Docket: T-1653-16
Citation:
2017 FC 487
Ottawa, Ontario, May 10, 2017
PRESENT: The
Honourable Mr. Justice Manson
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BETWEEN:
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APOTEX INC., apotex pharmachem india pvt ltd
and apotex research private limited
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Plaintiffs
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and
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Rona Ambrose, Julie Vaux, Clark Olsen, Nick
Switalski, Cailin Rodgers, George da Pont, Paul Glover, Anil Arora, Anne
Lamar, Supriya Sharma, Robin Chiponski, Mary Morgan, Steven Schwendt, Sharon
Mullin, Barbara Sabourin, Karen Reynolds, Craig Simon, Michelle Kovacevic,
John Doe, Jane Doe, Her Majesty the Queen and the Attorney General of Canada
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Defendants
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JUDGMENT AND REASONS
I.
Background
[1]
This is a motion to strike pursuant to Rule
221(1)(a) of the Federal Courts Rules, SOR/98-106, in which the
Defendants seek an order dismissing the action against all Defendants except
Her Majesty the Queen.
A.
The Parties
[2]
The Plaintiffs in the underlying action
(respondents in this motion) are Apotex Inc. (“Apotex”), and its two affiliate companies,
which are located in India: Apotex Pharmachem India Pvt Ltd. (“APIPL”), and
Apotex Research Private Limited (“ARPL”) (collectively, the “Plaintiffs”). Apotex
is a generic manufacturer and seller of pharmaceutical products in Canada. In
addition to manufacturing pharmaceuticals, Apotex imports and sells drugs
manufactured by its affiliates.
[3]
The Defendants in the underlying action
(applicants in this motion) are Rona Ambrose, Julie Vaux, Clark Olsen, Nick
Switalski, Cailin Rodgers, George Da Pont, Paul Glover, Anil Arora, Anne Lamar,
Supriya Sharma, Robin Chiponski, Mary Morgan, Steven Schwendt, Sharon Mullin,
Barbara Sabourin, Karen Reynolds, Craig Simon, Michelle Kovacevic, John Doe,
Jane Doe (together, the “Individual Defendants”), Her Majesty the Queen (the
“Crown”), and the Attorney General of Canada (collectively, “the Defendants”).
[4]
Ms. Ambrose was the Minister of Health (the
“Minister”) between July 2013 and November 2015. Ms. Vaux was, at all relevant
times, the Minister’s Chief of Staff and most senior political advisor. Mr.
Olsen and Ms. Rodgers were, at all relevant times, the Minister’s Directors of
Communications. Mr. Switalski was, at all relevant times, the Minister’s senior
special assistant. Mr. Da Pont was the federal Deputy Minister of Health,
between August 2013 and January 2015. Mr. Glover is, and was at all relevant
times, the federal Associate Deputy Minister of Health.
[5]
Health Canada is the federal department that
oversees the regulation of drug products in Canada. It consists of various
branches, bureaus, and offices, including: (1) the Regions and Programs Bureau
(“RAPB”), which is responsible for inspecting facilities that manufacture
pharmaceutical products; and (2) the Health Products and Food Branch (“HPFB”),
a branch that oversees a number of directorates. The directorates under the
authority of the HPFB include (1) the Health Products and Food Branch
Inspectorate (the “Inspectorate”), which is responsible for compliance and
enforcement activities, and oversight of establishment licencing for facilities
that manufacture pharmaceutical products; and (2) the Therapeutic Products
Directorate (“TPD”), which is responsible for the federal regulation of
pharmaceutical drugs and medical devices.
[6]
Mr. Arora was the federal Assistant Deputy
Minister of Health of the HPFB, between September 2014 and September 2016. Ms.
Lamar is, and was at all relevant times, the federal Associate Assistant Deputy
Minister of Health of the HPFB. Ms. Sharma was, at all relevant times until
August 2015, the Senior Medical Advisor to the assistant Deputy Minister of
Health of the HPFB; in August 2015, she was appointed as the Senior Medical
Advisor to the Deputy Minister of Health.
[7]
Ms. Chiponski is, and was at all relevant times,
the Director General of the Inspectorate. Mr. Schwendt was, at all relevant
times, an employee of the Inspectorate and, for a period of time from 2015 to
2016, the Acting Director General of the Inspectorate. Ms. Mullin is, and was
at all relevant times, an employee of the Inspectorate. Ms. Sabourin was, at
all relevant times until January 2016, the Director General of the TPD. Ms.
Reynolds is, and was at all relevant times, the Director of the TPD’s Bureau of
Pharmaceutical Sciences. Mr. Simon is, and was at all relevant times, the
Associate Director of the TDP’s Bureau of Pharmaceutical Sciences. Ms.
Kovacevic is, and was at all relevant times, the Assistant Deputy Minister of
Health of the Communications and Public Affairs Branch of Health Canada
(“CPAB”).
[8]
Apotex has reserved the right to implead such
further individuals who were also personally responsible for, or involved, in
the decision and actions taken in this case, who are currently unknown to
Apotex and identified herein as John Doe and Jane Doe.
B.
The Regulatory Regime
[9]
In Canada, the sale of drugs is highly regulated
and depends upon compliance with federal legislation, which is designed to
balance two competing interests—encouraging continued innovation in new drugs
and promoting timely access to generic equivalents: (1) the Patented
Medicines (Notice of Compliance) Regulations [PM(NOC) Regs] and (2)
the Food and Drug Act [FD Act] and accompanying
regulations [FD Regs] (collectively, the “Act and Regs”). These
instruments set forth rules and requirements that deal with topics such as the
classification of drugs, drug identification numbers (“DINs”), labelling,
maintenance of records, conditions for drug manufacturing establishments, good
manufacturing practices (“GMP”), and clinical trials.
[10]
The Act and Regs are complemented by various
policies and guidelines that set out the Minister’s interpretation of these
pieces of legislation. The Minister is nominally the person responsible for
administering the Act and Regs. However, the Minister’s power and discretion
are, in reality, delegated to various groups and individuals within Health
Canada.
(1)
Drug Identification Numbers
[11]
Every drug sold in Canada in a final dosage form
is assigned a DIN by the Assistant Deputy Minister of Health of the HPFB. The
assignment of a DIN occurs pursuant to the provisions of Part C, Division 1 of
the FD Regs, upon application by either the manufacturer of the drug (in
Canada), its agent, or by the importer.
[12]
In an application for a DIN, the applicant must
supply information according to Regulation C.01.014.1(2), which relates to the
composition and labelling of the drug. If a manufacturer or importer has
provided all of the information prescribed, the Director issues the
manufacturer a DIN, unless the Director believes on reasonable grounds that the
product is not a drug, that its sale would cause injury to the health of the
consumer or purchaser, or that its sale would be a violation of the FD Act
and the FD Regs (Regulation C.01.014.2).
[13]
Under Regulation C.01.014.6(2), the Director may
cancel the assignment of a DIN for a drug where:
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a) the manufacturer of the
drug has failed to comply with section C.01.014.5; or
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a) si le fabricant de la drogue ne
s’est pas conformé à l’article C.01.014.5; ou
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b) the manufacturer to whom
the number was assigned has been notified pursuant to section C.01.013 that
the evidence he submitted in respect of the drug is insufficient.
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b) si le fabricant à qui
l’identification numérique a été attribuée a été avisé, selon l’article
C.01.013, que les preuves présentées au sujet de la drogue sont
insuffisantes.
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(2)
Notices of Compliance (“NOCs”)
[14]
In the case of a “new
drug”, the application for a DIN must also comply with the requirements
of Part C, Division 8 of the FD Regs. A new drug is defined as
(C.08.001):
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(a) a drug that contains or
consists of a substance, whether as an active or inactive ingredient,
carrier, coating, excipient, menstruum or other component, that has not been
sold as a drug in Canada for sufficient time and in sufficient quantity to
establish in Canada the safety and effectiveness of that substance for use as
a drug;
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a) une drogue qui est constituée
d’une substance ou renferme une substance, sous forme d’ingrédient actif ou
inerte, de véhicule, d’enrobage, d’excipient, de solvant ou de tout autre
constituant, laquelle substance n’a pas été vendue comme drogue au Canada pendant
assez longtemps et en quantité suffisante pour établir, au Canada,
l’innocuité et l’efficacité de ladite substance employée comme drogue;
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(b) a drug that is a combination
of two or more drugs, with or without other ingredients, and that has not
been sold in that combination or in the proportion in which those drugs are
combined in that drug, for sufficient time and in sufficient quantity to
establish in Canada the safety and effectiveness of that combination and
proportion for use as a drug; or
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b) une drogue qui entre dans une
association de deux drogues ou plus, avec ou sans autre ingrédient, qui n’a
pas été vendue dans cette association particulière, ou dans les proportions
de ladite association pour ces drogues particulières, pendant assez longtemps
et en quantité suffisante pour établir, au Canada, l’innocuité et
l’efficacité de cette association ou de ces proportions employées comme
drogue; ou
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(c) a drug, with respect to which
the manufacturer prescribes, recommends, proposes or claims a use as a drug,
or a condition of use as a drug, including dosage, route of administration,
or duration of action and that has not been sold for that use or condition of
use in Canada, for sufficient time and in sufficient quantity to establish in
Canada the safety and effectiveness of that use or condition of use of that
drug
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c) une drogue pour laquelle le
fabricant prescrit, recommande, propose ou déclare un usage comme drogue ou
un mode d’emploi comme drogue, y compris la posologie, la voie
d’administration et la durée d’action, et qui n’a pas été vendue pour cet
usage ou selon ce mode d’emploi au Canada pendant assez longtemps et en
quantité suffisante pour établir, au Canada, l’innocuité et l’efficacité de
cet usage ou de ce mode d’emploi pour ladite drogue.
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[15]
To sell a new drug, the manufacturer has to file
with the Minister a new drug submission (“NDS”), an extraordinary use new drug
submission, an abbreviated new drug submission (“ANDS”), or an abbreviated
extraordinary use new drug submission. The Minister must also have issued a NOC
in respect of the new drug, which must not have been suspended, and the Minister
must have received sufficient information from the manufacturer regarding the
labelling of the new drug. The information submitted must be sufficient to
enable the Minister to assess the safety and effectiveness of the new drug, and
include the information prescribed by Regulation C.08.002(2). Upon request, the
manufacturer may have to submit samples of the new drug and additional
information or material respecting the safety and effectiveness of the new drug
(C.08.002(3)).
[16]
Generic pharmaceutical manufacturers, like
Apotex, generally submit an ANDS, which does not typically include the results
of clinical trials. Instead, an ANDS compares the drug formulation in question
to a formulation, in the same dosage form, that is already on the market in
Canada. These comparison studies include “comparative
bioavailability studies” or “bioequivalence
studies”, which are used to establish equivalence with the approved
drug.
[17]
The generic manufacturer must also satisfy the
requirements of the PM(NOC) Regs, which involve addressing whether the
medicament in question is covered by any patents listed on the “Patent Register”. The Minister’s authority with
respect to the review and issuance of NOCs is delegated to the Director General
of the TPD.
(3)
Establishment Licences (“ELs”) and Good
Manufacturing Practices (“GMP”)
[18]
Part C, Division 1A of the FD Regs
governs the issuance, amendment, and suspension of ELs in Canada. Pursuant to
Regulation C.01A.004(1)(a), no person shall fabricate, package/label, or import
a drug except in accordance with an EL. The Minister has delegated the
authority to oversee the EL regime to the Director General of the Inspectorate.
The Inspectorate, with assistance from RAPB inspectors, is responsible for
inspecting establishments that hold ELs, both within Canada and abroad.
[19]
Inspections conducted by the Inspectorate and
RAPB verify that establishments are complying with GMP, the requirements of
which are contained in Part C, Division 2 of the FD Regs. In addition to
the requirements set out in the FD Regs, the Minister publishes numerous
guidance documents, which explain the compliance mechanisms available to remedy
and enforce GMP deficiencies. Information about the Inspectorate, including
directives, guidance documents, policies, and checklists can be found on Health
Canada’s website.
C.
Events underlying this action
(1)
Apotex’s regulatory history
[20]
Both prior and subsequent to September 30, 2014,
Apotex held and continues to hold valid, unsuspended DINs and NOCs for the
products from APIPL and ARPL that were the focus of an import ban, which was
first announced and implemented on September 30, 2014 (the “Import Ban”). At no
time were these DINs and/or NOCs suspended or cancelled.
[21]
Both prior and subsequent to September 30, 2014,
Apotex held and continues to hold valid ELs in respect to its manufacturing
facilities in Canada, which allow Apotex to import products from APIPL and
ARPL. Additionally, all of Apotex’s facilities, in Canada and abroad, had been
physically inspected by Health Canada’s inspectors and found to be
GMP-compliant.
(2)
The Import Ban
[22]
The Import Ban prevented the importation into
Canada of drug products made at APIPL and/or ARPL. The Import Ban was implemented
through two mechanisms: (1) shipments were detained by the Canadian Border
Services Agency; and (2) terms and conditions were imposed on Apotex’s ELs,
prohibiting the import and sale of products from ARPL or APIPL. At the same
time, the Defendants released public statements and press statements to justify
the Import Ban, allegedly defaming the Plaintiffs (the “Public Statements”).
[23]
The purported basis for the Import Ban was that
APIPL and ARPL were not compliant with GMP. However, none of the DINs or NOCs
for any of the banned products were cancelled or suspended, nor were any of
Apotex’s ELs suspended, in accordance with sections of with the FD Regs
that deal with GMP compliance. Instead, the Minister’s action was taken
pursuant to section C.01A.008 of the FD Regs.
[24]
In October 2014, Apotex commenced an application
for judicial review of the decision to implement the Import Ban. By Judgment
dated October 14, 2015 (Apotex Inc v Canada (Health), 2015 FC 1161), this
Court quashed the Import Ban, finding that the Minister had acted for an
improper purpose in implementing the ban (i.e., to ease media and political
pressure) and had failed to act in accordance with the principles of natural
justice. The Court also ordered the Minster and Health Canada to retract the
Public Statements.
(3)
The August 2015 Decision
[25]
In June 2015, Health Canada conducted
inspections of the APIPL and ARPL facilities. These inspections failed to
identify any concerns. On August 31, 2015, Ms. Chiponski wrote to Apotex and
advised that Heath Canada had decided to amend, in part, the terms and
conditions it had imposed through the Import Ban (the “August 2015 Decision”).
The amended terms and conditions provided that the Import Ban remain in place
for products manufactured prior to June 10, 2015, and that products
manufactured after June 10 be subject to further testing in Canada prior to
their sale.
[26]
In September 2015, Apotex commenced a second
application for judicial review seeking to quash the August 2015 Decision. By Judgment
dated June 15, 2016 (Apotex Inc v Canada (Health), 2016 FC 673), this
Court declared the August 15 Decision unlawful, on the basis that it was “infected” by the improper purpose that had motivated
the Import Ban and that there was no evidence to support implementing or
maintaining the August 15 Decision.
(4)
The data integrity issue
[27]
On or about September 23, 2014, the
then-Director General of TPD, Ms. Sabourin, received a telephone call from a
colleague at the Inspectorate, regarding data integrity at ARPL and APIPL, and
an electronic copy of the FDA’s Form 483. Shortly after, a draft NOC for
Apotex’s Apo-Rasagiline was delivered to Ms. Sabourin, indicating that APIPL
and ARPL would be responsible for manufacturing and testing the drug product.
Because of the GMP and data integrity concerns that had been raised regarding
APIPL and ARPL, Ms. Sabourin declined to sign the draft NOC. Ms. Sabourin also
informed Apotex that NOCs would not be issued for submissions containing data
from APIPL and ARPL until further notice (the “November 2014 Decision”).
Although it had already applied for judicial review of the Import Ban, Apotex
implemented corrective and preventative action to address these GMP and data
integrity concerns.
[28]
In January 2015, the TPD developed an
overarching policy regarding its approach to managing submissions containing
data from sites where the integrity of data had been called into question. All
drug manufacturers were given formal notice of this policy on May 22, 2015. In
June 2015, the TPD conducted further inspections of the APIPL and ARPL
facilities. Overall, the TPD’s findings did not identify any instances of data
integrity violations, which had been previously observed by the FDA. However,
the TPD determined that, although the new system controls and modified
procedures satisfactorily addressed the data integrity concerns, additional
supervision was necessary to demonstrate the sustainability and effectiveness
of these procedures during times of increased production.
[29]
In the fall of 2015, Apotex began proceedings in
the Federal Court challenging the November 2014 Decision, and its continuation
by the new Director General of the TPD, Marion Law. By Judgment dated March 27,
2017 (Apotex v Canada, 2017 FC 315), the Court found that Health
Canada’s continued refusal to grant NOCs for Apo-Varenicline and
Apo-Sitagliptin, the only two products for which the TPD continued to require
additional data integrity information as of the date of the hearing before the
Federal Court, was neither improper nor unreasonable.
II.
The Issues
[30]
In their written submissions in support of this
motion, the Plaintiffs state that they do not object to the removal of the
Attorney General of Canada as a party, provided that the Crown undertakes not
to raise any issue, pursuant to section 23 of the Crown Liability and
Proceedings Act, RSC 1985, c C-50, or otherwise, as to the sufficiency of
naming “Her Majesty the Queen” as the proper
party in respect to the Plaintiffs’ claims against the Crown.
[31]
The Defendants do not dispute that the Federal Court
has jurisdiction over claims against the Crown. The style of cause, in this
action, is hereby ordered to be amended to delete the Attorney General of
Canada.
[32]
Therefore, the sole issue remaining to be
determined in this motion is whether the Federal Court has jurisdiction over
the claims made against the Individual Defendants.
[33]
Based upon the written material before the Court
and the arguments presented at the hearing by the Parties, I dismiss the motion
to strike. For the reasons that follow, I find that it is not plain and obvious
that the Federal Court lacks jurisdiction over the Individual Defendants.
III.
Analysis
A.
The Applicable Test on a Motion to Strike
[34]
Rule 221(1)(a) governs the Defendants’ motion to
strike as pleaded:
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221 (1) On motion, the Court may,
at any time, order that a pleading, or anything contained therein, be struck
out, with or without leave to amend, on the ground that it
(a) discloses no reasonable cause
of action or defence, as the case may be …
and may order the action be
dismissed or judgment entered accordingly.
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221 (1) À tout moment, la Cour
peut, sur requête, ordonner la radiation de tout ou partie d’un acte de
procédure, avec ou sans autorisation de le modifier, au motif, selon le cas :
a) qu’il ne révèle aucune cause
d’action ou de défense valable;
Elle peut aussi ordonner que
l’action soit rejetée ou qu’un jugement soit enregistré en conséquence.
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[35]
The Supreme Court of Canada, in R v Imperial
Tobacco, 2011 SCC 42 at paragraph 17, laid out the applicable test on a
motion to strike:
A claim will only be struck if it is plain
and obvious, assuming the facts pleaded to be true, that the pleading discloses
no reasonable cause of action. Another way of putting the test is that the
claim has no reasonable prospect of success. Where a reasonable prospect of
success exists, the matter should be allowed to proceed to trial.
[citations omitted]
[36]
The Defendants point out that the Federal
Courts Rules do not contain a specific provision for striking a claim on
the basis that the Federal Court does not have jurisdiction to hear the claim. They
argue that the plain and obvious test is ill-suited for issues of Federal Court
jurisdiction because, unlike striking a claim for other reasons, the success of
a jurisdictional question rarely depends on evidence that will be adduced
during discovery. The Defendants also suggest that this difference makes it
appropriate to modify the standard on a motion to strike for want of
jurisdiction to a balance of probabilities. Further, the Defendants suggest
that the double negative situation, which is a possible result under the
current test—i.e., a finding that it is not plain and obvious that the Court
does not have jurisdiction—can lead to a situation where jurisdiction is not
completely determined until trial, which is not ideal.
[37]
The Plaintiffs submit that the plain and obvious
test is the correct test for challenging Federal Court jurisdiction on a motion
to strike under Rule 221(1)(a). They suggest that it is appropriate for the
Court to apply a stringent test to the jurisdictional question, because the
consequence of finding that the Court does not have jurisdiction deprives the
Plaintiffs of their chosen forum. Moreover, they rely on relevant Federal Court
of Appeal jurisprudence and the recent Supreme Court of Canada decision City
of Windsor v Canadian Transit Co, 2016 SCC 54 at paragraph 24 [City of
Windsor], which endorse the plain and obvious standard:
The sole issue is whether the Federal Court
has jurisdiction under the ITO test to hear the Company’s application. If it is
plain and obvious that the Federal Court lacks jurisdiction to hear this
application, the motion to strike must succeed.
[38]
While the Defendants’ concern that the
jurisdictional question should not be left to be determined at trial may have merit,
I disagree that the plain and obvious test is ill-suited or that the standard
on a motion to strike for want of jurisdiction should be changed to a balance
of probabilities. The history of the test for a motion to strike under Rule
221(1) was canvassed, in 2002, by Prothonotary Hargrave in the decision Charlie
v Vuntut Gwitchin First Nation, 2002 FCT 344 [Vuntut]. In finding that
the plain and obvious test, where the standard is beyond a doubt, is
appropriate, he stated (Vuntut at paras 10, 16 to 18):
[10] The test for striking out for want of a
cause of action, that it be plain, obvious and beyond doubt that a claim or a
defence will not succeed, as in the well known trilogy of cases, Hunt v
Carey Canada Inc, [1990] 2 S.C.R. 959, Operation Dismantle Inc v The Queen,
[1985] 1 S.C.R. 441 and Canada v Inuit Tapirisat of Canada, [1980] 2 SCR
735, is so solidly established that it is no longer usually necessary to dwell
on the test. However, in the present instance, the Vuntut Gwitchin Defendants
say that the test for striking out for want of jurisdiction is less stringent,
submitting that the approach to strike out is really akin to answering a
question of law and further, that the burden shifts to the Plaintiff to show,
positively, that there is jurisdiction. Here the Vuntut Gwitchin Defendants
refer to several examples which they submit support the position that the test
for striking out for want of jurisdiction is a preponderance of evidence or a
balance of probabilities.
…
[16] Fortunately, this somewhat unproductive
discussion of procedure and seeming inconsistent standards on motions to strike
out for want of jurisdiction has been laid to rest in Hodgson v The Queen.
In my reasons of 10 September 1999, in action T-2553-91, I set out at paragraph
28 that I would only find want of jurisdiction where a matter was plain,
obvious and beyond doubt, which was not there the case.
[17] On appeal to the Trial Division, Madam
Justice Reed was squarely faced with that test as a ground for appeal. In
denying the appeal she found that the plain and obvious test applied:
. . . The "plain and
obvious" test applies to the striking out of pleadings for lack of
jurisdiction in the same manner as it applies to the striking out of any
pleading on the ground that it evinces no reasonable cause of action. The lack
of jurisdiction must be "plain and obvious" to justify a striking out
of pleadings at this preliminary stage.
That finding was not changed when Mr.
Justice of Appeal Rothstein denied the appeal. While he noted that counsel for
the Defendants conceded the test, it was that test which the Court of Appeal in
fact applied in allowing the action to proceed. An application in Hodgson for
leave to appeal was dismissed by the Supreme Court of Canada on 6 September
2001.
[18] While some jurisdictional issues ought
not to be decided until trial, when all of the facts on the question are before
the Court, in other instances jurisdiction may be decided in a summary way. In
such an instance it is the usual plain, obvious and beyond doubt test which
applies in striking out for want of jurisdiction. Of course, to reach that
conclusion, one must initially test jurisdiction on the basis of Miida
Electronics Inc v Mitsui OSK Lines Ltd and ITO-International Terminal Operators
Ltd, [1986] 1 S.C.R. 752.
[39]
I concur. The plain and obvious test is the
correct test to use when determining whether a claim should be struck because
the Federal Court lacks jurisdiction.
B.
The test for Federal Court jurisdiction
[40]
The Parties agree that the appropriate test to
determine whether the Federal Court has jurisdiction over a matter is the test
articulated by the Supreme Court in ITO-International Terminal Operators v
Miida Electronics Inc, [1986] 1 S.C.R. 752 [ITO]:
1. There must be a statutory grant of
jurisdiction by Parliament.
2. There must be an existing body of
federal law which is essential to the disposition of the case and which
nourishes the statutory grant of jurisdiction.
3. The law on which the case is based must
be “a law of Canada” as the phrase is used in section 101 of the Constitution
Act, 1867.
[41]
However, the Parties do not agree as to whether
or how City of Windsor, above, applies to the proper determination of
jurisdiction of this Court.
[42]
Further, the Defendants argue that, at the time
of the events pleaded, all the Individual Defendants were servants or agents of
the Crown and, therefore, the Crown is vicariously liable for their actions
pursuant to the Crown Liability and Proceedings Act. It is true that the
Crown is vicariously liable for torts committed by the Individual Defendants as
servants or agents of the Crown. However, this does not preclude the Federal
Court from having jurisdiction over the Individual Defendants, should the ITO-test
be satisfied.
C.
Essential nature of the claim
(1)
Does the essential nature of the claim need to
be determined?
[43]
The Defendants argue that, subsequent to City
of Windsor, the first step in determining jurisdiction, before turning to
the ITO-test, is to characterize the essential nature of the claim. They
state that the essential nature of the Plaintiffs’ claims against the
Individual Defendants is based in tort. The Defendants stress the personal
nature of the torts claimed and assert that these private law causes of action,
as pleaded by the Plaintiffs, cannot be said to arise from federal law merely
because they include, as a component, an allegation of an invalid or unlawful
exercise of statutory duty or power.
[44]
The Plaintiffs contend that the Supreme Court’s
direction to characterize the nature of the claim at issue is not applicable to
this action because the claims arise under section 17(5)(b) of the Federal
Courts Act, RSC 1985, c F-7, not section 23(c) as was the case in City
of Windsor. They argue that the majority of the Supreme Court was only
considering the test to be applied when determining whether the Federal Court
has jurisdiction over a claim arising under section 23(c). Further, they
submit that, because the language of section 17(5)(b) is very different from
section 23(c), it is clear that the Supreme Court in City of Windsor
intended for this step of determining the essential nature of the claim to be
limited in application to section 23.
[45]
Section 17(5) of the Federal Courts Act states:
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Relief in favour of Crown or
against officer
(5) The Federal Court has
concurrent original jurisdiction
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Actions en réparation
(5) Elle a compétence
concurrente, en première instance, dans les actions en réparation intentées :
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(a) in proceedings of a civil
nature in which the Crown or the Attorney General of Canada claims relief;
and
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a) au civil par la Couronne ou le
procureur général du Canada;
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(b) in proceedings in which relief
is sought against any person for anything done or omitted to be done in the
performance of the duties of that person as an officer, servant or agent of
the Crown.
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b) contre un fonctionnaire,
préposé ou mandataire de la Couronne pour des faits — actes ou omissions —
survenus dans le cadre de ses fonctions.
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[46]
Section 23 of the Federal Courts Act
states:
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Bills of exchange and
promissory notes — aeronautics and interprovincial works and undertakings
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Lettres de change et billets à
ordre — Aéronautique et ouvrages interprovinciaux
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Except to the extent that jurisdiction has been otherwise specially assigned,
the Federal Court has concurrent original jurisdiction, between subject and
subject as well as otherwise, in all cases in which a claim for relief is
made or a remedy is sought under an Act of Parliament or otherwise in
relation to any matter coming within any of the following classes of
subjects:
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23
Sauf attribution spéciale de cette compétence par ailleurs, la Cour fédérale
a compétence concurrente, en première instance, dans tous les cas — opposant
notamment des administrés — de demande de réparation ou d’autre recours
exercé sous le régime d’une loi fédérale ou d’une autre règle de droit en
matière :
|
|
(a) bills of exchange and
promissory notes, where the Crown is a party to the proceedings;
|
a) de lettres de change et
billets à ordre lorsque la Couronne est partie aux procédures;
|
|
(b) aeronautics; and
|
b) d’aéronautique;
|
|
(c) works and undertakings
connecting a province with any other province or extending beyond the limits
of a province.
|
c) d’ouvrages reliant une
province à une autre ou s’étendant au-delà des limites d’une province.
|
[47]
The Parties both refer the Court to paragraph 25
of City of Windsor, wherein Justice Karakatsanis, writing for the
majority, stated:
In order to decide whether the Federal Court
has jurisdiction over a claim, it is necessary to determine the essential
nature or character of that claim. As discussed in further detail below, s.
23(c) of the Federal Courts Act only grants jurisdiction to the Federal
Court when a claim for relief has been made, or a remedy has been sought,
“under an Act of Parliament or otherwise”. The conferral of jurisdiction
depends on the nature of the claim or remedy sought. Determining the claim’s
essential nature allows the court to assess whether it falls within the scope
of s. 23(c). Jurisdiction is not assessed in a piecemeal or issue-by-issue
fashion.
[citations omitted]
[48]
Thus, while the preliminary characterization
step is mandated, it is simply identifying the material facts needed to assess
whether the claim falls within the statutory grant of jurisdiction identified
in the first step of the ITO-test.
(2)
Does the essential nature of a claim under
section 17(5)(b) have to arise from federal law?
[49]
The Defendants argue that the essence of the
claims against the Individual Defendants is based on alleged breaches of
private law duties. They state that City of Windsor stands for the
principle that in order for the Federal Court to have jurisdiction over these
types of claims they must arise under a federal law that is separate from section
17(5)(b). Additionally, the Defendants rely on Canada (AG) v Telezone Inc,
2010 SCC 62 at paragraphs 28 to 30 [Telezone] to support their assertion
that causes of action in tort cannot be said to arise from federal law and,
therefore, do not fall within the Federal Court’s jurisdiction simply because they
include allegations of invalid or unlawful exercises of statutory duty or
power.
[50]
The jurisdictional question in City of Windsor
involved section 23, which explicitly states that the Federal Court has
jurisdiction in cases where a claim for relief is sought “under an Act of Parliament or otherwise”. Justice
Karakatsanis interpreted this to mean that the right to seek relief must arise
directly from federal law, and not merely in relation to federal law (City
of Windsor at paras 46 to 48). However, section 17(5)(b) does not have this
limitation; rather, it states that the Federal Court has jurisdiction with
respect to claims for relief “sought against any person
for anything done or omitted to be done in the performance of the duties of
that person as an officer, servant or agent of the Crown”.
[51]
The Defendants are correct that breaches of
statutory power do not automatically lead to related claims in tort being
within the jurisdiction of the Federal Court. However, Telezone was
concerned with the question of whether a claim for compensation could proceed
in a Superior Court without the plaintiff having had the Federal Court, prior
to the commencement of the proceedings in the Superior Court, quash the
underlying decision on judicial review; not whether the Federal Court had
jurisdiction to hear claims for relief arising out of tort, or how the question
of jurisdiction over claims in tort should be determined
[52]
Further, at paragraph 58 of Telezone,
Justice Binnie, writing for the unanimous Supreme Court, quoted the following statements
made by the Minister of Justice in 1989, when amendments were being made to
section 17 of the Federal Courts Act:
For example, a person should be able to sue
the Crown in a suitably convenient court for breach of contract to purchase
goods or for negligent driving by a Crown employee that causes injuries to
another motorist…
…
With this in mind, the government has
proposed that both the provincial courts and the Federal Court share
jurisdiction with respect to such actions, thereby generally giving a plaintiff
a choice of forum.
[citations omitted, emphasis in original]
[53]
Justice Binnie concluded that section 17 had to
be read in such a manner that gives the Plaintiffs a choice of forum, thereby
making available to the Plaintiffs relief in a court that was more “familiar” to them (Telezone at para 59).
Therefore, contrary to the Defendants’ argument, Telezone stands for the
principle that if an action in tort comes within the scope of section 17, the
Plaintiffs should have their choice of forum.
[54]
Further, nothing in City of Windsor
suggests that Justice Karakatsanis was contradicting Justice Binnie’s
conclusion in Telezone: the Plaintiffs have a choice of forum in the
cases of a breach of contract or tort, such as negligence, which properly come before
the Federal Court under section 17. In fact, an examination of the trial level
decision which led to City of Windsor, Canadian Transit Company v
Windsor (City), 2014 FC 461 [Canadian Transit Company], shows that
the factual situation underlying City of Windsor was very different from
the factual matrix in this case, and puts the Supreme Court’s decision and
their comments about section 23(c) into context.
[55]
In City of Windsor, the underlying claim
involved a dispute between the Canadian Transit Company and the City of Windsor
over 114 vacant properties that had become a blight on the community, and for
which the City of Windsor had issued repair orders. The Canadian Transit
Company appealed these orders to the Property Standards Committee, a municipal
board that hears appeals of orders made by the City’s Property Standards
Officer.
[56]
At the trial level, the primary relief requested
by the Canadian Transit Company was for a declaration that the Ambassador
Bridge be considered a “federal undertaking”
and, as such, not subject to municipal by-laws (Canadian Transit Company at
para 6). The City of Windsor, in response, brought an application asking the
Court to strike the claim for want of jurisdiction. In assessing the application
to strike, Justice Michel Shore commented (Canadian Transit Company at
paras 12 to 13, and 15):
[12] Without deciding this matter on the
merits, the Court is of the view that it is plain and obvious that the
application lacks a reasonable cause of action and that it is bereft of any
possibility of success. Even on a generous reading of the Applicant’s Notice of
Application, it is extremely unclear what exactly the Applicant is asking of
the Court. The Applicant does not appear to be challenging any particular
decision of the City of Windsor, the Property Standards Committee, or any order
of a federal board, commission or other tribunal. Rather, the Applicant appears
to be simply seeking a legal opinion regarding the applicability of the AICTC
from the Court.
[13] The Court does not have the statutory
authority to grant such a remedy. A reference to the Court can only be sought
by the Attorney General of Canada or a federal board, commission or other
tribunal over which the Court otherwise exercises judicial review functions
pursuant to paragraphs 18.3 (1) and (2) of the Federal Courts Act, RSC
1985, c F-7. It cannot be used by private applicants as a tool to obtain a
declaratory judgment from this Court.
…
[15] The Court also finds that it is equally
unclear what legal basis the Applicant has relied upon in bringing the
application to the Court. The Applicant issued the Notice of Application on the
basis of paragraph 23(c) of the Federal Courts Act; however, paragraph
23(c) only constitutes a statutory grant of jurisdiction to the Court by the
Federal Parliament. The provision does not grant any right of appeal or
judicial review to an applicant, nor does it give the Court the authority to
grant a declaratory remedy.
[citations omitted]
[57]
In this case, unlike City of Windsor, it is
clear what the Plaintiffs are requesting: relief against officers of the Crown
for anything done or omitted, resulting from activities that are deeply rooted
in the framework of the Act and Regs, which harmed the Plaintiffs. As is
evident from the discussion in Telezone, this Court has the statutory authority
to adjudicate claims in tort and contract which properly come before the Court
under section 17 of the Federal Courts Act. Therefore, the Defendants’
statement that the private law causes of action pleaded, in this case, must
arise from a separate federal law and cannot be a claim in tort in order for
the Federal Court to have jurisdiction, is incorrect.
(3)
What is the essential nature of the claims?
[58]
Justice Karakatsanis, at paragraphs 26 to 27 of City
of Windsor, provided the following directions to a court determining the
essential nature of a claim:
The essential nature of the claim must be
determined on a “realistic appreciation of the practical result sought by the
claimant”. The “statement of claim is not to be blindly read at its face meaning”.
Rather, the court must “look beyond the words used, the facts alleged and the
remedy sought to ensure … that the statement of claim is not a disguised
attempt to reach before the Federal Court a result otherwise unreachable in
that Court”.
On the other hand, genuine strategic choices
should not be maligned as artful pleading. The question is whether the court
has jurisdiction over the particular claim the claimant has chosen to bring,
not a similar claim the respondent says the claimant really ought, for one
reason or another, to have brought.
[citations omitted]
[59]
There is no dispute between the Parties that the
action as against the Crown is appropriately before the Federal Court, and that
the essential nature of that claim falls within the scope of the Court’s
jurisdiction.
[60]
The issues in the underlying action as pleaded by
the Plaintiffs are:
1)
Did the Defendants knowingly and in bad faith
act unlawfully outside the scope of their authority?
2)
Did the Defendants owe the Plaintiffs a duty of
care, and fail to exercise reasonable skill, care, and diligence in their
interpretation and discharge of their duties and responsibilities under the FD
Act, the FD Regulations, or otherwise at law?
3)
Did the Defendants defame the Plaintiffs?
a.
Should the Plaintiffs receive elevated damages
by reason of the method of publication of the allegedly defamatory statements
and the remaining website content?
4)
Did the Defendants conspire to inflict damage
upon the Plaintiffs?
5)
Should the Plaintiffs receive public law damages
or other similar monetary relief?
6)
Should the Plaintiffs receive punitive and
exemplary damages?
[61]
The Plaintiffs seek the following relief against
the Defendants, jointly and severally:
1)
general, special, aggravated, and punitive
damages in the total amount of $500,000,000.00;
2)
an interlocutory or a permanent injunction and a
mandatory order (or the equivalent declaratory relief) requiring the Defendants
to:
a.
cease publication of, and to formally retract
and otherwise remove, all remaining defamatory content from their websites, as
detailed in the Statement of Claim;
b.
to process Apotex’s ANDSs for regulatory
approval without any super-added requirement of having to demonstrate “data integrity”;
3)
an equitable bill of discovery, requiring the
Defendants to identify any and all individuals who were involved in and agreed
to the decision to implement and sustain the Import Ban, the publication of the
defamatory statements, and the data integrity package requirement;
4)
pre-judgment and post-judgment interest;
5)
the cost of this action; and
6)
such further and other relief as this Honourable
Court deems just.
[62]
The Plaintiffs have alleged multiple
wrongdoings, many of which, if proven, could lead the Court to grant all the
relief requested. As such, the Court must determine the essential character of
each claim made by the Plaintiffs and determine whether each falls within the
scope of section 17(5)(b).
[63]
Misfeasance in public office requires the
Plaintiffs to show that the Defendants had a “deliberate
disregard of official duty, coupled with knowledge that the misconduct was
likely to injure the [Plaintiffs]” (Odhavji Estate v Woodhouse,
2003 SCC 69 at para 23). Thus, the essential nature of the Plaintiffs’
claim in misfeasance in public office, against the Individual Defendants, is
whether their actions or omissions conformed to actions that were authorized or
required by the Act and Regs. That is, were the Individual Defendants carrying
out functions pursuant to federal statute, and in the course of their duties as
servants of the Crown, in a manner where they (1) disregarded the boundaries of
their authority or the scope of their duties; and (2) had the
means/understanding to know, or a reckless disregard for or a wilful blindness
of, the harm would likely come to the Plaintiffs because of their actions?
[64]
The principle elements of the tort of negligence
are: (1) the existence of a duty of care owed by a defendant to a plaintiff;
(2) a breach by the defendant of the duty of care; and (3) damage caused to a
plaintiff by the breach (Donoghue v Stevenson, [1932] AC 562 at 580
(HL); Anns v Merton London Borough Council, [1978] SC 728, at 751 to 752
(HL)). The essential nature of the claim for negligence is whether the
operation of the Act and Regs creates a duty of care owed by any of the
Individual Defendants to the Plaintiffs. Put another way, did the duties of the
Individual Defendants, as governed by the Act and Regs, or the interactions
between the Individual Defendants and the Plaintiffs within the context of the
regulatory regime governing the manufacture and import of drugs, create a
relationship of proximity, such that any of the Individual Defendants owed the
Plaintiffs a duty of care?
[65]
Additionally, in determining whether any of the
Individual Defendants are liable for negligence, the Court will have to
ascertain the standard of care owed to the Plaintiffs. This will also require
careful consideration of the Act and Regs.
[66]
The legal elements of conspiracy are as follows
(Cement Lafarge v BC Lightweight Aggregate, [1983] 1 S.C.R. 452):
1)
two or more persons acting in combination by
agreement or with a common design; and
2)
(a) the predominant purpose of the conduct is to
cause the Plaintiff injury, whether or not the means were lawful; or (b)
unlawful conduct directed towards the Plaintiff, in circumstances that the Defendants
should know that an injury to the Plaintiff is likely.
[67]
In this case, the alleged injury caused to the
Plaintiffs is an injury that was effected through conduct that the Individual
Defendants were in the position to perform because of their positions as Health
Canada employees. Therefore, the essential nature of this claim is whether the
Individual Defendants performed their duties in a manner that (1) was by
agreement or common design, outside of coordination contemplated by the statutory
framework, and (2) for the purpose of causing the Plaintiffs injury, or in
circumstances where the Individual Defendants knew, or should have known, that
an injury to the Plaintiffs was likely.
[68]
In Colour You World Corp v CBC (1998),
156 CLR (4th) 27 at 36 (ONCA), Justice Abella (as she then was) defined
defamation as follows:
A defamatory statement is one which has a
tendency to injure the reputation of the person to whom it refers; which tends,
that is to say, to lower him [or her] in the estimation of right-thinking
members of society generally and in particular to cause him [or her] to be
regarded with feelings of hatred, contempt, ridicule, fear, dislike, or
disesteem. The statement is judged by the standard of an ordinary,
right-thinking member of society. Hence the test is an objective one…
[69]
The Plaintiffs allege that the Individual
Defendants are liable for defamation because of the Public Statements. However,
some of the Individual Defendants, namely the Minister and Individual
Defendants whose job titles indicate that they are responsible for
communications, may have a duty to keep the public informed about the
activities of Health Canada, particularly with regards to measures taken to
ensure public safety. As such, it is not clear without analysis of the
statutory and policy framework of the Act and Regs that the Public Statements
were not made in a manner that would provide some of the Individual Defendants
with a defense to the claim of defamation: for example qualified privilege, if
the tort of defamation is made out.
[70]
Therefore, the essential nature of this claim is
whether the Individual Defendants were making statements damaging the
Plaintiffs’ reputation, in a manner for which the statutory framework provides
no defense.
[71]
Finally, monetary relief in public law is the
novel cause of action proposed in Paradis Honey Ltd v Canada, 2015 FCA
89 at paragraphs 116 to 118 [Paradis Honey], also called abusive
administrative action. Although, this novel cause of action has yet to be
litigated, liability for the Individual Defendants would seem to be based on
whether their actions or omissions in the performance of their duties were
administratively acceptable. From this Court’s decisions regarding the Import
Ban, the August 2015 Decision, and the November 2014 Decision, the essential
nature of each action or omission will have to be assessed against the
statutory framework created by the Act and Regs to determine whether it was
administratively acceptable.
(4)
Conclusion on the essential nature of the claims
[72]
Based upon the analysis above, I find that the
essential nature of the Plaintiffs’ claims are as follows:
1)
Misfeasance: were the Individual Defendants
carrying out functions pursuant to the Act and Regs, in the course of their
duties as servants of the Crown, and disregarding the boundaries of their
authority with knowledge or reckless disregard of the fact that the Plaintiffs
would be harmed?
2)
Negligence: did the duties of the Individual
Defendants, as servants of the Crown, or the interactions between the
Individual Defendants and the Plaintiffs, within the context of the regulatory
regime under the Act and Regs governing the manufacture and import of drugs,
create a relationship of proximity? If so, was the duty of care breached,
causing the Plaintiffs harm?
3)
Conspiracy: did the Individual Defendants
perform their duties in a manner that was, by agreement or common design,
outside of any cooperation contemplated by the statutory and policy framework
of the Act and Regs, to purposefully cause the Plaintiffs injury, or in
circumstances where the Individual Defendants knew, or ought to have known,
that an injury to the Plaintiffs was likely?
4)
Defamation: did the Individual Defendants make
statements that would damage the Plaintiffs’ reputation in the eyes of an
ordinary, right-thinking member of society, in a manner for which the statutory
framework of the Act and Regs provides no defense?
5)
Monetary relief in public law: were the actions
or omissions of the Individual Defendants, in the course of the performance of
their duties pursuant to the Act and Regs, administratively acceptable?
[73]
Given a contextual and purposive interpretation,
the Plaintiffs’ claims have the following overarching essential nature: did the
Individual Defendants do or omit to do anything, in the performance of their
duties as servants of the Crown, under the Act and Regs, and in a manner that
was outside of their authority or for an improper purpose, that gives rise to
valid claims for relief as pleaded in this proceeding?
D.
ITO-test: Is there a statutory grant of
jurisdiction?
[74]
The Parties agree that section 17(5)(b) of the Federal
Courts Act creates the specific statutory grant of jurisdiction that would
be applicable to this action: “in proceedings in which
relief is sought against any person for anything done or omitted to be done in
the performance of the duties of that person as an officer, servant or agent of
the Crown”. I find that the overarching essential nature of each of the
claims against the Individual Defendants is within the scope of this section,
such that there is a specific statutory grant of jurisdiction to the Federal
Court.
E.
ITO-test: Is there an existing body of federal
law which is essential to the disposition of the case and which nourishes the
statutory grant of jurisdiction?
[75]
The Defendants argue that there is a “traditional” line of authority in the Federal Court
and Federal Court of Appeal that has maintained that tort claims against
individually named Crown servants cannot be pursued in Federal Court. This line
of authority purportedly stands for the proposition that both a defendant’s
liability and a plaintiff’s right to damages in tort are provided for by
provincial common law, and that it is insufficient that the claims in tort
involve alleged misuses of powers or breaches of duties owed under federal
statute.
[76]
The Defendants also state that only claims for
breach of contract, in cases where federal statutes govern every aspect of the
contractual relationship, are within the Federal Court’s jurisdiction. They
assert that a similar logic does not apply to claims in tort, and rely on
various cases in support of this pronouncement: Ingle v Canada, [1984] 2
FC 57 (FCTD); Stephens Estate v R, [1982] FCJ No 114 (FCA); Leblanc
v R, 2003 FC 776; Stoney Band v Canada (Minister of Indian and Northern
Affairs), 2005 FCA 220.
[77]
The Plaintiffs contend that the cases presented
by the Defendants are distinguishable from this case, and that there is another
line of jurisprudence that is more aligned with the facts here, starting with R
v Rhine; R v Prytula, [1980] 2 S.C.R. 442 [Rhine/Prytula], which holds
that, where federal legislation provides a detailed statutory framework
governing every aspect of the relationship between the parties, a claim in
contract or tort can be brought in Federal Court. They rely on the following
cases for the principle that the Federal Court has jurisdiction over cases that
are in “pith and substance”, based on federal
law: Peter G White Management Ltd v Canada (Minister of Canadian Heritage),
2006 FCA 190 [Peter G White]; Oag v Canada, [1987] 2 FC 511 (FCA);
Kigowa v Canada, [1990] 1 FC 804 (FCA); Gottfriedson v Canada,
2014 FCA 55; Maguire v Canada, [1990] 1 FC 742; Abdelrazik v Canada, 2009
FC 580; and Dickson v Canada, 2016 FC 836 [Dickson].
[78]
The Defendants’ assertion that tort claims are
solely within the jurisdiction of the provincial superior courts because they
arise from the common law is not correct. In Rhine/Prytula at 447, the
Supreme Court articulated the principle that “‘contract’
or other legal institutions, such as ‘tort’ cannot be invariably attributed to
sole provincial legislative regulation or be deemed to be, as common law,
solely matters of provincial law”.
[79]
Having reviewed the cases relied upon by the
Parties, I agree that the cases relied on by the Plaintiffs are more similar to
this case than the cases presented by the Defendants. In particular, the facts
in this action are similar to those in Peter G White, where the right to
operate the gondola was created by a leasing and management regime that was
governed by federal legislation. Here, the Plaintiffs’ rights to manufacture
and import drugs are created by the specific statutory framework of the Act and
Regs.
[80]
In Peter G White, the plaintiff (“PGW”)
leased Crown land in Banff National Park, where it operated a ski hill. PGW was
never able to operate the gondola lift outside of the winter season, having
been twice refused a licence by Field Unit Superintendents of Banff National
Park, under the National Parks Businesses Regulations (the “Park Defendants”).
Further, in a management plan for the park, which was tabled in the House of
Commons, pursuant to the National Parks Act, the summer use of the
gondola was prohibited. PGW brought an action for damages in the Federal Court
for relief against the Park Defendants, who were Crown servants, alleging that
they were liable for breach of a lease and abuse of public office.
[81]
The Federal Court of Appeal stated that section
17(5)(b) of the Federal Courts Act “expressly
contemplates that Crown servants may be sued” and that “in determining the liability of a Crown servant or officer,
no distinction should be drawn between the individual’s ‘official’ versus
‘unofficial’ actions”; therefore, individual Crown servants should not
be struck as defendants on the grounds that their allegedly tortious acts
occurred in the course of their duties as a servant or officer of the Crown (Peter
G White at paras 44 to 47). The Federal Court of Appeal further held that
the Federal Court has jurisdiction over cases in tort which are in pith and
substance based on federal law and when parties’ rights arise under and are
extensively governed by a detailed statutory framework (Peter G White at
paras 54 to 60).
[82]
The Federal Court of Appeal found that PGW’s
rights under the lease were created in a legal environment that is heavily
regulated by federal legislation because the “federal
legislation provides parameters within which leases in national parks may be
granted”, and PGW’s rights are expressly made subject to applicable
federal legislation and the need to obtain any necessary licence (Peter G
White at paras 68, 70). Therefore, the Court of Appeal found that “federal legislation provide[d] a sufficiently detailed
framework to nourish and support the grant of federal jurisdiction in this
case” (Peter G White at para 72).
[83]
The Defendants argue Peter G White is the
“high-water mark” of expansive Federal Court
jurisdiction, and that Justice Karakatsanis’ comments in City of Windsor, at
paragraph 69, indicate that cases in which an expanded view of the Federal
Court’s jurisdiction was taken deviate from the restrictions outlined by the
Supreme Court in ITO:
These articulations of the test should not
be understood to lower in any way the high threshold articulated in ITO
itself. The fact that the Federal Court may have to consider federal law as a
necessary component is not alone sufficient; federal law must be “essential to
the disposition of the case”. It must “nourish” the grant of jurisdiction.
[84]
However, the cases referred to regarding “these articulations”—Bensol Customs Brokers Ltd v
Air Canada, [1979] 2 FCR 575 [Bensol]; and The Queen v Montreal
Urban Community Transit Commission, [1980] 2 FC 151 [Montreal Urban
Community]—are distinguishable on their facts and the standard that these cases
articulated provided a lower standard than the standard to be applied in this
matter. For example, in Bensol at 582 to 583, which is quoted in Montreal
Urban Community, Justice Le Dain states:
It should be sufficient in my opinion if the
rights and obligations of the parties are to be determined by some material
extent by federal law. It should not be necessary that the cause of action be
one that is created by federal law so long as it is one affected by it.
[85]
Moreover, many of the cases relied on by the
Plaintiffs were referenced in the Federal Court of Appeal decision Canadian
Transit Co v Windsor (City), 2015 FCA 88, and were squarely brought to the
attention of the Supreme Court. In my opinion, the cautions of the majority in City
of Windsor against an expansion of the Federal Court’s jurisdiction do not
create a new position on the standard laid out in ITO. These cautions
simply serve to remind the Court of the requirement that the underlying federal
statutory framework must be essential to the disposition of the case and must
nourish the grant of jurisdiction to the Federal Court. For the reasons that
follow, I find that the Act and Regs meet these standards, as articulated in
both ITO and City of Windsor.
[86]
The Act and Regs create the rights which the Plaintiffs
allege were trammelled. The rights to sell, import, and manufacture drugs are
entirely created by federal statute. It is a comprehensive scheme, such that no
other common law doctrine informs the scope of these rights. Further, the Act
and Regs define the scope of the Minister’s and Health Canada’s authority and
create the metric against which the lawfulness of their actions will be
measured. This is particularly true with regards to the allegations of
misfeasance in public office and negligence. For example, in addition to the
requirements for GMP set out in Part C, Division 2 of the FD Regs, the
Minister publishes guidelines that explain that any GMP deficiencies noted
during an inspection are to be explained unambiguously and directly supported
by the FD Regs, and also explain the compliance mechanisms available to
remedy and enforce GMP deficiencies. Similarly, the issuance, amendment, and
suspension of ELs are governed by the FD Regs.
[87]
In my opinion, the interpretation and
application of the Act and the Regs will be essential to the disposition of
each of the Plaintiffs’ claims due to the nexus that exists between the federal
laws and the material facts pleaded against the Individual Defendants. As such,
the Act and Regs provide the context required to assess the relevant facts in
each claim.
(1)
Misfeasance in public office
[88]
The Defendants’ official duties with regards to
the Plaintiffs were all prescribed by and detailed in the Act and Regs.
Additionally, all of the Plaintiffs’ rights to import and sell drugs are
regulated and arise from the Act and Regs. Further, the Defendants’ knowledge
of the potential injury to the Plaintiffs would be based upon their
understanding of and familiarity with the Act and Regs. For example, the FD
Act, section 31.2, makes it an offense to sell or import therapeutic
products in contravention with the FD Act and the FD Regulations,
with the maximum punishment being a fine not exceeding $5,000,000 or
imprisonment for a term not exceeding two years, or both.
[89]
As such, determining what constitutes a “deliberate disregard of official duty” involves an
interpretation of the Act and Regs, as well as any guidance documents, and the
lawfulness of the Defendants’ conduct will be decided by reference to these
federal laws.
(2)
Negligence
[90]
Peter Hogg, in Liability of the Crown,
4th ed (Toronto: Thomson Reuters Canada Ltd, 2011) at 232 to 244, opines that
the Supreme Court has not given clear direction with regards to how a statutory
scheme is to be used to determine the proximity of public servants to plaintiffs
in negligence cases. However, he concludes, at 242, that the following
principles can be elucidated from a reading of the case law (Cooper v Hobart,
2001 SCC 79; Edwards v Law Society of Upper Canada, 2001 SCC 80; The
Queen v Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205; Hill v
Hamilton-Wentworth Regional Police Services Board, 2007 SCC 41; Fullowka
v Pinkerton’s of Canada Ltd, 2010 SCC 5; Reference re Broome v Prince
Edward Island, 2010 SCC 11):
1)
A public authority will not be open to liability
for negligence unless the public authority was in “close
and direct” or a proximate relationship with a plaintiff.
2)
The relevant statutory scheme is not the
exclusive, or even a necessary source of proximity in cases involving public
authorities.
3)
The statutory scheme will preclude a duty of
care, where such duty would conflict with the statute.
4)
The statutory scheme may play a positive role in
establishing proximity.
5)
Factors suggesting proximity include physical
and causal closeness, assumed or imposed obligations and expectations,
representations, reliance, and the property or other interests involved.
[91]
In Kamloops v Neilsen, [1984] 2 S.C.R. 2 at
9, the Supreme Court quoted Lord Wilberforce, who opined that “the more operational a power or duty may be, the easier it
is to superimpose upon it a common law duty of care”. As such, it is
possible that the actions or omissions that the Individual Defendants took
while performing their duties could attract liability, if a duty of care is
proven. Therefore, in order for a court to determine whether the Defendants are
liable for negligence, the court will have to engage in an interpretation of
the extent of the duties and powers granted by the Act and Regs, and the
associated statutory and policy frameworks.
(3)
Conspiracy
[92]
With regard to the allegedly conspiratorial
actions, the injury inflicted upon the Plaintiffs, if any, will have to be
assessed based upon the lawful actions that the Defendants could take within
their statutory framework. That is, the existence of an injury to the
Plaintiffs, and a predominant intent by the Individual Defendants to injury the
Plaintiffs, will depend on whether the Individual Defendants’ actions were
required of them, or allowable, under federal law.
[93]
Further, the Plaintiffs claim that the
Individual Defendants’ conspiratorial conduct was wrongful conduct, outside the
boundaries of their statutory authority, despite the fact that it occurred
through mechanisms that are inherently tied to the performance of their duties
at Heath Canada, for example administration of the EL scheme. However, it is
possible that the alleged conspiracy is simply a function of coordination
created within Health Canada by the Act and Regs, and the guidelines through
which they are made operational. The statutory framework will be essential to
determining whether the Individual Defendants acted unfairly, contrary to their
own published guidelines, and predominantly to injure the Plaintiffs.
(4)
Defamation
[94]
As the Plaintiffs point out, if the tort of
defamation is made out, there are two defences available to the Individual
Defendants: statutory duty and qualified privilege. Deciding whether or not
either of these defences is available to the Individual Defendants will be
determined by the application of the Act and Regs. In this regard, this case is
similar to Dickson, where whether the actions of the individual Canada
Revenue Agency defendants (the “CRA Defendants”) were justified was dependent
on the interpretation of federal laws.
[95]
The underlying action in Dickson, arose
out of a refusal of the Minister of National Revenue to renew the applicants’
federal tobacco manufacturing licence because of unpaid taxes. The motions
judge, after reviewing the legislation and the jurisprudence relating to
jurisdiction, held that the determination of whether the CRA Defendants were
liable for wrongfully refusing the tobacco licence would ultimately depend on
whether the applicants were exempt from taxation pursuant to section 87 of the Indian
Act. Therefore, the applicants’ claim was “‘in pith
and substance’ based on federal law and [was] governed by a detailed federal
statutory framework essential to the outcome of the case” (Dickson at
para 61).
[96]
In this case, whether there is a defense to
defamation will have to be addressed against each Individual Defendant’s
mandate under the Act and Regs, as well as whether they could have believed in
good faith that the Public Statements were true, based upon their understanding
of the procedures that would be in place under the relevant statutory
framework.
(5)
Monetary relief in public law
[97]
This novel cause of action is based upon a
framework of unacceptability, in the administrative law sense, of the public
authority’s conduct and the court’s exercise of remedial discretion (Paradis
Honey at para 139). An important component to this cause of action is the
quality of the public authority’s conduct: for example, did the public
authority fail to fulfill a clear and specific duty to act, and is the failure
to act unacceptable or indefensible in the administrative law sense (Paradis
Honey at paras 144 to 145).
[98]
As such, interpreting the statutory regime will
be determinative in finding liability or not under this novel cause of action.
Further, given Justice Russell’s findings that Health Canada’s continued
refusal to grant NOCs, in relation to products that still present data
integrity concerns (i.e., Apo-Varenicline and Apo-Sitagliptin), is reasonable
and the actions of the TBD not improper, understanding the different aspects of
the statutory framework under which each Individual Defendant was operating
will be essential to the determination of his or her liability, if any, and
whether certain relief should be granted.
[99]
Therefore, I find that the Act and the Regs are
essential for the trial judge to reach a decision with respect to each of the
claims made by the Plaintiffs against the Individual Defendants, and I find
that they sufficiently nourish the grant of jurisdiction, meeting the standard
set out in ITO and reaffirmed in City of Windsor. As such, it is
not plain and obvious that the rights, obligations, and potential defences
arising in this action are not essentially dependent upon and nourished by the
federal statutory framework.
F.
ITO-test: Is the law on which the case is based “a law of Canada” as the phrase is used in section 101 of the Constitution Act, 1867?
[100] The Defendants argue that this stage of the ITO-test requires
that the private law causes of action arise from federal law, in a manner that
is something more than the allegedly tortious actions being unauthorized by
federal law and/or the relationship between the Parties being based on federal
law.
[101] The Defendants’ understanding of the requirements of the third part
of the ITO-test is incorrect. The majority in City of Windsor is
silent on the requirements of this step; however, the minority opinion makes it
clear that the third part of the ITO-test requires that the federal law,
which is essential to the disposition of the case and nourishing of the grant
of jurisdiction, be valid federal law: i.e., law that is within the federal
legislative competence (City of Windsor at para 116; see also ITO
at 777).
[102] There is no dispute between the Parties that the Act and Regs are
within the federal legislative competence.
[103] Based on the above analysis, it is not plain and obvious that the
Federal Court does not have jurisdiction to hear the claims against the Individual
Defendants.
IV.
Costs
[104] Costs are awarded to the Plaintiffs in any event of the cause.
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