Docket: A-117-16
Citation:
2017 FCA 101
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CORAM:
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NADON J.A.
RENNIE J.A.
DE MONTIGNY J.A.
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BETWEEN:
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CANADA
(MINISTER OF HEALTH) and
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THE ATTORNEY
GENERAL OF CANADA
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Appellants
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and
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THE WINNING
COMBINATION INC.
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Respondent
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PUBLIC
REASONS FOR JUDGMENT
RENNIE J.A.
[1]
This is an appeal by the Attorney General of
Canada and the Minister of Health from the Judgment of the Federal Court (2016
FC 381) per Russell J. In broad terms, the Judgment under appeal set aside a
decision, and subsequent variations and reconsiderations of that decision, by
the Minister of Health (the Minister) under the Natural Health Products
Regulations (S.O.R./2003-196) (the Regulations). The effect of those
decisions was to refuse a product licence (Natural Health Product Licence) to
the respondent, The Winning Combination Inc. (TWC), in respect of Resolve, a
product that may assist in cessation from smoking. After finding that
governmental officials involved in the regulatory review process were biased
and that there had been multiple breaches of procedural fairness, the judge
issued an order of mandamus compelling the Minister to issue a Natural
Product Licence to the respondent. He granted costs of the application to TWC
on a full indemnity basis.
[2]
At the heart of the Attorney General’s appeal
lies the order of mandamus. The Attorney General contends that the judge
erred in law in issuing mandamus and in so doing usurped a duty vested
in the Minister under the Regulations. The Attorney General also
contends that the judge erred in concluding that his findings of bias meant
that there could be no fair and objective assessment of TWC’s application, and
in placing a burden on the Minister to demonstrate circumstances to the
opposite effect. The Attorney General further contends that the judge erred in
receiving and relying on evidence that was not before the Minister, erred in
first striking and later relying on certain evidence and erred in principle in
awarding solicitor and client costs.
[3]
At the outset of the hearing of the appeal, the
Attorney General conceded that the licensing decision and reconsideration process
under the Regulations had not been reached in accordance with procedural
fairness. However, the Attorney General maintained her position that the order
of mandamus be set aside and that the question of whether a Natural
Product Licence should be issued in respect of Resolve be remitted to the
Minister for redetermination.
[4]
This concession was appropriate. There was no
error in the Federal Court’s factual findings relevant to procedural fairness,
nor in the application of the principles of procedural fairness to those
findings. The judge found multiple breaches of procedural fairness throughout
the licensing and subsequent reconsideration process, and was correct in doing
so. The Court did not understand the Attorney General to be conceding bias, at
least on a systemic level, given her position that the matter be returned to
the Minister.
[5]
Before the Federal Court, TWC advanced other
grounds on which it claimed it was entitled to relief. To supplement its
position that it was entitled to mandamus, TWC argued that once the
Minister had decided that Resolve was classified as a natural health product,
the doctrines of functus officio and estoppel precluded the Minister
from reversing her decision. In light of his findings with respect to
procedural fairness, bias and the unreasonableness of the decision, these
grounds were not addressed by the judge but are raised again by TWC before this
Court.
[6]
For the reasons that follow, the appeal should
be allowed, in part.
I.
Legislative framework
[7]
In order to set the stage for what is a rather
extensive review of the history of this proceeding, a description of key
elements of the regulatory scheme governing natural health products (NHPs) and
its distinction from the regulatory scheme governing drugs is required.
[8]
This Court, and the Federal Court, are familiar
with the drug approval process under the Food and Drugs Act (R.S.C., 1985, c. F-27). Although there is similarity in some of the terms between the
regulations governing drugs and NHPs, they do not necessarily share the same
scientific or empirical regulatory requirements. The regimes for approval of
drugs and NHPs are legally and operationally discrete. Subsection 3 of the Regulations
makes this clear; unless expressly indicated, the Food and Drug Regulations
(C.R.C., c. 870) do not apply to NHPs.
[9]
The Minister of Health is responsible for the
administration of the Regulations. The Health Products and Food Branch
of Health Canada includes the Natural Health Products Directorate (NHPD, now
the Natural and Non-prescription Health Products Directorate), responsible for
the licensing of NHPs, and the Health Products and Food Branch Inspectorate
(HPFBI), responsible for compliance and enforcement activities.
[10]
Selling a NHP in Canada requires a licence,
which is to be obtained by application to the Minister. The Product Licence
Application (PLA) shall, pursuant to subsection 5(g) of the Regulations,
include “information that supports the safety and
efficacy of the natural health product”. Section 6 directs the Minister
to dispose of applications within 60 days in cases where safety and efficacy
information submitted by an applicant is limited to that within the Department
of Health’s Compendium of Monographs. Subsection 7(d) provides that the
Minister “shall” issue a licence if the product
is “not likely to result in injury to the health of a
purchaser or consumer.”
[11]
The Regulations provide the Minister with
a wide range of powers to administer and enforce the regime. Sections 16 to 19
give the Minister the authority at any time to request information from a
licence holder where reasonable grounds exist that the product may no longer be
safe. The Minister may issue a direction to stop sales if no response is
forthcoming. The Minister may suspend a licence where reasonable grounds exist
that a licence holder has contravened the Act or Regulations or there has
been a false or misleading statement in the information submitted under section
5 in a PLA. The Minister may also suspend a licence at any time, and without an
opportunity for the licence holder to be heard, where there are reasonable
grounds to believe it is necessary to prevent injury to the health of the
consumer.
[12]
Save in circumstances where suspension is necessary
to prevent injury, sections 19 and 20 of the Regulations require the
Minister to give the licence holder both notice and an opportunity to be heard before
a suspension takes effect and, once suspended, before taking administrative
action to reinstate or cancel a suspended licence. So too at the application
stage; section 9 requires that reasons for refusal (Notice of Refusal or NOR)
to issue a licence be given, and provides a process by which an applicant may
request reconsideration with the associated opportunity to be heard.
[13]
There is a threshold question that must
necessarily be answered to determine the applicability of the Regulations
to a particular product, and that is whether the product that is the subject of
an application is a NHP. “Natural health product”
is defined in subsection 1(1) as a substance listed in Schedule 1 of the Regulations.
Schedule 1 states that, inter alia, a natural health product substance is,
“[a] plant or a plant material, an alga, a bacterium, a
fungus or a non-human animal material” (Item 1). Item 2 of the Schedule
provides that a natural health product substance includes “[a]n extract or isolate of a substance described in item 1,
the primary molecular structure of which is identical to that which it had
prior to its extraction or isolation”.
[14]
The question of classification of a substance, either
as a NHP or as a drug, determines which regulatory scheme is engaged and, in
consequence, the nature of the evidence that must be provided in support of the
licence application. There is an inherent logic to this. If natural health products
were to be subject to the same regulatory requirements and standards as drugs,
a separate regulatory regime would not have been required.
II.
History of the proceeding
A.
The licence application for Resolve
[15]
The Regulations came into force in
January 2004. The series of events under review began with the 2004 application
by the then-owner of Resolve to the NHPD for a Natural Product Licence. Consistent
with departmental practice, as the Active Ingredient in Resolve was listed in
the Dictionary of Natural Products (DNP), the NHPD concluded on December 2,
2004, that Resolve fell within the definition of a NHP within Schedule 1 to the
Regulations. The application for Resolve was given a PLA submission
number.
[16]
TWC purchased the rights to Resolve in 2006 and
began to sell the product in Canada in October of that year. However, in
December of 2006, Health Canada received a complaint from Pfizer Canada Inc. (Pfizer),
alleging health and safety concerns related to Resolve. The complaint asserted
that the description of the pharmacology of the product suggested that it
should be regulated as a drug. This complaint triggered an internal inquiry by
the HPFBI, that part of Health Canada responsible for regulatory compliance. Responsibility
for the inquiry was assigned to Mr. Paul Gustafson.
[17]
Five months later, on May 4, 2007, Mr. Gustafson
sent TWC a warning letter, requesting that it stop the sale and advertising of
Resolve and recall the product from the market. This request was based on an
alleged contravention of the Act and Regulations and a determination
that Resolve posed a risk to health. The letter stated that, as Resolve was a NHP
subject to the Regulations, it could not be sold or advertised without a
licence. Further, a Health Hazard Evaluation (HHE) requested as part of the
investigation had resulted in classification of the product as a Type II Health
Hazard. A Type II Health Hazard is defined as “a situation in which the use of, or exposure to, a product may
cause temporary or mild to moderate adverse health consequences or where the
probability of serious adverse health consequences is remote.” Health Canada concluded, among other things, that Resolve contained
a substance that was derived from passion flower and that there was a risk of
at least a temporary or mild adverse health consequence.
[18]
In its response TWC noted that it was taken by
surprise, particularly with respect to the safety and efficacy concerns raised
by Health Canada. TWC took the position that the requests to stop sale,
advertising and the recall of Resolve were unwarranted, but indicated its
willingness to meet and work with Health Canada to resolve the situation.
[19]
Approximately one month later, on June 20, 2007,
in response to information submitted by TWC, Health Canada issued a revised HHE
which confirmed the Type II Health Hazard classification and alleged regulatory
contravention. Health Canada requested once again that TWC immediately stop the
sale and advertising of, and recall, Resolve.
[20]
This triggered a meeting between TWC and Health
Canada officials on June 28, 2007. At that meeting, TWC was provided with
another revised HHE which confirmed that there was no residual passion flower
in Resolve, but noted a report of an adverse reaction
(Adverse Reaction Report or ARR) as establishing a “serious”
case with a “possible” causality between the use
of Resolve and symptoms reported by a patient. The
judge determined that neither the classification of Resolve as a NHP nor its
efficacy was raised as a concern at the meeting.
[21]
At the close of the meeting, TWC agreed, on an
interim basis, to comply with the stop sale and advertising requests made by
Health Canada, but the issue of a recall was left in abeyance. Correspondence
was exchanged by the parties on the issue, and TWC submitted written materials,
along with 16 attachments and a subsequent expert opinion, in order to address
the issues raised in the investigation. Health Canada was not satisfied. It
ultimately issued a public advisory, which stated that Resolve was not
authorized for sale, TWC had not complied with Health Canada’s recall request,
and advised Canadians not to use Resolve because of its potential health risk.
[22]
At the risk of disrupting the chain of events, I
will jump forward in the chronology to note that, by September 18, 2008, Health
Canada conceded that it had no safety concerns with respect to Resolve.
[23]
On July 19, 2007, the NHPD issued a Notice of
Refusal (the July NOR). TWC’s application was rejected on the basis of
subsections 7(a) and (d) of the Regulations, including in particular a lack
of sufficient evidence to support the safety and efficacy of the product. The July NOR expressed concerns over the Active Ingredient’s potential
effects on the liver, the scientific evidence submitted in support, the
therapeutic benefit of Resolve and its recommended dosage. It cited the ARR noted
in the prior HHE as establishing a “possible” causality
between the use of Resolve and the symptoms reported by a patient. No mention was made in the July NOR of any concern as to whether
Resolve was properly classified as a NHP.
[24]
TWC sought recourse. It filed both a request for
reconsideration on July 26, 2007 under subsection 9(2) of the Regulations
(Request for Reconsideration), and an application for judicial review of
the July NOR.
[25]
Approximately one month following the Request
for Reconsideration, on August 21, 2007, NHPD wrote to TWC “adjusting” the grounds for the July NOR (the
Adjustment Letter). Resolve was no longer considered to be a NHP, but rather a
drug, and therefore subject to regulation under the Food and Drug
Regulations. The letter stated that NHPD relied, in part, on the DNP for
classification, but that a review of the DNP’s sources led the NHPD to determine
that its inclusion of the Active Ingredient was in error. NHPD took the
position that the Active Ingredient “is in fact a
synthetic substance that does not occur naturally”. TWC accordingly
amended its Notice of Application to include judicial review of the Adjustment
Letter.
[26]
The grounds upon which the Adjustment Letter
relied represented the first time that NHPD had directly addressed the question
of the classification of Resolve as a NHP with TWC. The judge found that the
licence application had proceeded up to that date on the basis that Resolve was
classified as a NHP, a determination that he found to have been confirmed on
December 2, 2004, January 25, 2007 and June 18, 2007.
[27]
There was evidence before the judge that the DNP
was the authoritative reference in North America for natural health products.
It was at the time, the definitive reference source used by the NHPD with
respect to classification of natural health products. It was on the basis of
the DNP that Resolve had originally been classified as a NHP. However, on
September 11, 2007, the Active Ingredient in Resolve was removed from the DNP.
[28]
The judge found that this de-listing occurred at
the instigation of Dr. Robin Marles, the Director of the Bureau of Clinical
Trials and Health Sciences at NHPD, and the official who oversaw the HHE
process. While the “motivation and sequence of events
were murky” leading up to the Adjustment Letter, the judge found it was
clear at that time that the Active Ingredient was still listed in the DNP and
that neither Dr. Marles nor Health Canada had evidence to suggest that it was
not a natural product. No notice had been given to TWC of this change in
position, nor was it given an opportunity to make submissions on the point before
the Adjustment Letter was issued.
B.
Reconsideration process – August 2007 to January
30, 2012
[29]
I turn now to the reconsideration process, a
regulatory review or appeal mechanism established under subsection 9(2) of the Regulations.
[30]
Beginning in late August 2007 and continuing
throughout the lengthy reconsideration process, TWC provided NHPD with written
submissions, additional scientific data and expert analysis regarding its
conclusions related to classification, safety and efficacy. TWC requested that the
reconsideration process be conducted by different officials than those involved
in the original PLA assessment. NHPD gave TWC assurances throughout the process
that it had consulted individuals who were not involved in the original PLA
process; however, the judge questioned the independence of the experts retained
by Health Canada in its review.
[31]
On April 7, 2008, the NHPD rendered its first decision
in the reconsideration process, responding to TWC’s requests for
reconsideration related to both classification and safety and efficacy at once.
NHPD maintained that Resolve did not meet the definition of a NHP. It found the
additional data submitted by TWC to support its position that the Active
Ingredient was naturally occurring was inconclusive. As a result, safety and
efficacy could only be addressed pursuant to an application under the Food
and Drug Regulations.
[32]
Five months after its initial refusal to
reconsider, on September 18, 2008, NHPD rendered a second refusal. On the basis
of its review of additional information submitted by TWC, it reversed its prior
decision on safety. However, it maintained its position that there was insufficient
evidence of efficacy as a smoking reduction/cessation aid. Despite abandoning
its position that the product was not safe, no change was made by Health Canada
to the requirement that Resolve be recalled from the Canadian market. NHPD
indicated that it would be willing to further reconsider its findings related
to efficacy.
[33]
NHPD rendered its “final”
reconsideration decision regarding classification and efficacy on July 22, 2009,
concluding once again that the evidence was insufficient to classify Resolve as
a NHP. NHPD stated that it drew this conclusion on the basis of its review of
all of the evidence that TWC had submitted throughout the licensing and
reconsideration processes. Given its classification decision, NHPD considered
the outstanding efficacy issue to be “moot”. Nonetheless,
NHPD confirmed its previous findings relating to the efficacy of Resolve. NHPD
gave “final notice” pursuant to subsection 10(2)
of the Regulations that the product did not meet the definition of a NHP
and that its conclusion on efficacy was final.
[34]
Though the NHPD communicated to TWC that the
July 22, 2009 decision was final, it subsequently accepted further submissions related
to Resolve. Further additional reconsideration decisions were communicated to
TWC on October 19, 2009; September 20, 2011; and January 30, 2012. On January
30, 2012, the NHPD stated that additional evidence had been considered, but it
maintained its position on both classification and efficacy. The letter stated
that the refusal was final and the reconsideration process concluded.
C.
The Federal Court decision
[35]
The judicial review and reconsideration
proceedings moved in parallel. As decisions were rendered in the
reconsideration process, the original judicial review application was amended.
But the proceedings were not separate – independent laboratory reports and
expert opinions submitted in the reconsideration process were filed in the
judicial review. The reconsideration process lasted four years, the judicial
review, much longer. The reconsideration process was poorly managed. There was
no finality. Even Health Canada’s “final”
decision was not final in practice, as it continued to receive, review and
respond to further submissions. These, as well as Health Canada’s responses,
all found their way into the court record. As will be seen, this was not
without consequence for the judicial review.
[36]
It is useful to recapitulate the key findings in
the Federal Court insofar as they underlie the judge’s legal analysis and bear
on the appropriateness of the remedy.
(1)
Classification
[37]
First, from December 2, 2004 to the August 21, 2007
Adjustment Letter, the judge found that Health Canada had concluded, on the
basis of its own criteria, that Resolve was properly classified as a NHP. It
had confirmed that conclusion on more than one occasion between those dates. For
example, the judge noted that the issue of classification was raised when Mr. Gustafson,
the investigator assigned to the Pfizer complaint, emailed Dr. Marles to
challenge the previous classification of Resolve. Dr. Marles responded to Mr.
Gustafson by confirming that the Active Ingredient was a NHP according to the
DNP (Reasons for Judgment, para. 75).
[38]
The judge found that, based on the structure of
the Regulations, the reliance on safety and efficacy concerns for the
July NOR necessarily implied that NHPD did not consider classification to be at
issue when it rendered its decision. Put otherwise, if it were not a NHP, the
findings on efficacy and safety would be immaterial given that those criteria
would have to be evaluated under the standards and methodologies governing drug
submissions.
[39]
The judge found that, even after the first
decision was made, Dr. Marles made it clear by way of email on July 25, 2007
that “everyone internally knows [the Active Ingredient]
is an NHP”. Despite this correspondence, Mr. Gustafson conducted his own
research into the scientific articles relied upon by the DNP and raised the
issue again with Dr. Marles, who was now convinced that the classification of
the product should be questioned. The judge found that Dr. Marles directed that
the Adjustment Letter on classification be issued (Reasons for Judgment, paras.
75-77).
[40]
In October 2008, TWC received a report by Dr.
Arnason, an expert retained by Health Canada for the purposes of the judicial review.
Dr. Arnason opined that “there is no convincing
evidence of [the Active Ingredient naturally occurring] that would be
acceptable in a peer reviewed phytochemical journal”. Based on this
report, the judge noted this to be evidence that the standards upon which
Resolve was evaluated as a NHP were “asserted – and
then changed” during the reconsideration process. Dr. Arnason’s evidence
was subsequently struck from the record as improper expert opinion.
(2)
Safety and efficacy
[41]
Safety was raised as an issue on May 4, 2007,
when the first warning letter was issued to TWC. The letter attached a revised
HHE which demonstrated that Resolve had been classified as a Type II Health
Hazard. By September 18, 2008 safety had been conceded.
[42]
The judge noted that the efficacy and safety
issues were intricately connected, as they both formed part of the July NOR.
The lack of prior notice and deviation from standard practices were equally
concerning for the judge on the issue of efficacy (Reasons for Judgment, paras.
131-132).
[43]
The judge also took issue with NHPD’s interpretation
of the efficacy requirements, which seemed to demand “conclusive
proof of efficacy in the form of unimpeachable human clinical studies”
(Reasons for Judgment, para. 132). The judge concluded that section 7 and
subsection 5(g) of the Regulations only require an applicant to provide
information that reasonably supports some degree of efficacy as claimed in the
PLA (Reasons for Judgment, para. 142).
[44]
TWC claimed in its PLA that Resolve “may” help with smoking cessation, and the judge found
that the information submitted supported such a claim. The judge determined
that the NHPD’s reading of the Regulations was both “incorrect as a matter of statutory interpretation and
unreasonable in the full context of the manner in which efficacy was dealt
with” (Reasons for Judgment, para. 142).
[45]
The judge correctly noted the demarcation
between the regulatory standards for the assessment of the safety and efficacy
of drugs and the regulatory standards for the assessment of the safety and
efficacy of NHPs. Subsection 5(g) of the Regulations requires “information that supports the safety and efficacy” of
NHPs in contrast with Regulation C.08.002(2) of the Food and Drug Regulations
which requires that a submission for a Notice of Compliance for a new drug
contain:
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[…]
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…
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(f) details of the tests to be applied to control the potency,
purity, stability and safety of the new drug;
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f) le détail des épreuves qui doivent être effectuées pour
contrôler l’activité, la pureté, la stabilité et l’innocuité de la drogue
nouvelle;
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(g) detailed reports of the tests made to establish the safety of
the new drug for the purpose and under the conditions of use recommended;
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g) les rapports détaillés des épreuves effectuées en vue d’établir
l’innocuité de la drogue nouvelle, aux fins et selon le mode d’emploi
recommandés;
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(h) substantial evidence of the clinical effectiveness of the new
drug for the purpose and under the conditions of use recommended;
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h) des preuves substantielles de l’efficacité clinique de la
drogue nouvelle aux fins et selon le mode d’emploi recommandés;
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[…]
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…
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[46]
I also agree with the judge’s conclusion that,
given the breaches of procedural fairness, the reconsideration process related
to efficacy did not rectify the shortcomings of the PLA process (Reasons for
Judgment, para. 143).
(3)
Procedural fairness / Bias
[47]
As noted, the Attorney General has conceded that
there were breaches of procedural fairness plaguing this series of events.
However, I have summarised some of the key facts which underlie this concession
as they inform the judge’s approach to remedy:
i.
Dr. Marles instigated removal of the Active
Ingredient by enlisting the support of the DNP in an effort to legitimize his
unacceptable decision (Reasons for Judgment, para. 82);
ii.
The reconsideration process involved individuals
responsible for the Adjustment Letter, despite assurances given to the contrary
(Reasons for Judgment, para. 91);
iii.
The NHPD responded to TWC’s request for
independent experts with Drs. Arnason and Foster, whose impartiality was called
into question (Reasons for Judgment, para. 92);
iv.
The NHPD did not conduct its own laboratory
testing, as Dr. Marles admitted would have been necessary to refute the
evidence provided by TWC’s experts (Reasons for Judgment, para. 93);
v.
There was evidence sufficient to raise a concern
that Dr. Marles knew which expert opinions to secure in order to support his
own conclusions and past decisions (Reasons for Judgment, para. 93);
vi.
Though Dr. Arnason stated that he conducted a
literature search of “one of the most authoritative
databases”, he did not find any articles confirming the natural
occurrence of the Active Ingredient, despite the existence of one such article
(Reasons for Judgment, para. 94); and
vii.
The final reconsideration decision of January
30, 2012, which referenced the reports of Health Canada’s experts Drs. Arnason
and Foster, set out new allegations and arguments not previously disclosed to
TWC and did not provide TWC with an opportunity to respond (Reasons for
Judgment, para. 95).
[48]
The judge also found a reasonable apprehension
of bias arising from consideration of the safety of Resolve. For example, he noted
that safety had been confirmed within Health Canada in June 2007 (Reasons for
Judgment, para. 99). This was in contradiction to the HHEs, including HHE#6,
which contained new reasons supporting Resolve's designation as a Type II
Health Hazard that appeared to be unsupported by the evidence. TWC was given no
opportunity to respond to these new allegations (Reasons for Judgment, paras.
98 and 108).
[49]
The judge noted in particular the statement made
by Mr. Gustafson to a TWC representative to the effect that, no matter the
information provided by TWC, a PLA was not going to be granted (Reasons for
Judgment, para. 109). I note however, that this finding was challenged as
hearsay. In fact, TWC had provided Health Canada with an expert report
confirming its safety in July 2007, prior to the issuance of the July NOR
(Reasons for Judgment, para. 106).
[50]
The judge detailed further Dr. Marles’
involvement in the PLA process. He noted that, before his intervention, an
official within the Bureau of Product Review and Assessment (BPRA) within NHPD
had confirmed that the product was safe. The judge found that BPRA took Dr.
Marles’ concerns at face value without conducting its own review or analysis,
and allowed Dr. Marles to direct that the initial Safety and Efficacy
Assessment Report be set aside and replaced by an assessment taking greater
account of his safety concerns (Reasons for Judgment, para. 119). The judge
concluded that Dr. Marles influenced BPRA to deviate from its standard
licensing practices (Reasons for Judgment, para. 121).
[51]
The judge concluded that Dr. Marles’
orchestration of the Adjustment Letter and his influence in the reconsideration
process in particular led to a reasonable apprehension of bias in accordance
with the test laid out in Baker v. Canada (Minister of Citizenship and
Immigration), [1999] 2 S.C.R. 817, 174 D.L.R. (4th) 193, at paras. 45-47 (Reasons
for Judgment, para. 96).
(4)
Evidentiary issues
[52]
What began as a discrete judicial review of the
July NOR metamorphasized into a six-year inquiry into the merits of the licence
application, with the applicant and respondent before him filing competing
evidence, each vying to win a scientific debate before the applications judge. The
evidence before the Federal Court for the purposes of the judicial review
included those expert reports and opinions exchanged throughout the
reconsideration process. Both NHPD and TWC adduced further expert evidence that
was not before the Minister. For example, TWC tendered a report from a
pharmacologist retained to review the manner in which the PLA was dealt with by
NHPD and Health Canada tendered evidence in response. This led, as might be
expected, to a flurry of motions and objections to evidence at the hearing of
the judicial review, as the parties tried to disentangle the factual from the
opinion, hearsay from first-hand evidence.
[53]
The judge was concerned with Dr. Marles’ role as
the sole fact witness of Health Canada, given the extent of his influence and
participation in the PLA and reconsideration processes. The judge considered
Dr. Marles to be advocating for himself in his affidavit evidence and
criticized Health Canada for not putting forth any reliable factual evidence
from other individuals who may have been involved in the process. As such, Dr.
Marles’ evidence was not given much weight and a significant portion of it was
struck from the record.
[54]
The judge also struck most of the evidence of
Health Canada’s experts, Drs. Arnason and Foster, on the basis of improper
expert opinion, “bootstrapping” and hearsay.
Given the involvement of Dr. Marles in the PLA process, the judge noted that
the need for “truly objective evidence” was
warranted (Reasons for Judgment, para. 92). As Dr. Foster was an employee of
Health Canada in the therapeutic drug branch with no experience with natural
health products, the judge doubted his independence and qualifications. He
struck his entire report. Although Dr. Arnason “appear[ed]
qualified for the task”, the judge noted close personal and professional
affiliations with Health Canada, Dr. Marles and Dr. Foster. He struck the
majority of Dr. Arnason’s evidence.
[55]
Before the Federal Court in 2015, TWC tendered
evidence in the form of a peer-reviewed article published in the Journal of
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which established, according to the authors and TWC, that the Active Ingredient
was naturally occurring in mangos (the Mango article). Before this Court, the
Attorney General objects to the judge’s reliance on this paper to support the
award of mandamus. ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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[56]
Viewed in light of how the judicial review
proceedings unfolded, I have considerable sympathy for the judge. The entire
proceeding and conduct of the parties were directed to put the judge in a
position to decide the substantive question which, by regulation, was for the
Minister to make. Both parties sought to shape the record with dueling and
evolving reports and evidence. In light of this, the Attorney General’s
complaint that the judge erred in receiving new evidence rings hollow.
III.
The standard of review
[57]
The issues raised in this appeal orbit around
decisions made by the judge himself and not his review of decisions made by the
respondent Minister. Accordingly, the applicable standard of review is the
appellate standard of review stated in Housen v. Nikolaisen, 2002 SCC
33, [2002] 2 S.C.R. 235. In consequence, to succeed on this appeal the Attorney
General must persuade us that the Federal Court erred on a pure question of law
or on a question of law that can be extracted from a question of mixed fact and
law. In the absence of this sort of legal error the appellant can succeed only
if he demonstrates palpable and overriding error in his assessment of the
evidence: Blank v. Canada (Justice), 2016 FCA 189, at para 25.
IV.
Analysis
A.
Mandamus
[58]
The primary responsibility of the Minister under
the Food and Drugs Act and the Regulations is the health and
safety of Canadians. Like the Food and Drugs Act, the purpose of the Regulations
is “to encourage bringing safe and effective medicines
to market to advance the nation’s health”: AstraZeneca Canada Inc. v.
Canada (Minister of Health), 2006 SCC 49, [2006] 2 S.C.R. 560, at para. 12.
When the Minister exercises her discretion under section 7 of the Regulations
to issue a Natural Product Licence, she must be satisfied that the product is
safe and effective, albeit to different standards than in the assessment of new
drugs. Thus, where the safety and efficacy of products are concerned, natural
or otherwise, a court should be cautious about issuing mandamus. These
are matters for the Minister to decide.
[59]
This is not to be taken as authority for the
proposition that mandamus cannot issue where the question relates to
whether drugs or natural health products comply with safety and efficacy requirements.
There is no doubt that the Federal Court has the authority to compel the
Minister to issue a Notice of Compliance or a Natural Product Licence. See, for
example, Apotex Inc. v. Canada (Attorney General), [1994] 1 F.C. 742,
[1993] F.C.J. No. 1098 (Apotex), aff’d [1994] 3 S.C.R. 1100, [1994]
S.C.J. No. 113. However, the question at the heart of this appeal is whether
the judge erred in ordering mandamus in the particular circumstances of
this case.
[60]
This Court in Apotex, and more recently
in Lukacs v. Canada (Transportation Agency), 2016 FCA 202, at para. 29, set
out criteria to guide the issuance of a mandamus order:
(1) there must be a legal duty to act;
(2) the duty must be owed to the applicant;
(3) there must be a clear right to performance of that duty;
(4) where the duty sought to be enforced is discretionary, certain
additional principles apply;
(5) no adequate remedy is available to the applicant;
(6) the order sought will have some practical value or effect;
(7) the Court finds no equitable bar to the relief sought; and
(8) on a balance of convenience an order of mandamus should
be issued.
[61]
The judge held that the conditions for mandamus
were satisfied. He found the PLA review of TWC’s product to be dysfunctional
and biased, such that remitting the matter back for reconsideration would
simply result in more litigation. He thus ordered that the Natural Product Licence
be granted on the basis that there were no outstanding safety concerns, the
test for efficacy under the Regulations had been satisfied, and the
evidence before him confirmed that the Active Ingredient was naturally
occurring, referencing specifically to the Mango article.
[62]
In my view, the judge erred in granting mandamus.
I say this for two reasons.
(1)
The finding of systemic bias
[63]
The first error relates to the principal justification
for the decision to grant mandamus. The judge concluded that there would
be “no point in directing reconsideration” of
TWC’s application for a licence (Reasons for Judgment, para. 158). He observed
that the “system did not function as it should have in
this case, and there is no evidence that it is likely to if this matter is
returned for reconsideration” (Reasons for Judgment, para. 155). He also
concluded that it was “by no means clear that totally
independent people with the necessary qualifications can be found within Health
Canada” (Reasons for Judgment, para. 157). Although not explicitly
addressed by the judge in terms of the Apotex criteria, these factors
underscore his conclusion that no adequate remedy was available to TWC.
[64]
The judge’s findings of individual bias had a
solid foundation in the extensive record. It is, however, of an entirely
different order to extrapolate those findings to an entire department of government.
The judge noted that “[t]o simply return the matter for
reconsideration to a system that has shown itself to be so dysfunctional might
simply plunge TWC back into the quagmire and trigger more litigation”
(Reasons for Judgment, para. 155). While I note the judge’s concerns, I am not
satisfied that there was evidence upon which it could be concluded that the
responsible branches within Health Canada, or its senior management, were
incapable of discharging their regulatory obligations in a fair and impartial
manner in light of the reasons of the Court.
[65]
Further, in placing an evidentiary onus on
Health Canada to affirmatively prove that it could conduct a fair and objective
redetermination, the judge erred. If any presumptions are to be made they would
be that a statutory decision maker will act fairly and in accordance with its
legal obligations, including being scrupulously faithful to both the letter and
spirit of the reasons of the Court when it remits a matter for redetermination.
The finding of bias on the part of officials did not, in the absence of further
evidence, justify the conclusion that the Department as a whole was
systemically incapable of making a fair assessment of TWC’s application. As the
judge predicated his decision to grant mandamus on an inference which
cannot be sustained on the evidence, the order must be set aside.
(2)
Fresh Evidence on Appeal
[66]
I turn to the second ground of error. The
Attorney General advances an argument relating to the evidence on which the
decision to grant mandamus was based. The judge considered the Mango
article to be determinative of the question of classification. The Attorney
General takes issue with the fact that the Mango article was not before the
Minister and therefore not properly part of the record. As previously noted,
the Attorney General has submitted fresh evidence on appeal which appears to
call into question the conclusions of the Mango article.
[67]
I will address the question of admissibility and
then turn to the use of the Mango article by the judge.
[68]
The record on judicial review is generally
restricted to that which was before the decision maker: Association of
Universities and Colleges of Canada v. Canadian Copyright Licensing Agency
(Access Copyright), 2012 FCA 22. There are exceptions to this principle which
include evidence directed to proof of an allegation of bias. The Mango article
was admissible and relevant in respect of the bias issue and was relied on by the
judge for that purpose. To that extent, it falls within the scope of the
exception.
[69]
I turn now to the use to which the evidence was
put.
[70]
The judge also relied on the Mango article to
find that the Active Ingredient should be classified as a NHP such that TWC had
a clear right to issuance of a licence on the record before him.
[71]
In reaching the conclusion that the Mango
article was determinative of classification, the judge noted the evidence of
Health Canada’s expert, Dr. Arnason, which he interpreted as setting out a new
standard that only a peer-reviewed article evidencing natural occurrence of a
substance would be sufficient to meet Health Canada’s classification
requirements. The Mango article met that standard, and accordingly the judge
relied on it to determine the substantive, scientific question.
[72]
TWC contends that there is a distinction between
consideration of the safety and efficacy of a product and the threshold
question as to whether it is a NHP. TWC submits that the question of whether
Resolve is a NHP is a factual determination, devoid of discretionary or policy
considerations. The definition of a natural health product substance in
Schedule 1 is clear. TWC argues that classification, unlike safety and
efficacy, is not an elastic concept. Classification only opens the door to the
appropriate regulatory review. The twin requirements of safety and efficacy
remain to be determined by the Minister.
[73]
I do not agree. The evidence before the Federal
Court and the fresh evidence on appeal, demonstrate the opposite. The
parameters of Schedule 1 and the definition of what is a natural health product
can be, in some but not all cases, a matter of legitimate scientific debate.
[74]
The fresh evidence tendered on appeal is first
in the form of a comment submitted to the Journal of Agricultural and Food
Chemistry in rebuttal to certain claims in the Mango article. ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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[75]
There is, on the record before this Court, fresh
evidence on appeal of what appears to be a debate on a scientific question, the
resolution of which is central to the question of which regulatory regime is
applicable. This evidence undermines the basis on which the judge determined
that TWC had a clear right to the licence on the record before him in 2016.
There is, therefore, no clear right, in 2017, to performance of the duty. In
sum, the judge erred insofar as he relied on the Mango article to answer the
question of classification. Recognizing that the relief under subsection 18(1) of
the Federal Courts Act, R.S.C. 1985, c. F-7 is discretionary, I would
not, given the fresh evidence on appeal, confirm the decision to grant mandamus:
MiningWatch Canada v. Canada (Fisheries and Oceans), 2010 SCC 2, [2010]
1 S.C.R. 6.
[76]
TWC points to the excessive delay in processing
its application, and notes that mandamus is available in such
circumstances to compel a specific exercise of discretion.
[77]
The circumstances of this case do not warrant
this exercise of discretion. There is a dispute on a substantive, scientific
question, the answer to which determines the legal rights and obligations of
both TWC and the Minister. TWC’s argument in this regard is best addressed
through an expedited redetermination, not a directed verdict.
[78]
For completeness, I turn to TWC’s argument that
the Minister was precluded from making the decisions that she did based on the
doctrines of functus officio and estoppel.
B.
The other grounds – functus officio and estoppel
[79]
TWC contends that the doctrine of promissory
estoppel prevents the Minister from revisiting the July NOR as the Minister had
maintained and confirmed the position over three years that Resolve is a NHP.
It contends the doctrine of functus officio is engaged because the
Minister’s regulatory power was spent having made, on July 19, 2007, her
regulatory decision.
[80]
As noted above, TWC submits that the question of
whether Resolve is a natural health product is a factual determination, devoid
of discretionary or policy considerations which limit the scope and the
application of the doctrine of functus officio. TWC contends that the functus
argument in this case is more compelling than Mount Sinai Hospital Center v.
Quebec (Minister of Health and Social Services), 2001 SCC 41, [2001] 2
S.C.R. 281, where the Minister attempted to reverse his decision before
issuance of a permit. TWC contrasts that with the situation here, where the
Minister attempted to alter the grounds for her decision after the July NOR had
been issued.
[81]
As a practical matter, it should be recalled
that there was never a decision to issue a licence. The licence application was
refused at various times and in various forms over a period of at least six
years, albeit not according to law. The licensing power, and the affirmative
decision to grant a licence, remained extant – subject to TWC engaging the reconsideration
process. Safety remained in dispute until September 2008, although not for any
reason that the judge found to be justified. While the Minister never conceded
efficacy, the court found that there was no reasonable basis for withholding
approval on either safety or efficacy.
[82]
The extent to which the doctrines of functus
officio and estoppel apply is necessarily informed by the nature of the
decision and the legislative context in which the doctrines are said to
operate. Here, the Regulations give the Minister significant authority
to revisit decisions with respect to NHPs. Following the issuance of a licence,
section 16 allows the Minister to request further information “[i]f the Minister has reasonable grounds to believe that a
natural health product may no longer be safe”. Sections 17 to 19 give
the Minister the authority to stop the sale of a natural health product,
provided there exist reasonable grounds for a concern that the product may no
longer be safe, or where it appears that false or misleading information was
filed in support of the original application. This would include information in
respect of safety and efficacy.
[83]
It is clear that the doctrine of functus
officio is limited in the context of the Minister’s mandate to ensure the
safety of licenced products to be consumed by Canadians. The doctrine has been
displaced or constrained by the regulatory scheme. There is nothing in the
regulatory scheme that supports the position that the Minister may not revisit all
licensing requirements. In conclusion, the principles of functus officio
have limited application in the context of regulatory approval of products
where use may have deleterious impacts on the health of the consumer. The door
must always be open for the Minister, in light of evolving science and
information, to determine whether a product, natural or otherwise, should be
made available to the public at large.
[84]
As a corollary of the functus argument, TWC
seeks to limit the scope of the reconsideration to only the matters which it
puts in issue. The Minister was bound by the July NOR on classification and, to
be precise, the Minister could reconsider only the issues of safety and
efficacy. On the other hand, the Attorney General notes that section 10 allows
for reconsideration of “the application”,
suggesting that if the applicant engages the reconsideration process, all
matters are in issue.
[85]
I am not prepared to read the limitation on the
scope of reconsideration into section 10 as urged by TWC. To do so would be
inconsistent with the governing principle of statutory interpretation that
legislation is to be given its plain and obvious meaning, informed by its
context, and consistent with its purpose: see, Ruth Sullivan, Statutory
Interpretation, 3rd ed. (Toronto: Irwin Law, 2016).
[86]
The power to reconsider all issues is not,
however, unlimited. It must be exercised according to law and the principles of
procedural fairness. Here, the reconsideration process was tainted by breaches
of procedural fairness, such that the judge deemed it to be a nullity.
[87]
Thus, the reconsideration process, while opening
the door to all issues, did not cure the procedural breaches that had plagued
the original PLA assessment process: Newfoundland Telephone Co. v.
Newfoundland (Board of Commissioners of Public Utilities), [1992] 1 S.C.R.
623, at paras. 38-41.
C.
Remedy
[88]
The judge erred in directing the Minister to
issue a Natural Product Licence in respect of Resolve. The judge erred in
extrapolating his findings of bias to the entirety of Health Canada, and in relying
on the Mango article to ground his finding that there was a clear right to the
issuance of a Natural Product Licence in 2016.
[89]
It is axiomatic that the Court should respect
the role of statutory decision makers to discharge their responsibility and obligations
under the Regulations. This principle should not be lightly displaced.
The judge made significant and damaging findings related to the behaviour of
senior Health Canada officials, administrative confusion, deliberate
cherry-picking of evidence, shifting standards of evaluation, bias and an
admitted denial of procedural fairness. While I maintain and rely upon the
presumption that statutory decision makers will act fairly and in accordance
with their legal obligations, circumstances such as these have the potential to
compromise public confidence in the licensing system for NHPs.
[90]
Despite his findings, the proper remedy was for
the judge to remit the matter back to the decision maker for redetermination. The
redetermination shall be completed within 90 days of the date of this decision,
unless extended on consent.
D.
Costs
[91]
The judge awarded costs on a solicitor-client,
full indemnity basis. In reaching this decision, he considered relevant
principles under Rule 400 of the Federal Courts Rules (S.O.R./98-106)
and the case law with respect to awards of solicitor-client costs. He listed,
with precision, the conduct that he felt required sanction. An award of costs
is highly discretionary, and I am not convinced that the judge misdirected
himself to either the relevant principles or mischaracterised the conduct of
the appellant.
[92]
With respect to costs in this Court, the parties
have had divided success. The Attorney General was successful on the principal
ground of appeal that the order of mandamus be set aside. She was also
successful in the argument that the reconsideration process included all
elements of the licensing process. The Attorney General also conceded that the
decisions had violated procedural fairness, although this concession came at
the hearing, after all related costs had been incurred. The favourable outcome
for the Attorney General arose in part because of the fresh evidence tendered
on appeal. TWC, while unsuccessful in maintaining the mandamus order,
did preserve the factual foundation of the Judgment.
[93]
In the ordinary course costs are awarded to the
successful party. Costs are, however, discretionary, and there are
considerations relevant to the exercise of that discretion in this case which
warrant a departure from the usual course. The concession that there had been
breaches of procedural fairness came only on the eve of the hearing before this
Court, following nearly a decade of litigation and nearly a year after the
Federal Court decision. The concession on procedural fairness was confirmation
of that which was obvious to the judge, there was bias on the part of
officials, shifting regulatory standards and interpretations, objections on the
grounds of safety which were not substantiated and from which the department
resiled, lack of notice and disclosure.
[94]
Parliament has given the Minister a mandate to
ensure that Canadians have access to natural health products that are safe and
efficacious. The provisions of the regulatory scheme, which I have reviewed in
some detail, demonstrate that the discretionary powers vested in the Minister
are to be exercised on the basis of objective scientific considerations, and in
a fair and transparent manner. Public confidence in the products they consume,
of whatever origin, is dependent on the understanding that decisions are made
on the foundation of these principles. In this case, they were not, and for
that reason I would award costs of this appeal to TWC on a solicitor-client
basis.
[95]
In sum, I would allow the appeal in part and set
aside paragraphs (2) and (3) of the Judgment of the Federal Court. Making the
judgment that the judge should have made, TWC’s licence application will be
remitted to the Minister for redetermination in accordance with these reasons.
Given the circumstances, the Minister is directed to make the redetermination
within 90 days of the date of this decision, unless the parties consent to an
extension of the time. It will be for the Minister to devise a process by which
her regulatory decision-making responsibilities in respect of TWC’s application
can be discharged in a manner consistent with these reasons.
“Donald J. Rennie”
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“I agree
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M. Nadon, J.A.”
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“I agree
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Yves de
Montigny, J.A.”
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