Holland v. Saskatchewan, 2008 SCC 42, [2008] 2 SCR 551

                                                 SUPREME COURT OF CANADA

Between:

Roger Holland

Appellant

and

Government of Saskatchewan, as represented by the Minister

in Charge of Saskatchewan Agriculture, Food and Rural

Revitalization, John Doe and Jane Doe

Respondents

‑ and ‑

Attorney General of Canada, Attorney General of Ontario

and Attorney General of British Columbia

Interveners

Coram: McLachlin C.J. and Binnie, LeBel, Fish, Abella, Charron and Rothstein JJ.

______________________________

Holland v. Saskatchewan, [2008] 2 S.C.R. 551, 2008 SCC 42

Roger Holland                                                                                                                    Appellant

v.

Government of Saskatchewan, as represented by the Minister

in Charge of Saskatchewan Agriculture, Food and Rural

Revitalization, John Doe and Jane Doe                                                                       Respondents

and

Attorney General of Canada, Attorney General of Ontario

and Attorney General of British Columbia                                                                    Interveners

Indexed as:  Holland v. Saskatchewan

Neutral citation:  2008 SCC 42.

File No.:  31979.

2008:  May 21; 2008:  July 11.

Present:  McLachlin C.J. and Binnie, LeBel, Fish, Abella, Charron and Rothstein JJ.

on appeal from the court of appeal for saskatchewan

Torts — Negligence — Claim for negligently acting outside the law — Claim for negligent failure to implement judicial decree — Farmers obtaining declaration that government’s action of reducing certification status of their herds unlawful — Minister taking no steps to reinstate farmers’ certification — Whether Court of Appeal erred in striking out farmers’ cause of action in negligence.

Crown law — Crown liability — Duty to implement judicial decree — Whether action lies against public authorities for negligently failing to implement judicial decree.

The appellant represents a group of game farmers who refused to register in a federal program aimed at preventing chronic wasting disease in domestic cervids, because they objected to the broadly worded indemnification and release clauses in the registration form.  As a result, the farmers’ herd status was down‑graded to the lowest level, reducing the market price of their product and diminishing their ability to sell it.  On judicial review, the farmers established that these clauses had been invalidly included in the registration form and obtained a declaration that the government’s action of reducing the herd certification status was unlawful.  Despite the court’s ruling, the government took no steps to reinstate the farmers’ certification or compensate them for the revenue they lost.  They commenced a class action against the Minister, claiming damages on three grounds, including the tort of negligence.  The motions judge denied the government’s motion to strike the farmers’ claims in negligence, but the Court of Appeal held that no action lies against public authorities for negligently acting outside their lawful mandates and struck out the cause of action in negligence in its entirety.

Held:  The appeal should be allowed in part.

The statement of claim, read generously as required in an application to strike, focused mainly on two alleged acts of negligence:  requiring the game farmers to enter into the broad indemnification agreement and down‑grading the status of those who refused to do so. In both cases, the alleged fault was the failure of the public authority to act in accordance with the authorizing acts and regulations.  The Court of Appeal correctly held that the appellant’s claim for negligently acting outside the law, or breach of statutory duty, does not constitute negligence and rightly struck the paragraphs of the statement of claim asserting this cause of action.  Even if the requirement of proximity were established, policy considerations arising at the second stage of the Anns test, including the chilling effect and specter of indeterminate liability, militate against recognizing this new instance of negligence.  However, the Court of Appeal failed to address the appellant’s central claim alleging negligent failure to implement a judicial decree to remedy the wrongful reduction of the appellant’s herd status.  The implementation of a judicial decision is an “operational” act that public authorities are expected to carry out.  Therefore, in this case, it is not clear that an action in negligence based on the breach of a duty to implement a judicial decree could not succeed in law.  Read broadly, the pleading was sufficient to put the government on the notice of the essence of the appellant’s claim and it should not have been struck out. [7‑16]

Cases Cited

Referred to:  Anns v. Merton London Borough Council, [1978] A.C. 728; Cooper v. Hobart, [2001] 3 S.C.R. 537, 2001 SCC 79; The Queen in right of Canada v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205; Welbridge Holdings Ltd. v. Greater Winnipeg, [1971] S.C.R. 957; Kamloops (City of) v. Nielsen, [1984] 2 S.C.R. 2; Just v. British Columbia, [1989] 2 S.C.R. 1228; Laurentide Motels Ltd. v. Beauport (City), [1989] 1 S.C.R. 705; Lewis (Guardian ad litem of) v. British Columbia, [1997] 3 S.C.R. 1145.

APPEAL from a judgment of the Saskatchewan Court of Appeal (Gerwing, Richards and Smith JJ.A.) (2007), 281 D.L.R. (4th) 349, [2007] 7 W.W.R. 17, 299 Sask. R. 109, 408 W.A.C. 109, [2007] S.J. No. 75 (QL), 2007 CarswellSask 120, 2007 SKCA 18, setting aside a decision of Laing C.J. (2006), 277 Sask. R. 131, [2006] S.J. No. 144 (QL), 2006 CarswellSask 133, 2006 SKQB 99.  Appeal allowed in part.

Reynold A. J. Robertson, Q.C., Cameron Pallett and Clinton G. Docken, Q.C., for the appellant.

Barry J. Hornsberger, Q.C., and Jerome A. Tholl, for the respondents.

John S. Tyhurst, for the intervener the Attorney General of Canada.

Sara Blake, for the intervener the Attorney General of Ontario.

Karen A. Horsman, for the intervener the Attorney General of British Columbia.

The judgment of the Court was delivered by

[1]     The Chief Justice — The issue in this case is whether the Court of Appeal erred in striking out the plaintiff’s cause of action in negligence.  The result of this order was to prevent the claim in negligence from proceeding to trial.

[2]     The appellant, Roger Holland, represents a group of approximately 200 game farmers who refused to register in a federal program aimed at preventing chronic wasting disease (“CWD”) in domestic cervids, because they objected to a broadly worded indemnification and release clause in the registration form. As a result of their refusal to sign the form, the game farmers lost the CWD-free herd certification level which they had acquired by conforming to provincial CWD prevention rules, before the merging of the provincial and federal programs. The down-grading of the farmers’ certification status both reduced the market price of their product and diminished their ability to sell it.  This resulted in a financial loss to the farmers.   

[3]     The game farmers successfully established on judicial review that the indemnification and release clauses had been invalidly included in the registration form. These clauses required that game farm operators would not only assume “sole responsibility for any death losses . . . which may occur when animals are being handled for the purposes of inspection, sampling or testing”, but would also indemnify the federal and provincial governments “from and against all claims and demands . . . arising out of or attributable or with respect to the Program, or any aspect of the Program or its implementation”. Gerein C.J.Q.B. found that the Minister had no legislative authority to make acceptance of these clauses, which he characterized as “broad in the extreme”, a condition to participate in the CWD program ((2004), 258 Sask. R. 243, 2004 SKQB 478, at para. 38). The program’s reliance upon game farm operators might justify limited indemnification and release clauses restricted to the operator’s actions, but it could not validly extend to the actions of government employees (para. 37). While Gerein C.J.Q.B. found that the applicants’ herd status was wrongly reduced to the lowest level of “surveillance”, he declined to reinstate the prior herd status in the absence of any evidence on the current circumstances of the game farm operations. He specified, however, that if the applicants met the certification program conditions, the court’s declarations would “serve to remove the earlier impediments” (para. 50). The government did not appeal this decision.

[4]      Despite the court’s declaration that the government’s reduction of the herd status was invalid, the government did not take the necessary steps to consider reinstating the farmers’ certification or take any steps to compensate the farmers for the revenue they lost through the wrongful cancellation of their prior certification level.

[5]     Seeking a remedy for the financial loss they suffered as a result of the government’s wrongful reduction of certification status, the game farmers turned to the law of tort.  They commenced a class action, in the name of the appellant, claiming damages on three alleged grounds: (1) the tort of misfeasance in public office; (2) the tort of intimidation; and (3) the tort of negligence.

[6]     The government brought a motion to strike out the farmers’ claims.  The motions judge, Laing C.J., struck the intimidation claim for lack of evidence of any threat ((2006), 277 Sask. R. 131, 2006 SKQB 99, at para. 36), granted leave to amend the statement of claim with regard to the misfeasance claim (para. 33), and denied the motion on the negligence claim (para. 34).  The Court of Appeal of Saskatchewan allowed the government’s appeal from the ruling on negligence, holding that no action lies against public authorities for negligently acting outside their lawful mandates ((2007), 299 Sask. R. 109, 2007 SKCA 18, at para. 40).  The question before this Court is whether the Court of Appeal erred in striking out the appellant’s negligence claim in its entirety.

[7]     The Court of Appeal read the appellant’s negligence claim as a claim for negligently acting outside the law (paras. 18-21).  With one exception, discussed more fully later, I agree with this characterization of the negligence claim.  For purposes of these reasons, I would characterize the imputed fault as breach of statutory duty.  The statement of claim, read generously as required in an application to strike, focused mainly on two alleged acts of negligence: requiring the game farmers to enter into the broad indemnification agreement, and down-grading the status of those who refused to do so.   In both cases, the alleged fault may be described as failing to act in accordance with the authorizing acts and regulations.  As the statement of claim puts it at para. 58, the government and its employees “were under a duty of care to the Class [game farmers] to ensure those Acts and Regulations were administered in accordance with law and not to operate in breach of them”.

[8]     I agree with the Court of Appeal that the claim, thus characterized, discloses no cause of action recognized by law and must be struck.  The Court of Appeal correctly concluded that the viability of the action in negligence falls to be determined by application of Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), adopted and refined by this Court in Cooper v. Hobart, [2001] 3 S.C.R. 537, 2001 SCC 79.  The Court of Appeal concluded that to date the law has not recognized an action against a government authority for negligent breach of statutory duty by acting outside or contrary to the law. This being the case, the question was whether a new instance of negligence should be permitted. This question is resolved by asking whether a new kind of duty of care arises under the two-step Anns inquiry.  The Court of Appeal did not find it necessary to consider the first branch of Anns, holding that even if the requirement of proximity were established, residual policy considerations at the second step militate against recognizing such a cause of action.

[9]     In my view, the Court of Appeal was correct in these conclusions.  The law to date has not recognized an action for negligent breach of statutory duty.  It is well established that mere breach of a statutory duty does not constitute negligence: The Queen in right of Canada v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205.  The proper remedy for breach of statutory duty by a public authority, traditionally viewed, is judicial review for invalidity.  The appellant pursued this remedy before Gerein C.J.Q.B. and obtained a declaration that the government’s action of reducing the herd certification status was unlawful and invalid.  No parallel action lies in tort.

[10] The next question was whether a hitherto unrecognized relationship of potential liability in negligence should be recognized under the Anns test.  Assuming, without deciding, that the legislative and regulatory matrix established proximity between the Class and the government at the first step, policy considerations would negate recognition of liability, as the Court of Appeal detailed.  These include the chilling effect and specter of indeterminate liability. As Richards J.A. stated at para. 43 of the Court of Appeal’s decision:

. . . the respondent’s theory of liability would fundamentally shift the way in which the public and private spheres historically have carried the consequences or burden of governmental action which is shown to be ultra vires. I see no policy reason which would warrant such a dramatic revision in the shape of the law and, as indicated above, see much which cuts tellingly against shaping the law in the manner sought by the respondent.

[11] I therefore agree with the Court of Appeal that the appellant’s claim for negligently acting outside the law, or breach of statutory duty, cannot succeed and that the paragraphs of the statement of claim asserting this cause of action were rightly struck.

[12] One allegation of negligence, however, appears to fall into a different category.  Paragraph 61.1(f) of the appellant’s statement of claim alleges that the Minister  was negligent because “[n]otwithstanding the declarations of Mr. Justice Gerein that the indemnification and release clauses were invalid and [of] no effect, and that the herd status of ‘surveillance’ was wrongfully assigned, [he] refused to restore the CWD herd status . . . to the level . . . enjoyed before or to pay compensation . . . for . . . loss”. The claim is essentially one of negligent failure to implement an adjudicative decree.

[13] The Court of Appeal treated this claim as separate and different from the claim for breach of statutory duty, dealing with it under the heading “The Other Alleged Duties of Care”.  However, it did not address the central assertion in this claim that the Minister was under a duty to implement the judicial decree of Gerein C.J.Q.B.  Chief Justice Gerein’s order arguably placed the Minister under a duty to remedy the wrongful reduction of the applicants’ herd status.  The Court of Appeal never discussed this question.  Instead, it held that the pleadings’ reference to restoration of herd status must be struck, not because it disclosed no cause of action, but because the appellant “has not pleaded any facts to the effect his herd or any other farmer’s herd had been maintained so as to warrant any particular CWD status, including the status it enjoyed before being reduced to ‘surveillance’ . . . .  [T]he failure to plead such facts in the statement of claim”, it concluded, “means this aspect of the negligence action must fail” (para. 49).

[14] With respect, it is not clear to me that the reasons given by the Court of Appeal provide a sound basis for striking para. 61.1(f) at the outset of the proceedings.  The real issue, not addressed by the Court of Appeal, is whether a claim for negligent failure to implement a judicial decree clearly cannot succeed in law and hence must be struck at the outset.  Such a claim is not a claim for negligent breach of statute.  It stands on a different footing.  In Welbridge Holdings Ltd. v. Greater Winnipeg, [1971] S.C.R. 957, at p. 970, this Court noted the difference in terms that appear to recognize the possibility of an action for failure to implement a judicial decree:

. . . the risk of loss from the exercise of legislative or adjudicative authority is a general public risk and not one for which compensation can be supported on the basis of a private duty of care.  The situation is different where a claim for damages for negligence is based on acts done in pursuance or in implementation of legislation or of adjudicative decrees. [Emphasis added.]

More recent authorities describe the distinction in terms of “policy” versus “operational”  decisions.  Policy decisions about what acts to perform under a statute do not give rise to liability in negligence.  On the other hand, once a decision to act has been made, the government may be liable in negligence for the manner in which it implements that decision: Kamloops (City of) v. Nielsen, [1984] 2 S.C.R. 2; Just v. British Columbia, [1989] 2 S.C.R. 1228; Laurentide Motels Ltd. v. Beauport (City), [1989] 1 S.C.R. 705; Lewis (Guardian ad litem of) v. British Columbia, [1997] 3 S.C.R. 1145. Public authorities are expected to implement a judicial decision.  Consequently, implementation of a judicial decision is an “operational” act.  It is therefore not clear that an action in negligence cannot succeed on the breach of a duty to implement a judicial decree.

[15] The remaining question is whether para. 61.1(f) must be struck because it fails to plead sufficient facts.  In my view, it should not. The government’s refusal “to restore the CWD herd status” is pleaded as a fact.  It is also pleaded, elsewhere, that loss of herd status led to losses to the members of the Class.  These facts, in my view, were sufficient to support the claim for negligent failure to implement a judicial decree.  It might be argued that facts relating to the conditions for restoration should have been pleaded. However, I am satisfied that the pleading was sufficient to put the government on the notice of the essence of the appellant’s claim.  Taking a generous view, it should not have been struck.

[16] I do not comment on whether the evidence and the applicable law will in fact establish a claim for negligence on this head at the time of trial.  However, applying the rule that, on an application to strike, pleadings must be read broadly and that it must be clear that the claim cannot succeed if it goes to trial, I am of the view that para. 61.1(f) should not be struck.

[17] I would therefore confirm the order of the Court of Appeal that paras. 58 to 63.1 of the statement of claim should be struck out, with the exception of para. 61.1(f).  I add that this order should not be read as precluding further applications by the appellant to amend the statement of claim, nor to prevent reliance on facts mentioned in the portions of the claim struck out, insofar as such facts relate to the actions properly raised in the statement of claim.

[18] In the result, I would allow the appeal in part, with costs in the cause. 

Appeal allowed in part.

Solicitors for the appellant:  Robertson Stromberg Pedersen, Saskatoon; Legge & Legge, Toronto; Docken & Co., Calgary.

Solicitor for the respondents:  Ministry of Justice, Regina.

Solicitor for the intervener the Attorney General of Canada:  Deputy Attorney General of Canada, Ottawa.

Solicitor for the intervener the Attorney General of Ontario:  Attorney General of Ontario, Toronto.

Solicitor for the intervener the Attorney General of British Columbia:  Attorney General of British Columbia, Vancouver.