Is Government Still Able to Govern? Claims in Damages Based on Legal Administrative Action

Is Government Still Able to Govern? Claims in Damages Based on Legal Administrative Action November 2009 Michèle Ducharme, Counsel Kay Young, General Counsel Justice Canada 1 However, the Crown is not a person and must be free to govern and make true policy decisions without becoming subject to tort liability as a result of those decisions Just v. British Columbia, [1989] 2 S.C.R. 1228 government actions are likely to cause harm to some members of the public. That is why government is not an easy matter. Of course, the government owes a duty to the public but it is a duty owed to the public collectively and not individually. A.O. Farms Inc. v. Canada (2000), 28 Admin. L.R. (3d) 315 Introduction Can a plaintiff take what in its essence is a question of public law whether government administrative action is legal and by way of creative pleading, argue that the grounds to support administrative law invalidity amount to a private law wrong that is compensable in damages? The Supreme Court of Canada will soon hear seven cases addressing this issue. 2 These cases all involve federal administrative action, and therefore raise, in addition to the 1 The views expressed in this paper are those of the authors and do not necessarily represent the views of the Department of Justice. 2 Three cases originate from the Ontario Court of Appeal: Telezone v. AG Canada; Fielding Chemical Technologies Inc. v. AG Canada; McArthur v. AG Canada, 2008 ONCA 892. Three cases originate from the Federal Court of Appeal: Canada v. Manuge, 2009 FCA 29; Parrish & Heimbecker Ltd. v. Canada, 2008 FCA 362; Nu-Pharm Inc. v. Canada, 2008 FCA 227. One case comes from the Quebec Court of Appeal : Agence canadienne d'inspection des aliments c. Institut

2 interplay between public and private law remedies, the issue of the exclusive judicial review jurisdiction of the Federal Court over federal boards. In this paper, I will address the following: 1. The context in which these issues came about and ended up before the Supreme Court of Canada. 2. The interplay between public and private law between the rules governing the legality of administrative action and the rules governing the civil liability of the Crown; 3. The federal twist to this interplay the additional layer of complexity brought by the Federal Court s exclusive jurisdiction over judicial review of federal administrative action; 4. Additional considerations raised by these issues. 1. Context It all really started with a decision of the Federal Court of Appeal issued in 2005, Canada v. Grenier. 3 This case is about a federal inmate, Daniel Grenier, who was put in administrative segregation by the head of the penitentiary where he was already serving a sentence. The segregation decision was made under the Corrections and Conditional Release Act (CCRA), which provides for periodic review of this type of decisions. In addition to this internal recourse, Grenier had the right to commence court proceedings to challenge the legality of his administrative detention: he could have sought a writ of habeas corpus in the provincial superior court; he could also have sought judicial review pursuant to section 18 of the Federal Courts Act (FCA). He did not, however, do anything to directly challenge the legality of his detention. Some years later, he instituted professionnel de la Fonction publique du Canada et autres, [2008] J.Q. No. 8906 (otherwise known as Olymel). Leave to appeal was granted by the Supreme Court of Canada in all these cases on June 18, 2009 and the hearing is scheduled for January 20 and 21, 2010. 3 [2006] 2 F.C.R. 287. 2

3 an action in the Federal Court, claiming damages for wrongful imprisonment on the basis that the segregation decision made pursuant to the CCRA was unlawful because it was arbitrary and oppressive. Damages were sought not only for the infringement of Grenier s personal liberty, but also for the negative effect that the decision had had on his record, and was continuing to have, on his chances for favorable treatment within the prison (for example in relation to his security classification and to his chances of getting parole). The Federal Court of Appeal, in its reasons for decision, summarizes the issue as follows: Should an inmate directly challenge an institutional head's decision affecting him by way of judicial review, or may the inmate choose to disregard that procedure and attack it collaterally by means of an action in damages? The Court concluded that it was not an option for the plaintiff to bring an action in damages against the Crown where the legality of the segregation decision had never been challenged through the proper mechanism, an application for judicial review in the Federal Court, pursuant to sections 18 and 18.1 of the FCA. For a unanimous Federal Court of Appeal, Létourneau J.A. observed that a decision of a federal agency, such as the one by the institutional head in this case, retains its legal force and authority, and remains juridically operative and legally effective as long as it has not been invalidated, 4 and to find the appellant liable as a result of the order of administrative segregation, the Prothonotary had to review the lawfulness of the institutional head's decision ordering it and set it aside. 5 Thus, he concluded, the action necessarily sought relief in the nature of the remedies listed in s. 18(1)(a). 4 Ibid, at para. 19. 5 Ibid, at para. 34. While the Prothonotary of the Federal Court has jurisdiction to hear certain claims against the Crown, he or she does not have jurisdiction to hear judicial review applications pursuant to s. 18 and 18.1 of the FCA: see rule 50 and 300 and foll. of the Federal Court Rules(FCR). In other words, the Prothonotary could not review the legality of the segregation 3

4 Following Grenier, motions were brought by the federal Crown to strike out actions in various courts in which plaintiffs complained of, criticized, attacked or otherwise impugned federal administrative action and decisions via allegations that the federal Crown conduct was tortious or amounted to some combination of civil wrongs. Where such claims have been brought in provincial superior courts, the basis for the challenge has been that the court lacks jurisdiction, by virtue of s. 18 of the FCA, to adjudicate the claims. While the caselaw in this area has always involved the federal Crown, it would be a mistake to conclude that the issue raised is one that is exclusively relevant to federal administrative action. Federal Court jurisdiction is but an additional layer to a more general question: in what circumstances a plaintiff can take what in its essence is a question of public law (whether government administrative action is legal) and argue that the grounds to support administrative law invalidity amount to a private law cause of action, compensable in damages. To address this issue, it is important to examine the relationship between public law and private law between the rules governing the legality of government administrative action and the rules governing the civil liability of the Crown. 2. The Interplay Between Public and Private Law Different substantive rules apply to public law and private law claims. 2.1 Public Law and Judicial Review of Administrative Action The fundamental purpose of judicial review was described by the majority in Dunsmuir v. New Brunswick as follows: decision in the context of an action and therefore an essential element of the claim could not be determined. 4

5 Judicial review is the means by which the courts supervise those who exercise statutory powers, to ensure that they do not overstep their legal authority. The function of judicial review is therefore to ensure the legality, the reasonableness and the fairness of the administrative process and its outcomes. 6 The majority in Dunsmuir emphasized that judicial review is intimately connected with the preservation of the Rule of Law and that courts in exercising their powers of judicial review must avoid undue interference with the discharge of administrative functions in respect of the matters delegated to administrative bodies by Parliament and legislatures. 7 Hence, judicial review ensures the protection of the Rule of Law because the courts have the last word on jurisdiction, and legislative supremacy is assured because determining the applicable standard of review is accomplished by establishing legislative intent. 8 The procedures and remedies available in judicial review applications are designed to determine the legality or validity of a government decision quickly, and thus to promote finality and certainty surrounding that decision. The remedies available by way of an application for judicial review reflect the public law nature of the errors to be corrected. An applicant for judicial review can seek and obtain the following remedies: the quashing of a decision and the return of the matter to the decision-maker to decide the matter in accordance with the Court s decision; mandamus to compel performance of a public law duty; a declaration of the applicable law; and prohibition. 9 6 Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, para. 28. 7 Ibid, para. 27. 8 Ibid, para. 30. 9 See for example s. 18(1) of the FCA. 5

6 Public law in general, and judicial review in particular, is not intended to redress or enforce private legal rights. It is for that reason that damages are not available on judicial review. 10 2.2 Private Law and Civil Liability of the Crown Tort law is based on a completely different set of principles than is judicial review: A tort is a civil wrong, other than a breach of contract, which the law will address by an award of damages. The primary function of tort law is to shift the burden of loss from one party (the plaintiff) to another party (the defendant). 11 There can be no liability for negligence unless some compensable damages have been suffered. 12 First and foremost, tort law is a compensator. 13 The law of tort compensates for past wrongs. Unlike judicial review remedies, tort law cannot deprive the past wrongful act of its legal effects 14 ; nor can it restore the plaintiff to the legal position he or she occupied before the alleged wrong occurred. The purposes of private law remedies are therefore completely distinct from the purposes of public law remedies. 15 10 Canada (Minister of Citizenship and Immigration) v. Hinton, 2008 FCA 215, para. 45, referencing Al-Mhamad v. Canada (Canadian Radio-Television and Telecommunications Commission) 2003 FCA 45. 11 Linden & Feldthusen, Canadian Tort Law, 8 th ed., Toronto: Butterworths, 2006 at pp.1-2 12 Ibid, pp.110-111. 13 Ibid, p. 4. See pp. 4-30 for a discussion of different functions of the law of torts. 14 For example, where a decision to cancel a fishing licence is quashed on judicial review, the effect of the decision, unless the license s term has expired, is that the license is restored and the person can continue to fish. The function of judicial review is therefore corrective. Tort law uses a monetary remedy (damages) as a substitute for the fact that the plaintiff cannot in reality be put back in the situation he or she was in before the wrongful act occurred. It restores, rather than correct. To use the fishing licence cancellation example, damages could not revive the legal authorization needed to enable the plaintiff to fish, but inconsistently would treat the plaintiff as entitled to the profits from the fishing activity which is not permitted. 15 The same can be said in Quebec civil law : the private law remedy of "dommages-intérêts" seeks to compensate the victim of a wrongful act by an award in damages. 6

7 Private law enables individuals to enforce a remedy for interference with their personal rights. 2.3 The Rules Governing Public Law and the Rules Governing Private Law Must Not Be Confused Claims in civil liability against the Crown depend on the application of the ordinary private law rules of civil liability to the government. The Supreme Court of Canada has reiterated numerous times over the years that it is important not to confuse administrative law rules with the rules of civil liability. It is important not to confuse the rules of administrative law with the rules that govern the extra-contractual liability of a public body. The rules of administrative law allow for an application to be made to the Superior Court for judicial review of a public body s decision. The setting aside of such a decision will not necessarily lead to the municipality s being civilly liable. 16 Another case illustrating this point is the decision of the Supreme Court of Canada is Finney v. Barreau du Québec. 17 Finney was an action in damages brought by a person who had been harassed by a lawyer and who had complained numerous times to the Barreau, to no avail. The issue in the case was whether the Barreau du Québec could rely on a statutory immunity clause protecting it from civil liability for acts done in good faith, in the performance of its duties. The Quebec Court of Appeal held that the Barreau could not rely on the immunity clause because it acted outside the scope of the discretion that it was conferred by statute. In other words, the Court held that the test for civil 16 Entreprises Sibeca Inc. v. Frelighsburg (Municipality), [2004] 3 S.C.R. 304, para. 15. To the same effect, see also; Morier v. Rivard, [1985] 2 S.C.R. 716, at p. 745, per Chouinard J.; Québec (Procureur général) v. Deniso Lebel Inc., [1996] R.J.Q. 1821, at pp. 1836-37, leave to appeal refused, [1997] 1 S.C.R. vi. 17 Finney v. Barreau du Québec, [2004] 2 S.C.R. 17 7

8 liability was whether the Barreau had acted legally, in the administrative law sense. The Supreme Court of Canada clearly rejected the approach taken by the Court of Appeal: Although the result of this method is also recognition of the Barreau s liability, it is preferable to take an approach different from the one taken by the Quebec Court of Appeal. That court declined to apply s. 193, because in its opinion the appellant had failed to exercise its powers for the purposes set out in the Act, that is, the protection of the public. That method has the disadvantage of confusing review of the legality of a public body s decisions with the rules that determine that body s civil liability. Undoubtedly those questions will overlap on occasion, and acts that are illegal and that may be set aside under the rules that govern review for legality may found an action in civil liability. However, this does not often happen, and illegality is not necessarily synonymous with civil fault, or a source of delictual liability ( ) In this case, the issue is clearly the question of civil liability for the acts or omissions of the Barreau in relation to the performance of its duties and functions in respect of supervision of the profession of law, that is, the manner in which the complaints made by McCullock-Finney and the cases involving Belhassen were handled. This is not an issue of jurisdiction. ( ) 18 2.4 Breach of Statutory Duty Is Neither a Tort Nor a Fault in Canada The fact that a public authority makes a mistake in the public law sense commits an error that is legally reviewable by way of an application for judicial review does not constitute a recognized head of civil liability in Canada. 18 Ibid, at para.31. 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, 8

9 is judicial review for invalidity. The appellant pursued this remedy before G 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. 19 In order to state a viable cause of action in tort, a plaintiff must therefore allege facts apart from the suggestion that a government decision or action is unlawful, in an administrative law sense. The fact that a statutory decision or other administrative action foreseeably caused him or her some harm is also insufficient. It is inherent in the nature of a policy decision that it may affect different persons in different ways. The foreseeability of a potential negative impact has no effect in terms of creating a tort cause of action. This is illustrated by several important tort decisions, including the Supreme Court of Canada s judgments in Cooper v. Hobart 20 and Edwards v. Law Society of Upper Canada, 21 which make it clear that in addition to foreseeability of damages, there must be sufficient proximity in order for civil liability to flow. In its recent unanimous judgment in Attis v. AG Canada, 22 the Ontario Court of Appeal characterized Health Canada s decision under the Food and Drugs Act to issue a Notice of Compliance for breast implants as a policy decision which could not give rise to a proximate relationship between the plaintiffs and government. Thus, no duty of care was owed and the claim was struck out. The same is generally true of all good faith statutory decisions which involve balancing competing interests such as a regulatory decision to issue a public notice about a possibly-contaminated food product, taken in the interests of ensuring public safety, even 19 Holland v. Saskatchewan, 2008 SCC 42, para 9. See also: Wellbridge Holdings Ltd. v. Greater Winnipeg, [1971] S.C.R. 957; The Queen in Right of Canada v. Saskatchewan Wheat Pool, [1983] 1 S.C.R. 205; and KF Evans Ltd. v. AG Canada, 2002 BCSC 1709. 20 [2001] 3 S.C.R. 537. 21 [2001] 3 S.C.R. 562. 22 2008 ONCA 660. 9

10 if it will foreseeably result in commercial losses to an identified importer, producer or retailer. 23 Fundamentally, complaints about the reasonableness or administrative law validity of statutory decisions are not proper tort claims at all. Absent conduct that is clearly wrong, in bad faith or an abuse of power, the courts will not award damages for the harm suffered as a result of policy decisions. In Just v. British Columbia, 24 the Supreme Court of Canada wrote: The increasing complexities of life involve agencies of government in almost every aspect of daily living. Over the passage of time the increased government activities gave rise to incidents that would have led to tortious liability if they had occurred between private citizens. The early governmental immunity from tortious liability became intolerable. This led to the enactment of legislation which in general imposed liability on the Crown for its acts as though it were a person. However, the Crown is not a person and must be free to govern and make true policy decisions without becoming subject to tort liability as a result of those decisions. The exercise of a statutory power conferring a discretionary power on a public authority or official is a policy decision and absent conduct that is clearly wrong, in bad faith or an abuse of power, a claim in tort against a public authority based on the exercise of such a power cannot succeed. 23 In addition to the Parrish & Heimbecker case, supra note 2, this very kind of regulatory decision-making is alleged to be tortious in Agence canadienne d'inspection des aliments c. Institut professionnel de la Fonction publique du Canada et autres, supra note 2 and The Los Angeles Salad Company Inc. v. CFIA, 2009 BCSC 109. 24 [1989] 2 S.C.R. 1228 10

11 2.5 Corollary Legality of Administrative Action Justifies the Negative Impacts that Administrative Action Can Have on Individuals The Holland decision conclusively establishes that the administrative law invalidity of a harm-causing decision does not give rise to a tort cause of action. It is a necessary corollary that if a discretionary statutory decision is legal and valid in the administrative law sense, it cannot give rise to a tort claim if it negatively affects the interests of a plaintiff. Simply put, knowing whether a particular decision or action is administratively valid or invalid is not generally useful in establishing tort liability. Jones and DeVillars write, in their text on administrative law: Official liability in damages depends on two necessary preconditions: the action complained of must be tortious, and it must also be illegal or ultra vires. 25 To the same effect, in their text on Crown liability, Professors Hogg and Monahan state categorically that a lawful act cannot possibly give rise to liability to pay damages. They write: It goes without saying that the Crown is liable to pay damages only if the plaintiff can establish facts that amount to a cause of action against the Crown. A lawful act by the Crown, even if it causes injury, is not tortious, and therefore gives rise to no liability to pay damages. Even an act that is unauthorized by law is not necessarily tortious: if the circumstances do not come within a recognized head of tortious liability, the Crown will come under no liability to pay damages. 26 25 Principles of Administrative Law, 4 th ed., Toronto: Carswell, 2004 at p. 611. 26 Liability of the Crown, 3rd ed., Toronto: Carswell, 2000, at p. 26. 11

12 Since it is clear that even a statutory decision which has been determined to be invalid does not, without more, give rise to private law liability in respect of the consequences of the decision, a fortiori a decision which has never been declared invalid and which remains part of the legal fabric, effective to justify and authorize the consequences it entailed, cannot give rise to private law liability. There is a new version of Jones & devillars and I m unsure whether they have changed their conclusion about 3. The Federal Twist There is another layer of issues that come into play where the administrative action upon which a claim in damages is based is federal administrative action. A challenge to such action is within the exclusive judicial review jurisdiction of the Federal Court, pursuant to sections 18 and 18.1 of the Federal Courts Act (FCA). Judicial review of federal administrative action was statutorily carved out of the provincial superior courts inherent jurisdiction and conferred exclusively upon the Federal Court of Canada by the Federal Court Act in 1972. Ever since then, when a person seeks to challenge a decision of a federal board, commission or other tribunal, 27 he or she must bring an application for judicial review in the Federal Court. 28 27 Section 2 of the FCA reads as follows: federal board, commission or other tribunal means any body, person or persons having, exercising or purporting to exercise jurisdiction or powers conferred by or under an Act of Parliament or by or under an order made pursuant to a prerogative of the Crown, other than the Tax Court of Canada or any of its judges, any such body constituted or established by or under a law of a province or any such person or persons appointed under or in accordance with a law of a province or under section 96 of the Constitution Act, 1867. 28 Section 18 of the FCA, as it exists now, reads as follows: 18. (1) Subject to section 28, the Federal Court has exclusive original jurisdiction ( a) to issue an injunction, writ of certiorari, writ of prohibition, writ of mandamus or writ of quo warranto, or 12

13 When the Federal Court Act was first enacted, it also provided exclusive jurisdiction to the Federal Court over civil claims brought against the federal Crown. 29 In 1992, the jurisdiction of the Federal Court over claims against the federal Crown was made concurrent rather than exclusive. 30 In cases where plaintiffs wanted to sue private codefendants in addition to the Crown, the 1992 amendments allowed them to sue everybody in the same court, i.e. the provincial court, making it easier, faster and cheaper for plaintiffs to seek relief, while avoiding the risk that two different courts come to contradictory conclusions. The 1992 amendments did not, however, alter the exclusivity of the Federal Court s supervisory jurisdiction over federal administrative action. Judicial review of federal administrative action remained and still remains under the exclusive purview of the Federal Court. The fact that the Federal Court s jurisdiction remained exclusive for judicial review matters, but became concurrent for claims against the Crown, brought its own share of difficulties. grant declaratory relief, against any federal board, commission or other tribunal; and (b) to hear and determine any application or other proceeding for relief in the nature of relief contemplated by paragraph (a), including any proceeding brought against the Attorney General of Canada, to obtain relief against a federal board, commission or other tribunal. 29 Former section 17 of the Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10 reads as follows [emphasis added]: 17. (1) The Trial Division has original jurisdiction in all cases where relief is claimed against the Crown and, except where otherwise provided, the Trial Division has exclusive original jurisdiction in all such cases. 30 The new section 17 reads as follows [emphasis added]: 17. (1) Except as otherwise provided in this Act or any other Act of Parliament, the Federal Court has concurrent original jurisdiction in all cases in which relief is claimed against the Crown. 13

14 Where a plaintiff s claim against the federal Crown involves a fact pattern which appears to require the trial court to evaluate the legality of the decision of a federal board, commission or other tribunal, and is brought in the provincial courts, the problem is immediately apparent. Is such a claim effectively a collateral attack on the legality of a federal administrative decision tantamount to conferral of judicial review jurisdiction the provincial superior court? And what about the situation where a plaintiff decides to bring such a claim against the Crown in the Federal Court? The Federal Court has jurisdiction over judicial review of federal administrative action pursuant to section 18 of the FCA as well as jurisdiction over actions against the federal Crown pursuant to section 17. Does the plaintiff s claim entitle the Federal Court to deal with public law issues of legality in the action? Or is a judicial review application a necessary prerequisite? In Grenier, the Federal Court of Appeal concluded that the lawfulness of the decisions of a federal board, commission or other tribunal could not be reviewed through an action. Allowing plaintiffs to proceed in this manner would, according to Létourneau J.A., cause the dismemberment of federal administrative law and fail to respect the intention of Parliament to consolidate review of all federal administrative action in the Federal Court. 31 In addition, the Court of Appeal concluded that the public interest and the principle of finality of decisions dictate that collateral attacks should be limited, especially when Parliament has provided for a mechanism of direct challenge. It is suggested that these issues are a federal twist on a more fundamental set of legal principles because if those principles are given primacy, it becomes apparent in many 31 Létourneau J.A. was, in part, thinking of the implications of concurrent jurisdiction under s. 17 for other cases commenced in provincial courts in mentioning this point. However, the Grenier claim was an appeal from a trial before the Prothonotary, rather than a judge of the Court. Thus the question of the competence of the trier of fact to deal with the judicial review aspect of the case was a live one, even though the case was a Federal Court action a Prothonotary has no judicial review jurisdiction. 14

15 cases that the problem with a given claim may very well be that the pleaded facts do not support a valid cause of action as a matter of law; not that the claim has been advanced in the wrong court or by means of the wrong procedure. 4. Other considerations 4.1 Judicial Review is not a Pre-Requisite to Every Claim in Tort Against the Government Not every action or decision of a public authority is amenable to the public law recourse of judicial review and its remedies. Many tort claims are focused on allegedly wrongful behaviour of the officials and not on the exercise of a statutory power. Behaviour in this sense refers to things done by officials which may affect the plaintiff in various ways but which are not by nature legally effective to alter the plaintiff s legal position. Behaviour includes the way in which a matter is handled. A number of decisions have refused, based on Grenier, to strike actions complaining that delay in the processing of the plaintiff s immigration application gave rise to a claim in negligence. 32 These claims are focused on allegedly wrongful behaviour of the officials but not on any exercise of a statutory discretion. Behaviour also includes negligent misrepresentations. For example, in Keeping v. AG Canada, 33 a fisheries officer mis-measured the plaintiff s boat. Based on the inaccurate measurement, the plaintiff s application for a licence was denied. Had the boat been properly measured, it would have been clear that the plaintiff was eligible for the licence sought. The action for damages succeeded based on ordinary 32 Khalil v. R., 2007 FC 923 (actions for damages for delayed processing of immigration applications not barred by Grenier, although the Khalil case was dismissed on the merits); Samimifar v. Canada, 2007 FCA 248, affirming 2006 FC 1301; Paszkowski v. Canada, [2007] 2 F.C.R. 507. 33 2003 NLCA 21. This decision pre-dates Grenier so obviously did not consider that decision. However, it is an excellent fact-pattern for illustrating how a damages claim which necessarily involves a harm-triggering licensing decision need not depend on impugning the validity of the decision. 15

16 negligence principles; the operational carelessness consisted of the inept measurement of the boat. The fact that the licence had been denied was relevant only because the absence of a fishing licence was the mechanism by which the plaintiff suffered loss. 34 In addition, a claim for a breach of contract involves a private relationship between two parties. The fact that the Crown is one party does not alter the nature of that relationship. The enforcement of private contract rights depends on the private relationship entered into by the parties to the contract and not on a determination that the federal Crown has failed to act in accordance with principles of public law. It has been suggested that the government contracting authorities powers enable them to make a contractually wrong decision as well as a contractually right decision. 35 A finding confirming the public law validity of a contracting decision would, therefore, be of no assistance in determining whether the contract had been breached and would not resolve the issue of whether the other party is entitled to compensation for the breach. Where the essence or true nature of a claim is a contractual dispute between the federal Crown and another party, it should be resolved by private law contracting principles. 36 34 Similarly in Genge v. AG Canada, 2007 NLCA 60, the plaintiffs sought damages after they complied with a Notice to Fishers served on them by fisheries officers and the RCMP, advising that the seal fishery was closed to them. In fact, as had been formally admitted in the action, there had been no decision to close the fishery; the notice was simply wrong. The plaintiffs incurred financial losses as a result of complying with the notice. The essence of the plaintiffs claim was that losses flowed from a negligent misrepresentation and this could be litigated regardless of the possibility that, had the plaintiffs discovered the problem much earlier, judicial review would have been available and might have provided effective recourse. 35 Glenview Corporation v. Canada, [1990] F.C.J. No. 202. 36 Judicial review can also play a role in contract matters involving the federal Crown. The decision of the Federal Court of Appeal in Gestion Complexe Cousineau (1989) Inc. v. Canada (Minister of Public Works and Government Services), [1995] 2 F.C. 694 (C.A.) stands for the proposition that a party who has statutory procedural rights created as part of its contractual relationship with the Crown can choose to pursue the enforcement of those rights through judicial review. In cases involving allegations of unlawful decisions relating to statutory duties, or statutory illegality, impropriety or bias in a tendering or procurement process, and where what is sought is the setting aside of a decision of a federal board, judicial review would be the appropriate mechanism and the Federal Court would be the proper forum to obtain relief. 16

17 4.2 The Plaintiff s Choice of Legal Recourse Does not Create a Cause of Action The fact that a plaintiff calls a claim a private law claim does not make it so: we must look at the elements of the claim to see if indeed it is a private law claim and it is authorized. As the majority wrote in Weber v. Ontario Hydro: One must look not to the legal characterization of the wrong, but to the facts giving rise to the dispute. 37 To determine the essential character of a claim we must examine the factual context in which it arose, not the legal characterization by the parties. In its decision in Telezone, 38 the Ontario Court of Appeal held that the Federal Court s exclusive jurisdiction was limited to the granting of particular listed remedies, regardless of the legal nature of the claim in question. Thus, the fact that all four of the plaintiffs sought damages and pleaded in tort and/or contract was, in effect, determinative. The Court did not need to attempt to discern the essential character of the claims in the cases. This approach seems unduly narrow and formalistic, as well as out of keeping with Parliament s intent to confer exclusive jurisdiction over judicial review of the legality of federal administrative decisions in the Federal Court. This cannot be overcome simply by a plaintiff s decision to avoid specifically claiming the remedies mentioned in s. 18(1)(a) of the FCA, as the Ontario Court of Appeal apparently held. Section 18 also gives the Federal Court exclusive jurisdiction over proceedings for relief in the nature of those listed remedies. This recognizes that the Federal Court s judicial review jurisdiction has a substantive content which cannot be defeated through inventive pleading. The Ontario Court of Appeal should not, therefore, have rejected the federal Crown s argument that it is necessary to evaluate the essential character of the claim 37 [1995] 2 S.C.R. 929, para. 49. This principle was reiterated by the Court in Vaughan v. Canada, [2005] 1 S.C.R. 146, para. 11. 38 Telezone v. Canada, supra note 2. 17

18 advanced before reaching a conclusion about the applicability of section 18 of the FCA, and it was wrong to accept at face value the possibly-inappropriate legal labels for the claim chosen by the plaintiff. The exercise of looking for the essential nature of a claim, well-established in other areas of jurisdictional limitations on the courts, 39 should apply equally here. By contrast, consider the way in which the Newfoundland Court of Appeal has dealt with similar issues. In Genge v. AG Canada, 40 the court held that "each case must be considered on its merits to determine whether in essence the pleadings amount to a disguised attempt to collaterally attack administrative action of a federal official rather than proceeding by judicial review or whether their true substance must be properly characterized as a legitimate claim for damages in tort". 41 The same court applied this approach in nuanced fashion in another group of appeals, which were not considered by the Ontario Court of Appeal in Telezone. In Donovan v. AG Canada, 42 the Newfoundland court dismissed two claims but allowed a third to proceed. The dismissed cases both involved complaints that the Minister of Fisheries was negligent in taking action to suspend the appellants fishing permits pending the outcome of charges that they had breached permit conditions and/or the Act and regulations. The gist of the claims was simply that the Minister, in essence, had a tort or fiduciary obligation to make a different statutory decision. The third claim, which was allowed to go forward, pleaded facts alleging that the plaintiff had suffered losses when he relied on misrepresentations made by Department of Fisheries & Oceans employees. The court explained its reasoning in this passage: In order to prove the breach of a Crown duty, Duffett and Donovan must establish the invalidity of the alleged decisions to cancel the 2000 permit and to refuse to issue 39 Weber v. Ontario Hydro, [1995] 2 S.C.R. 929. 40 2007 NLCA 60. 41 Ibid. at para. 40. Ironically, Genge was cited with approval by the Ontario Court of Appeal despite the fact that that court fundamentally disagreed with the analytical approach it outlined. 42 2008 NLCA 8. 18

19 2001 permits. As previously discussed, this differs from Perrot's case, where he may prove a breach of duty by establishing improper failure to notify regarding reinstatement and he need not establish that the Minister's decision was invalid. 43 4.3 Timely judicial review may reduce or avoid damages In many situations, a prompt challenge to a decision by way of judicial review cannot only produce a prompt answer, settling the legality of the administrative action once and for all, it can (assuming the challenge is well-founded) also work to the pecuniary advantage of the applicant by enabling it to minimize or perhaps avoid altogether the losses that it might otherwise be tempted to claim as damages in a civil action. For example, in Telezone itself, the plaintiff seeks damages representing the profits it says it would have earned, had it received a spectrum licence under the Radiocommunications Act. The Minister s decision not to award it a licence is said to have been improper for reasons which would, if substantiated, have furnished a good argument for having the decision itself set aside in judicial review. In that event, the Minister would have been required to revisit the decision and Telezone (again, assuming it is correct in its factual assertions) could have been awarded a licence after all. No losses would have been suffered, and lengthy and expensive litigation would have been avoided for all parties. 4.4 The Rule Against Collateral Attacks Precludes the Determination of Legality of Administrative Action in a Tort Claim The case law on collateral attack is preoccupied with the ability of a court to consider earlier decisions with binding force on the plaintiff, reached by competent courts or tribunals acting under specific legislation. The concern, which in Grenier was characterized as the need for finality, is with the undermining of previous orders issued 43 Ibid. at para.18. 19

20 by such courts or tribunals. Where a plaintiff, directly affected by an administrative decision, fails to use the administrative law process to challenge it, the effect is to strip the applicable public law regime, which creates the legal status of such decision, of its effectiveness and undermine its legitimacy. This concern is absent in a case in which the claim seeks damages for allegedly wrongful behaviour of federal officials, even if such behaviour is itself a form of administrative action which might properly have been the subject of judicial review. Conclusion There are fundamental differences between public and private law which indicate that tort claims seeking damages for the consequences of administrative action are not appropriate. Even where administrative action has been judicially established to be invalid, prior to such a claim, no tort cause of action is created as a result. A fortiori, when the administrative action has never been directly attacked, it stands as presumptively valid and effective to justify its consequences as a matter of law, and those consequences cannot, by virtue of being claimed under the guise of damages, give rise to a valid tort claim. The structural problem with claims of this kind is aggravated by the fact that federal administrative action can only be directly challenged in the Federal Court by way of an application for judicial review. At root, however, such claims are suspect primarily from a tort law perspective. Government must be able to govern, and make policy decisions which foreseeably affect the interests of the citizen, without becoming civilly liable for the consequences. 20