Docket: A-365-14
Citation: 2015 FCA 227
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CORAM:
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STRATAS J.A.
RENNIE J.A.
GLEASON J.A.
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BETWEEN:
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NICK MANCUSO,
THE RESULTS COMPANY INC., DAVID ROWLAND, LIFE CHOICE LTD. (AMALGAMATED FROM,
ROLLED INTO, AND CONTINUING ON BUSINESS FOR, AND FROM, E.D. MODERN DESIGN
LTD. AND E.G.D.
MODERN DESIGN LTD.) AND DR. ELDON DAHL, AND
AGNESA DAHL
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Appellants
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and
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MINISTER OF
NATIONAL HEALTH AND WELFARE, ATTORNEY GENERAL OF CANADA, MINISTER OF PUBLIC
SAFETY AND EMERGENCY PREPAREDNESS, ROYAL CANADIAN MOUNTED POLICE, AND HER
MAJESTY THE QUEEN IN RIGHT OF CANADA
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Respondents
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REASONS
FOR JUDGMENT
RENNIE J.A.
[1]
This appeal and cross-appeal arise from a
judgment dated July 16, 2014 of the Federal Court striking the appellants’
statement of claim: 2014 FC 708. In brief, the appellants commenced an action challenging
the constitutional authority of Parliament to enact a scheme for the regulation
of the production and sale of natural health products, including vitamins, and
dietary and nutritional food supplements. In the alternative, if the scheme is
constitutional, the appellants challenge the statutory authority that authorizes
the regulations, and plead various Charter violations and tortious conduct by
government officials in the administration and enforcement of the scheme. The
appellants seek declarations of invalidity and a stay of the enforcement of the
legislation and regulations.
[2]
The Federal Court, per Justice James Russell
(the judge) granted the defendants’ motion to strike. The appellants appeal the
order striking the statement of claim. Should the Court find that the judge did
not strike the claim in its entirety, the respondents have filed a
cross-appeal, contending that it was an error not to do so.
[3]
For the reasons that follow, I would dismiss the
appeal and cross-appeal.
I.
The Statement of Claim
[4]
The plaintiffs plead in their statement of claim
that they are consumers, distributors and producers of “natural
health products” in Canada. They include both natural persons and
corporations. “Natural health products” are
regulated as “drugs” as defined by section 2 of
the Food and Drugs Act (R.S.C., 1985, c. F-27) (FDA), and the Natural
Health Products Regulations, SOR 2003-196 (the Regulations), non-compliance
with which attracts regulatory and criminal consequences.
[5]
In their statement of claim, the plaintiffs
plead that Parliament does not have the legislative competence, under section
91(27) of the Constitution Act, 1867, to regulate natural health
substances. They plead that Parliament’s competence is confined to the
regulation of substances that pose a health risk and does not extend to the
regulation of substances that pose no health risk, or little health risk, like
natural health products. In the alternative, they say that the Regulations
defining a “drug” are overbroad and that
Parliament did not intend the definition of “drug”
in section 2 of the FDA to include natural health products, and
therefore the Regulations exceed the authority delegated by the FDA.
[6]
They also plead that the Regulations as a
whole, and specific provisions such as the prohibition on the production and
sale of a “natural health product” without a “Natural Product Number” or NPN, violate subsections
2(a), 2(b), and sections 7, 9 and 15 of the Charter. Section 8 violations are also
said to arise from various searches and seizures to which some of the
plaintiffs were subject under the FDA and the Regulations and the
Controlled Drugs and Substances Act (S.C. 1996, c. 19).
[7]
The plaintiffs also plead that in the
implementation and enforcement of this regulatory scheme, agents and officials
of the defendants committed torts related to the exercise of state authority,
including malicious prosecution and misfeasance in a public office. They seek damages
for lost profits, loss of reputation, mental distress, punitive and exemplary
damages, as well as damages under subsection 24(1) of the Charter. They seek to
have the action determined by a jury trial.
II.
Analysis
A.
Standard of review
[8]
The decision of this Court in Imperial Manufacturing
Group Inc. v. Decor Grates Incorporated, 2015 FCA 100 instructs that the usual
appellate standard of review applies to decisions of a trial judge in matters
of pleadings and therefore that conclusions on questions of fact and questions
of mixed fact and law that are suffused by fact can only be interfered with if
there is a palpable and overriding error. Conclusions on questions of law and
questions of law that may be extracted from questions of mixed fact and law attract
no deference and are reviewed on a standard of correctness.
[9]
I am satisfied that the judge identified and
properly applied the governing principles applicable to a motion to strike and
that no reviewable error arises in his conclusion that the statement of claim
did not comply with the rules of pleading.
B.
Preliminary issue - The scope of the decision
below
[10]
The first paragraph in the judge’s judgment provides
that “The Claim is struck in accordance with my reasons
pursuant to s. 221 of the Federal Court Rules.” The appellants
contend that this should be interpreted as meaning that the claim is struck,
subject to the parts of the reasons which allowed some paragraphs to stand. I
do not think there is any merit to this argument. The judge intended that the
whole claim be struck and the plaintiffs be permitted to file a “fresh as amended statement of claim” that eliminated
the defects existing in the pleading before him.
[11]
I agree that the judge found certain paragraphs
of the claim unobjectionable. He accepted, for example, that the plaintiffs
could, in an action in the Federal Court, obtain declarations of invalidity on
both constitutional and administrative law grounds along with claims for
damages and restitution. He also accepted that the facts pleaded in relation to
the general attack on the vires of the scheme might also bear on the
claims for individual relief. Further, he accepted that certain paragraphs and subparagraphs
of the claim were also unobjectionable (see, for example, subparagraphs 1(a),
1(b), 1(d), and 1(e)(i) and paragraphs 2, 3, and 18).
[12]
However, the appellants’ interpretation of the judgment
is not supported by its plain language– “the claim is
struck.” Further, the judge’s reasons leave no doubt that the judge
struck the claim in its entirety. He found that the claim invited a broad
ranging policy discussion as to whether, and how, natural health products
should be regulated. On multiple occasions he adverted to the inability of the
defendants to plead in defence, given the scope or breadth of the assertions
and the lack of underlying material facts or particularity, and in addressing
costs, the judge characterized the pleading as “very
unwieldy and non-compliant.” Given the number of paragraphs and subparagraphs
struck and their distribution throughout the claim, the residue would be a disjointed
and difficult read and entirely lacking in any material fact.
[13]
Although some paragraphs seeking declaratory
relief were not mentioned as explicitly being struck, these comments must be
read in light of the judge’s extensive consideration of the requirement of a
factual matrix as prerequisite to the determination of constitutionality. The
judge found that the plaintiffs were seeking to impugn the whole scheme for the
classification, inspection and enforcement of food, dietary food supplements
and vitamins. He noted that the pleading did not particularize which of the
55,000 natural food products were in issue and made no link between the
products and the plaintiffs. He concluded that the pleadings did not provide a
factual foundation for such a broad declaration.
[14]
The argument that the judge allowed the
declaratory component of the claim to continue is also inconsistent with the
appellants’ own memorandum of fact and law which concedes at paragraph 21 that “the Court erred in striking the claim in its entirety.”
[15]
In the result, the cross-appeal is unnecessary
and should be dismissed.
C.
The requirement of material facts
[16]
It is fundamental to the trial process that a
plaintiff plead material facts in sufficient detail to support the claim and
relief sought. As the judge noted “pleadings play an
important role in providing notice and defining the issues to be tried and that
the Court and opposing parties cannot be left to speculate as to how the facts
might be variously arranged to support various causes of action.”
[17]
The latter part of this requirement – sufficient
material facts – is the foundation of a proper pleading. If a court allowed
parties to plead bald allegations of fact, or mere conclusory statements of
law, the pleadings would fail to perform their role in identifying the issues. The
proper pleading of a statement of claim is necessary for a defendant to prepare
a statement of defence. Material facts frame the discovery process and allow
counsel to advise their clients, to prepare their case and to map a trial
strategy. Importantly, the pleadings establish the parameters of relevancy of
evidence at discovery and trial.
[18]
There is no bright line between material facts
and bald allegations, nor between pleadings of material facts and the prohibition
on pleading of evidence. They are points on a continuum, and it is the
responsibility of a motions judge, looking at the pleadings as a whole, to ensure
that the pleadings define the issues with sufficient precision to make the pre-trial
and trial proceedings both manageable and fair.
[19]
What constitutes a material fact is determined
in light of the cause of action and the damages sought to be recovered. The
plaintiff must plead, in summary form but with sufficient detail, the
constituent elements of each cause of action or legal ground raised. The
pleading must tell the defendant who, when, where, how and what gave rise to
its liability.
[20]
The requirement of material facts is embodied in
the rules of practice of the Federal Courts and others: see Federal Courts Rules,
Rule 174; Alta. Reg. 124/2010, s. 13.6; B.C. Reg. 168/2009, s. 3-1(2); N.S.
Civ. Pro. Rules, s. 14.04; R.R.O. 1990, Reg. 194, s. 25.06. While the contours
of what constitutes material facts are assessed by a motions judge in light of the
causes of action pleaded and the damages sought, the requirement for adequate
material facts to be pleaded is mandatory. Plaintiffs cannot file inadequate
pleadings and rely on a defendant to request particulars, nor can they
supplement insufficient pleadings to make them sufficient through particulars: AstraZeneca
Canada Inc. v. Novopharm Limited, 2010 FCA 112.
D.
Pleading of Charter violations
[21]
There are no separate rules of pleadings for Charter
cases. The requirement of material facts applies to pleadings of Charter
infringement as it does to causes of action rooted in the common law. The
Supreme Court of Canada has defined in the case law the substantive content of
each Charter right, and a plaintiff must plead sufficient material facts to
satisfy the criteria applicable to the provision in question. This is no mere
technicality, “rather, it is essential to the proper
presentation of Charter issues”: Mackay v Manitoba, [1989]
2 S.C.R. 357 at p. 361.
[22]
In respect of all of the Charter allegations,
the judge found that the plaintiffs did not identify any specific natural
health product to which they had been denied access, nor how that denial
related to the rights might be protected by the Charter provisions raised. For
example, a violation of subsection 2(a) requires that the claimant’s practice
or belief have a nexus with a religious belief or practice or secular morality:
Syndicat Northcrest v. Amselem, [2004] 2 S.C.R. 551, 2004 SCC 47, at p.
56. Here, no material facts were pleaded supporting the proposition that the
plaintiffs had such a practice or belief that was in any way connected with
their consumption or sale of natural health products. Similarly, insofar as the
plaintiffs assert infringement of their freedom of expression, no material
facts were pleaded as to communications that the plaintiffs intended to send or
receive that were interfered with by the regulatory scheme, a prerequisite for
a violation of subsection 2(b).
[23]
With regard to the section 7 claims, the
plaintiffs need to plead material facts to support the claim that restrictions
on the availability of natural health products interfered with either their
security of person or liberty. Again, as the judge noted, the plaintiffs did not
identify any particular products to which they have been denied access or how any
such denial might have risen to the level of a section 7 violation. A section 7
infringement typically engages a fundamental life choice or issues inherently
related to personal well-being: Re B.C. Motor Vehicle Act, [1985] 2 S.C.R.
486; R. v. Morgentaler, [1988] 1 S.C.R. 30. In the absence of a pleading
of a specific regulated drug to which the plaintiffs have been denied access,
or a description of how the plaintiffs use of it has been constrained in a
manner that engages section 7 interests, the defendant would be left guessing
as to the scope of the case it has to meet to respond to the section 7 infringement.
[24]
Similarly, to establish a violation of section
15, a claimant must first establish that the basis on which he or she claims to
have been discriminated against is either an enumerated or an analogous ground
within the scope of section 15. While the appellants plead that choice in food,
supplements and vitamins is an analogous ground, they did not plead any facts
in support of this claim, or facts in support of the other elements of a section
15 violation, such as how the regulation of the product perpetuates
disadvantage or prejudice rising to substantive discrimination: Withler v.
Canada (Attorney General), [2011] 1 S.C.R. 396, 2011 SCC 12 at paras. 30-31.
E.
The corporate plaintiffs
[25]
The judge correctly struck the claims of Charter
violations advanced by the corporate plaintiffs. A corporation cannot maintain
a section 7 Charter challenge for either a subsection 24(1) or a section 52
remedy unless it is the defendant in a criminal or regulatory prosecution or is
subject to compulsory measures, such as injunctive relief, at the behest of the
state in a regulatory proceeding: R. v. Big M Drug Mart Ltd., [1985] 1 S.C.R.
295; Canadian Egg Marketing Agency v. Richardson, [1998] 3 S.C.R. 157. The
pleadings on behalf of the corporate defendants also suffer from the same
deficiency found by the judge in respect of the individual plaintiffs. The
claims by the corporate plaintiffs for breaches of the “right
to equality as a structural imperative of the
underlying principle of the Constitution Act 1867”, and
for violations of the corporations’ subsection 2(b) rights, lacked a factual
foundation in the pleadings. In any event, a corporation cannot assert section
15 rights.
F.
The tort claims
[26]
A properly pleaded tort claim identifies the
particular nominate tort alleged and sets out the material facts needed to satisfy
the elements of that tort. As the judge pointed out, while the appellants assert
various torts including misfeasance in public office, they do not link
particular conduct to the elements of the tort. For example, the tort of
misfeasance in public office requires a pleading of a particular state of mind
by a public official – deliberate, specific conduct which the official knows to
be inconsistent with their legal obligations: Odhavji Estate v. Woodhouse,
2003 SCC 69; St. John's Port Authority v. Adventure Tours Inc., 2011 FCA
198; Merchant Law Group v. Canada Revenue Agency, 2010 FCA 184. The statement
of claim in this case does not meet that standard.
[27]
The bald assertion of a conclusion is not a
pleading of material fact. The judge properly struck many of the paragraphs
underlying the tort claims on the basis that without more, these were conclusory
statements. He also found that the allegations of bad faith and abuse of power
comprised a set of statements or conclusions and did not meet the standard of
pleading described in Merchant Law at paras. 34-35.
[28]
The judge assessed the allegations of tortious
conduct in the implementation and enforcement of the Regulations against
these principles and concluded that the appropriateness of the enforcement
measures could only be assessed in the light of the facts and context of a
particular action or series of actions. What was pleaded, however, was a
general practice, with no specific instances, leaving it unclear as to whether
the conduct was “something mandated by the Act or the
Regulations, or conduct set out in some administrative policy of directive, or
whether they are referring to what individual officials have chosen to do”
(Reasons for Decision at para. 106).
G.
Damages
[29]
Relying on Mackin and Ward, the
judge correctly dismissed the claim for relief under sections 24(1) of the Constitution
Act, 1982: Mackin v. New Brunswick (Minister of Finance); Rice v. New Brunswick, [2002] 1 S.C.R. 405, 2002 SCC 13; Vancouver (City) v. Ward,
[2010] 2 S.C.R. 28, 2010 SCC 27; Henry v. British Columbia (Attorney
General), 2015 SCC 24. As a general rule, damages are not available from
harm arising from the application of a law which is subsequently found to be
unconstitutional, without more. The plaintiffs pleaded that the respondents’
conduct was “clearly wrong, in bad faith or an abuse of
power” – one of the elements typically required in order to found a
damages claim under section 24(1) of the Charter – but failed to supply
material facts on the question of how the Regulations and their
enforcement constitute serious error, bad faith or abuse so as to trigger an
entitlement to Charter damages. They also fail to give any particulars of any
conduct that would support a damages claim.
H.
Declaratory relief
[30]
As noted, the judge did not explicitly strike
the paragraphs of the claim which sought declarations as to the
constitutionality of the scheme, either under the Constitution Act, 1867
or the Charter. Nor did he explicitly strike the declaratory relief in respect
of administrative law challenges to the scope of the definition of “drug” in section 2 of the FDA and the Regulations.
[31]
The appellants allege that their action can
nonetheless proceed to trial on the basis of the surviving paragraphs. It is
not problematic, in their view, that there are no material facts in the
statement of claim, including none that link the impugned scheme to an effect
on themselves as plaintiffs. They base this argument on the proposition that
freestanding declarations on the constitutionality of laws and legal authority
are always available.
[32]
On this latter point, there is no doubt. Free-standing
declarations of constitutionality can be granted: Canadian Transit Company
v. Windsor (Corporation of the City), 2015 FCA 88. But the right to the
remedy does not translate into licence to circumvent the rules of pleading. Even
pure declarations of constitutional validity require sufficient material facts
to be pleaded in support of the claim. Charter questions cannot be decided in a
factual vacuum: Mackay v. Manitoba, above, nor can questions as to
legislative competence under the Constitution Act, 1867 be decided
without an adequate factual grounding, which must be set out in the statement
of claim. This is particularly so when the effects of the impugned legislation
are the subject of the attack: Danson v. Ontario (Attorney General),
[1990] 2 S.C.R. 1086, at p. 1099.
[33]
The Supreme Court of Canada in Canada (Prime Minister) v. Khadr, 2010 SCC 3, [2010] 1 S.C.R. 44, para. 46
articulated the pre-conditions to the grant of a declaratory remedy: jurisdiction
over the claim and a real as opposed to a theoretical question in respect of
which the person raising it has an interest.
[34]
Following Khadr, this Court in Canada
(Indian Affairs) v. Daniels, 2014 FCA 101 (leave to appeal granted) at paras.
77-79 highlighted the danger posed by a generic, fact-free challenge to
legislation – in other words, a failure to meet the second Khadr
requirement. Dawson JA noted that legislation may be valid in some instances,
and unconstitutional when applied to other situations. A court must have a
sense of a law’s reach in order to assess whether and by how much that reach
exceeds the legislature’s vires. It cannot evaluate whether Parliament
has exceeded the ambit of its legislative competence and had more than an
incidental effect on matters reserved to the provinces without examining what
its legislation actually does. Facts are necessary to define the contours of
legislative and constitutional competence. In the present case, this danger is
particularly acute; as the judge noted, the legislation at issue pertains to
literally thousands of natural health supplements.
[35]
This is not new law. While the plaintiffs point
to Solosky v. The Queen, [1980] 1 S.C.R. 821 for the proposition that
there is a broad right to seek declaratory relief, Solosky also notes
that there must be “a ‘real issue’ concerning the
relative interests of each [party].” The Court cannot be satisfied that
this requirement is met absent facts being pleaded which indicate what that
real issue is and its nexus to the plaintiffs and their claim for relief.
[36]
To conclude, while the Federal Court correctly
found that there was nothing inherently faulty with claims in respect of
declaratory relief (subparagraphs 1(a)(ix) through 1(b)(v)), the action could
not move forward on the constitutional issues on the basis of the claims for
relief alone. The paragraphs said to underlie the claims of constitutional
breaches were struck, and with them disappeared the basis on which these claims
could be adjudicated.
I.
The section 8 violations
[37]
A final issue concerns the claim that searches
conducted by officers of the defendant against some of the appellants violated
section 8 the Charter. The judge struck these allegations on the basis that
they had previously been raised and disposed of in the criminal and regulatory
prosecutions: R v. Dahl, 120998, March 26th 2004 (BC Prov Ct); R v.
Eldon Garth Dahl, Agnesa Dahl and EDG Modern Design Ltd, 100237221Q3 (Alta
QB)). Given that, he found that the section 8 Charter claim constituted a
collateral attack on the Provincial Court and Queen’s Bench decisions and also an
abuse of process.
[38]
The appellants raise three arguments. Their
first and second arguments are that these doctrines do not apply because the
judicial forum and the relief sought are different. They also contend that the
judge erred in striking the claim on the basis of abuse of process and
collateral attack on preliminary motion. On this last point, they say that they
will adduce evidence at trial which is different from or expands on the facts
which underlie the decision of the BC and Alberta courts, and explain why this
claim is not impermissible relitigation. As this requires the judge to weigh
evidence, the issue of collateral attack and abuse of process cannot be
determined on a motion to strike and must await trial.
[39]
Collateral attack and abuse of process are related,
but distinct, doctrines: Toronto (City) v. C.U.P.E., Local 79, [2003] 3
S.C.R. 77, 2003 SCC 63. A collateral attack is an impermissible attempt to
nullify the result of another proceeding outside of the proper channels for the
review of that decision. The purpose of the doctrine is to prevent attempts to
overturn decisions made in other courts. Its ambit is narrow.
[40]
Abuse of process, in contrast, is a residual and
discretionary doctrine of broad application and scope, which bars the
relitigation of issues. It is directed to preventing relitigation of the same
issues and the attendant mischief of inconsistent decisions by different courts
which, in turn, would undermine the doctrines of finality and respect for the
administration of justice. It is thus a more flexible doctrine than collateral
attack. It permits a judge to bar relitigation of a criminal conviction in a
different forum, as was the case in CUPE.
[41]
The relief sought by the appellants is different
in this action from that in the BC and Alberta proceedings. Here, damages are
sought for an alleged unconstitutional search and for torts claimed to have
been committed in the execution of the search. In the provincial courts, what
was sought was the exclusion of the evidence obtained in the search at a criminal
trial. These differences preclude the application of the doctrine of collateral
attack. Abuse of process, however, remains available; indeed, contrary to the
appellants’ first and second arguments, abuse of process explicitly
contemplates a different judicial forum and relief sought.
[42]
The remaining question is whether it is appropriate
to strike a claim on the basis that it is an abuse of process on a motion to
strike. It should be noted at the outset that the rules of practice of the
Federal Courts expressly contemplate this (Rule 221(f)). Further, this Court
has endorsed the propriety of striking a claim as being an abuse of process at
the pleadings stage where the claimant sought to relitigate a criminal
conviction from another jurisdiction in a civil action before the Federal Court:
Sauvé v. Canada 2011 FCA 141 (commenting favourably on the lower court’s
striking of paragraphs not under appeal).
[43]
Whether a particular issue has previously been
judicially determined is a fact of which a judge is entitled to take notice at the
early stage of a motion to strike. The fact of the other decision can form the
foundation for the exercise of the judge’s discretion. Allowing the abuse of
process doctrine to be raised at the pleadings stage is consistent with the objective
of maintaining respect for the administration of justice and the court’s desire
for comity and mutual respect between jurisdictions. More practically, a
defendant has the right to have an abusive claim struck before being subjected
to an intrusive and costly discovery process. While plaintiffs are not required
to build into their pleadings a response to every conceivable defence, it is
not unduly burdensome to expect plaintiffs who know they are relitigating a
previously-determined issue to include in their pleadings the material facts
they will rely upon to explain why the discretion to find the claim abusive
should not be exercised.
[44]
Here, there are no such facts that could be
pleaded because granting the Charter or tort claims related to the impugned
search would necessarily require the Federal Court to make different factual
findings from those reached in the final decisions of the BC Provincial Court
and Alberta Court of Queen’s Bench in the criminal proceedings, which found the
impugned search to be lawful.
[45]
Accordingly, while the judge erred in
characterising the claim as a collateral attack, he correctly identified it as
an abuse of process. The difference of forum and relief do not preclude the
claim from being abusive; it was appropriate for the judge to decide this issue
on a motion to strike, and there is no reviewable error in his application of
the principle of abuse of process to the claim before him.
III.
Conclusion
[46]
I would dismiss the appeal and the cross-appeal,
with costs. I would grant the appellants sixty days from the date of this
Court’s judgment to serve and file their fresh as amended statement of claim.
"Donald J. Rennie"
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“I agree
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David Stratas”
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“I agree
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Mary J.L.
Gleason”
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