Arntsen v. Canada

Arntsen v. Canada
Court (s) Database
Federal Court Decisions
Date
2021-01-14
Neutral citation
2021 FC 51
File numbers
T-1319-19, T-1320-19, T-1321-19, T-724-19, T-725-19, T-726-19
Decision Content
Date: 20210114
Dockets: T-724-19
T-725-19
T-726-19
T-1319-19
T-1320-19
T-1321-19
Citation: 2021 FC 51
Ottawa, Ontario, January 14, 2021
PRESENT: The Honourable Madam Justice Strickland
Docket: T-724-19
BETWEEN:
SHAUN WILLIAM ARNTSEN, MICHAEL GRANT RUDE AND MARTIN LEPINE
Plaintiffs
and
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
Defendant
Docket: T-725-19
AND BETWEEN:
DAVID BONA, CLAUDE LALANCETTE AND SHERRI ELMS
Plaintiffs
and
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
Defendant
Docket: T-726-19
AND BETWEEN:
CHRISTIAN MCEACHERN AND PHILLIP BROOKS
Plaintiffs
and
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
Defendant
Docket: T-1319-19
AND BETWEEN:
STEPHEN BOULAY, TYSON MATTHEW BOWEN, ALISON CLARK, ALEXANDER DEELEY, BENJAMIN DOMINIE, ROGER GAUTHIER, TYLER COADY, MICHAEL BUZNY, STEPHANE CHARBONNEAU, JASON ANDERSON, ANN BASTIEN, MATTHEW BLEACH, WADE COOPE, HAROLD DICKSON, KYLE GETCHELL, IAN LANG, JORDAN LOGAN, ALI NEHME, MAXIME GABORIAULT, JUSTIN PAQUETTE, BRAD PETERS, KIRK POWELL, ISAAC PRESIDENT, ERNEST SMITH, RANDY J. SMITH, ANDREW STAFFORD, JASON LE NEVEU, DANIEL HASLIP, RICHARD FIESSEL, GARY SANGSTER, CODY KULUSKI, ADRIAN DROHOBYCKY, JIMMY LAROCQUE, LANCE COVYEOW, SALVADOR RENATO ZELADA-QUINTANILLA, TREVOR GROHS, CHRISTOPHER CHARTIER, ROB COBB, GREG HART, EWARLD HOLLY, TRAVIS JONES, DANIEL JOUDREY, JOSEPH MOORE, BRANDON KETT, WILLIAM ALDON NICKERSON, JUSTIN NORMAN, JUDY OCHOSKI, OWEN PARKHOUSE, LANDON PERRY, THOMAS BOWDEN, CURTIS GIBSON, LEO VEMB, LEROY BOURGOIN, JEREMY LEBLANC, MARK VERALL, CONRAD KEEPING, WILLIAM PERRY, JEFFRY FLEMING, TIMOTHY MILLS, STEPHEN BARTLETT, SCOTT FIERLING, ADAM LANG, NATHAN BLAKE, CHRISTOPHER MADENSKY, GORDON MAIDMENT, MICHAEL DESMOND JOHN RYAN, TOM BRYSON, BRADLEY QUAST, JODY HARTLING, ANDREW JASON GUSHUE, ROBBIE LATREILLE, LUC CHAMPAGNE, ANTONY PETERS, DARYL INGLIS, DANIEL BOUDREAULT, JUSTIN TOBIN AND QUENTIN MULLIN
Plaintiffs
and
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
Defendant
Docket: T-1320-19
AND BETWEEN:
ALLAN ALEXANDER, MARK AUCOIN, DEAN BERGSTROM, ROBERT GARY BURNS, MICHAEL KENNETH ESTEY, MARIE-CLAUDE LEMIEUX, JOSEPH DANIEL ROBERT LIZZOTTE, BRAD LOCKE, PATRICK MACDONALD, MELVYN NEVILLE, ALLEN SZABON, RANDY TITUS, GRAHAM MASON, VERNON MACKAY, STEVE WRATHALL, KEVIN DAWE, TERRENCE HURLEY, JOHN ALEXANDER WILT, PETER THORP-LEVITT, PETER BARNES, DAVE BURTCH, JOHN JOSEPH HARDY, JEFFEREY HARRISON, ANDREW BLACKIE, BLAISE BOURGEOIS, MICHAEL THIER, MURRAY CLARKE, JAMES HOWARD MACKAY, SHELDON ERNEST ROBERTS, MICHAEL BENNETT, FREDERICK ROBERT PERRY, STEPHEN SIMMONS, THOMAS KEARNEY, MICHAEL HACKETT, WAYNE FRANK, ALAIN PELLEGROMS, DONALD WAYNE COLE, MARK DIOTTE, RICHARD ROY CAMERON, STEPHEN LIVELY, JAMES KEITH SHEPPARD, JOSPEH LOREN BOLT, YVES JOSEPH LEGERE, DARLENE ARSENAULT, JASON HOEG, DONALD FOX, MICHAEL BECH, PIERRE GENTES, THOMAS YURKIW, MARIE GODFREY, RUBY SMITH, PETER CHIASSON, MARK ROYAL, MARK STRICKLAND AND MICHAEL THIBODEAU
Plaintiffs
and
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
Defendant
Docket: T-1321-19
AND BETWEEN:
WILLIAM AITKEN, BRENDA CAMPBELL, TOM GOODBODY, MICHAEL HOPPING, STEPHANE LEROUX, ANDY MOSIENKO, DAVID NYSOLA, NEIL DODSWORTH, KEVIN MORROW, JOSEPH JASIN, PAUL MORNEAULT, COLIN WILMS, JAMIE P. GRENIER, JOHN ARTHUR ARMSTRONG, CHRIS HODD, STEVEN M.D. BARTON, ALAN BROWN, TONY HILL, TRENT HOLLAHAN, GERARD MOORES, DARREN VERNVILLE, JOHN DOWNS, DINO SIMONE, ROERT MACDONALD, NORMAN HARRISON, RODERICK MACKAY, KEITH LOSIER, PHILLIP PALMER, THOMAS PATRICK HANEY, RICKIE CHAYKOWSKI, PETER OLAND, JOHN RALPH MCMILLAN, GARY JOHN REID, JASON CLAUDE FLANDERS, JODY DANIAL GILLIS, MILES WATSON, JOSEPH (ANDRE) VAILLANCOURT, DEAN HISCOCK, BRIAN PETER JEFFERSON, BRIAN MCGEAN, BRENT COUNTWAY, PAUL TURMEL, ERIC ST. GELAIS, ROBERT FARQUHAR, DWAYNE SPENCER, RONALD HERBERT O’CONNOR, KEVIN JOHN STEWART, MARTIN GAGNON, PERRY ANTLE, TRACY BARNSDALE, EAMONN BARRY, GRAHAM FORD, PHILLIPE JOSEPH CERE, MASON EDWARD HUDDLESTON AND CHRISTOPHER BRECKON
Plaintiffs
and
HER MAJESTY THE QUEEN IN RIGHT OF CANADA
Defendant
ORDER AND REASONS
[1] The Plaintiffs bring this motion, pursuant to Rule 51(1) of the Federal Courts Rules, SOR/98-106 [Rules], appealing the September 16, 2020 Order of the Case Management Judge, Prothonotary Furlanetto. By her Order, the Prothonotary granted the motion of the Defendant [Canada] seeking to stay the Plaintiffs’ proceedings against Canada, pursuant to s 50.1(1) of the Federal Courts Act, RSC 1985 c F-7 [Federal Courts Act], because Canada intends to institute a third party claim over which this Court lacks jurisdiction (Arntsen v Canada (Attorney General), 2020 FC 898 [Arntsen]).
Factual Background
[2] In their statements of claim, the Plaintiffs allege that the Canadian Armed Forces [CAF] and the Department of National Defence [DND] negligently ordered them to take an anti-malarial drug, mefloquine (also known as Lariam), prior to and during deployment to malarial endemic regions between 1992 and 2017. Those Plaintiffs deployed to Somalia in 1992 and 1993 claim that they were ordered to take the drug as part of a clinical drug trial in which CAF and DND participated and that Canada negligently administered the drug trial. All Plaintiffs allege that CAF and DND knew or ought to have known that mefloquine can cause severe and potentially permanent neurological and psychological damage but negligently continued to order CAF members to take the drug. To date, six actions have been filed in this Court (T-724-19, T-725-19, T-726-19, T-1319-19, T-1320-19 and T-1321-19). These actions are being case managed as a group but are not consolidated or class proceedings. They are described by counsel for the Plaintiffs as a “mass tort proceeding” and additional actions are anticipated. In these proceedings, Canada is the only named defendant.
[3] Prior to commencing the subject proceedings in this Court, proposed class action proceedings were filed in the Ontario Superior Court of Justice [ONSC]. In 2000, a class action was commenced by Ronald Smith as the representative plaintiff on behalf of a proposed class of CAF members and former members who were ordered to take mefloquine. Canada and the drug manufacturer, Hoffman-La Roche [Roche] were named as co-defendants in that proposed class action. That action was dismissed for delay on April 17, 2018. On January 18, 2019, a new proposed class action was commenced in the ONSC against Canada and Roche, as co-defendants, by John Dowe as the representative plaintiff [Dowe Proposed Class Action]. Counsel for the Plaintiffs in these actions subsequently assumed conduct of the Dowe Proposed Class Action.
[4] On July 16, 2019, Canada delivered a Notice of Intent to Defend the Dowe Proposed Class Action.
[5] On September 26, 2019, Canada indicated its intention to initiate a third party claim against Roche in respect of the proceedings in this Court. On November 5, 2019, Canada moved to stay these proceedings pursuant to s 50.1 and sections 50(1)(a) and (b) of the Federal Courts Act. On September 16, 2020, the Prothonotary granted the motion pursuant to s 50.1.
Decision under review
[6] The Prothonotary described the background facts in some detail, which I need not restate here (Arntsen, para 2-12).
[7] The Prothonotary noted that for a stay to be granted under s 50.1 of the Federal Courts Act, Canada had to establish two elements: i) that it has a desire to institute the third party proceedings, and ii) that its third party claim against Roche is outside the jurisdiction of the Federal Court (Dobbie v Canada (Attorney General), 2006 FC 552 at para 8 [Dobbie]). Further, that once a party seeking the stay establishes the elements of s 50.1, then the stay of the action is mandatory.
Desire to institute third party proceedings
[8] The Prothonotary noted that at the first stage of the analysis, establishing a genuine desire to institute third party proceedings, the Court will consider three factors: (a) evidence of a desire to commence third party proceedings; (b) whether the information provided about the third party claim is clear, or vague and un-particularized; and (c) whether the third party claim has any likelihood of success (Dobbie at para 11).
[9] The Prothonotary found that Canada had asserted that it will be initiating a third party claim against Roche in these actions and had provided a draft form of a third party claim as part of its motion materials, and she reproduced the draft pleading in full (Arntsen, para 18). She noted that the stated intention to proceed with the third party claim was made prior to the pleadings closing and a statement of defence being filed. She found that the timing was without delay and supported a desire to institute third party proceedings.
[10] The Prothonotary next considered the Plaintiffs’ assertion that there was insufficient detail provided in the draft third party claim to support a genuine interest in pursuing the claim. She noted that for the purposes of a s 50.1 stay motion, the Court does not require that the third party claim plead particulars of the negligence that would satisfy the ordinary rules of pleading. It is sufficient for the defendant to set out a rational basis for the third party claim (Dobbie at para 14). Based on her reasoning at paras 18 – 24, the Prothonotary held that Canada articulated the basis for the proposed third party claim in sufficient detail in the motion materials.
[11] Finally, with respect to the possible likelihood of success of the proposed third party claim, the Prothonotary noted that it was not appropriate at this part of the analysis for the Court to assess the reasonable likelihood that the claim will succeed (Dobbie at paras 17-18). Rather, the threshold for this part of the test is whether the claim proposed is so plainly without any possibility of success. The Prothonotary found that she could not conclude that the third party claim would be so plainly without any possibility of success, based on the filed materials and facts asserted, including that similar claims against Roche have been made by former CAF members in the Dowe Proposed Class Action (Arntsen, para 25).
[12] The Prothonotary concluded that Canada has a genuine desire to institute third party proceedings.
Jurisdiction of the Court over the proposed third party claim
[13] At the second stage of analysis, whether the proposed third party claim was outside the Federal Court’s jurisdiction, the Prothonotary noted that for a proceeding to be within the jurisdiction of the Federal Court it must satisfy the three part test set out in ITO-International Terminal Operators v. Miida Electronics, [1986] 1 SCR 752 at para 12 [ITO] which she set out:
(i) There must be a statutory grant of jurisdiction by the federal Parliament;
(ii) There must be an existing body of federal law that is essential to that the disposition of the case and that nourishes the statutory grant of jurisdiction; and
(iii) The law on which the case is based must be a “law of Canada” as that phrase is used in s.101 of the Constitution Act, 1867.
[14] The Prothonotary held that s 17(5) of the Federal Courts Act grants the Federal Court concurrent original jurisdiction in proceedings of a civil nature in which the Crown or the Attorney General of Canada claims relief. Thus, the first part of the ITO test was met as Canada seeks third party relief in these actions (Arntsen, para 30).
[15] As to the second and third parts of the ITO test, these overlap (Canadian Forest Products Ltd. v. Canada (Attorney General), 2005 FCA 220 at para 24 [Stoney Band]) and the analysis is contextual. The Prothonotary noted that she must characterize the claim to determine its essential nature or “pith and substance”, based on a realistic appreciation of the practical result sought by the claimant (Windsor (City) v Canadian Transit Co., 2016 SCC 54 at para 26 [Windsor (City)]; 744185 Ontario Inc. v Canada, 2020 FCA 1 at para 31 [Air Muskoka]; Peter G. White Management Ltd. v Canada (Minister of Canadian Heritage), 2006 FCA 190 at para 58 [Peter G. White]). Further, when applying the analysis to a third party claim, the third party claim must be characterized separately from the main claim, although the main claim may assist in ascertaining the essential nature of the third party claim (Air Muskoka at para 32).
[16] The Prothonotary noted that Canada’s proposed third party claim alleges contribution and indemnity for any damages awarded against Canada in the Federal Court actions and also claims contribution and indemnity under the Negligence Act of Ontario, RSO 1990, c N.1 [Negligence Act].
[17] Further, that Canada’s position was that the third party claim is rooted in the common law of negligence and is governed by the Negligence Act. Accordingly, there is no body of federal law or law of Canada that is essential to the disposition of the case and that nourishes the grant of jurisdiction in this Court. Conversely, the Plaintiffs submitted that Canada’s position is flawed because it does not consider that the relationship at the heart of the actions is one between Canada and its soldiers. The Prothonotary rejected the Plaintiffs’ assertion that the allegations are grounded in either Canadian military law and the common law fiduciary duty that Canada owes to members of the CAF as governed by the statutory regime of the National Defence Act, RSC 1985, c N-5 [National Defence Act], or the statutory and regulatory regime regarding clinical drug trials, as governed by the Food and Drugs Act, RSC 1985 c F-27 [Food and Drugs Act] and its associated regulations (Arntsen at paras 38-42).
[18] The Prothonotary concluded that the central issue is whether Roche manufactured and supplied a drug that it knew to be unsafe (Arntsen, para 53). The actions complained of relate to tortious acts that arise out of an alleged common law duty of care arising from Roche’s manufacture and supply of the drug and its role in the clinical trial. Thus, the third party claim is grounded in allegations of tort, not in drug regulatory law.
[19] The Prothonotary also rejected the Plaintiffs’ claim that this case parallels Canada (Attorney General) v. Gottfriedson, 2014 FCA 55 [Gottfriedson] (Arntsen, paras 43 and 51). She noted that in Gottfriedson, Canada sought to bring a third party claim against religious organizations that operated residential schools. There, the Court found that Canada’s sui generis duties under the Constitution, the duties stemming from the honour of the Crown, and the Indian Act were all federal laws central to the disposition of both the main and third party claim. The Prothonotary also noted that in Scott v Canada (Attorney General), 2017 BCCA 422 at paras 68-72 [Scott], the British Columbia Court of Appeal rejected the concept of expanding the constitutional honour of the crown doctrine in Aboriginal law as a foundation to support claims by former members of the CAF against the Crown. The Court in Scott also rejected that the Crown owed a fiduciary duty to CAF members in the context of the claim that had been made for administrative benefits. The Prothonotary concluded that, unlike in Gottfriedson, the allegations against Roche do not depend on a heightened duty between Canada and CAF members under the National Defence Act. Further, there is no statutory basis in the National Defence Act that would ground an extension of any asserted fiduciary duty owed by Canada to CAF members and impose such a duty on Roche (Arntsen, para 50). The Prothonotary also did not consider there to be the same sui generis relationship at play in this case as was at issue in Gottfriedson. Rather, the correct parallels in the case before her were to Air Muskoka and Dobbie.
[20] The Prothonotary concluded that the proposed third party claim was outside the Federal Court’s jurisdiction.
[21] The Prothonotary also stated that while her conclusion on s 50.1 was sufficient to dispose of the motion, she would not have granted a stay pursuant to s 50(1)(a) and (b) of the Federal Courts Act and gave her reasoning for this (Arntsen, paras 55 – 65).
[22] Finally, the Prothonotary considered whether to grant the Plaintiffs’ alternate request for relief, being that if a stay was granted pursuant to s 50.1 that they be granted leave to amend their statements of claim before the actions were stayed. The Prothonotary stated that she saw no reason to grant leave at that stage based on the submissions made and without further detail as to the nature of the amendments sought. She denied the request (Arntsen at para 66).
Issues
[23] The issues in this motion can be framed as follows:
(i) Did the Prothonotary err in finding that the information provided by Canada about the intended third party claims is sufficiently clear to establish Canada’s genuine desire to institute third party proceedings;
(ii) Did the Prothonotary err in finding that the Federal Court does not have jurisdiction over Canada’s proposed third party claims; and
(iii) Did the Prothonotary err by refusing the Plaintiffs’ request to permit them to amend their statements of claim prior to staying the actions?
Standard of review
[24] In Hospira Healthcare Corporation v. Kennedy Institute of Rheumatology, 2016 FCA 215 [Hospira] the Federal Court of Appeal held that the appellate standards in Housen v. Nikolaisen, 2002 SCC 33 apply to reviews of discretionary decisions by prothonotaries (para 69). Therefore, the palpable and overriding error standard applies to questions of fact, while questions of law are reviewed on the standard of correctness.
[25] In Hughes v. Canada (Human Rights Commission), 2020 FC 986 Justice Little summarized which standard applies to issues of mixed fact and law:
[63] The correctness standard may also apply to a question of law or a legal principle that is extricable from a question of mixed fact and law: Hospira, at paras 66, 71-72; Creston Moly Corp. v Sattva Capital Corp., 2014 SCC 53, [2014] 2 SCR 633, at paras 53-55, 63-64; Mahjoub v Canada (Citizenship and Immigration), 2017 FCA 157, [2018] 2 FCR 344 (Stratas, JA), at paras 57 and 74; Canadian National Railway v Emerson Milling, 2017 FCA 79, [2018] 2 FCR 573 (Stratas, JA), at paras 21-28; Teal Cedar Products Ltd. v British Columbia, 2017 SCC 32, [2017] 1 SCR 688, at para 44; Clayworth v Octaform Systems Inc., 2020 BCCA 117 (Hunter, JA), at para 47. However, if the impugned findings are factually suffused or a legal principle is not readily extricable, the standard will be palpable and overriding error: Mahjoub at paras 60, 156 and 318; Housen, at para 36; Teal Cedar Products, at paras 45-46.
[26] Therefore, which standard applies to questions of mixed fact and law depends on whether the legal principle is bound with, or extricable from, the finding of fact.
[27] As to the first issue, whether the Prothonotary erred in finding that the information provided by Canada about the intended third party claims is sufficiently clear to establish Canada’s genuine desire to institute third party proceedings, the Plaintiffs make no substantive submission other than stating that the appeal raises errors reviewable on the standard of correctness. However, elsewhere in their written submissions the Plaintiffs assert that while the Prothonotary identified the correct legal tests she misapplied the legal principles, meaning she erred in finding that Canada’s proposed third party claims are set out in sufficient detail in the motion materials. Canada submits, and I agree, that the finding of sufficiency of detail is factual and, therefore the applicable standard of review is one of palpable and overriding error.
[28] As to the second issue, whether the Prothonotary erred in finding that the Federal Court does not have jurisdiction over Canada’s proposed third party claims, the parties submit and I agree that this attracts the correctness standard (Air Muskoka at paras 49-50).
[29] Finally, as to the third issue, being whether the Prothonotary erred by refusing the Plaintiffs’ request to permit them to amend their statements of claim prior to staying the actions, the Plaintiffs assert that the Prothonotary erred by stating the law incorrectly and by applying the wrong legal principles, thereby attracting the correctness standard of review. Canada submits that the Plaintiffs requested that they be granted 30 days to file amended statements of claim if the Prothonotary was inclined to stay these actions and that this discretionary finding is factual, attracting the palpable and overriding error standard.
[30] I note that in the Plaintiffs’ written submission filed in support of the stay motion before the Prothonotary, under the heading “Order Sought”, the Plaintiffs requested that Canada’s motion be dismissed and:
92. In the alternative, if this Court is inclined to grant the Defendant’s motion pursuant to s 50.1 of the Federal Courts Act, the Plaintiffs respectfully request that they be granted 30 days’ indulgence to file amended statements of claim before these actions are stayed.
[31] In her reasons, under “Alterative Relief”, the Prothonotary stated:
[66] As part of their motion the plaintiffs have included a request that if a stay is granted under section 50.1 of the Federal Courts Act, that they be granted leave to amend their statements of claim before the actions are stayed. I see no reason to grant leave for amendment at this stage based on the submissions made and without further detail as to the nature of amendments sought. Accordingly, the request for alternative relief is denied.
[32] The Plaintiffs argue that the Prothonotary erred by imposing a leave requirement where none existed. They submit that as the pleadings had not closed, the Plaintiffs were permitted as of right to amend their claims pursuant to Rule 200 of the Federal Courts Rules. In my view, if the Prothonotary misapprehended the facts and, therefore, the requirement for leave to amend the statements of claim, then this issue is subject to review on the palpable and overriding error standard. In any event, even if the correctness standard applies to the Prothonotary’s apparent determination that leave to amend was required, for the reasons that follow I am of the view that the Prothonotary did not err in declining to delay the implementation of the stay in the circumstances that were before her.
[33] The correctness standard is non-deferential and the Court may intervene and substitute its own discretion or decision (Hospira at para 68). Conversely, palpable and overriding error is a highly deferential standard where the Court may only intervene if the motions judge made an obvious error that affects the outcome of the case (Laliberte v Day, 2020 FCA 119 at para 32, Mahjoub v. Canada (Citizenship and Immigration), 2017 FCA 157 at paras 61 – 64).
Issue 1: Did the Prothonotary err in finding that the information provided by Canada about the intended third party claims is sufficiently clear to establish Canada’s genuine desire to institute third party proceedings?
Plaintiffs’ position
[34] The Plaintiffs submit that determining whether Canada has a genuine desire to institute third party proceedings involves consideration of whether the proposed claim is clear or if it is vague and un-particularized (Dobbie at para 11). And, although the Prothonotary correctly found that Canada’s proposed third party claim in a s 50.1 stay motion need not satisfy the strict rules of pleadings, the Prothonotary erred in finding that Canada’s proposed third party claims are sufficiently detailed.
[35] The Plaintiffs submit that Canada’s draft third party claim lacks a description of the claim, since it only states that Canada is bringing the claim against Roche for contribution and indemnity under the Ontario Negligence Act. Therefore, it is impossible to assess what Roche is alleged to have done wrong. The Plaintiffs submit that there is no legal basis for Canada to seek indemnity from Roche based on the Plaintiffs’ causes of action as against Canada and that Canada has not provided any details regarding the contribution claim, relying only on Roche’s potential liability as raised in the Dowe Proposed Class Action.
[36] The Plaintiffs submit that this case is distinguishable from Dobbie and the Prothonotary erred in relying on that case. While the draft third party claim supplied in Dobbie was “pro forma” it was still sufficient to demonstrate a rational basis for the claim, unlike the draft third party claim submitted in this matter. Further, the Prothonotary erred in equating the evidence of a rational basis for the third party claim in Dobbie – settlements in similar US actions – to Canada’s reliance on the allegations against Roche as a co-defendant in the Dowe Proposed Class Action and failed to consider the draft third party claim on its own merits.
Defendant’s Position
[37] Canada submits that the Prothonotary considered, and correctly decided, that Canada met the three elements that demonstrate it has a genuine desire to bring a third party claim.
[38] As to the second element of the test, the Prothonotary gave sufficient weight to the evidence before her and did not misapprehend the facts in finding that Canada’s proposed third party claim was set out in sufficient detail. Accordingly, there is no basis upon which to interfere with her decision (Hospira at para 68).
[39] Canada notes that the draft third party claim refers to the allegations made against Canada and Roche in the Dowe Proposed Class Action and points to a chart showing the similarities between the allegations made against Roche by the plaintiffs in the Dowe Proposed Class Action and those made by the Plaintiffs against Canada in these actions. Canada submits that the proposed third party claim explains that if the allegations made against Roche in the Dowe Proposed Class Action are proven to be true, and assuming causation is established, Roche as the manufacturer of the allegedly unsafe drug would be partially or fully liable for the injuries the Plaintiffs allege to have suffered in these actions.
[40] Canada submits that in this appeal the Plaintiffs’ attempt to narrow their claims, arguing that they do not allege that the drug was unsafe or dangerous, rather that the Plaintiffs’ harm stems from how DND administered the drug and the drug’s use during military deployments. However, the Plaintiffs did not previously raise this narrow claim and therefore the Plaintiffs’ suggestion that the Prothonotary erred by not considering the assertion cannot succeed (Canada (Attorney General) v Honey Fashions Ltd, 2020 FCA 64 at paras 47-48; Becker v Toronto (City), 2020 ONCA 607 at paras 34-43). In any event, Canada may genuinely desire to bring a third party claim against Roche irrespective of how narrowly the Plaintiffs now describe their claim. And neither a broad reading of the claim, that the drug was unsafe, nor a narrow reading, that Canada negligently administered the drug, reveals an error in the Prothonotary’s findings. Canada submits that the Prothonotary correctly found that the particulars of negligence need not be pleaded to establish that the desire to bring a third party claim is genuine (Dobbie at para 14), that their draft pleadings are sufficiently clear, and that the pleadings do in fact specify the types of claims against Roche.
[41] Canada also submits that the Plaintiffs provide no authority in support of their submission that it was not appropriate for Canada to have relied on similar allegations made against Roche in another jurisdiction as support for the rationale for its proposed third party claim, or that the stage of the ONSC proceeding render reliance improper. As to the latter point, the Prothonotary’s reliance on Dobbie was appropriate. In Dobbie, the existence of parallel proceedings supported the Court’s finding that there was a rational basis for a third party claim. While those parallel proceedings had been settled, there is no indication that the stage of the proceeding impacted the decision. The Prothonotary did not err in relying on the allegations made against Roche as co-defendant in the Dowe Proposed Class Action to support her finding that there is a rational basis for the proposed third party claim.
Analysis
[42] As the Prothonotary correctly found, the test for determining whether the Crown genuinely intends to commence third party proceedings in this matter was set out by this Court in Dobbie:
[11] To satisfy the requirement for a stay under section 50.1 of the Act, the Crown's desire to institute the third party claim must be genuine. (See Fairford First Nation v. Canada (Attorney General), 1995 CanLII 3597 (FC), [1995] 3 F.C. 165 (T.D.), aff'd 205 N.R. 380 (F.C.A.) per Justice Paul Rouleau at paragraph 11; and Charalambous v. Canada (2004), 128 A.C.W.S. (3d) 282 (F.C.) per Prothonotary Hargrave at paragraphs 4-6). In determining genuineness, the Court will consider:
1. the evidence of the desire to commence a third party proceeding;
2. whether the information provided about the proposed third party claim is clear or if it is vague and un-particularized; and
3. does the third party claim have any possible likelihood of success.
……..
[13] In the third party claim against the manufacturers Dow and Monsanto, the defendants plead elements of a cause of action in negligence:
5. The third parties manufactured the Agent Orange and other herbicides identified in the Amended Statement of Claim as having been used in the 1966 and 1967 test sprayings.
6. If any harm has been caused to any of the plaintiffs or proposed class members as alleged in the Amended Statement of Claim, then that harm was caused by the products manufactured by the third parties.
7. The use of these products as alleged in the Amended Statement of Claim was one of the uses that the third parties knew or ought to have known would be made of the products they manufactured.
8. The third parties knew or ought to have known that use of these products as alleged in the Amended Statement of Claim was likely to cause the harm as alleged in the Amended Statement of Claim.
9. Liability for any harm that has been caused to any of the plaintiffs or proposed class members rests entirely with the third parties.
In my view, this is sufficient to establish that the Crown intends to take third party proceedings against the manufacturers.
Vague and un-particularized allegations
[14] In Fairford, above, Justice Rouleau found that the Crown's information about an intended third party claim was "extremely vague" and did not contain any particulars. In Charalambous, Prothonotary Hargrave found that the Crown's intent to commence third party proceedings was so vague and un-particularized that he found that the Crown did not really intend to commence third party proceedings. In the case at bar, the third party claim has actually been filed pro forma. While it is lacking in particulars, it is sufficient to show the general basis of the claim. The plaintiffs submit that the third party claim does not properly plead a cause of action in negligence, and relies upon the Federal Court of Appeal in Apotex Inc. v. Syntex Pharmaceuticals International Ltd. (2005), 144 A.C.W.S. (3d) 726 (F.C.A.). I agree but at the stage of this motion for a stay the Court does not require that the third party notice plead the particulars of the negligence that would satisfy the ordinary rules of pleading.
[15] Further evidence that the claim has a rational basis is in the U.S. class action against Dow and Monsanto by Vietnam veterans for damages suffered as a result of their exposure to Agent Orange and other chemicals. This action was settled for 180 million dollars. While this settlement is no precedent for liability, it illustrates the rationale for the claim.
(emphasis in bold added)
[43] The Plaintiffs take issue with the second element of the three part test, asserting that the Prothonotary erred in finding the third party claim sufficiently detailed. The Plaintiffs submit that Canada’s proposed third party claim contains only one bald statement regarding the nature of its claims against Roche and that Canada should have included “material facts or an articulate theory of liability against Roche as a tortfeasor that caused or contributed to the Plaintiffs’ injuries”. Canada notes that “pages 2 and 3 of Annex I demonstrates that claims against Roche would include Roche failing to properly advise Canada, failing to properly administer and monitor the SMS [Safety Monitoring Study] and supplying a drug to members of the CAF which it knew or ought to have known was unsuitable for military use”.
[44] Contrary to the Plaintiffs’ submissions made in support of this motion appealing the Prothonotary’s decision, the draft third party claim does not “contain only one bald statement regarding the nature of its claim(s) against Roche”, referencing paragraph 14 of the draft claim. The draft third party claim seeks “[c]ontribution and indemnity for any amounts which Canada may be found liable to pay the plaintiffs in any of the six (6) following actions….”. It sets out background facts and then states:
8. All plaintiffs allege that they were ordered to take mefloquine when CAF and DND knew or ought to have known that mefloquine causes serious neurological and psychiatric side-effects. The plaintiffs allege that the CAF and DND were aware of the risks of taking mefloquine and willfully concealed them or failed to warn of the risks, and failed to properly screen individuals before ordering them to take the drug. The claims seek a series of declarations against Canada along with hundreds of millions of dollars in damages for not only negligence, but also negligent misrepresentations, breach of fiduciary duty, battery and breach of section 7 of the Canadian Charter of Rights and Freedoms.
9. If these Federal Court actions proceed and Canada has to defend, it will deny any and all liability. Canada will also deny that the plaintiffs have suffered the alleged injuries as a result of taking mefloquine. Canada will put the plaintiffs to the strict proof thereof.
10. The potential liability of Roche has been raised in essentially the same claim which was commenced as a proposed class action in the Ontario Superior Court of Justice (OSCJ) in January 2019. The representative plaintiff in that case who is represented by the same counsel who represents the plaintiffs in these Federal Court actions has made a series of allegations of breaches of duty of care on the part of Roche related to its role in the SMS in the early 1990s and its distribution of mefloquine.
11. A chart attached to Canada’s written representations as Annex 1 shows the similarities between the allegations of breaches of duty of care made against Roche in the OSCJ and those made against Canada in these Federal Court actions.
12. Should the allegations made against Roche in the OSCJ be proven to be true, and assuming causation is established, Roche would be partially or entirely responsible for the injuries the plaintiffs allege they have suffered in these Federal Court actions.
13. Accordingly, Canada brings this third party claim against Roche for contribution and indemnity under the Negligence Act of Ontario, R.S.O. 1990, c. N.1 as amended.
[45] In her reasons, the Prothonotary reproduced the draft third party claim in whole and, referencing paragraph 14 of Dobbie, correctly found that for the purpose of a motion for stay the Court does not require that the third party claim plead particulars of the negligence that would satisfy the ordinary rules of pleading. It is sufficient for the defendant to set out the rational basis for the third party claim (Arntsen, para 20). She acknowledged that Canada relied on the allegations of CAF members made in the Dowe Proposed Class Action against Canada and Roche as co-defendants for negligence and breach of duty of care as the rational basis for its third party claim. She then stated:
[22] As submitted by Canada, if the allegations against Roche are proven to be true and causation established, Roche would be partially or entirely responsible for the injuries alleged to have been suffered by the plaintiffs. It is reasonable to conclude that a third party claim would be brought by Canada to similarly allege indemnity from Roche for the same causes of action alleged. As similarly held in Dobbie supra at para 14, the fact that Roche is already a defendant in the Dowe proposed class action, which includes assertions against Canada that parallel those made in the Federal Court actions, provides support for the rationale for the proposed third party claim.
[46] In my view, the Prothonotary did not err in relying on Dobbie or in her conclusion that the basis for the proposed third party claim is set out in sufficient detail. That conclusion is based upon the content of the draft third party claim and the Annexes referenced therein comparing the actual allegations against Roche and against Canada in the Dowe Proposed Class Action to the actual allegations against Canada in these actions. I see no error in the Prothonotary’s finding that the draft third party claim provided sufficient detail such that the rational basis for the claim could be ascertained. Put otherwise, it is sufficient to show the general basis of the claim (Dobbie at para 14).
[47] I also see no reason why the Prothonotary could not rely on the similar allegations in the parallel Dowe Proposed Class Action proceeding in the ONSC to demonstrate a rational basis for Canada’s proposed third party claim given that Canada and Roche are named as co-defendants in the Dowe Proposed Class Action. And while the Plaintiffs’ attempt to distinguish Dobbie on the basis that the parallel proceedings in Dobbie were settled, in that case the Court relied on the existence of parallel proceedings as further evidence of a rational basis for the third party claim; the fact that the claims were settled does not detract from this finding.
[48] The Plaintiffs also assert, as an aspect of their allegation that the Prothonotary erred in finding that the information provided in the third party claim was sufficiently clear, that the Prothonotary did not consider the third party claim “on its own merits”. As I have found above, the Prothonotary was fully aware of the content of the draft third party claim and did not err in her assessment of it with respect to the second element of the test. Whether the third party claim has any possible likelihood of success on the merits is addressed by the third branch of the test.
[49] In Dobbie this Court stated that in deciding whether the Crown had a genuine intention to commence third party proceedings in a s 50.1 stay motion, “any speculation of this Court as to the merits of the defendants’ claim against Dow and Monsanto would similarly obstruct the superior court in the exercise of its jurisdiction”. For that reason, it took no view as to the merits of the Crown’s third party claim, but went on to say that:
[18] At the same time, the Court will find the third party claim disingenuous if it plainly has no possibility of success. That is a much lower threshold which the Court should examine in deciding whether a third party claim is genuine. In this case, I cannot say that the third party claim has no possibility of success.
[50] Accordingly, in my view the Prothonotary did not err in her assessment of the third party claim as set out in her finding that:
[25] With respect to the possible likelihood of success of the proposed third party claim, as noted in Dobbie supra at paras 17 and 18, it is inappropriate at this part of the analysis for the Court to assess the reasonable likelihood that the claim will succeed as this will be a matter for the Court to determine