Docket: T-504-09
Citation: 2012 FC 282
Ottawa, Ontario, March 1 2012
PRESENT: The Honourable Mr. Justice Harrington
BETWEEN:
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THE
MOHAWKS OF KANESATAKE
AS
REPRESENTED BY THE MOHAWK COUNCIL OF KANESATAKE
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Plaintiff
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and
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HER
MAJESTY IN RIGHT OF CANADA
AS
REPRESENTED BY THE DEPUTY ATTORNEY GENERAL OF CANADA
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Defendant
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REASONS
FOR ORDER AND ORDER
[1]
It does not much matter whether or not I grant the
plaintiffs’ appeal from an order of Prothonotary Morneau in which he dismissed their
motion for leave to further amend their amended statement of claim. In my
opinion, the Prothonotary’s discretionary decision was not unreasonable.
However as it was “vital” to the outcome of the case, as that word has been
dealt with in previous cases, I am obliged to exercise my own discretion. In my
opinion, the appeal should be granted and the plaintiffs given leave to file its
proposed further amended statement of claim.
[2]
The dispute, as it currently stands, relates to various
funding arrangements between the parties. Due to an alleged default by the
plaintiffs thereunder, the defendant appointed PriceWaterhouseCoopers in May
2003 to act as third-party manager of programs and services. In this action,
filed 31 March 2009, the plaintiffs seek a declaration that Her Majesty breached
statutory, contractual, extra-contractual and fiduciary obligations owed to them
with respect to the said third party management of various programs and
services between 2003 and 2006. Damages with interest and costs, as well as
equitable relief, including an accounting, are also sought. The underlying
allegation is that the third party mismanaged rather than managed.
[3]
In his amended statement of defence, the Deputy Attorney
General of Canada, on behalf of Her Majesty,
denies any and all liability for the three fiscal years in question: 2003-2004,
2004-2005 and 2005-2006. In any event, it is alleged that even if there were
any liability on behalf of Her Majesty, the claim is prescribed or time-barred.
As aforesaid, the statement of claim was filed 31 March 2009. Section 39 of the
Federal Courts Act provides:
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39. (1) Except as expressly
provided by any other Act, the laws relating to prescription and the
limitation of actions in force in a province between subject and subject apply
to any proceedings in the Federal Court of Appeal or the Federal Court in
respect of any cause of action arising in that province.
(2) A proceeding in the Federal Court of
Appeal or the Federal Court in respect of a cause of action arising otherwise
than in a province shall be taken within six years after the cause of action
arose.
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39. (1) Sauf disposition
contraire d’une autre loi, les règles de droit en matière de prescription
qui, dans une province, régissent les rapports entre particuliers s’appliquent
à toute instance devant la Cour d’appel fédérale ou la Cour fédérale dont le
fait générateur est survenu dans cette province.
(2) Le délai de prescription est de six
ans à compter du fait générateur lorsque celui-ci n’est pas survenu dans une
province.
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[4]
Her Majesty takes the position that if any cause of action
arose, it arose in the Province of Quebec and, therefore, is subject to article 2925 of the Civil
Code of Quebec which provides for a three-year prescription:
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2925. An action to enforce a personal right
or movable real right is prescribed by three years, if the prescriptive
period is not otherwise established.
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2925. L'action qui tend à faire
valoir un droit personnel ou un droit réel mobilier et dont le délai de
prescription n'est pas autrement fixé se prescrit par trois ans.
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[5]
It has yet to be established where the alleged cause of
action arose.
[6]
The motion to re-amend deals with Her Majesty’s position
that the plaintiffs did not spend some $510,985 of funding during the 2002-2003
fiscal year. The lynchpin of the proposed amendments is that on 19 January
2009, Mr. Jacques Giroux, Regional Director of Funding Services for the
Department of Indian and Northern Development (DIAND) declared that this
alleged surplus had to be recovered from the plaintiffs, which was being
achieved through withholding of funding which would otherwise have been
payable.
[7]
In their proposed amendments, the plaintiffs allege that
even if DIAND had a cause of action, it is prescribed by the same article 2925
of the Civil Code of Quebec. The plaintiffs’ ultimate concern is that if
all disputes do not get resolved in the same proceedings, Her Majesty might
claim a six-year time bar with respect to the 2002-2003 matter contrary to the
position she has taken with respect to the 2003-2004 and following years.
PROTHONOTARY
MORNEAU’S DECISION
[8]
The Prothonotary was aware of the approach taken by the
Federal Court of Appeal in these matters, as can be seen from paragraph 6 of
his reasons, delivered 29 November 2001, 2011 FC 1385:
The Court is aware
from the start, as is reflected in the following passage from Canderel Ltée
v. Canada, [1994] 1 F.C. 3 (C.A.), at page 10, that, with regard
to the principles that apply to amendments to pleadings, a liberal approach
must be taken:
…while it is
impossible to enumerate all the factors that a judge must take into
consideration in determining whether it is just, in a given case, to authorize
an amendment, the general rule is that an amendment should be allowed at
any stage of an action for the purpose of determining the real questions in
controversy between the parties, provided, notably, that the allowance
would not result in an injustice to the other party not capable of being
compensated by an award of costs and that it would serve the interests of
justice.
[His emphasis.]
[9]
However, he took the plaintiffs’ amended statement of claim
as relating to the obligation of the defendant in regards to the appointment of
a third-party manager and the execution of third-party management agreements,
while the proposed amendments relate to alleged obligations in regards to a
request for repayment arising from a comprehensive funding agreement from an
earlier fiscal year. He concluded that there was no injustice and that the
amendments in dispute would not assist in determining the real questions in
controversy in the action as it presently stood.
SUBSEQUENT
DEVELOPMENTS
[10]
The hearing of the appeal was delayed for various reasons,
none of which was caused by the parties. Concerned that a three-year
prescription might apply, the plaintiffs parcelled their proposed amendments
into a separate action which they filed 18 January 2012 under court docket
T-171-12, and which has been stayed by Court order pending the outcome of this
appeal.
DISCUSSION
[11]
Appeals from orders of prothonotaries are to be brought to
a judge of the Federal Court by way of motion pursuant to rule 51 of the Federal
Courts Rules. It is well established that if the order in question is
discretionary, as this one is, the judge hearing the motion in appeal can only
exercise his or her discretion de novo if the questions raised are vital
to the final issue in the case, or the orders are clearly wrong in the sense
that the exercise of discretion was based upon a wrong principle or a misrepresentation
of the facts (Merck & Co v Apotex Inc, 2003 FCA 488, [2004] 2 FCR
459; Canada v Aqua-Gem Investments Ltd, [1993] 2 FC 425, [1993] FCJ No
103 (QL); and Z.I. Pompey Industrie v ECU-Line N.V., 2003 SCC 27, [2003]
1 SCR 450).
[12]
The passage from Canderel Ltd v Canada, [1994] 1 FC 3, [1993] FCJ No 777 (QL) (FCA),
quoted by the Prothonotary in no way created new law. In Tildesley v Harper
(1878), 10 ChD 393, Lord Justice Bramwell stated at pages 396-397:
My practice has always been to give leave to
amend unless I have been satisfied that the party applying was acting mala
fide, or that, by his blunder, he had done some injury to his opponent
which could not be compensated for by costs or otherwise.
For a most scholarly and
historical review of the practice, see the decision of Prothonotary Hargrave in
Fox Lake Indian Band v Reid Crowthers & Partners Ltd, 2002 FCT 630,
[2003] 1 FC 197.
[13]
Nonetheless, the Prothonotary did not grant the motion to
re-amend, and as I have said at the outset, I do not consider that decision
unreasonable. However this Court has always held that amendments to add new
causes of action are vital, and so I must exercise my discretion de novo.
As stated by Mr. Justice Décary in Merck, above, at paragraph 25:
When
is an amendment a routine one as opposed to a vital one? It would be imprudent
to attempt any kind of formal categorization. It is much preferable to
determine the point on a case by case basis (see Trevor Nicholas
Construction Co. v. Canada (Minister for Public Works), 2003 FCT 255, per O'Keefe J. at para.
7, aff'd 2003 FCA 428). I note that amendments that would advance additional
claims or causes of action have consistently been found, in the Federal Court
of Canada, to be vital for the purposes of the Aqua-Gem test (see Scannar
Industries Inc. et al v. Minister of National Revenue (1993), 69 F.T.R.
310, Denault J., aff'd (1994), 172 N.R. 313 (F.C.A.); Trevor Nicholas
Construction Co., (supra); Louis Bull Band v. Canada, 2003
FCT 732 (Snider J.).
[14]
In exercising my discretion de novo, I must consider
whether Her Majesty would be prejudiced in a way that could not be compensated
by an order of costs or in some other fashion. In this case, the parties have
yet to proceed to discovery and the claim set out in the proposed amendments is
not subject to a time bar defence, even if the whole cause of action arose in Quebec. The question is whether our rules of practice prohibit
the granting of an amendment. Rules 75, 76 and 201 provide:
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75. (1) Subject to subsection
(2) and rule 76, the Court may, on motion, at any time, allow a party to
amend a document, on such terms as will protect the rights of all parties.
(2) No amendment shall be allowed under
subsection (1) during or after a hearing unless
(a) the purpose is to make the
document accord with the issues at the hearing;
(b) a new hearing is ordered;
or
(c) the other parties are given
an opportunity for any preparation necessary to meet any new or amended
allegations.
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75. (1) Sous réserve du
paragraphe (2) et de la règle 76, la Cour peut à tout moment, sur requête,
autoriser une partie à modifier un document, aux conditions qui permettent de
protéger les droits de toutes les parties.
(2) L’autorisation visée au paragraphe
(1) ne peut être accordée pendant ou après une audience que si, selon le cas
:
a) l’objet
de la modification est de faire concorder le document avec les questions en
litige à l’audience;
b) une
nouvelle audience est ordonnée;
c) les
autres parties se voient accorder l’occasion de prendre les mesures préparatoires
nécessaires pour donner suite aux prétentions nouvelles ou révisées.
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76. With leave of the Court, an
amendment may be made
(a) to correct the name of a party,
if the Court is satisfied that the mistake sought to be corrected was not
such as to cause a reasonable doubt as to the identity of the party, or
(b) to alter the capacity in which
a party is bringing a proceeding, if the party could have commenced the
proceeding in its altered capacity at the date of commencement of the
proceeding,
unless to do so would result in prejudice to
a party that would not be compensable by costs or an adjournment.
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76. Un document peut être modifié
pour l’un des motifs suivants avec l’autorisation de la Cour, sauf lorsqu’il
en résulterait un préjudice à une partie qui ne pourrait être réparé au moyen
de dépens ou par un ajournement :
a) corriger le
nom d’une partie, si la Cour est convaincue qu’il s’agit d’une erreur qui ne
jette pas un doute raisonnable sur l’identité de la partie;
b) changer la
qualité en laquelle la partie introduit l’instance, dans le cas où elle
aurait pu introduire l’instance en cette nouvelle qualité à la date du début
de celle-ci.
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201. An amendment may be made under
rule 76 notwithstanding that the effect of the amendment will be to add or
substitute a new cause of action, if the new cause of action arises out of
substantially the same facts as a cause of action in respect of which the
party seeking the amendment has already claimed relief in the action.
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201. Il peut être apporté aux
termes de la règle 76 une modification qui aura pour effet de remplacer la
cause d’action ou d’en ajouter une nouvelle, si la nouvelle cause d’action
naît de faits qui sont essentiellement les mêmes que ceux sur lesquels se
fonde une cause d’action pour laquelle la partie qui cherche à obtenir la
modification a déjà demandé réparation dans l’action.
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[15]
In reality, rule 201 deals with a potential time bar which
has accrued after the original action was filed, and before the motion to
amend. In Scottish & York Insurance Co v Canada (2000), 180 FTR 115, 94 ACWS (3d) 449, Mr. Justice
Teitelbaum held that rule 201 must be interpreted broadly. In his view, rule
201 allowed an amendment to raise a new cause of action if it arose out of
substantially the same facts as the original cause of action, notwithstanding
that the amendment may eliminate a potential defence: see also Louis Bull
Band v Canada, 2005 FC 1041, 141 ACWS (3d) 21 and Houle v Canada,
[2001] 1 FC 102, 192 FTR 236.
[16]
I do not agree with the plaintiffs’ submission that the
separate causes of action (and in my opinion they are separate in that the
Court could reach different conclusions) should be heard together to preclude
Her Majesty from raising different time bar defences. That can be done whether
or not matters proceed under one docket number or two. It is in the better
interests of the administration of justice that these matters be heard
together, as they arise out of the same overall relationship.
[17]
Rule 3 provides:
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These
Rules shall be interpreted and applied so as to secure the just, most
expeditious and least expensive determination of every proceeding on its
merits.
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Les
présentes règles sont interprétées et appliquées de façon à permettre
d’apporter une solution au litige qui soit juste et la plus expéditive et
économique possible.
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As Mr. Justice Pigeon
said in Hamel v Brunelle, [1977] 1 S.C.R. 147, at page 156: “…que
la procédure reste la servante de la justice et n’en devienne jamais la
maîtresse.” / “…that procedure be the servant of justice not its mistress.”
[18]
Given the above conclusion, it is unnecessary for me to
address the submission that a new cause of action in an amended pleading need
only arise out of substantially the same facts as the original cause of action when
it would be otherwise prescribed.
COSTS
[19]
Prothonotary Morneau dismissed the plaintiffs’ motion with
costs in the amount of $300. As his order falls, so does the order for costs.
In the circumstances, I shall grant this appeal without costs.
ORDER
FOR REASONS GIVEN;
THIS COURT ORDERS that:
1.
The appeal from the order of Prothonotary Morneau dated 29
November 2011 is granted.
2.
The plaintiff is at leave to file its re-amended statement
of claim on or before 9 March 2012.
3.
On consent, the defendant shall have forty-five (45) days
from the date of service of the re-amended statement of claim to file a
re-amended defence.
“Sean
Harrington”
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