Polchies v. The Queen, 2003 FC 961

Date: 20030808

Docket: T-713-03

Citattion: 2003 FC 961

Ottawa, Ontario, Friday, this 8^th day of August, 2003.

PRESENT:      MADAM PROTHONOTARY MIREILLE TABIB

BETWEEN:

CALISTA POLCHIES

Plaintiff

- and -

HER MAJESTY THE QUEEN

Defendant

REASONS FOR ORDER AND ORDER

TABIB P.

[1]                 Should the Plaintiffs' action, seeking special damages in an amount of less than $50,000.00 and punitive damages in an unspecified amount, proceed as a simplified action? That is the issue to be determined on the motion before me.

[2]                 The present motion was brought by the Defendant, Her Majesty the Queen, in this and related Court files no. T-714-03 and T-715-03. The Defendant also seeks an order that the three actions be consolidated and an extension of time to serve and file its statement of defence. The Plaintiffs in all three actions having now consented to the consolidation of the actions and the extension of time, the sole issue to be determined remains whether the consolidated proceeding should be ordered to proceed as a simplified action. For the purpose of this discussion, I will treat the three actions as a single, consolidated action, and this order and reasons for order shall avail for and be filed in all three actions.

THE ACTION            

         The Plaintiffs are all siblings and members of the Oromocto Indian Band. The action arises out of a Land Settlement Agreement reached in March 1983 between the Oromocto Band and the Government of Canada, pursuant to which each member of the band, including the Plaintiffs, were to receive a per capita distribution of $11,650. In the case of minors, as were all three Plaintiffs, the agreement stipulated that each should receive an initial payment of $8,325 and a further payment of $3,325, with interest, upon reaching 21 years of age. The statement of claim alleges that in breach of sections 52 and 62 of the Indian Act, R.S.C. 1970, c.I-6, which put the Minister of Indian and Northern Affairs (the "Minister") in a relationship of trust, fiduciary and guardianship with the minor Plaintiffs, the Minister allowed their initial share of the distribution to be paid to their mother and the balance to be paid into the Band's Land Claim account instead of holding it in trust for them. The statement of claim alleges that as of 2003, the Plaintiffs have not received any of their share of the distribution.

         The Plaintiffs therefore claim special damages in the amount of $11,650.00 each, for a total of $34,950.00, plus interest and costs. The statement of claim further claims punitive damages in an unspecified amount. There are no specific allegations as to why the actions of the Minister should attract punitive damages.

THE POSITION OF THE PARTIES

         For the Defendant, it is argued that on its face, the statement of claim does not specify that the monetary relief sought exceeds $50,000.00, as required by Rule 182(b), and that the monetary relief specified, in the form of special damages, is clearly under the threshold set out in Rule 292(a). The Defendant therefore in essence argues that the Plaintiffs had the onus of pleading that their total claim for relief exceeds $50,000.00 failing which it will be assumed that the claim falls within the ambit of Rule 292(a). The Defendant finds further support for its position in Rules 293 and 400(3)(n), which contemplate an award of costs against a successful Plaintiff who exaggerates its claim merely to avoid the operation of the simplified action rules. Alternatively, the Defendant urges the Court to exercise its discretion under Rule 292(d) and order that the action be conducted as a simplified action, based on the amounts specifically claimed as special damages and the initial agreement of counsel for the Plaintiffs to proceed as a simplified action, which he subsequently withdrew over concerns about documentary discoveries.

         The Plaintiffs' argument is twofold: That Rule 292 is ultra vires of the Court's rule-making power, in that it creates a "wholly new type of action", which is not contemplated in section 46 of the Federal Court Act, and that it conflicts with the provisions of section 48(1), providing for the manner in which proceedings against the Crown are to be instituted. For the purpose of their present action, the distinctions between the conduct of an action under the simplified action rules and as a "normal" action that most concern them are the filing fees ($50.00 for a simplified action, as opposed to $2.00 pursuant to section 48(1)) and the liberty of the parties to serve a list of documents instead of an affidavit of documents. They nevertheless cite as additional material differences: the lack of oral discoveries, unavailability of summary judgement and deferment of most interlocutory motions to the pre-trial conference under the simplified action rules.

         In the alternative, the Plaintiffs submit that this action is not a case in which it is appropriate for the Court to exercise its discretion to order that the action proceed as a simplified action, as the Plaintiffs would be seriously prejudiced by the unavailability of documentary discovery by way of an exchange of affidavits of documents. In particular, the Plaintiffs argue that they have no documents at all, and that they are counting on the Crown's obligation of due diligence to make inquiries in order to produce an affidavit of documents, which obligation they imply either does not exist or will not be carried out if the Crown is allowed to provide only a list of documents. The Plaintiffs do not suggest that the other procedural particularities of conducting an action as a simplified action would cause them prejudice.

THE RELEVANT PROVISIONS

         The relevant provisions of the Federal Court Act and of the Federal Court Rules, 1998 are as follows:

Federal Court Act:

46. (1) Subject to the approval of the Governor in Council and subject also to subsection (4), the rules committee may make general rules and orders

(a) for regulating the practice and procedure in the Trial Division and in the Court of Appeal, including, without restricting the generality of the foregoing,

(ii) rules providing for discovery and production, and supplying of copies, of documents by the Crown in a proceeding to which the Crown is a party.

48. (1) A proceeding against the Crown shall be instituted by filing in the Registry of the Court the original and two copies of a document that may be in the form set out in the schedule and by payment of the sum of two dollars as a filing fee.

Federal Court Rules, 1998:

182. Every statement of claim, counterclaim and third party claim shall specify

(b) where monetary relief is claimed, whether the amount claimed, exclusive of interest and costs, exceeds $50,000.

292. Unless the Court orders otherwise, rules 294 to 299 apply to any action in which

(a) each claim is exclusively for monetary relief in an amount not exceeding $50,000, exclusive of interest and costs;

(b) in respect of an action in rem claiming monetary relief, no amount claimed, exclusive of interest and costs, exceeds $50,000;

(c) the parties agree that the action is to be conducted as a simplified action; or

(d) on motion, the Court orders that the action be conducted as a simplified action.

293. The Court may award costs against any party, including a party who is successful in an action, who it finds has exaggerated a claim, including a counterclaim or third party claim, merely to avoid the operation of rules 292 and 294 to 299.

IS RULE 292(a) ULTRA VIRES?

         It is trite law that subordinate legislation, as are the Federal Court Rules, 1998, cannot conflict with the provisions of a statute. Here, the Plaintiffs argue that Rule 292 is ultra vires of the rule-making powers conferred by s. 46 and conflicts with section 48(1) on two aspects: the type of procedure allowed and the filing fee.

         Save for a few exceptions, the Federal Court Act does not mandate the procedural vehicle for obtaining relief before the Court, nor the interlocutory remedies and discovery process available to the parties in various proceedings. That is left to be determined by the exercise of the rules committee's rule-making powers, conferred by section 46. Nothing in section 48(1) or in the Federal Court Act suggests that actions against the Crown - or any action - should proceed in accordance with a single set of rules applicable to all actions. In any event, Rules 292 and following do not, as argued by the Plaintiffs, create a "wholly new type of action". The rules as to simplified actions are comprised in part IV of the Federal Court Rules, 1998, "Actions", and save where specifically modified to respond to the particular imperatives of accommodating small claims, simplified actions remain governed by the provisions of part IV, applicable to all actions.

         More specifically, there exists, neither in the Federal Court Act nor at common law, a "fundamental right" to documentary discovery by way of an exchange of affidavit of documents. As an example, the concept of an affidavit of documents is unknown in Quebec's Code of Civil Procedure. Moreover, section 46(2) specifically empowers the rules committee to make "rules providing for the discovery and production, and supplying of copies of documents by the Crown in a proceeding to which the Crown is a party". Entitling the Crown to provide a list documents where an affidavit of documents would otherwise be required would therefore even be a legitimate exercise of this rule-making power.

       As regards filing fees, the fees for a simplified action are not prescribed by Rule 292, but by Tariff A, through the application of Rule 19. Thus, if conflict there is in respect of filing fees, it does not arise out of Rule 292, but of Tariff A. Tariff A provides three different levels of fees for the issuance of a statement of claim, being: $2.00 under section 48 of the Federal Court Act, $50.00 in a simplified action or an appeal that proceeds by way of action and $150.00 in any other action. The Plaintiffs' action (if it otherwise qualifies as a simplified action under Rule 292(a)), being both a statement of claim under s. 48 and a simplified proceeding, two different levels of fees are susceptible of being applicable. It is only if the fee for simplified actions is held to prevail over the fee applicable to section 48 actions that a conflict with s. 48 arises. As the principles of statutory interpretation demand that legislation which is capable of two interpretations be construed in a manner that would make them valid, rather than ultra vires, any difficulty in interpreting the Tariff is easily resolved so that the fee payable upon issuance of a statement of claim under s. 48 of the Federal Court Act be applicable, whether the action be governed by the general rules or by the simplified action rules.

APPLICATION OF RULE 292(a) TO THE ACTION HEREIN

       The question of the application of Rule 292(a) to a claim for unspecified damages does not appear to have been the subject of reported judgements of this Court. However, I agree with the Defendant's argument as to the combined effects of Rules 182(b) and 292(a).

       Rule 292(a) mandates simplified rules of proceeding in actions in which only monetary relief is claim, and where each claim does not exceed an amount set at $50,000.00, exclusive of interest and costs. These rules are designed to ease, for the Court as well as for the parties, the burden in time and expense of full-fledged discoveries and of potentially numerous appearances on motions where the amounts at stake would not justify this burden. Whether the claim is for special, general or punitive damages is not relevant to the application of Rule 292(a), so long as it remains purely for monetary relief. As to the amount, it is arbitrarily set at $50,000.00. Whether an action involving a purely monetary claim will automatically come within the regime of simplified actions is dependant solely on the dollar value stated by the plaintiff in is statement of claim. If a plaintiff exaggerates this amount for the purpose of avoiding the application of Rules 292 to 299, he may face cost consequences (Rules 293 and 400(3)(n)).

       If unspecified damages are to be presumed to exceed $50,000.00, there is a danger that a plaintiff could avoid both the potential cost consequences of an exaggerated claim and the application of Rules 292 to 299 by simply including a claim for unspecified damages. For example, a defendant may find it difficult, if not impossible, to establish that the claim was exaggerated so as to trigger the application of Rules 293 and 400(3)(n). As well, on a motion under Rule 292(d) to determine whether an action ought to proceed as a simplified action, the Court would be called upon to consider the complexity of the issues and the amount by which the claim exceeds the $50,000.00 limit. How is this determination to be made where unspecified damages are claimed? The monetary value of a plaintiff's claim is generally within the peculiar knowledge of the plaintiff. A defendant wishing to avail itself of Rule 292 would find itself at a distinct disadvantage were the plaintiff allowed to avoid the automatic application of Rule 292(a) by simply not quantifying its claim.

       Rule 182(b) specifically requires a statement of claim to "specify [...] whether the amount claimed, exclusive of interest and costs, exceeds $50,000.00" [emphasis mine]. The French text of Rule 182(b) is just as specific "une mention indiquant si le montant demandé excède $50,000". I find that in the absence of a clear indication in the statement of claim that claim for monetary relief exceeds $50,000.00, it must be deemed that it does not. Had the drafters of the Rules contemplated that a claim for monetary relief be presumed to exceed $50,000.00 in the absence of a clear statement to the contrary, Rule 182(b) would have either been framed differently or would not have been necessary at all.

APPLICATION OF RULE 292(d)

       In the event that I am wrong in my interpretation of Rule 292(a), I would, in the exercise of my discretion, have ordered this action to proceed as a simplified action. Although the Plaintiffs' claim arises out of events that occurred some twenty years ago, the issues, although not fully defined by a statement of defence, do appear to be fairly contained and well identified. The Plaintiffs have not argued that the issues present any complexity which would make it inappropriate for it to proceed as a simplified action. Indeed, they initially consented to proceed by way of a simplified action, and it appears from the evidence and the arguments presented on behalf of the Plaintiffs that the Plaintiffs' change of mind was predominantly motivated by the issue of documentary discovery. That part of the claim which is quantified clearly falls within the ambit of the simplified action rules. As for the unquantified claim for punitive damages, the Plaintiffs have not even attempted, in their responding materials, to provide an indication of the potential value of that claim, apart from an unsupported statement that "it is not unreasonable in that situation to foresee a punitive award in excess of $15,051".

       As suggested by this Court in Cana Foods Inc. v. Kent Line International Ltd. [1998] F.C.J. No. 1889, it appears that the factors to be balanced in the application of Rule 292(d) are the complexity of the action and the margin by which a claim for monetary relief exceeds the $50,000.00 threshold.

       I cannot weight that last factor otherwise than by my own assessment of the merits of the Plaintiffs' claim. As mentioned earlier, the statement of claim contains no allegations specifically supporting a claim for punitive damages, and I can see no obvious grounds for such an award, other perhaps than the mere fact that the nature of the action is for breach of trust. I am therefore not convinced that the likelihood that the Plaintiffs' claim in capital would exceed $50,000.00 is any more than a remote possibility. The circumstances herein amply justify an order that the consolidated action proceed as a simplified action.

       I should also mention that the Plaintiffs' apprehension of prejudice arising from the lack of documentary discovery by way of affidavit of documents is unfounded. Save for the formalities of an affidavit and the ability to cross-examine an affiant, the rights and obligations of the parties, and the content and organization of the list of documents contemplated in Rule 295 should conform to Rules 222 to 233. The Plaintiffs' concerns therefore do not affect my perception of the suitability of this action for proceeding under the simplified action rules.

IT IS ORDERED THAT:

1.          The proceedings in files T-713-03, T-714-03 and T-715-03 shall be consolidated and heard together.

2.          The resulting action shall be conducted as a simplified action.

3.          The Plaintiffs shall, no later than 30 days from the date of this order, serve and file an amended statement of claim consolidating the actions of the three Plaintiffs. All further proceedings shall be filed in file T-715-03 only.

4.          The time within which the Defendant is to serve and file its statement of defence to the consolidated action shall run from the time of filing the Plaintiffs' amended statement of claim.

5.          The costs of a single motion shall go to the Defendant.

6.        The present order shall avail for and be filed in files T-713-03, T-714-03 and

T-715-03.

                                                                                                                                              "Mireille Tabib"                 

                                                                                                                                                   Prothonotary                    

                                                    FEDERAL COURT OF CANADA

TRIAL DIVISION

                              NAMES OF COUNSEL AND SOLICITORS OF RECORD

DOCKET:                                                                                     T-713-03

STYLE OF CAUSE:                           CALISTA POLCHIES v. HER MAJESTY THE

QUEEN                         

MOTION DEALT WITH IN WRITING WITHOUT APPEARANCE OF PARTIES

REASONS FOR ORDER BY:                                                 MADAM PROTHONOTARY

MIREILLE TABIB

DATED:                                                                                        AUGUST 8, 2003

WRITTEN REPRESENTATIONS BY:

SOLICITORS OF RECORD: