SUPREME COURT OF PRINCE EDWARD ISLAND. Between: Gabriel Elbaz, Sogelco International Inc. and Summerside Seafood Supreme Inc.
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1 SUPREME COURT OF PRINCE EDWARD ISLAND Citation: Summerside Seafood v. Gov PEI 2012 PESC 4 Date: January 30, 2012 Docket: S1-GS Registry: Charlottetown Between: Gabriel Elbaz, Sogelco International Inc. and Summerside Seafood Supreme Inc. Plaintiffs (Moving Parties) And: The Honourable Michael F. Currie, in his own right and as Minister of the Crown, The Honourable Mitchell Murphy, in his own right and as Minister of the Crown, The Hon. J. Chester Gillan, in his own right and as Minister of the Crown, PEI business Development Inc., and The Government of Prince Edward Island Defendants (Respondents) Before: The Honourable Justice Gordon L. Campbell Appearances: E.J. Mockler, Q.C., solicitor for the Plaintiffs (Moving Parties) D. Spencer Campbell, solicitor for the Defendants (Respondents) Place and date of hearing: Place and date of judgment: Charlottetown, Prince Edward Island November 24, 2011 Charlottetown, Prince Edward Island January 30, 2012
2 Page 2 Practice - Injunctive relief - Interlocutory order against the Crown available only in limited circumstances - Judicial Review - Collateral attack against Minister s decision - Seeking interim relief which goes beyond permanent relief sought - Injunctive relief not available for prospective decision - Declaratory relief CASES CONSIDERED: Summerside Seafood Supreme Inc., et al v. The Government of Prince Edward Island (Minister of Fisheries, Aquaculture & Environment) et al, 2004 PESCTD 68,(or SSS v. PEI 2004 PESCTD 68), RJR-MacDonald Inc. v. Canada, [1994]1 S.C.R. 31, CanLII 117 SCC, The Government of Prince Edward Island (Minister of Fisheries, Aquaculture and Environment et al) v. Summerside Seafood Supreme Inc., et al, 2006 PESCAD 11 (cited as PEI v. SSS 2006 PESCAD 11), Canada (Attorney General) v. TeleZone Inc., 2010 SCC 62, Businessworld Computer Pty. Ltd. v. Australian Telecommunications Commission (1988), 82 A.L.R TEXT REFERRED TO: Injunctions and Specific Performance (Aurora, Ont: Canada Law Book, 2010 update) at para , P.W. Hogg, Liability of the Crown, 2 nd ed. (Agincourt, Ont: Carswell, 1989). ACTS REFERRED TO: Judicial Review Act, R.S.P.E.I., 1988, Cap. J-3, Crown Proceedings Act, R.S.P.E.I. 1988, Cap. C-32. Introductory note It may be helpful for readers to know that a decision on another motion between the same parties was issued on January 30, 2012 with the following citation: (Summerside Seafood v. Gov PEI 2012 PESC 3) That decision deals with the defendant Government s motion to strike certain portions of the plaintiffs Further Amended Statement of Claim in the within action. Campbell J.: Background [1] The plaintiffs claim damages for breach of contract, negligence or bad faith in the creation and implementation of policy decisions, unlawful interference with economic interest, misfeasance in public office, conspiracy, abuse of process, deliberate and malicious breach of the plaintiffs constitutional rights, intentional infliction of economic harm, defamation, injurious falsehood, and malicious prosecution. In addition the plaintiffs claim declaratory relief in relation to many governmental or ministerial decisions and actions. [2] It should be noted, there is a significant history with respect to the pleadings on this matter. An initial statement of claim was filed on April 29, That claim was
3 Page 3 amended, following which a defense and counterclaim was filed. The plaintiffs filed a reply and defense to the counterclaim following which the defendants issued a demand for particulars. The plaintiffs replied to the demand for particulars on March 15, 2011 and then filed a Further Amended Statement of Claim on April 19, The motion [3] On this motion, the plaintiff Summerside Seafood Supreme Inc. (SSS) is seeking: (i) an interlocutory order requiring the government to remove SSS from the Central Default Registry (CDR) pending final determination of this proceeding; (ii) an order prohibiting the government from denying SSS access to government financial assistance programs generally available to similar businesses (provided SSS meets normal criteria); (iii) an order prohibiting the defendants from refusing to process applications by SSS for assistance on the basis only that SSS is listed in the CDR. [4] Corporations or individuals who have defaulted on the payment of debt they are legally obliged to pay to the Government are listed on the CDR. Listed companies are ineligible for further government assistance, at least while they are still on the list. [5] Of significance, on May 1, 2002, even before the first statement of claim was filed, the plaintiff SSS filed an application for judicial review in respect of certain decisions of the defendant Minister of Fisheries, Aquaculture and Environment, and others. SSS sought review of decisions in relation to placing them on the Central Default Registry (CDR) and the subsequent refusal to issue SSS a fish processing license for the year Among other things, the applicant sought: Prior decision (i) a declaration that it was entitled to a fish processing license, and (ii) an order that the applicant s name be stricken from the CDR until such time as the province had a final judgment against it in respect of any legal obligation. [6] In a decision between these same parties, dated November 23, 2004, Summerside Seafood Supreme Inc., et al v. The Government of Prince Edward Island (Minister of Fisheries, Aquaculture & Environment) et al, 2004 PESCTD 68, (or SSS v. PEI 2004 PESCTD 68 ), I dealt with certain aspects of the judicial review application
4 Page 4 and granted interim relief, declaring that the applicant s fish processing license ought to remain in effect and be renewed or replaced as required until the final determination of the application, or until further order of the court. Following my decision in 2004, the Government issued a processing license to SSS and has renewed it in each subsequent year. I did not order the government to strike the applicant s name from the listing on the Central Default Registry. [7] In assessing the latter issue, I held there was a serious question to be tried, concluding that it would be necessary for the Court to examine the matter more fully. In particular, the Court would have to examine the terms of the guarantee given by the defendant Government in respect of certain indebtedness of the applicant, and the manner in which the guarantee was triggered and paid out by the defendant Government. The applicant stated it intended to argue that by dealing directly with the applicant s lender and settling the debt without input from the applicant, the respondent Government, acting as guarantor, had compromised the applicant s position and had thereby extinguished any legal obligation on the part of the applicant to repay the financial assistance in question. [8] On February 14, 2011, SSS withdrew its application for judicial review. [9] Notwithstanding numerous claims for declaratory relief, there is no claim or demand in the new ( Further Amended ) statement of claim that SSS be removed (permanently or otherwise) from the CDR. However, SSS does claim that as a result of the Government s alleged unilateral actions, or otherwise, SSS never had any legally binding obligation to repay the monies the Province paid to the bank pursuant to its guarantee. If this position prevails, it would have the effect of removing any basis for the Government to have listed SSS on the CDR in the first place. Injunctive relief [10] In RJR-MacDonald Inc. v. Canada, [1994]1 S.C.R. 311, CanLII 117 SCC, the Supreme Court of Canada confirmed that courts must consider three factors when determining whether to issue an interlocutory injunction: (i) the existence of a serious issue to be tried; (ii) whether or not irreparable harm will occur if the injunction is not granted; and (iii) the balance of convenience between the parties. The applicant argues that it meets all of the tests for injunctive relief in this case. [11] Firstly, the applicant submits there is a serious issue to be tried with respect to the listing of SSS on the CDR. The threshold for this test is very low. [12] Secondly, it submits that financial assistance has historically been, and continues to be, of great importance to the fish processing industry on PEI. SSS have provided specific examples of financial assistance being refused directly as a result of
5 Page 5 SSS being listed on the CDR (notably, funding under the Provincial Nominee Program, or PNP). By losing the competitive advantage to others who are eligible for financial assistance in the same industry, SSS claims it is suffering irreparable harm. It predicts it will be another two or three years before this matter gets to trial, by which time it may be out of business if it continues to be denied financial assistance as a result of being listed on the CDR. [13] Finally, the applicant submits the balance of convenience is in favor of removing SSS from the CDR until the trial of this matter, arguing the consequences of not being removed are much more severe on SSS then are the consequences on the Government of removing SSS from the list. Five arguments of the respondent [14] The respondent Government offers five arguments against the motion, outlined as follows: (i) Pleadings (i) Pleadings - a party cannot claim for interlocutory relief when no similar claim for permanent relief has been made; (ii) Collateral attack - this motion constitutes a collateral attack on the 2002 decision of government to list SSS on the CDR, which decision must be attacked by way of judicial review, not by way of a damages claim; (iii) Prospective decisions - there can be no judicial review of a prospective decision; (iv) Unavailable against Crown - no injunctive relief is available against the Crown in these circumstances; and (v) The three part test for injunctive relief has not been met - even if injunctive relief was available against the Crown in these circumstances. [15] The applicant has made a claim for interim injunctive relief. However, they have not made a corresponding claim for such injunctive relief to be permanent. The respondent states that a moving party cannot obtain better relief on an interlocutory or interim basis than it could at the conclusion of the action, and cites R.J. Sharpe, Injunctions and Specific Performance (Aurora, Ont: Canada Law Book, 2010 update) at para : Interlocutory injunctive relief will not normally be granted where there is no prospect for a specific remedy being granted at the trial. The rationale underlying interlocutory injunctions is the need to protect the plaintiff s
6 Page 6 ultimate right to an appropriate remedy and it will ordinarily be unnecessary to grant interlocutory relief unless there is at least some prospect of specific relief being granted at trial. [16] As well, the respondent relies on a decision of the Prince Edward Island Supreme Court - Appeal Division (as it then was) in The Government of Prince Edward Island (Minister of Fisheries, Aquaculture and Environment et al) v. Summerside Seafood Supreme Inc., et al, 2006 PESCAD 11 (cited as PEI v. SSS 2006 PESCAD 11) at para. 97 where Webber J. states, The interim relief cannot grant more than the final relief. [17] On this motion, the applicant is seeking an interlocutory order requiring the Government to remove SSS from the Central Default Registry (CDR) pending final determination of this proceeding. However, paraphrasing the claim set out in paragraph 1(d) of its Further Amended Statement of Claim, the applicant seeks a declaration that the plaintiffs never had any binding legal obligation to repay the monies the province paid to the bank pursuant to its guarantee. [18] While making such a declaration would have the effect of removing the justification for SSS to be listed on the CDR, the remedy sought on an interim basis differs significantly from that sought on a permanent basis. There is not sufficient evidence before the Court to grant the permanently requested declaration on this interim motion. In effect, it involves the central question that must be determined following a full hearing. As Webber J. stated at para. 87 of PEI v. SSS 2006 PESCAD 11: SSS statement that it is not indebted to the Government and as a result has been improperly placed on the Loans in Default Central Registry may also be arguable when all the evidence is presented. [19] Granting the request on the motion (removing SSS from the CDR) would require granting something on an interim basis which is not claimed, at least not directly, on a permanent basis.there is a difference between ordering that a certain action must be reversed, and declaring that the factual basis for a decision did not exist. (ii) Collateral attack [20] Any person interested in challenging or setting aside a decision of the Minister of the Crown must proceed by way of the Judicial Review Act, R.S.P.E.I., 1988, Cap. J- 3, (the Act ), within 30 days of the decision or action challenged, unless the Court grants an extension of time for doing so. The applicant in this case did file an application for judicial review in May, 2002, following the decision by the Government to place SSS on the CDR and deny it a fish processing license as of the
7 Page 7 date of that listing. As I have indicated, based on exceptional circumstances which I will address below, I granted interim relief and declared that SSS was to be given its fish processing license. I did not grant interim relief to SSS with respect to them being listed on the CDR. (SSS v. PEI 2004 PESCTD 68). [21] Following an appeal by the Government, the Appeal Division upheld the decision enjoining the Minister from refusing to issue a fish processing license to SSS on the basis that it is listed on the CDR until this matter can be fully heard and determined, or until further order of the Court. (See: PEI v. SSS 2006 PESCAD 11). [22] The respondents contend the applicant now seeks to nullify or enjoin the operation of a ministerial decision as part of their claims for declaratory relief. The respondents submit that any such application could only be undertaken by way of judicial review. Section 2 (1) of the Act reads as follows: 2. (1) The purpose of this Act is to substitute an application for judicial review for the following existing proceedings: (a) proceedings by way of application for an order in the nature of mandamus, prohibition or certiorari; (b) proceedings by way of an action for a declaration or for an injunction, or both, in relation to the exercise, refusal to exercise or proposed or purported exercise of a statutory power. (2) An application in the nature of mandamus, prohibition or certiorari shall be deemed to be an application for judicial review and shall be made, treated and disposed of as if it were an application for judicial review. 1988, c.35, s.2; 1990, c.26, s.1 (Emphasis added). [23] In accordance with s. 2 of the Act, any request for a declaration or an injunction, brought by way of an action, shall be deemed to be an application for judicial review and shall be treated as such. In my view, the current circumstance is governed by that section. SSS seeks an interlocutory order to set aside the ministerial decision to list SSS on the CDR, or for an interim declaration that SSS ought not to have been listed on the CDR in the first place. That aspect of the plaintiffs action is deemed to be an application for judicial review. To entertain this as something else would be to ignore the purpose and provisions of the Act. [24] The impugned decision was made almost 10 years ago. An application for judicial review was filed in a timely manner, which according to the Act is within 30 days of the decision complained of. That judicial review application was maintained until relatively recently and was abandoned. The decision to abandon it may have been part of the plaintiffs effort to streamline its actions before the Court, I don t know.
8 Page 8 [25] Whether that application could be recommenced or reactivated, or whether it needs to be, is not before me. If this action seeking a declaration is to be treated as an application for judicial review, the plaintiffs must apply for an extension of time within which to file such an application. If such a motion were made, I would think the defendants would be hard pressed to argue prejudice given they have never been led to believe the plaintiffs were dropping their challenge to the decision to list SSS on me CDR. However, as I have said, there is no motion for an extension of time before the court. In the current motion, the applicant is seeking to avoid the consequences of the ministerial order against it by a route other than as set out in the Act. In my view that constitutes a collateral attack against the governmental decision. [26] The respondent maintains that the current motion for interlocutory relief, as part of the action for damages and other declaratory relief, is prohibited by the decision in Canada (Attorney General) v. TeleZone Inc., 2010 SCC 62. In that case the Supreme Court of Canada confirmed that parties who wish to allow a governmental decision to stand and simply sue for damages may do so without first proceeding by way of judicial review. However, it also states that one cannot, in such an action, add a supplementary claim for a declaration or injunction to prevent a government from acting on a decision said to be tainted by illegality. I interpret the Telezone decision to be addressing jurisdictional issues as between the Federal Court and the Ontario Superior Court as it relates to judicial review coupled with a claim for damages. With respect to an application for judicial review against a provincial Crown and a simultaneous action for damages, there is no question of jurisdiction and there is nothing preventing an application for judicial review and a claim for damages from proceeding at the same time. (iii) Prospective decisions [27] The Appeal Division addressed the issue of reviewing prospective decisions in PEI v. SSS 2006 PESCAD 11, at para. 97 where Webber J. stated: By virtue of being decisions under review, these matters relate to decisions that have already been made. There cannot be a judicial review of a prospective decision. Therefore, there cannot be any remedy under judicial review for a prospective decision. Only decisions in the past can be ruled upon, not decisions in the future. If this is true of the main application for a judicial review, it is also true of any interim relief sought in connection with a judicial review. The interim relief cannot grant more than the final relief. While an interim decision might purport to grant relief from the effect of the decision under review, it cannot grant relief for a decision not under review because it has not yet been made. While the consequences of this legal state of affairs may appear at times to be unfortunate, this does not change the law. (See: Community of Hazelbrook v. Government of PEI 2005 PESCAD 5).
9 Page 9 [28] I agree with the conclusion of the Appeal Division in PEI v. SSS 2006 PESCAD 11. Interim relief cannot grant more than has been sought as final relief. However, I note that in the same case, Webber J. found it was acceptable to enjoin the Minister from refusing to grant a fish processing license to SSS on the basis they were listed on the CDR. Such an injunction did not mandate the automatic issuance of a license to SSS. It simply prohibited the Government from refusing to issue a license on the basis of the decision in dispute. [29] If interim relief was not proscribed on other grounds, such as that there was no permanent relief sought, it might very well be possible, upon sufficient evidence being presented to the court, to declare there was no basis to list SSS on the CDR, in effect removing that ground as a basis for denying financial aid to SSS. (iv) Injunctive relief unavailable against the Crown [30] The Crown Proceedings Act, R.S.P.E.I. 1988, Cap. C-32, prohibits the issuance of orders granting injunctive relief directly against the Crown, or against an officer of the Crown if the effect of doing so would be to give relief indirectly against the Crown which could not be obtained directly: 13. (2) Where, in proceedings against the Crown, any relief is sought that might, in proceedings between persons, be granted by way of injunction or specific performance, the court shall not, as against the Crown, grant an injunction or make an order for specific performance, but may, in lieu thereof, make an order declaratory of the rights of the parties.... (4) The court shall not in any proceedings grant an injunction or make an order against an officer of the Crown if the effect of granting the injunction or making the order would be to give any relief against the Crown that could not have been obtained in proceedings against the Crown, but in lieu thereof may make an order declaratory of the rights of the parties. [31] Therefore the most the applicant could hope for would be declaratory relief. Interim declaratory relief is granted sparingly as the making of a declaration is, by its nature, final. P.W. Hogg, Liability of the Crown, 2 nd ed. (Agincourt, Ont: Carswell, 1989) at p. 26 states: The most unfortunate result of the Crown s immunity from injunction is that no interlocutory relief is available against the Crown. This problem was fully discussed in the earlier section of this chapter on declaration, where it was explained that a declaration is by its nature final (or perpetual) and cannot serve as a vehicle for interlocutory relief. In that earlier section, it was argued that interlocutory relief ought to be available against the Crown; the straightforward way of accomplishing that reform would be to amend the Crown proceedings statutes so as to make the remedy of injunction available against the Crown.
10 Page 10 [32] Some of the exceptional reasons for granting interlocutory relief against the Crown in a judicial review context were discussed in my above-noted decision, SSS v. PEI 2004 PESCTD 68. At paragraph 32, I stated: Even while concluding there is a general rule that interim declarations should not be granted against the Crown, the Court in Loomis, supra, [Loomis v. Ontario (Minister of Agriculture and Food) (1993), 108 D.L.R. 4 th 330, (Ontario Court of Justice General Division, Divisional Court)] cited several exceptions involving cases where there was some evidence of deliberate flouting of established law by the governmental authority. I am of the view that this case fits into those exceptions. Further, to that list of exceptions I would add cases in which there is some evidence of the Government having acted in bad faith or having abused its power, such as is the case here. [33] While the same principle applies, the evidence before the Court with respect to the decision to list SSS on the CDR is not comparable to the evidence that was before the Court with respect to the decision to deny SSS a fish processing license. Without further evidence, in my view this is not an appropriate case for an interim declaration against the Crown. (v) Three part test for injunctive relief [34] Having decided above that the applicant cannot obtain greater interim relief than the permanent relief claimed, and that the within motion constitutes a collateral attack on the ministerial decision made in 2002, it is not necessary to consider the three-part test set out in RJR-MacDonald Inc. v. Canada, supra. The interim declaration requested is not available without further amendment to the statement of claim, an application for extension of time in which to consider the question on judicial review, and appropriate evidence surrounding the circumstances of the payout by the Government of the SSS loan. [35] However, for completeness, and given the parties argued the issues, I will address their arguments. [36] The respondents argue, based on their interpretation of the Supreme Court of Canada s decision in TeleZone, that there is no serious issue to be tried because, while the plaintiffs may obtain an order in relation to damages arising from the allegations presented in their Further Amended Statement of Claim, the plaintiffs cannot obtain an order requiring the Government to remove SSS from the CDR as part of their civil action. As indicated in para. 26, I do not take the same meaning from the TeleZone line of cases. [37] With respect to the declaratory relief sought in the applicant s statement of claim, it is clear that there would be a serious issue to be tried concerning the circumstances surrounding the payment by the Government of the applicant s
11 Page 11 indebtedness to the bank and whether the legal obligations of SSS were such that it was appropriate for the Government subsequently to list SSS on the CDR. [38] With respect to irreparable harm, the respondent argues the applicant has not suffered any harm in that its financial position has actually improved since it was placed on the CDR. It also argues that any harm is compensable by damages. As proof, the respondent refers to the fact that SSS has quantified its damages by way of an expert s report, placing them somewhere between $16,242,200 and $16,737,200. [39] However, irreparable harm refers to the nature of the harm suffered rather than its magnitude. In this case, SSS claims the irreparable harm it will suffer is that, without access to government financial assistance which would otherwise be available, it is at a serious competitive disadvantage and is at risk of going out of business before the matter can get to trial. Not only is their access to government financial assistance affected, but the willingness of commercial banks to finance SSS while they are on the CDR is also impacted. The categorization of the harm SSS could potentially suffer as being irreparable is not foreclosed simply because they have put a price tag on their damages.. [40] The final step is to consider the balance of convenience as between the parties. This can be viewed as being a consideration of which party is the most hurt by the granting of, or failure to grant, injunctive relief. In PEI v. SSS 2006 PESCAD 11, Webber J. quoted Gummow J. of the Federal Court of Australia when he stated the following in Businessworld Computer Pty. Ltd. v. Australian Telecommunications Commission (1988), 82 A.L.R. 499: A fundamental principle is therefore that the court should take whichever course appears to carry the lower risk of injustice if it should turn out to have been wrong in the sense I have described. [41] The worst-case scenario for the Government is that it might grant some financial assistance to a company in the fish processing industry which it might otherwise not have granted in light of that company being listed on the CDR. The worst-case scenario for SSS is that without financial assistance, which is theoretically available to its competitors, it fails to remain viable and goes out of business. In such a circumstance, the balance of convenience would clearly be in favor of granting an interim declaration enjoining the Minister from denying financial aid to SSS on the basis they were listed on the CDR. [42] Notwithstanding those factors, for other reasons stated, an injunction cannot issue on the present motion.
12 Page 12 Conclusion [43] In summary, there are three bases upon which the motion is denied: Costs i) The applicant has made a claim for interim injunctive relief which is not supported by a corresponding claim for such injunctive relief to be permanent. ii) As currently framed, the applicants motion seeks to challenge a ministerial order against it by a route other than judicial review, which in my view constitutes a collateral attack against that order. iii) Interlocutory declarations against the Crown are only permitted in limited circumstances. There is not sufficient evidence before the Court to conclude the current set of circumstances are in the nature of cases which would warrant granting such interim relief against the Crown. [44] The defendants/respondents shall have their costs on a partial indemnity basis. If the parties are unable to agree on the reasonable sum within one month of this decision, the defendants/respondents shall have one further week within which to file brief written materials setting out their position. The plaintiffs/moving parties shall then have one further week to respond, and the defendants/respondent may file reply materials, if any, in the subsequent week. I encourage the parties to make reasonable efforts to resolve the costs issue. [45] Motion denied. January 30, 2012 Campbell J.
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