Docket: A-47-17
Citation: 2018 FCA 39
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CORAM:
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PELLETIER J.A.
NEAR J.A.
WOODS J.A.
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BETWEEN:
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ATTORNEY GENERAL
OF CANADA
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Appellant
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and
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WILLIAM WEI LIN
LIANG
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Respondent
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REASONS FOR
JUDGMENT
PELLETIER J.A.
[1]
The Attorney General appeals from a decision of
the Federal Court of Canada striking the statements of claim in two proposed
class actions for reasons reported as Whaling v Canada (Attorney General)
and Liang v Canada (Attorney General), 2017 FC 121, 374 C.R.R. (2d)
249 (Reasons). The Attorney General appeals from a decision in which she was
successful because, having struck the claims in their entirety, the Federal
Court granted the plaintiffs (respondents in the appeals) leave to amend. The
Attorney General contends that the claims cannot be amended in a way that will
disclose a reasonable cause of action.
[2]
The statements of claim sought damages pursuant
to subsection 24(1) of the Canadian Charter of Rights and Freedoms
because of the unconstitutionality of the retrospective application of the Abolition of Early Parole Act, S.C. 2011 c. 11 (the Act).
In Canada (Attorney General) v. Whaling, 2014
SCC 20, [2014] 1 S.C.R. 392, the Supreme Court ruled that the
retrospective application of the Act was a violation of Mr. Whaling’s right to
be free of double jeopardy pursuant to paragraph 11(h) of the Charter.
[3]
In Mr. Liang’s case, the British Columbia Court of Appeal held that the retrospective
loss of the right to early parole effectively increased the penalty for the
offence for which he was convicted. This was held to be a violation of his
right under paragraph 11(i) of the Charter to the benefit of the
lower punishment where the punishment for an offence has been varied between
the time of the commission of the offence and the time of sentencing: Liang v. Canada (Attorney
General), 2014 BCCA 190, 311 C.C.C. (3d) 159.
[4]
Mr. Whaling and Mr. Liang each commenced a proposed class proceeding in
the Federal Court by way of a statement of claim in which each claimed to be a
representative plaintiff. The statements of claim were substantially the same.
Each claimed damages under subsection 24(1) of the Charter on the
basis that the passage of the legislation with unconstitutional retrospective
effect was done recklessly, in a grossly negligent manner, in bad faith and/or
in abuse of the defendant’s power by passing a bill into law which it knew, or
ought to have known, was unconstitutional and would infringe the rights of
those to whom it applied, and did so motivated by political self-interest.
[5]
The Attorney General brought a motion to have
each statement of claim struck pursuant to Rule 221(1) of the Federal Courts
Rules, SOR/98-106 (the Rules), on the basis that it did not disclose
a reasonable cause of action and was an abuse of process.
[6]
The Federal Court agreed that the facts pleaded
did not disclose recklessness, bad faith or abuse of power such as to ground a
claim for relief under subsection 24(1) of the Charter: Reasons at
para. 12. To be clear, the Federal Court did not rule that the cause of action
advanced by the plaintiffs was not known to law; it ruled that the pleading of
the facts was defective, and so the proceedings should be struck. However, the
Court declined to exercise its discretion with respect to the Attorney
General’s arguments as to cause of action estoppel or abuse of process because
it was of the view that doing so would result in unfairness to potential class
members, should the claims be certified as class proceedings. The Court did not
accept the Attorney General’s contention that the applicable limitation period
had expired. It found that the applicable limitation period is six years as set
out in subsection 39(2) of the Federal Courts Act,
R.S.C. 1985, c. F-7 because the cause of action arose otherwise than in a
province. In the end, the Federal Court struck out the claims in their entirety
but gave the plaintiffs leave to amend.
[7]
In this Court, the Attorney General argues that
the Federal Court erred in granting leave to amend. She relies on this Court’s
decision in Collins v. Canada, 2011 FCA 140, 418 N.R. 23 (Collins)
as authority for the proposition
that the test for granting leave to amend is whether a claim can be cured by an
amendment: see Collins at para. 26.
[8]
In the
Attorney General’s submission, these claims cannot be cured because they are
doomed to fail. The Attorney General advances five grounds in support of her
position. She says that the claims are non-justiciable and are subject to
legislative privilege. Next, she alleges that the claims are statute-barred
because the applicable limitation period is the provincial limitation period of
two years. The Attorney General also maintains that the claims are caught by
the doctrines of cause of action estoppel and abuse of process, largely because
of the plaintiffs’ failure to include their claim under subsection 24(1)
of the Charter in their actions to have the legislation declared
unconstitutional. She argues that the plaintiffs were bound to raise all
possible claims in their original proceedings and that, not having done so,
they are estopped from raising their subsection 24(1) claims in a separate
proceeding. Finally, the Attorney General submits that these claims are an
abuse of process as they compel her to relitigate a question which has already
been decided with the attendant risk of inconsistent verdicts, a result which
would bring the administration of justice into disrepute: see Toronto (City)
v. Canadian Union of Public Employees (C.U.P.E.) Local 79, 2003 SCC 63,
[2003] 3 S.C.R. 77 (C.U.P.E.).
[9]
The standard of review of an interlocutory decision of the Federal Court
sitting as a trial court is that set out in Housen v. Nikolaisen, 2002
SCC 33, [2002] 2 S.C.R. 235: correctness for questions of law,
palpable and overriding error for questions of fact and questions of mixed fact
and law, unless one can identify an extricable question of law, in which case,
the correctness standard applies. Where the decision in issue is discretionary,
the same standard applies: see Hospira Healthcare Corp. v. Kennedy Institute
of Rheumatology, 2016 FCA 215 at para. 83, [2017] 1 F.C.R. 331.
[10]
The first two arguments made by the Attorney
General, justiciability and legislative immunity, refer to two distinct legal
doctrines which on the facts of this case are intertwined. Justiciability
refers to the judiciary’s reluctance to engage with questions which are not
appropriate for adjudication. In Reference re Canada Assistance Plan,
[1991] 2 S.C.R. 525 at page 546 , 83 D.L.R.
(4th) 297, the Supreme Court of Canada held that “a question which possesses a sufficient legal component to
warrant a decision by a court” is, to that extent, justiciable.
[11]
As for legislative immunity, in Mackin v. New
Brunswick (Minister of Finance), 2002 SCC 13 at paragraphs 78 to
82, 209 D.L.R. (4th) 564 (Mackin), the
Supreme Court held that “absent conduct that is clearly
wrong, in bad faith or an abuse of power, the courts will not award damages for
the harm suffered as a result of the mere enactment or application of a
law that is subsequently declared to be unconstitutional […] [emphasis added]”. The general rule that the enactment of
unconstitutional legislation is not actionable does not apply where the
plaintiff can show “conduct that is clearly
wrong, in bad faith or an abuse of power.”
[12]
In deciding whether the
plaintiff’s statement of claim should be struck, the test is whether it is “plain and obvious” that the plaintiff’s claim will fail: Hunt
v Carey Canada Inc, [1990] 2 S.C.R. 959 at page 980, 74 D.L.R. (4th)
321. Taking Mackin at face value, it is not plain and obvious that the
doctrine of legislative immunity is an absolute bar to the plaintiff’s action.
Further, a question as to whether Charter damages will be awarded
because of “conduct that is
clearly wrong, in bad faith or an abuse of power” in the enactment of a law subsequently
found to be unconstitutional “possesses
a sufficient legal component” to be justiciable. These arguments fail.
[13]
The Attorney
General next argues that the claims could not be cured because they are statute
barred. As noted above, the Federal Court found that the cause of action
allegedly arose otherwise than in a province so that the limitation period in
subsection 39(2) of the Federal Courts Act applied. The Federal
Court emphasized the following passage of Markevich v. Canada, 2003 SCC 9 at paragraph 40, [2003] 1 S.C.R. 94
(Markevich):
If the cause of action were found to arise
in a province, the limitation period applicable to the federal Crown’s
collection of tax debts could vary considerably depending upon the province in
which the income was earned and its limitation periods. In addition to the
administrative difficulties that potentially arise from having to determine the
specific portions of tax debts that arise in different provinces, the
differential application of limitation periods to Canadian taxpayers could
impair the equitable collection of taxes.
Reasons, at para. 32
[14]
In addition,
the Federal Court was particularly influenced by the fact that the plaintiffs’
actions were brought in response to parliamentary action in enacting
unconstitutional legislation resulting in the loss of rights guaranteed by
federal legislation. The Court found that these claims could only be
purposively seen as arising “otherwise than in a
province”: see Reasons at
paragraph 33.
[15]
The Attorney General
relies upon the jurisprudence which holds that a claim for Charter
damages is not sui generis; a claim that is subject to a provincial
limitation period remains subject to that limitation period even if it is
advanced as a claim for Charter damages: see namely St. Onge v. Canada,
2001 FCA 308 at para 2, 288 NR 3; Vancouver (City) v
Ward, 2010 SCC 27, at para 43, [2010] 2 S.C.R. 28; Ravndahl
v Saskatchewan, 2009 SCC 7 at para 17, [2009] 1 S.C.R. 181.
[16]
While the
Attorney General correctly states the law, the proposition upon which she
relies is not determinative of the limitations issue. The issue here is the
interpretation of section 39 of the Federal Courts Act, in
particular the determination of when a cause of action arises “otherwise than in a province.” We were not directed to any jurisprudence which deals
with the interpretation of this phrase in section 39 in the context of proceedings
arising from the enactment of an unconstitutional law.
[17]
Markevich, which was relied upon by the
Federal Court, considered the limitations issue from the perspective of the
effect upon the Crown of applying provincial limitations to proceedings to collect
debts owed to the Crown pursuant to federal legislation. No such issue arises
in this case. Whether one applies federal or provincial limitation periods will
have no effect whatsoever upon federal administration of penitentiaries. The
limitations question arises only in connection with actions arising from the
enactment of unconstitutional legislation.
[18]
While I do
not necessarily disagree with the views expressed by the Federal Court as to
the appropriateness of a federal limitation period, those views are not the
correct basis for determining where the cause of action in these cases arose.
[19]
A cause of action is a
set of facts that provides the basis for an action in court: see Markevich,
at paragraph 27. A cause of action arises in a province when all of the
elements of the cause of action are present in that province: see Canada v.
Canada Maritime Group (Canada) Inc., [1995] 3 F.C. 124 at page 129, 185 N.R. 104; Apotex v. Sanofi-Aventis,
2013 FCA 186 at paragraph 105, [2015] 2 F.C.R. 644. The question as to which facts
constitute the plaintiffs’ cause of action and where they arose does not appear
to have been canvassed in the Federal Court and it was not debated on this
appeal. Given the importance of the question for these litigants and for the
jurisprudence, I would allow the appeal in part and return this question to the
Federal Court, to be decided as directed by the case management judge.
[20]
The Attorney General’s
last two grounds of appeal are that the Federal Court erred in not exercising
its discretion to find that the proceedings were doomed to fail because they
were caught by the doctrines of res judicata and abuse of
process. The Federal Court found that the application of these doctrines was
discretionary and that the discretion should be exercised so as to ensure that the requirements of justice are met and
that the Court’s processes are not abused: Reasons at para. 36.
[21]
In my view,
the Federal Court committed no palpable and overriding error in exercising its
discretion as it did. While these proceedings have not yet been certified, I do
not believe that the Federal Court erred in having regard to the position of
potential class members in exercising its discretion. These considerations are
certainly material to meeting the requirements of justice. As for the question
of abuse of process, these proceedings are not an attempt to re-litigate a
question which was finally determined in other proceedings, as in C.U.P.E. There
is no risk of inconsistent findings here.
[22]
For these
reasons, I have not been satisfied that the Federal Court’s decision should be
set aside other than with respect to the question of the appropriate limitation
period. I would therefore allow the appeal in part and return the matter to the
Federal Court so that the issue of the correct limitation period can be
determined as provided in these reasons and in accordance with the directions
of the case management judge. In light of the divided success, each party
should bear their own costs.
"J.D. Denis Pelletier"
“I agree
D.G. Near
J.A.”
“I agree
J. Woods J.A.”
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