Date: 19990422
Docket: 99-T-9
BETWEEN:
687764 ALBERTA LTD. operating as
WEST END HEALTH AND HOME CARE CENTRE
Applicant
- and -
THE MINISTER OF HEALTH
Respondent
REASONS FOR ORDER
SHARLOW J.:
[1] This is an application for an order pursuant to section 18.1(2) of the Federal Court Act extending the time for making an application for judicial review.
Facts
[2] The applicant is a corporation carrying on the business of a pharmacy and supplier of medical supplies and equipment. It wants the right to bill the Government of Canada directly for medical products it provides to individuals who are covered by the Non-Insured Health Benefits (NIHB) Program administered by the Medical Services Branch of the Department of Health.
[3] The applicant says that right is obtained by becoming party to a "Provider Agreement" with a corporation named First Canadian Health Management Corporation Inc. ("First Canadian"). First Canadian is responsible for certain aspects of the administration of the NIHB Program by virtue of a contract it has with the Government of Canada, the "Non Insured Health Benefits (NIHB) Information and Claims Processing Contract." I was referred to no statute or regulation that deals with Provider Agreements.
[4] On December 1, 1998, the applicant entered into two Provider Agreements with First Canadian. The two agreements are identical except for the products to which they relate.
[5] Each Provider Agreement states that its term would end on December 31 of the following year but would automatically be extended for successive one year terms unless terminated by either party upon written notice to the other party at least 90 days prior to the end of the initial or any renewal term. Section 8 also provides for two additional ways to terminate and prevent further renewals. Clause B of section 8 says that in the event of a default in performance of an obligation under the agreement that is not cured within a stipulated time after notice of the default, the other party is entitled to terminate the agreement upon fourteen days' written notice. Clause C of section 8 provides that either party has the right to terminate without prior notice and without penalty for cause.
[6] On December 9, 1998, First Canadian sent a notice to the applicant terminating both Provider Agreements for cause. The cause was not stated and the applicant claims to have no knowledge of the cause. The effect of the termination, if it stands, is that the applicant is not entitled to bill Canada for anything supplied on or after December 9, 1998 to individuals covered by the NIHB Program.
[7] Between December 9 and December 24, 1998, the applicant's counsel made efforts to obtain an explanation for the termination. On December 10, 1998, First Canadian sent a letter to counsel for the applicant. That letter reads in part as follows:
| We [First Canadian] became the current contractor [to Health Canada] on December 1st of this year. The Agreement between your client [the applicant] and First Canadian Health pertains only to the Non-Insured Health Benefits Program. All program management remains with Medical Services Branch of Health Canada. First Canadian Health's role is to adjudicate claims and pay providers as directed by Medical Services Branch. |
|
| Thus, the direction to terminate the stated Agreement, which addresses only the Non-Insured Health Benefits Program, came from Medical Services Branch of Health Canada. The termination was for cause, for non-compliance to the Non-Insured Health Benefits Program. |
|
[8] No further explanation was provided. On January 7, 1999, the applicant commenced an action against First Canadian in the Court of Queen's Bench of Alberta. The remedies sought in that action are, first, a declaration that the Provider Agreements constitute a binding contractual obligation between the parties, and second, an injunction restraining First Canadian from wrongfully terminating the Provider Agreements, and finally, in the alternative, damages for wrongful termination of the Provider Agreements.
[9] The applicant applied in the Court of Queen's Bench for an interim injunction prohibiting First Canadian from terminating the agreements. On February 9, 1999, the affidavits filed in support of that application were the subject of cross-examination by counsel for First Canadian. Dr. Harry Hodes, a representative of the Department of Health, attended the cross-examination with the consent of the applicant. The application for an injunction is still pending, having been adjourned sine die.
[10] The applicant claims that the attendance of Dr. Hodes at the cross-examination led the applicant to conclude that the decision to terminate the Provider Agreements was made by an official in the Department of Health, and not by First Canadian.
[11] The applicant acknowledges that it is entitled to take steps to make the Minister of Health a party to the Alberta action, but argues that if the termination was a decision of the Department of Health, subsection 18(1) of the Federal Court Act1 precludes the Alberta Court of Queen's Bench from granting an order quashing the termination decision. The applicant argues that is the only remedy that would compel the reinstatement of the Provider Agreements effective December 9, 1998.
[12] It is not clear to me that the jurisdiction of the Alberta court in an action for breach of contract is as limited as the applicant fears. If the applicant is wrong on that point, its application for judicial review would be a pointless duplication, and leave to extend the time should be denied on that ground alone. However, I prefer to give the applicant the benefit of the doubt and proceed on the basis that a successful application for judicial review would provide the applicant with the best possible remedy, if not the only one.
[13] If the termination decision was made on December 9, 1998, and is the proper subject of a judicial review, section 18.1(2) of the Federal Court Act required the application for judicial review to be commenced within 30 days of that date. This application to extend the time was filed on March 5, 1999.
Principles to be applied
[14] There are no hard and fast rules that will determine in any particular case whether leave will be granted to extend a time limit for the commencement of a legal proceeding. The purpose of the time limit is to give effect to the principle that there must be an end to litigation. On the other hand, giving the court the discretion to extend the time limit recognizes that an extension of time may be necessary to do justice between the parties. These competing considerations must be borne in mind in considering whether to grant the extension.2
[15] The cases set out the factors to be taken into account. The most important of these is that the applicant must demonstrate an arguable case for the remedy sought or, as is said in some cases, a reasonable chance of success. In addition, the delay should be explained or justified, and there should be evidence that the applicant exercised reasonable diligence in asserting its rights. Usually this consists of evidence of a bona fide intention, in existence within the statutory time limits, to seek redress for the impugned decision, and evidence of the steps taken to pursue the matter. Any prejudice to the respondent or third parties must be taken into account.
Applicant's due diligence
[16] The respondent argues that the applicant's failure to recognize the December 10, 1998 letter as evidence of a potentially reviewable decision should weigh against its application for an extension of time. I disagree. As of December 10, 1998, the applicant would have had no basis for determining whether the contents of the letter were true. In this regard it is sufficient to note that its author was not an official of the Department of Health.
[17] On the question of due diligence, I must also consider the evidence of the applicant indicating that in the period prior to the commencement of the Alberta action, no explanation for the termination was given to the applicant despite repeated requests, even though that information must have been known to First Canadian and, I presume, the respondent as well. The evidence also indicates that the applicant challenged the termination decision from the outset but was hampered by the lack of information. There is no suggestion of prejudice to the respondent resulting from the delay in the applicant's commencement of judicial review proceedings.
[18] If the existence of the December 10, 1998 letter were the only basis for an argument favouring the respondent, I would grant this application.
Whether the decision to terminate is not reviewable because it is a commercial decision
[19] The respondent argues that the principles of administrative law should not be applied to what is essentially a private commercial law matter (Socanav Inc. v. Northwest Territories (Commissioner) (1993), 16 Admin. L.R. (2d) 266 (N.W.T.S.C.)). In support of the contrary view, the applicant cites Hughes Land Co. v. Manitoba (Minister of Government Services) (1991), 72 Man. R. (2d) 81 (Man. Q.B.) for the proposition that judicial review is appropriate to remedy any breach of the general duty of fairness imposed on all government decisions affecting the rights, interests, property, privileges and liberty of any person.3
[20] It seems to me that the categories of reviewable and non-reviewable decisions are not as easily identified as the respondent suggests. I refer to the following passage from Brown and and Evans, Judicial Review of Administrative Action in Canada,4 at 1:2257 (footnotes omitted):
| Not all decisions of statutory or public bodies are subject to judicial review by way of the prerogative remedies or under the Judicial Review Procedure Acts. Indeed, notwithstanding the statutory origin of all powers exercisable by public bodies, courts usually have declined to review decisions which can be characterized as "commercial" as opposed to "public," on the ground that when exercising powers flowing from their contractual capacity, public bodies are not acting in a governmental capacity. |
|
| More recently, however, it has been recognized that contract can be used to advance distinctly governmental objectives. Moreover, since a public authority's powers, including those with respect to contracts, are legally limited and exercisable only for statutorily authorized purposes, and since they involve the expenditure of public funds or other public assets, in principle they would seem to be subject to the courts' supervisory jurisdiction. |
|
The fact that the impugned decision is a decision to terminate a contract does not, by itself, preclude judicial review.
[21] That is not to say that judicial review should be available in every case involving the termination of a contract to which a government is a party or that somehow relates to a government program. Each case involving a convergence of contractual and statutory rights must be considered on its own merits to determine whether judicial review is appropriate. That such a convergence may exist in this case is suggested by the December 10, 1998, letter referred to above, assuming that letter is finally established to be an accurate representation of the facts.
Applicant's prospect of success
[22] The more difficult question is whether the applicant has a reasonable prospect of success.
[23] I summarize the applicant's argument on this point as follows. The Department of Health Act gives the Minister of Health the authority to manage and direct the Department of Health and thus the NIHB Program. It must be presumed that the decision to terminate the Provider Agreements was an exercise of that statutory authority and for that reason is subject to judicial review. The applicant has a reasonable prospect of success in an application for judicial review because of the failure to give the applicant advance notice of the termination decision and an opportunity to be heard before the decision was made.
[24] The respondent's argument on this point may be summarized as follows. The Provider Agreements are the only source of the applicant's right to challenge the termination, and the only parties to those contracts are the applicant and First Canadian. In entering into those contracts, First Canadian was acting in its own capacity and not as an agent of the Department of Health or any other government body. Regardless of any participation of the Department of Health in the termination decision, the decision itself was an act of First Canadian alone, exercising its contractual right to terminate for cause. In the context of the termination decision, neither the Department of Health nor the Minister of Health is a "federal board, commission or other tribunal" within the meaning of the Federal Court Act, and therefore the termination decision is not subject to judicial review. While there may be a fair question as to whether the termination was justified, that is a question that can and should be dealt with in the action in the Alberta Court of Queen's Bench.
[25] The problem with the respondent's argument is that it is based on the premise that the decision was not made by the Minister of Health or a delegate and so disregards the possibility that the decision to terminate the Provider Agreements has two aspects. Put simply, it is possible that the termination decision is both the exercise of a contractual right and an exercise of delegated statutory authority. I am far from concluding that is so, but it might be so. There is not enough evidence before me to decide one way or the other.
[26] In this regard, the respondent cited the following provision of the contract between First Canadian and the Government of Canada:
| The Contractor [First Canadian] is engaged as an independent contractor for the sole purpose of performing the Work. Neither the Contractor nor any of its personnel is engaged as an employee, servant or agent of Canada. |
|
[27] This provision does nothing to advance the debate either way. On its face it deals only with the contractual relationship between First Canadian and the Government of Canada, and so it is not necessarily inconsistent with the existence of a de facto delegation of authority from the Minister of Health to First Canadian. In any event, an agency relationship may come into existence by the conduct of the parties in the face of a written agreement to the contrary.5
[28] Thus, although I cannot determine whether or not the termination decision was a consequence of a de facto delegation or agency relationship, I think it right in the context of this application to assume that it was, which means that the decision should be subject to judicial review.
[29] That does not end the matter, however. While it is generally true that a person affected by a reviewable decision is entitled to due process and fair treatment, it is necessary to consider what procedural protection the applicant was entitled to expect, given the particular facts. The terms of the Provider Agreements are relevant in that regard.
[30] It bears repeating that the basis of the applicant's complaint is the failure to give notice of the termination of the Provider Agreements with the result that the applicant had no opportunity to be heard before the termination decision was made. The applicant's rights as a supplier under the NIHP Program are defined in the Provider Agreements by which the applicant agreed to be bound. I was referred to no statute or regulation that further defines those rights, or refers to them in any way.
[31] The termination clauses are part of the Provider Agreements. The applicant must be taken to have consented to the termination clauses along with the other terms. There has been no suggestion that the applicant's consent was obtained by inappropriate means or was invalid, or that the termination clauses are unlawful or unfair, or that their effect has been diminished by any conduct or promise on the part of First Canadian or the respondent.
[32] Therefore, I take the termination clauses at face value. They provide for three possible methods of termination. Two of those methods expressly give the applicant a right to advance notice. The third method is termination without notice for cause. In this case, the third method was chosen to terminate the Provider Agreements.
[33] It seems to me, reading the termination clauses as a whole, that the applicant has waived any right to advance notice of a decision to terminate for cause. If that is so, then any right to a hearing prior to the decision must have been waived also, because the only purpose of advance notice is to facilitate such a hearing. It follows that even if the decision to terminate the Provider Agreements was somehow an exercise of statutory authority or an act of an agent of the Minister of Health, it cannot be the basis of a successful application for judicial review that is based on the absence of advance notice.
[34] I conclude that the applicant has no reasonable prospect of success in its application for judicial review. On that basis the application for an extension of time is denied.
Karen R. Sharlow
Judge
Ottawa, Ontario
April 22, 1999
__________________
1Subsection 18(1) of the Federal Court Act reads in part as follows:
Subject to section 28, the Trial Division has exclusive original jurisdiction
(a) to issue an injunction, writ of certiorari, writ of prohibition, writ of mandamus or writ of quo warranto, or grant declaratory relief, against any federal board, commission or other tribunal [...].
2Grewal v. Minister of Employment and Immigration, [1985] 2 F.C. 263 (F.C.A.); Consumers' Ass'n (Can.) v. Ontario Hydro [No. 2], [1974] 1 F.C. 460 (F.C.A.)
3The court in Hughes Land relied on comments of Dickson J. in Martineau v. Matsqui Institution Disciplinary Board (1979), [1980] 1 S.C.R. 602">[1980] 1 S.C.R. 602, and Strayer J. in Thomas Assaly Corporation Ltd. v. The Queen (1990), 44 Admin. L.R. 89 (F.C.T.D.).
4D. Brown and J. Evans, Judicial Review of Administrative Action in Canada (Toronto: Canvasback Publishing, 1998)
5Commissioner of Inland Revenue v. Orion Caribbean Ltd., [1997] S.T.C. 923, [1997] N.L.O.R. No. 537 (QL) (J.C.P.C.)
Email this Content