Date:
20090203
Docket: A-262-08
Citation: 2009 FCA 29
CORAM: LÉTOURNEAU
J.A.
NOËL
J.A.
BLAIS
J.A.
BETWEEN:
HER MAJESTY THE QUEEN
Appellant
and
DENNIS MANUGE
Respondent
REASONS FOR JUDGMENT
LÉTOURNEAU J.A.
Issues
[1]
The
procedure used by the respondent in this case, which is the subject of the
appeal, runs directly counter to two legal maxims: one cannot do indirectly
what one is prohibited from doing directly, and no one may take the law into
his or her own hands.
[2]
This
appeal from a decision of the Federal Court raises the following three
procedural issues. They do not concern the merits of the case. Could the
respondent proceed by way of action rather than by application for judicial
review to challenge the lawfulness of section 24 of Part III(B) of insurance
policy SISIP901102 (hereafter SISIP), its constitutional validity and the fact
that it infringes his right to equality under section 15 of the Charter of
Rights and Freedoms (Charter)? Part III(B) of the SISIP governs the
payment of long-term disability benefits for members of the Canadian Forces who
took out this policy and who were released from the Forces after November 30, 1999.
[3]
Was the
respondent then entitled, with the blessing of a judge of the Federal Court, to
transform his action into a class proceeding?
[4]
Finally, assuming
that the respondent had to proceed by judicial review, which he did not do,
could the judge fictitiously transform the respondent’s action into a judicial
review and then transform it once again into an action before finally transforming
it into a class proceeding? As we will see, this is in practice what the judge
did in his alternative approach to resolving the problem that was submitted to
him. I think that to ask the question is to answer it. However, I will give
some additional explanations for this answer.
[5]
To
complete the picture, I would add that the respondent complains that the
appellant did not fulfil her obligations under public law, breached her
fiduciary duty toward the respondent, acted in bad faith and was unjustly
enriched by her conduct.
[6]
On the
basis of this series of alleged infringements, the respondent claims
reimbursement of the amounts that were deducted from his SISIP income and seeks
general, punitive, exemplary and enhanced damages, plus interest and costs.
[7]
The judge
of the Federal Court asked himself the question that was submitted to him and
which he summarized as follows: should the respondent’s action be converted
into a class proceeding under Rule 334.16 of the Federal Courts Rules?
This explains the procedural issues raised in this appeal that I identified and
defined above.
The disposition at issue
[8]
For a
better understanding of this case, I reproduce section 24 of Part III(B).
24. Other
Relevant Sources of Income
a. The
monthly benefit payable at Section 23 shall be reduced by the sum of:
(i) the monthly income benefits payable to the member under the
Canadian Forces Superannuation Act; and
(ii)
the Primary monthly income benefits payable to the member under the
Canada or Quebec Pension Plans (including retroactive payments covering the
period during which such benefits were prefunded under this Division 2); and
(iii)
the employment income of the member unless the member is participating in
a rehabilitation program approved by the Insurer in which case the monthly
benefit will be reduced in accordance with Section 28; and
(iv)
the total monthly income benefits payable to the member under the
Pension Act (including dependant benefits and retroactive payments covering
the period during which such benefits were prefunded under this Division 2).
[Emphasis added]
[9]
Before
dealing with the crux of the issue in this appeal, a brief summary of the facts
and the history of the proceedings is necessary.
Facts, Origins of the SISIP and the New
Veterans Charter, and Procedural History
a) The facts and the origins of the SISIP and the
New Veterans Charter
[10]
The
respondent was a member of the Canadian Forces until his compulsory release for
medical reasons. The respondent’s period of service extended over more than
nine years, from September 9, 1994, to December 29, 2003.
[11]
In 2002, before
his service was terminated, the respondent received a disability pension under
the Pension Act, R.S.C. 1985, c. P-6 (Pension Act), applicable to
certain members of the Canadian naval, land and air forces. The monthly pension
was in the amount of $386.28. This was in addition to the monthly salary of $3,942
that the respondent was receiving.
[12]
When he
was released from the Canadian Forces, the respondent qualified for a long-term
disability pension under the SISIP.
[13]
Participation
in the SISIP was mandatory. Farther on I will give an account of its origins
and evolution. For now, suffice it to say that section 24 of the SISIP refers
to section 23 and stipulates that the monthly benefits payable to the
respondent are 75% of his gross monthly pay, less the monthly benefits payable
to the respondent under the Pension Act. Accordingly, because of this deduction,
the respondent receives 59% of his income before his release from the Canadian
Forces, which I note was the sum of 75% of his monthly income and the amount of
the benefits paid under the Pension Act. It is this deduction that he considers
to be unlawful, unfair and discriminatory for himself and possibly for some 4,260
other comrades in arms who belong to the same plan.
[14]
I consider
that it is appropriate at this stage to explain the origins of the SISIP and
the 2006 New Veterans Charter.
[15]
In the 1960s,
it was estimated that more than 50% of military personnel received insufficient
income once their service was terminated. This income came from benefits under
the Pension Act and the Canadian Forces Superannuation Act,
R.S.C. 1985, c. C-17. Even if the benefits under the Canada Pension Plan
(R.S.C. 1985, c. C-8) or the Québec Pension Plan (R.S.Q., c. R-9)
were added, the income of members released for medical reasons was often
insufficient.
[16]
A study of
the situation resulted in the establishment of the SISIP under section 39 of
the National Defence Act, R.S.C. 1985, c. N-5 (NDA). The SISIP was
conceived and implemented by the Chief of the Defence Staff. Initially,
participation in the SISIP was voluntary. The fund was constituted solely by premiums
paid by the members, without any contribution from the government.
[17]
In 1969, insurance
policy SISIP 901102 was issued. It provided for the payment of long-term
disability benefits but only covered disabilities not attributable to military
service. However, benefits paid under the Pension Act did cover
disabilities related to military service. Therefore, beneficiaries under the Pension
Act could not receive benefits under the SISIP.
[18]
To keep SISIP
participants’ premiums as low as possible, the insurance policy had a clause
stipulating that benefits paid under that policy had to be reduced by the
amount of the benefits paid under other plans, such as those governed by the Canadian
Forces Superannuation Act and the Canada Pension Plan. This
is a fairly usual practice under private or public insurance plans.
[19]
The Treasury
Board gradually began to finance the cost of the SISIP. Government
contributions to the cost of premiums rose from 50% in 1971 to 85% in 1993.
This level of contribution is still paid to this day.
[20]
During the
same period, changes were made to the amounts of the benefits paid. They were
increased to 75% of the income received by a beneficiary before his or her release.
[21]
In
addition, coverage under the SISIP was enhanced in 1976 to include persons
suffering from a disability resulting from injuries sustained during their
military service. The extended coverage was designed to compensate for the insufficient
coverage extended to members of the Canadian Forces under the Pension Act.
[22]
It was at
this moment that the source of this dispute arose. Since as a result of these changes
beneficiaries could now cumulate benefits under the SISIP and the Pension
Act, section 24 of the SISIP was amended to add sub-paragraph (iv), to
avoid double indemnity. This sub-paragraph results in a reduction in the amount
of monthly benefits payable under the SISIP by the amount of the monthly
benefits paid under the Pension Act.
[23]
Sub-paragraph
(iv) thus complemented sub-paragraphs (i), (ii) and (iii), which also were
designed to prevent double indemnity. From the amount of monthly benefits under
the SISIP, those other sub-paragraphs respectively subtracted the monthly
benefits received under the Canadian Forces Superannuation Act, those
payable under the Canada or Québec Pension Plans and, finally,
the beneficiary’s employment income (with one exception that is not relevant to
this case).
[24]
In 1982,
participation in the SISIP became mandatory for all members of the Canadian
Forces.
[25]
On October
20, 2000, the Act to amend statute law in relation to veterans’ benefits,
S.C. 2000, c. 34, received Royal Assent. It brought about changes
regarding membership in the Canadian Forces and entitlement to benefits.
Members of the Canadian Forces who, in spite of a disability resulting from
their military service, were fit to continue their service could now remain
members of the Canadian Forces. Likewise, from that time on they could cumulate
employment income and disability benefits received under the Pension Act.
Because these persons work and do not receive any SISIP benefits, sub-paragraph
24(a)(iv) of policy SISIP 901102 does not apply, such that the specified
deduction for benefits under the Pension Act need not be made.
[26]
In
addition, in 2006, the Canadian Forces Members and Veterans Re-establishment
and Compensation Act, S.C. 2005, c. 21 (hereafter the New Veterans Charter)
was enacted. The New Veterans Charter replaced monthly benefits under the Pension
Act with a lump-sum payment. Since this meant that the payment was no
longer a monthly benefit within the meaning of sub-paragraph 24(a)(iv)
of the SISIP, the lump sum is not, in the case of new beneficiaries, deducted
from the disability benefits they receive under the SISIP. However, the New
Veterans Charter did not in any way affect the application of sub-paragraph 24(a)(iv)
to old beneficiaries, who continued to have amounts received under the Pension
Act deducted from their benefits.
[27]
This
apparent difference in treatment between new and old beneficiaries could not go
unnoticed. In fact, this situation attracted the attention of the Canadian
Forces Ombudsman. In a report dated October 2003, he concluded that the
deduction of benefits under the Pension Act from SISIP benefits was
unfair to old members such as the respondent. He reiterated his conclusion in
two letters sent to the Minister of National Defence in October 2005 and March
2007 respectively.
b) Procedural history
[28]
Tired of
battling the administration, the respondent turned to the courts and submitted his
claims.
[29]
On March 15, 2007, he filed an action with the
Registry of the Federal Court in Halifax, Nova Scotia. On April 17, 2007, he brought a motion under
Rule 334.12 of the Federal Courts Rules for the certification of his
proceeding as a class proceeding and for the appointment of himself as representative
of the group.
[30]
The
respondent subsequently made some amendments to his statement of claim in
support of his action. An amended statement of claim was filed in the Registry
of the Federal Court in Halifax on December 19, 2007.
[31]
The
hearing of the application for certification of a class proceeding was held
from February 12
to 14, 2008. Judgment
was rendered on May 20, 2008. It is from that judgment that the present appeal
is brought. I will therefore give an overview of its main points for the
purposes of this appeal.
Decision of the Federal Court
[32]
Before the
Federal Court, the appellant raised two objections to the process chosen by the
respondent. First, the appellant objected to the fact that the respondent
proceeded by action under section 17 of the Federal Courts Act,
R.S.C. 1985, c. F-7 (Act). Second, the appellant therefore objected to the
certification of this action as a class proceeding.
[33]
The
appellant submitted to the judge of the Federal Court that the respondent
should have instead proceeded under section 18 of the Act, by way of judicial
review. In support of her arguments, the appellant relied on the judgment of
our Court in Canada v. Grenier, 2005 FCA 348.
[34]
I will return
to this judgment when analyzing the decision of the Federal Court. Suffice it
to say for now that Grenier establishes the principle that challenges of
decisions of a federal board, commission or other tribunal must be made by way
of judicial review pursuant to sections 18, 18.1 and 28 of the Act. Under
sections 18 and 28, the Federal Court or the Federal Court of Appeal, as the
case may be, has exclusive jurisdiction in those matters.
[35]
The judge
of the Federal Court concluded that the consequences of sub-paragraph 24(a)(iv)
of the SISIP, of which the respondent complained, did not result from a
decision of a federal board, commission or other tribunal. According to him,
the respondent was instead contesting a government policy set out in section
24. On the basis of this conclusion, he ruled that the principles in Grenier
did not apply.
[36]
However, pushing
his consideration of the issue further, he expresses the opinion that if,
contrary to what he had decided, this was in fact a decision subject to
judicial review under section 18, it would then be appropriate to convert
it into an action rather than to ask the respondent to start his proceedings
over again: see paragraph 20 of the reasons for judgment. I will return to the justification
for his reasoning and conclusion later on.
[37]
He then
took the additional step of determining whether the action should be
transformed into a class proceeding, which he did in the end. Considering the
conclusion I reach on the merits of the Federal Court’s decision, there is no
need to wax eloquent on the reasons which led the judge to allow the
application for certification of the action as a class proceeding.
Analysis of the decision of the Federal
Court judge
[38]
The first
step in the analysis of the issue at hand consists in determining the nature
and the subject of the respondent’s challenge. Does it involve a government
policy, a decision of a federal board, commission or other tribunal or,
pursuant to subsection 18.1(1) of the Act, a matter that “directly affects” the
respondent:
|
18.1 (1) An application for judicial review may be
made by the Attorney General of Canada or by anyone directly affected by the
matter in respect of which relief is sought.
|
18.1 (1) Une demande de contrôle judiciaire peut
être présentée par le procureur général du Canada ou par
quiconque est directement touché par l’objet de la demande.
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Government policy, decision of a federal
board, commission or other tribunal or a matter that directly affects the
plaintiff?
[39]
As already
mentioned, the SISIP is an insurance policy benefiting members of the Canadian
Forces. The Chief of the Defence Staff is the policy holder. This situation is
actually quite special and unique.
[40]
Under
section 18 of the National Defence Act, the Chief of the Defence Staff is
charged with the control and administration of the Canadian Forces. He is
legally responsible for the Forces.
[41]
Section 39
of that same Act states that non-public property acquired by contribution shall
vest in the Chief of the Defence Staff. Except where the bequest includes
restrictions, the property may be disposed of at the discretion and direction
of the Chief of the Defence Staff for the benefit of the members of the
Canadian Forces or their dependents. I reproduce subsection 39(1):
|
39. (1) Non-public property acquired by
contribution but not contributed to any specific unit or other element of the
Canadian Forces shall vest in the Chief of the Defence Staff and, subject to
any specific directions by the contributor as to its disposal, may be
disposed of at the discretion and direction of the Chief of the Defence Staff
for the benefit of all or any officers and non-commissioned members or former
officers and non-commissioned members, or their dependants.
|
39. (1) Les biens non publics reçus en don sans
être spécifiquement attribués à une unité ou un autre élément des Forces
canadiennes sont dévolus au chef d’état-major de la défense; sous réserve de
toute instruction expresse du donateur quant à leur destination, celui-ci
peut, à son appréciation, ordonner qu’il en soit disposé au profit de l’ensemble
ou d’une partie des officiers et militaires du rang, anciens ou en poste, ou
des personnes à leur charge.
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[42]
It was
under section 39 that , the Honourable Léo Cadieux, Minister of National
Defence, following the recommendation of the Chief of the Defence Staff at the
time, created the SISIP: see the affidavit of André Bouchard, Appeal Book, tab
6, page 92, paragraph 14. The control and administration of the insurance plan
were entrusted to the Director of Personnel at the Department of National
Defence: ibidem, at page 101.
[43]
The
implementation of the SISIP is the result of a joint decision of the Minister
of National Defence and the Chief of the Defence Staff. The statutory basis for
the SISIP is found in section 39 of the National Defence Act. Under
the circumstances, on the basis of the uncontradicted evidence on record, it is
difficult to conclude that the SISIP and its section 24 are not the result of a
decision of a federal board, commission or other tribunal as defined in section
2 of the Act, that is, a decision made by a person or group of persons
(Minister and Chief of the Defence Staff) exercising a jurisdiction or
authority under a federal statute (the National Defence Act).
[44]
I admit that
I do not truly understand the distinction made by the judge of the Federal
Court, who held that this is not a decision, but a policy, and thus exempted from
judicial review. Policies or programs in the public service are regularly
implemented through ministerial or governmental decisions that are subject to
judicial review. Even if we admit that this is a policy or program for
compensating members of the Canadian Armed Forces with disabilities, the decisions
made by the federal public administration in managing the policy or program, be
it in terms of decisions regarding eligibility for benefits or, as in this case,
the amount of those benefits, not to mention the duration of insurance coverage,
are still decisions of a federal board, commission or other tribunal that are
subject to judicial review.
[45]
In
addition, the respondent complains that he is directly affected by section 24
of the SISIP and by the reduction in benefits required under sub-paragraph
(iv). He is making section 24 the very matter of his claim for relief. Under
subsection 18.1(1) of the Act, this matter is subject to judicial review: see Krause
v. Canada, [1999] 2 F.C. 476 (F.C.A.), in which it was agreed that the word
“matter” is not restricted to a decision or an order and embraces a variety of
administrative actions and activities.
[46]
With
respect, the judge erred in the analysis of the matter of the respondent’s claim
for relief. He also erred in refusing to apply the principles in Grenier
on the ground that the concerns expressed in Grenier about the finality
of the decisions, collateral attacks on those decisions and the deference that
administrative decision-makers should be shown apply were mostly if not
entirely absent here: see paragraph 21 of the reasons for his decision. As we
will see, these considerations, especially those concerning collateral attacks
and deference, are relevant in this case.
Judicial review or action in damages?
[47]
It is
important to revisit Grenier and Parliament’s intention as regards
federal administrative law.
a) Parliament’s intention and the Grenier
judgment
[48]
As Grenier
demonstrates, Parliament’s intention in enacting the Federal Courts Act
and creating the Federal Court and the Federal Court of Appeal was clear and
unequivocal. It intended to entrust these two courts with the exclusive
authority to oversee and review the lawfulness of decisions and activities of
the federal administration.
[49]
Parliament
made this choice to ensure consistency, efficiency, expeditiousness, fairness, legal
security and the finality of decisions made by the administration in the public
interest. I take the liberty of reproducing paragraphs 21 to 29 and 31 and 32
of Grenier:
[21] Under section 17 of the Federal
Courts Act, the Federal Court has concurrent jurisdiction with the courts
of the provinces to try a claim for damages under the Crown Liability and
Proceedings Act. Section 17 is reproduced in part:
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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
(a) the land, goods or money of any
person is in the possession of the Crown;
(b) the claim arises out of a contract
entered into by or on behalf of the Crown;
(c) there is a claim against the
Crown for injurious affection; or
(d) the claim is for damages under
the Crown Liability and Proceedings Act.
|
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 :
a) la
possession par la Couronne de terres, biens ou sommes d’argent appartenant à
autrui;
b) un
contrat conclu par ou pour la Couronne;
c) un
trouble de jouissance dont la Couronne se rend coupable;
d) une
demande en dommages-intérêts formée au titre de la Loi sur la responsabilité
civile de l’État et le contentieux administratif.
|
(Emphasis
added)
[22] However, Parliament thought it was appropriate to grant and reserve the
Federal Court exclusive jurisdiction to review the lawfulness of the decisions
made by any federal board, commission or other tribunal:
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18. (1)
Subject to section 28, the Federal Court has exclusive original
jurisdiction
(a) to issue an injunction, writ of certiorari,
writ of prohibition, writ of mandamus or writ of quo warranto,
or grant declaratory relief, against any federal board, commission or other
tribunal; and
(b) to hear and determine any
application or other proceeding for relief in the nature of relief
contemplated by paragraph (a), including any proceeding brought
against the Attorney General of Canada,
to obtain relief against a federal board, commission or other tribunal.
(2) The Federal Court has exclusive original
jurisdiction to hear and determine every application for a writ of habeas
corpus ad subjiciendum, writ of certiorari, writ of prohibition or
writ of mandamus in relation to any member of the Canadian Forces
serving outside Canada.
(3) The remedies provided for in
subsections (1) and (2) may be obtained only on an application for judicial
review made under section 18.1.
|
18. (1)
Sous réserve de l’article 28, la Cour fédérale a compétence exclusive,
en première instance, pour :
a) décerner
une injonction, un bref de certiorari, de mandamus, de
prohibition ou de quo warranto, ou pour rendre un jugement
déclaratoire contre tout office fédéral;
b) connaître de
toute demande de réparation de la nature visée par l’alinéa a), et notamment
de toute procédure engagée contre le procureur général du Canada afin d’obtenir
réparation de la part d’un office fédéral.
(2) Elle a compétence exclusive, en première
instance, dans le cas des demandes suivantes visant un membre des Forces
canadiennes en poste à l’étranger : bref d’habeas corpus ad subjiciendum,
de certiorari, de prohibition ou de mandamus.
(3) Les recours prévus aux paragraphes (1)
ou (2) sont exercés par présentation d’une demande de contrôle judiciaire.
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(Emphasis
added)
[23] In Canada v.
Capobianco, [2005] J.Q. No. 1155, 2005 QCCA 209, the Quebec Court of Appeal
acknowledged this exclusive jurisdiction and held that the action for damages
brought in the Superior Court of Québec was premature since the plaintiff’s
claim was essentially based on the premise that the decisions made in relation
to him by the federal tribunals from which his damage resulted were illegal:
only the Federal Court had jurisdiction to condemn this illegality which, under
subsection 18(3), is exercised through the judicial review procedure provided
by Parliament.
[24] In creating the
Federal Court and in enacting section 18, Parliament sought to put an end to
the existing division in the review of the lawfulness of the decisions made by
federal agencies. At the time, this review was performed by the courts of the
provinces: see Patrice Garant, Droit administratif, 4th ed., vol. 2 (Les
Éditions Yvon Blais Inc., 1996), at pages 11 to 15. Harmonization of
disparities in judicial decisions had to be achieved at the level of the
Supreme Court of Canada. In the interests of justice, equity and efficiency,
subject to the exceptions in section 28, Parliament assigned the exercise of reviewing
the lawfulness of the decisions of federal agencies to a single court, the
Federal Court. This review must be exercised under section 18, and only by
filing an application for judicial review. The Federal Court of Appeal is the
court assigned to ensure harmonization in the case of conflicting decisions,
thereby relieving the Supreme Court of Canada of a substantial volume of work,
while reserving it the option to intervene in those cases that it considers of
national interest.
[25] To accept that
the lawfulness of the decisions of federal agencies can be reviewed through an
action in damages is to allow a remedy under section 17. Allowing, for that
purpose, a remedy under section 17 would, in the first place, disregard or deny
the intention clearly expressed by Parliament in subsection 18(3) that the
remedy must be exercised only by way of an application for judicial review. The
English version of subsection 18(3) emphasizes on the latter point by the use
of the word “only” in the expression “may be obtained only on an application
for judicial review”.
[26] It would also
judicially reintroduce the division of jurisdictions between the Federal Court
and the provincial courts. It would revive in fact an old problem that
Parliament remedied through the enactment of section 18 and the granting of
exclusive jurisdiction to the Federal Court and, in the section 28 cases, the
Federal Court of Appeal. It is precisely this legislative intention that the
Quebec Court of Appeal recognized in the Capobianco case, supra,
in order to preclude the action in damages filed in the Superior Court of
Québec attacking the lawfulness of the decisions of federal boards, commissions
or other tribunals from leading, in fact and in law, to a dysfunctional
dismemberment of federal administrative law.
Compromising of legal
security
[27] To
allow a proceeding under section 17, whether in the Federal Court or in the
provincial courts, in order to have decisions of federal agencies declared
invalid, is also to allow an infringement of the principle of finality of
decisions and the legal security that this entails.
[28] I need not
expound at length on the importance of the principles of res judicata
and the finality of decisions. Similarly, I need not say much about the
abundant case law that recognizes and promotes these principles. I will confine
myself to saying that these principles exist in the public interest and that
Parliament’s intention to protect that interest is illustrated by the short
time limit allowed for challenging an administrative decision.
[29] Parliament has
provided, in subsection 18.1(2), that the time for filing an application for
judicial review is 30 days from the time the impugned decision of the federal
agency was communicated to the applicant (subject to any extension of the
periods allowed by the Court). Concerning this time limit, this Court writes in
Berhad, supra, at paragraph 60:
[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.
…
Promotion of indirect
challenges
[31] The principle
of the finality of decisions likewise requires that in the public interest, the
possibilities for indirect challenges of an administrative decision be limited
and circumscribed, especially when Parliament has opted for a procedure for
direct challenge of the decision within defined parameters.
[32] In Berhad,
supra, the owners of a vessel were suing the Crown following an
administrative decision by two inspectors to order the seizure of their vessel.
This Court restated, at paragraphs 61, 62, 65 and 66, the applicable principle
in such matters:
[61] There is
also a public interest in precluding the use of tort claims to engage in
collateral attacks on decisions that are, or should be, final. The case of R.
v. Consolidated Maybrun Mines Ltd., [1998] 1 S.C.R. 706, is instructive
because, not unlike the present instance, it relates to a collateral attack on
an order requiring that certain measures be taken to protect the environment
while direct review proceedings were available under the Environmental
Protection Act. In our case, the detention order requiring that certain
repairs be done was not only aimed at protecting the marine environment, but
also at ensuring the safety of human lives.
[62] In Maybrun,
the Supreme Court undertook a review of the statute and of the legislative
intent behind it and concluded that persons charged with failing to comply with
an order under that statute “cannot attack the validity of the order by way of
defence after failing to avail themselves of the appeal mechanisms available
under the [statute]”: ibidem, at paragraph 65. In the Court’s view,
to permit such a collateral attack would encourage conduct contrary to the
statute’s objectives and would tend to undermine its effectiveness: ibidem,
at paragraph 60. Although the circumstances of that case differ slightly from
those in the case at bar, the conclusions reached by the Supreme Court are
nevertheless relevant to the present issue. If an accused, who has a right
to full answer and defence, is not permitted in a penal proceeding to use as a
shield a collateral challenge to the administrative order that is the basis for
the charge that he faces, it seems to me that, in similar circumstances, a
party should be discouraged from employing a collateral attack as a sword in a
civil proceeding of the kind that the respondents initiated
…
[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.
…
(Emphasis added)
[50]
It is
obvious that Parliament did not intend to absolve the federal administration of
liability where its actions may cause prejudice or damage. Section 3 of the Crown
Liability and Proceedings Act, R.S.C. 1985, c. C-50, cannot be any
clearer on this point.
[51]
It is also
obvious that Parliament intended to make a procedural distinction between the lawfulness
of a decision or an administrative activity and the liability resulting therefrom.
Lawfulness is verified by a low-cost process of judicial review, designed to
proceed in a timely manner so as to offer security to citizens and the
administration and avoid administrative paralysis. Liability is punished by legal
action, generally by suing for damages to repair the prejudice caused by the administrative
decision or activity. One of the means chosen by Parliament, judicial review,
is a summary, thorough and expeditious proceeding. As stated and required under
section 18.4 of the Act, an application or reference “shall be heard and
determined without delay and in a summary way” by the Federal Court. The other
means, legal action, is elaborate and slow, given the compensation sought.
[52]
Grenier and Berhad (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 FCA 267, leave to appeal to the Supreme Court of Canada denied with costs
on May 25, 2006) illustrate the procedural conflict and the respective consequences
of each way of proceeding.
[53]
For committing
an act that was perceived as a threat and an attempt to strike a correctional
services officer, Mr. Grenier was placed in administrative segregation for a
period of fourteen (14) days following a decision by the warden of the penitentiary
where Mr. Grenier was incarcerated.
[54]
Mr.
Grenier did not challenge the lawfulness of the decision of the warden of the
penitentiary. Nearly three years later, he brought an action in damages against
the federal Crown, claiming that the warden’s decision was unlawful.
[55]
In Berhad,
a ship was inspected upon arrival in Vancouver
and, by order of the inspectors, was detained because it was so rusty that it
was deemed to be unseaworthy, unless certain repairs, including some structural
ones, were made to restore its seaworthiness. The lawfulness of the detention order
was challenged by reference under subsection 307(1) of the Canada
Shipping Act, R.S.C. 1985, c. S-9. Following this referral, the
Director General of Marine Safety for Transport Canada and Chairman of the Board of Steamship
Inspection upheld the decision of the inspectors while easing some of the
repair measures ordered.
[56]
This second
decision was not appealed to the Minister as could have been done under section
307. The ordered repairs were made to the ship, and it set sail for China.
[57]
Nearly a
year and a half later, the owners of the ship filed an action in tort against
the Federal Crown and the two inspectors behind the detention order. The owners
claimed approximately $4,350,000 in damages. This claim was based on the lawfulness
of the inspectors’ decision concerning the seaworthiness of the ship and the lawfulness
of their detention order.
[58]
It is
possible that a perfectly lawful administrative decision or activity may be carried
out in a negligent or abusive manner, thus giving rise to liability on the part
of the federal administration. In other words, even though a decision or an
activity is lawful, its execution may be negligent or wrongful. In such a case,
bringing an action in liability based not on the lawfulness of the decision or
activity, but on its negligent performance, is appropriate. In those
circumstances, the Federal Court shares its jurisdiction ratione materiae
with the provincial Superior Courts. The Quebec Court of Appeal recently dealt
with this issue in Agence canadienne d’inspection des aliments c. Institut
professionnel de la Fonction publique du Canada et autres, [2008] J.Q. No. 8906, J.E. 2008-1865.
It reached the following conclusions at paragraphs 37 and 58:
[translation]
37 Just as
in the case of municipal by-laws, where “invalidity is not the test of fault
and it should not be the test of liability”, until recently, it was understood
that a decision or measures validly taken by an organization acting within its
jurisdiction may give rise to fault in case of error or negligence. From this
point of view, only an activity conducted with care and diligence is covered by
the immunity from civil suits that protects certain decisions of public bodies.
Accordingly, an organization may incur civil liability in spite of the lawfulness
of the action where damage is caused by the flawed exercise of granted
authority.
58 In this
case, the respondents do not claim that the decisions and measures taken by the
Agency are unlawful, nor do they indirectly seek to quash them. At this
preliminary stage, they submit that even if the decisions and measures are
presumed to be lawful, they may nevertheless constitute wrongful acts giving
rise to civil liability. In this context, there would be no risk of
contradictory judgments.
[59]
However,
when the challenge concerns the very lawfulness of the decision or
administrative activity, as a general rule, Parliament intended that priority
be given to the issue for reasons of public interest so that doubts may be
eliminated and decisions or government policies may be enforced or amended if
they turned out to be illegal. It should also not be forgotten that decisions
or government policies often result in costs for those who have to abide by
them. For example, one can think of inspectors’ or minister’s decisions in
environmental matters which compel industries to put in place costly de-polluting
or anti-pollution measures. Hence, the importance of having final decisions and
government policies.
b) Degree of flexibility provided for by
Parliament
[60]
I say “as
a general rule” because at subsection 18.4(2) of the Act, Parliament provided
for an exception to the process it established. The Federal Court may, if it
considers it appropriate, direct that an application for judicial review be
treated and proceeded with as an action, in other words, that such an
application be converted into an action. In Macinnis v. Canada, [1994] 2
F.C. 464, Justice Décary, on behalf of a unanimous Court of Appeal, noted the
exceptional nature of subsection 18.4(2). He wrote the following at pages 470,
471 and 472:
One should not lose
sight of the clear intention of Parliament to have applications for judicial
review determined whenever possible with as much speed and as little
encumbrances and delays of the kind associated with trials as are possible.
…
[B]ut the key test is
whether the judge can see that affidavit evidence will be inadequate, not that
trial evidence might be superior.
[61]
Although
the conversion of an application for judicial review into an action is not
limited to evidentiary issues (see Drapeau v. Canada (Minister of National
Defence)
(1995), 179 N.R. 398), it is nevertheless exceptional.
[62]
This
procedural exception under subsection 18.4(2) of the Act does not adversely
affect the integrity of the judicial review process for the federal
administration envisioned by Parliament, which intended that the Federal Courts
have exclusive jurisdiction in that area.
[63]
By
requiring that a litigant proceed by way of judicial review, Parliament upholds
the exclusive jurisdiction of the Federal Courts. Any conversion application is
heard by the Federal Court. Once conversion is authorized, the action will
proceed in Federal Court and, according to Berhad, the Court must give the
administrative decision or activity whose lawfulness is impugned the deference
required by law, if any.
[64]
Conversion
into an action is not possible where a judicial review must be conducted by the
Federal Court of Appeal, as Parliament has preferred to provide for a summary
and expeditious procedure, without exception: see subsection 28(2) of the Act.
c) Appropriate remedy in the case at bar
[65]
Counsel
for the respondent readily admits that if section 24 of the SISIP and in particular
sub-paragraph (iv) are lawful and not discriminatory, his client is not
entitled to a reimbursement or damages. In other words, damages and
reimbursements are conditional on and incidental to the unlawfulness of the
provision in question, or its being declared to be of no force or effect. In
procedural terms, emphasizing damages and reimbursement rather than the lawfulness
of the provision, as the respondent did in this case, amounts to putting the
cart before the horse. Basically, the tail is wagging the dog.
[66]
In this
case, we are dealing with a well-defined question of law that requires little
evidence to decide. In fact, it may well proceed on the merits on the basis of
a mere admission of facts.
[67]
As the
appellant so rightfully mentioned, if the respondent had proceeded by judicial
review rather than by action as he did, he would have already obtained the
Court’s answer as to the lawfulness of the provision in question.
[68]
Although the
provision in question has existed for several years, there were no time
barriers preventing the respondent from proceeding by judicial review. He is
not challenging the initial decision to add sub-paragraph (iv) to section 24 of
the SISIP. Instead, he is challenging the monthly decision to reduce the
benefits he receives by the amounts received under the Pension Act, so
the time limit of thirty (30) days to apply for judicial review, as specified at
subsection 18.1(2) of the Act, does not apply in practice. The deduction made
under sub-paragraph 24(a)(iv) is an “act of a federal board, commission
or other tribunal” which, on judicial review, the Federal Court may declare invalid
or unlawful: see sub-paragraph 18(3)(b) of the Act and Krause v.
Canada, cited above at paragraph 23.
[69]
To justify
the procedure he chose, the respondent invoked the fear that other players
involved in managing the SISIP, such as the Treasury Board, would not be bound
by a judgment of the Federal Court on judicial review.
[70]
With
respect, I do not see any reasonable basis for such fear. Should the Federal
Court declare sub-paragraph 24(a)(iv) of the SISIP to be invalid ab
initio or unlawful, it goes without saying that the deductions would cease
and that reimbursements would be in order.
[71]
Finally,
the respondent relied on the following justification for his way of proceeding.
He wanted to proceed by class action because he claims to be afraid that other
members of the Forces who, like him, are subject to deductions would not be
reimbursed and that deductions would continue to be made from their benefits.
[72]
Once
again, I firmly believe that this fear is unfounded because the very basis for
the deduction would be eliminated.
[73]
Finally,
without ruling on this point, I note that as of December 13, 2007, rules 334.1 and 334.12 of
the Federal Courts Rules now allow an application for judicial review
(except for an application under section 28 of the Act) to be brought by a
member of a class of persons on behalf of the members of that class. The
applicant may then ask that the Federal Court certify his application for
judicial review as a class proceeding. It is therefore not necessary to convert
the judicial review procedure, as was the case under the former rules governing
class proceedings, which was then limited to actions.
Procedural history of the case at bar
[74]
I note that
the respondent instituted proceedings by way of an action and that he asked the
Federal Court convert the action into a class proceeding. The Federal Court
judge allowed this application.
[75]
In
proceeding by action as he did, the respondent took the law into his own hands
and presented the Federal Court with a fait accompli. Faced with the
appellant’s objection to the effect that he should have proceeded by way of
judicial review, he sought and obtained the indulgence of the Federal Court.
[76]
In fact,
the Federal Court judge considered the action as an application for judicial
review and then went ahead with the conversion process: see paragraphs 19 et
seq. of his reasons for judgment. However, this was not a judicial review,
so he could not use his discretion to convert pursuant to subsection 18.4(2) of
the Act.
[77]
The
respondent had to follow the procedure provided under the Act. To allow a
litigant to choose to proceed by action rather than by judicial review, as
required by Parliament, could allow that litigant to completely oust the
jurisdiction of the Federal Court over the federal administration, as well as
that of the Federal Court of Appeal under section 28 of the Act: see for
example paragraph 13 of the reasons in Parrish & Heimbecker Ltd. v.
Canada (Minister of Agriculture and Agri-Food) 2008 FCA 362, in which
Justice Pelletier writes the following:
13 This
case falls squarely within the principle stated in Grenier and
illustrates its underlying rationale. Presumably, P&H could have brought
its claim in any of the provincial superior courts and, on the basis of the
allegations in its pleadings, asked that court to determine the legality of the
revocation of the original permits and the issuance of the replacement permits.
Had another shipper encountered the same problem, it could have chosen to
proceed in another of the provincial superior courts and asked for a
determination of the same issue. Different cases could yield different
conclusions leading to an unraveling of the fabric of consistency in the
judicial review of federal administrative action.
[Emphasis added]
[78]
The
appellant is entitled to expect and demand from the respondent that he follows
the procedure. In converting the respondent’s action into an application for
judicial review, the judge created a legal fiction that deprives the appellant
of the right and ability to properly understand the whys and wherefores of the
respondent’s position on the unlawfulness of the provision in question. As a
result, it also deprives the appellant of the ability to contest a conversion application
effectively. It definitively deprives the appellant of the benefit of a
compulsory procedural process, established by Parliament, from which the Federal
Courts Rules do not allow a respondent or judge to derogate: Dawe v.
M.N.R. (Customs & Excise) (1994), 174 N.R. 1 (F.C.A.); Brandlake
Products Ltd. v. Adidas (Can) Ltd., [1983] 1 F.C. 197 (C.A.). I cannot subscribe
to this way of proceeding. The determination of the appropriate procedure to be
followed in this case involves a question of law subject to the correctness standard:
see The Minister of Citizenship & Immigration v. Hinton & Hinton,
2008 FCA 215, at paragraph 35.
Recent decision of the Court of Appeal for
Ontario in TeleZone Inc.
[79]
While these
reasons were being translated, the Court of Appeal for Ontario handed down its decision
in TeleZone Inc. v. Canada (Attorney General), [2008] O.J. No. 5291,
2008 ONCA 892, in which it concluded that the judgment of our Court in Grenier
was erroneous. I would have been content to remain silent on the divergent
views expressed by the Ontario Court of Appeal were it not for the fact that, at
the level of principles, this judgment raises three problems I must point out.
Accordingly, I will take care not to rule on the specific cases that were
submitted to it and that it decided.
[80]
First of
all, the judgment departs from the basic rule of modern statutory
interpretation to the effect that a statute and its provisions must be
interpreted in contextual way, that is, in relation to each other, in the
context of Parliament’s legislative purpose, in a manner consistent with the
promotion of that purpose.
[81]
Instead,
the Court of Appeal for Ontario resorted to a literal
interpretation of section 18 of the Act, and thus of section 28 of that same Act,
by limiting their scope to a codification of the former common law remedies,
namely prerogative writs.
[82]
However,
sections 18 and 28 and the Act itself are more than a mere codification of
remedies. These provisions and the Act itself constitute a policy on the judicial
review of the lawfulness of federal administrative activity by the
Federal Court and the Federal Court of Appeal (emphasis added). This is the
conclusion our Court reached in Grenier after a contextual analysis of
these provisions, the Act and the events surrounding their enactment.
[83]
Secondly, in
failing to give a contextual interpretation of the provisions and the Act in
question, which are the product of a reform of federal administrative law, the
Court of Appeal for Ontario ignored Parliament’s
intention. Far from taking us back to the Dickensian era, sections 18 and 28 of
the Act, as well as the spirit of the Act, are part of the modern reality of a
federal state, as opposed to a simply unitary one, where Parliament intended that,
in the national public interest, the federal state could and should receive a
timely answer as to the lawfulness of the decisions made and the
policies adopted, by means of centralized, timely and unified judicial review
rather than by means of a piecemeal judicial process resulting, as history has
shown, in contradictory decisions by different jurisdictions.
[84]
Finally,
the Court of Appeal for Ontario considered whether the
Superior Court had jurisdiction to hear actions in damages instituted by
litigants. Of course the Superior Court has this jurisdiction, and no one
questions that. However, what must be asked is whether a litigant may at his or
her own choice, challenge the lawfulness of a decision by means of an
action when the unlawfulness of that decision is, in whole or in part, a
pre-requisite (sine qua non) to a remedy in damages. In my opinion,
sections 18 and 28 of the Act, the rationale for and legislative history of the
Act itself and the objectives sought by Parliament unequivocally answer this question
in the negative.
Conclusion
[85]
For these
reasons, I would allow the appeal and set aside the decision of the Federal
Court certifying the respondent’s action as a class proceeding. Considering the
appellant’s consent, I would grant the respondent thirty (30) days from the
date of this judgment to serve and file an application for judicial review. I
would suspend the action brought by the respondent until a final decision has
been made on the application for judicial review. Since the appellant did not
claim costs, I would not award any.
“Gilles
Létourneau”
“I
agree
Marc
Noël J.A.”
“I
agree
Pierre
Blais J.A.”
Certified
true translation
Michael
Palles
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