the time of its seizure, would
have been sufficient authorization under the law to properly destroy the
product. The Commissioner concluded that since the Applicants did not provide
any information to suggest that consent for destruction from UPS had not been
obtained, he had no reason to believe that the officials of Health Canada
contravened section 27(1) of the FDA. Therefore, the Commissioner had no
reason to believe a wrongdoing had been committed, pursuant to section 33 of
the PSDPA.
III.
Preliminary Issues
[17]
There are two preliminary issues I shall address
before reviewing the reasonableness of the Commissioner’s Decision.
[18]
First, upon request of the Respondent, and as
directed at the hearing, I allow the style of cause to be amended from the Office
of the Public Sector Integrity Commissioner of Canada to the Attorney General
of Canada, in accordance with Rule 303(2) of the Federal Courts Rules
(SOR/98-106).
[19]
Second, three days before the hearing, the
Applicants filed a motion for leave to file a supplementary affidavit and leave
to file additional evidence. At the hearing, after arguments on this point, I
informed the litigants that I would reserve my decision on whether to admit
this evidence.
[20]
As the Federal Court of Appeal emphasized in Mazhero
v Canada (Industrial Relations Board), 2002 FCA 295 at para 5, “the discretion of the Court to permit the filing of
additional material should be exercised with great circumspection” (see
also Boshra v Canadian Association of Professional Employees, 2010 FCA
72 at para 3). I agree with the Respondent that the additional evidence, which
stemmed from an access to information request and which was not before the
Commissioner, is of little relevance to whether the Commissioner’s discretion
was exercised reasonably on the record before him (Forest Ethics Advocacy
Association v National Energy Board, 2014 FCA 88 at para 10 [Forest
Ethics]). The short time frame the Respondent was given to examine the
additional evidence was also prejudicial (Forest Ethics at para 12). I
therefore decline the motion and will proceed on the basis of the judicial
review as it was initially brought.
IV.
Issues
[21]
This judicial review turns on the following
questions:
a) Was the Commissioner’s Decision to dismiss the first four
allegations occurring prior to the enforcement date of the PSDPA reasonable?
b) Was the Decision reasonable with respect to the fifth allegation?
V.
Standard of Review
[22]
In the seminal case of Dunsmuir v New
Brunswick, 2008 SCC 9 [Dunsmuir], the Supreme Court of Canada
concluded that Courts are presumed to review administrative decisions for
reasonableness (Dunsmuir at para 146). This means that this Court must
assess whether the decision “falls within a range of possible,
acceptable outcomes which are defensible in respect of the facts and law” (Dunsmuir at para 47).
[23]
In their Notice of Application, the Applicants pled
that “the Public Sector
Integrity Commissioner of Canada refused to exercise its jurisdiction; thus
breaching a principle of procedural fairness and ignoring evidence.” Breaches of procedural fairness are
reviewed on a standard of correctness in order to ensure that parties have a
meaningful opportunity to present its case fully and fairly (Mission
Institution v Khela, 2014 SCC 24 at para 79; Uniboard Surfaces Inc v
Kronotex Fussboden GmbH, 2006 FCA 398 at para 7; Agnaou v Canada
(Attorney General), 2015 FCA 30 at para 36 [Agnaou]).
[24]
However, the nature of the Applicants’
submissions to this Court indicate that the Applicants’ concerns go to the
substance of the Decision – that is, whether it was unreasonable for the
Commissioner to decline to investigate the alleged wrongdoing - rather than
whether they were given a meaningful opportunity to present their case fully
and fairly to the Commissioner.
[25]
In Grain Services Union (ILWU-Canada) v
Freisen, 2010 FCA 339, the Federal Court of Appeal reviewed a decision by
the Canada Industrial Relations Board concluding that a collective agreement
was not in force at the time an application to revoke the certification of a
Union had been filed (Grain Services at para 3). Justice Mainville,
writing for a unanimous Court, held that the Board’s determination of whether a
collective agreement was in force was based on its interpretation of the Canada
Labour Code, and reviewed on a standard of reasonableness (Grain
Services at paras 30-31).
[26]
Similarly, in this case, the Commissioner
interpreted the PSDPA, his home statute, to determine whether the timing
of four of the five alleged instances of impropriety fell within the
jurisdictional ambit of the Act. I would apply reasonableness to these
determinations.
[27]
I shall also apply reasonableness to my
assessment of the Commissioner’s Decision with respect to the fifth allegation,
which was addressed on its merits, as the Federal Court of Appeal and the
Federal Court have concluded that this standard applies to decisions reflecting
the discretion of the Commissioner not to pursue an investigation of wrongdoing
(Agnaou at paras 25 and 35); Detorakis v Canada (Attorney General),
2010 FC 39 at paras 15-16; Agnaou v Canada (Attorney General), 2014 FC
86 at para 19 [Agnaou FC]).
VI.
Analysis
A.
Was the Commissioner’s Decision to dismiss the
first four allegations occurring prior to the enforcement date of the PSDPA
reasonable?
[28]
The Applicants posit two arguments regarding the
Commissioner’s Decision to decline to address four of the five allegations they
put forward because the allegations occurred prior to the date the PSDPA came
into force.
[29]
The first is that the PSDPA, which
received royal assent on November 25, 2005 and came into force on April 15,
2007 (section 60), was meant to replace the Treasury Board Policy on
the Internal Disclosure of Information Concerning Wrongdoing in the Workplace,
ensuring that investigations were to continue in a seamless fashion. In short,
while the form of the Commissioner’s jurisdiction shifted, his ability to
investigate matters did not (AR, p 221, para 11).
[30]
Second, according to the Applicants, the
allegations had an ongoing element, as demonstrated by the HCFBI Officer’s
final letter confirming the completion of the recall arrived on July 12, 2007,
almost 3 months after the Commissioner’s office had opened. Thus, the
continuing nature of these allegations brings them within the purview of the PSDPA.
[31]
With regard to the first argument, section 54.3
of the PDSA is a transitional provision which addresses
disclosures that had initially been made under the Treasury Board Policy on
the Internal Disclosure of Information Concerning Wrongdoing in the Workplace:
54.3 Disclosures under the Treasury
Board Policy on the Internal Disclosure of Information Concerning Wrongdoing in
the Workplace that are being dealt with on the coming into force of this
section are to be continued as though they had been made under this Act.
[32]
The record does not indicate that the Applicants
made any complaints under the Treasury Board Policy on the Internal
Disclosure of Information Concerning Wrongdoing in the Workplace. Since the
Applicants made their complaints to the Commissioner after the PSDPA had
come into force, section 54.3 has no application in these circumstances.
[33]
Second, there is a presumption in the common law
that legislation is not meant to apply retroactively, unless such a
construction is expressly or by necessary implication required by the language
of the Act (Gustavson Drilling (1964) Ltd v Minister of National Revenue,
[1977] 1 S.C.R. 271 at p 279 [Gustavson]; British Columbia v Imperial
Tobacco Canada Ltd, 2005 SCC 49 at para 69). This Court has not seen any
explicit language or the presence of some ambiguity in the PSDPA which
could serve to rebut that presumption.
[34]
The question of the time at which the first four
acts of wrongdoing manifested themselves is one of mixed fact and law, for
which this Court is required to show deference (Smith v Alliance Pipeline
Ltd, 2011 SCC 7 at para 26; Rennie v VIH Helicopters Ltd, 2015 FCA
25 at para 15).
[35]
Indeed, the Commissioner acknowledged the
Applicants’ submissions that the nature of Health Canada’s alleged malfeasance,
including its failure to prove the presence of undeclared prescription drugs in
Libidus and its failure to rescind the direction halting the sale of Libidus,
was ongoing in nature and thus subject to the PSDPA (RR, p 8).
[36]
The Commissioner nonetheless concluded that “each of these incidents took place prior to April 15, 2007
when the Act was formally enacted as a Federal law.” In my view, it is
within the range of reasonable options available to the decision maker to make
the determination that some of the allegedly nefarious behaviour was not
ongoing in nature simply because occasional administrative correspondence had
been exchanged after the contested acts in allegations 1-4 had transpired.
[37]
Therefore, I find the Commissioner’s Decision to
decline to investigate for lack of jurisdiction on the first four allegations
to be reasonable, because each can be traced to incidents which occurred
between August and September 2006 and prior to the PSDPA’s entry into
force.
B.
Was the Decision otherwise reasonable?
[38]
The final allegation, for which the Commissioner
acknowledged jurisdiction, was that on July 12, 2007, the HCFBI Officer
contravened section 27(1) of the Food and Drugs Act when he requested
the destruction of 450 units of Libidus without the Applicants’ consent.
Section 27(1) of the Food and Drugs Act states:
27. (1) Where an inspector has seized
an article under this Part and its owner or the person in whose possession the
article was at the time of seizure consents to its destruction, the article is
thereupon forfeited to Her Majesty and may be destroyed or otherwise disposed
of as the Minister or the Minister of Agriculture and Agri-Food may direct.
[39]
The Commissioner decided that there was no
information to suggest that the units had indeed been destroyed, and in any
event, that no wrongdoing had occurred since the carrier company was capable of
providing the consent necessary for the destruction of the product (AR, p 9).
Thus, there was no contravention pursuant to section 8(a) of the PSDPA, which
states:
8. This Act applies in respect of the
following wrongdoings in or relating to the public sector:
(a) a
contravention of any Act of Parliament or of the legislature of a province, or
of any regulations made under any such Act, other than a contravention of
section 19 of this Act;
[40]
After the hearing in this case, both parties
were invited to provide further submissions on what constitutes a wrongdoing
within the meaning of section 8(a) of the PSDPA.
[41]
In their Further Submissions of April 1, 2015,
the Applicants described the definition of wrongdoing in the following manner: “A mistake is an error in judgement…wrongdoing is knowing it
is a mistake but continuing to do it anyway.”
[42]
The Respondent countered that a wrongdoing is
determined by “whether there has been a breach or a
‘contravention’ of an Act or a regulation.” The Respondent further
argued that while a “technical breach” of an Act
or Regulation would fall under the ambit of section 8(a) of the PSDPA,
the Commissioner retained the discretion to decline to investigate the
wrongdoing pursuant to section 24(b), the subject matter of the investigation
not being sufficiently important.
[43]
In my view, there is little evidence before me
to indicate that a contravention of section 27(1) of the Food and Drugs Act
occasioned by the destruction of the 450 units of Libidus seized by Health
Canada occurred in this case.
[44]
In his reasons, the Commissioner acknowledged
that boxes of Libidus had been transferred for destruction, but concluded that “there is no information to suggest that the product, was in
fact, destroyed.” At the hearing, the Applicants conceded that they had
no evidence to suggest otherwise.
[45]
To this date, the status of these boxes remains
unclear. Nevertheless, as the Respondent points out in their Further
Submissions, Health Canada’s letter informing the Applicants that the units of
Libidus would be “removed for destruction” does
not equate to a “request for destruction”. In
other words, since the “request for destruction”
may not have been issued yet, this leaves open the possibility that the fifth
allegation of wrongdoing may not even have manifested itself.
[46]
So the question for this judicial review is,
given this ambiguous state of affairs, was it reasonable for the Commissioner
to conclude that there was no evidence of a wrongdoing? In coming to my
conclusion, I must restrict myself to the evidentiary record that was before
the administrative decision maker (Delios v Canada (Attorney General),
2015 FCA 117 at para 42 [Delios]).
[47]
The Federal Court of Appeal in Agnaou emphasized
the wide discretion available to the Commissioner in the determination of
whether to investigate (Agnaou at paras 66 and 70). In the light of the
dearth of evidence before the Commissioner regarding whether Health Canada had
even destroyed the boxes, I cannot say that the Commissioner’s choice declining
to exercise his discretion to investigate is unreasonable.
[48]
The Commissioner also noted, in the alternative,
that if the boxes of Libidus had been destroyed, this was done with the
permission of UPS and would be sufficient to constitute “consent” within the meaning of section 27(1) of the Food
and Drugs Act. Given that there was no jurisprudence cited for legal
requirements of obtaining consent under this provision, and that the matter has
not been argued before me, this is a legal conclusion which may or may not be
valid. To seek the answer to this legal issue, Health Canada’s alleged decision
to request destruction of the boxes would need to be judicially reviewed. The
judicial review at bar is the improper proceeding in which to review those
actions, because this judicial review does not concern the actions of Health
Canada, but rather the Commissioner’s Decision to decline to investigate the
alleged malfeasance.
[49]
In pointing out that there may not have even
been a technical breach of the Food and Drugs Act, I take this to mean
that the Commissioner made an implicit finding, in the language of section 33
of the PSDPA, that he did not believe “on
reasonable grounds that the public interest requires an investigation.”
In other words, there is no proof that Health Canada breached the Food and
Drugs Act by destroying the contested property, and even if it did, this
was done in the context of a good faith exercise of statutory interpretation.
[50]
In Chopra v Canada (Attorney General),
2014 FCA 179 at paras 33 and 59, the Federal Court of Appeal upheld a similar
implicit finding of fact made by the Trial Judge in the judicial review of a
PSDPA decision. At the Trial level, Justice Scott (as he then was) concluded
that the Public Sector Integrity Commissioner implicitly found that all the
conditions necessary to the application of section 24(1)(e) had been met,
despite not having been explicitly considered by the Commissioner in his
reasons (Chopra v Canada (Attorney General), 2013 FC 644 at paras 81-82).
[51]
It would have been preferable in this case for
the Commissioner to have made this logical route explicit. However, as the
Supreme Court of Canada noted in Newfoundland and Labrador Nurses' Union v
Newfoundland and Labrador (Treasury Board), 2011 SCC 62 at para 16 [Newfoundland
Nurses], “if the reasons allow the reviewing court
to understand why the tribunal made its decision and permit it to determine
whether the conclusion is within the range of acceptable outcomes, the Dunsmuir
criteria are met.”
[52]
As the Commissioner made clear on multiple
occasions, he did not believe any wrongdoing, as defined in sections. 2 and 8
of the PSDPA, occurred in this case. In reviewing the record, I do not
find sufficient evidence to merit overturning the Commissioner’s Decision, as
it does not appear that the Commissioner overlooked crucial evidence or made
factual findings entirely at odds with the evidence before him (Delios at
para 27). Newfoundland Nurses cautions against judges rendering certain
omissions ─ in this case that there were no reasonable grounds requiring
an investigation ─ to be determinative in the face of an otherwise
reasonable outcome (Newfoundland Nurses at paras 15-17).
VII.
Conclusion
[53]
While I have sympathy for the financial toll the
proceedings by Health Canada against Libidus took on the Applicants, I see no
evidence in the record which indicates that Health Canada’s employees acted in
an improper or maliciousness manner. Consequently, I find the Decision of the
Commissioner not to further investigate the Applicants’ allegations to be a
reasonable one, and would dismiss the judicial review.
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