Apotex Inc. v. Ambrose

Apotex Inc. v. Ambrose
Court (s) Database
Federal Court Decisions
Date
2017-05-10
Neutral citation
2017 FC 487
File numbers
T-1653-16
Notes
A correction was made on November 17, 2017.
Reported Decision
Decision Content
Date: 20170510
Docket: T-1653-16
Citation: 2017 FC 487
Ottawa, Ontario, May 10, 2017
PRESENT: The Honourable Mr. Justice Manson
BETWEEN:
APOTEX INC., apotex pharmachem india pvt ltd and apotex research private limited
Plaintiffs
and
Rona Ambrose, Julie Vaux, Clark Olsen, Nick Switalski, Cailin Rodgers, George da Pont, Paul Glover, Anil Arora, Anne Lamar, Supriya Sharma, Robin Chiponski, Mary Morgan, Steven Schwendt, Sharon Mullin, Barbara Sabourin, Karen Reynolds, Craig Simon, Michelle Kovacevic, John Doe, Jane Doe, Her Majesty the Queen and the Attorney General of Canada
Defendants
JUDGMENT AND REASONS
I. Background [1] This is a motion to strike pursuant to Rule 221(1)(a) of the Federal Courts Rules, SOR/98-106, in which the Defendants seek an order dismissing the action against all Defendants except Her Majesty the Queen.
A. The Parties [2] The Plaintiffs in the underlying action (respondents in this motion) are Apotex Inc. (“Apotex”), and its two affiliate companies, which are located in India: Apotex Pharmachem India Pvt Ltd. (“APIPL”), and Apotex Research Private Limited (“ARPL”) (collectively, the “Plaintiffs”). Apotex is a generic manufacturer and seller of pharmaceutical products in Canada. In addition to manufacturing pharmaceuticals, Apotex imports and sells drugs manufactured by its affiliates.
[3] The Defendants in the underlying action (applicants in this motion) are Rona Ambrose, Julie Vaux, Clark Olsen, Nick Switalski, Cailin Rodgers, George Da Pont, Paul Glover, Anil Arora, Anne Lamar, Supriya Sharma, Robin Chiponski, Mary Morgan, Steven Schwendt, Sharon Mullin, Barbara Sabourin, Karen Reynolds, Craig Simon, Michelle Kovacevic, John Doe, Jane Doe (together, the “Individual Defendants”), Her Majesty the Queen (the “Crown”), and the Attorney General of Canada (collectively, “the Defendants”).
[4] Ms. Ambrose was the Minister of Health (the “Minister”) between July 2013 and November 2015. Ms. Vaux was, at all relevant times, the Minister’s Chief of Staff and most senior political advisor. Mr. Olsen and Ms. Rodgers were, at all relevant times, the Minister’s Directors of Communications. Mr. Switalski was, at all relevant times, the Minister’s senior special assistant. Mr. Da Pont was the federal Deputy Minister of Health, between August 2013 and January 2015. Mr. Glover is, and was at all relevant times, the federal Associate Deputy Minister of Health.
[5] Health Canada is the federal department that oversees the regulation of drug products in Canada. It consists of various branches, bureaus, and offices, including: (1) the Regions and Programs Bureau (“RAPB”), which is responsible for inspecting facilities that manufacture pharmaceutical products; and (2) the Health Products and Food Branch (“HPFB”), a branch that oversees a number of directorates. The directorates under the authority of the HPFB include (1) the Health Products and Food Branch Inspectorate (the “Inspectorate”), which is responsible for compliance and enforcement activities, and oversight of establishment licencing for facilities that manufacture pharmaceutical products; and (2) the Therapeutic Products Directorate (“TPD”), which is responsible for the federal regulation of pharmaceutical drugs and medical devices.
[6] Mr. Arora was the federal Assistant Deputy Minister of Health of the HPFB, between September 2014 and September 2016. Ms. Lamar is, and was at all relevant times, the federal Associate Assistant Deputy Minister of Health of the HPFB. Ms. Sharma was, at all relevant times until August 2015, the Senior Medical Advisor to the assistant Deputy Minister of Health of the HPFB; in August 2015, she was appointed as the Senior Medical Advisor to the Deputy Minister of Health.
[7] Ms. Chiponski is, and was at all relevant times, the Director General of the Inspectorate. Mr. Schwendt was, at all relevant times, an employee of the Inspectorate and, for a period of time from 2015 to 2016, the Acting Director General of the Inspectorate. Ms. Mullin is, and was at all relevant times, an employee of the Inspectorate. Ms. Sabourin was, at all relevant times until January 2016, the Director General of the TPD. Ms. Reynolds is, and was at all relevant times, the Director of the TPD’s Bureau of Pharmaceutical Sciences. Mr. Simon is, and was at all relevant times, the Associate Director of the TDP’s Bureau of Pharmaceutical Sciences. Ms. Kovacevic is, and was at all relevant times, the Assistant Deputy Minister of Health of the Communications and Public Affairs Branch of Health Canada (“CPAB”).
[8] Apotex has reserved the right to implead such further individuals who were also personally responsible for, or involved, in the decision and actions taken in this case, who are currently unknown to Apotex and identified herein as John Doe and Jane Doe.
B. The Regulatory Regime [9] In Canada, the sale of drugs is highly regulated and depends upon compliance with federal legislation, which is designed to balance two competing interests—encouraging continued innovation in new drugs and promoting timely access to generic equivalents: (1) the Patented Medicines (Notice of Compliance) Regulations [PM(NOC) Regs] and (2) the Food and Drug Act [FD Act] and accompanying regulations [FD Regs] (collectively, the “Act and Regs”). These instruments set forth rules and requirements that deal with topics such as the classification of drugs, drug identification numbers (“DINs”), labelling, maintenance of records, conditions for drug manufacturing establishments, good manufacturing practices (“GMP”), and clinical trials.
[10] The Act and Regs are complemented by various policies and guidelines that set out the Minister’s interpretation of these pieces of legislation. The Minister is nominally the person responsible for administering the Act and Regs. However, the Minister’s power and discretion are, in reality, delegated to various groups and individuals within Health Canada.
(1) Drug Identification Numbers [11] Every drug sold in Canada in a final dosage form is assigned a DIN by the Assistant Deputy Minister of Health of the HPFB. The assignment of a DIN occurs pursuant to the provisions of Part C, Division 1 of the FD Regs, upon application by either the manufacturer of the drug (in Canada), its agent, or by the importer.
[12] In an application for a DIN, the applicant must supply information according to Regulation C.01.014.1(2), which relates to the composition and labelling of the drug. If a manufacturer or importer has provided all of the information prescribed, the Director issues the manufacturer a DIN, unless the Director believes on reasonable grounds that the product is not a drug, that its sale would cause injury to the health of the consumer or purchaser, or that its sale would be a violation of the FD Act and the FD Regs (Regulation C.01.014.2).
[13] Under Regulation C.01.014.6(2), the Director may cancel the assignment of a DIN for a drug where:
a) the manufacturer of the drug has failed to comply with section C.01.014.5; or
a) si le fabricant de la drogue ne s’est pas conformé à l’article C.01.014.5; ou
b) the manufacturer to whom the number was assigned has been notified pursuant to section C.01.013 that the evidence he submitted in respect of the drug is insufficient.
b) si le fabricant à qui l’identification numérique a été attribuée a été avisé, selon l’article C.01.013, que les preuves présentées au sujet de la drogue sont insuffisantes.
(2) Notices of Compliance (“NOCs”) [14] In the case of a “new drug”, the application for a DIN must also comply with the requirements of Part C, Division 8 of the FD Regs. A new drug is defined as (C.08.001):
(a) a drug that contains or consists of a substance, whether as an active or inactive ingredient, carrier, coating, excipient, menstruum or other component, that has not been sold as a drug in Canada for sufficient time and in sufficient quantity to establish in Canada the safety and effectiveness of that substance for use as a drug;
a) une drogue qui est constituée d’une substance ou renferme une substance, sous forme d’ingrédient actif ou inerte, de véhicule, d’enrobage, d’excipient, de solvant ou de tout autre constituant, laquelle substance n’a pas été vendue comme drogue au Canada pendant assez longtemps et en quantité suffisante pour établir, au Canada, l’innocuité et l’efficacité de ladite substance employée comme drogue;
(b) a drug that is a combination of two or more drugs, with or without other ingredients, and that has not been sold in that combination or in the proportion in which those drugs are combined in that drug, for sufficient time and in sufficient quantity to establish in Canada the safety and effectiveness of that combination and proportion for use as a drug; or
b) une drogue qui entre dans une association de deux drogues ou plus, avec ou sans autre ingrédient, qui n’a pas été vendue dans cette association particulière, ou dans les proportions de ladite association pour ces drogues particulières, pendant assez longtemps et en quantité suffisante pour établir, au Canada, l’innocuité et l’efficacité de cette association ou de ces proportions employées comme drogue; ou
(c) a drug, with respect to which the manufacturer prescribes, recommends, proposes or claims a use as a drug, or a condition of use as a drug, including dosage, route of administration, or duration of action and that has not been sold for that use or condition of use in Canada, for sufficient time and in sufficient quantity to establish in Canada the safety and effectiveness of that use or condition of use of that drug
c) une drogue pour laquelle le fabricant prescrit, recommande, propose ou déclare un usage comme drogue ou un mode d’emploi comme drogue, y compris la posologie, la voie d’administration et la durée d’action, et qui n’a pas été vendue pour cet usage ou selon ce mode d’emploi au Canada pendant assez longtemps et en quantité suffisante pour établir, au Canada, l’innocuité et l’efficacité de cet usage ou de ce mode d’emploi pour ladite drogue.
[15] To sell a new drug, the manufacturer has to file with the Minister a new drug submission (“NDS”), an extraordinary use new drug submission, an abbreviated new drug submission (“ANDS”), or an abbreviated extraordinary use new drug submission. The Minister must also have issued a NOC in respect of the new drug, which must not have been suspended, and the Minister must have received sufficient information from the manufacturer regarding the labelling of the new drug. The information submitted must be sufficient to enable the Minister to assess the safety and effectiveness of the new drug, and include the information prescribed by Regulation C.08.002(2). Upon request, the manufacturer may have to submit samples of the new drug and additional information or material respecting the safety and effectiveness of the new drug (C.08.002(3)).
[16] Generic pharmaceutical manufacturers, like Apotex, generally submit an ANDS, which does not typically include the results of clinical trials. Instead, an ANDS compares the drug formulation in question to a formulation, in the same dosage form, that is already on the market in Canada. These comparison studies include “comparative bioavailability studies” or “bioequivalence studies”, which are used to establish equivalence with the approved drug.
[17] The generic manufacturer must also satisfy the requirements of the PM(NOC) Regs, which involve addressing whether the medicament in question is covered by any patents listed on the “Patent Register”. The Minister’s authority with respect to the review and issuance of NOCs is delegated to the Director General of the TPD.
(3) Establishment Licences (“ELs”) and Good Manufacturing Practices (“GMP”) [18] Part C, Division 1A of the FD Regs governs the issuance, amendment, and suspension of ELs in Canada. Pursuant to Regulation C.01A.004(1)(a), no person shall fabricate, package/label, or import a drug except in accordance with an EL. The Minister has delegated the authority to oversee the EL regime to the Director General of the Inspectorate. The Inspectorate, with assistance from RAPB inspectors, is responsible for inspecting establishments that hold ELs, both within Canada and abroad.
[19] Inspections conducted by the Inspectorate and RAPB verify that establishments are complying with GMP, the requirements of which are contained in Part C, Division 2 of the FD Regs. In addition to the requirements set out in the FD Regs, the Minister publishes numerous guidance documents, which explain the compliance mechanisms available to remedy and enforce GMP deficiencies. Information about the Inspectorate, including directives, guidance documents, policies, and checklists can be found on Health Canada’s website.
C. Events underlying this action (1) Apotex’s regulatory history [20] Both prior and subsequent to September 30, 2014, Apotex held and continues to hold valid, unsuspended DINs and NOCs for the products from APIPL and ARPL that were the focus of an import ban, which was first announced and implemented on September 30, 2014 (the “Import Ban”). At no time were these DINs and/or NOCs suspended or cancelled.
[21] Both prior and subsequent to September 30, 2014, Apotex held and continues to hold valid ELs in respect to its manufacturing facilities in Canada, which allow Apotex to import products from APIPL and ARPL. Additionally, all of Apotex’s facilities, in Canada and abroad, had been physically inspected by Health Canada’s inspectors and found to be GMP-compliant.
(2) The Import Ban [22] The Import Ban prevented the importation into Canada of drug products made at APIPL and/or ARPL. The Import Ban was implemented through two mechanisms: (1) shipments were detained by the Canadian Border Services Agency; and (2) terms and conditions were imposed on Apotex’s ELs, prohibiting the import and sale of products from ARPL or APIPL. At the same time, the Defendants released public statements and press statements to justify the Import Ban, allegedly defaming the Plaintiffs (the “Public Statements”).
[23] The purported basis for the Import Ban was that APIPL and ARPL were not compliant with GMP. However, none of the DINs or NOCs for any of the banned products were cancelled or suspended, nor were any of Apotex’s ELs suspended, in accordance with sections of with the FD Regs that deal with GMP compliance. Instead, the Minister’s action was taken pursuant to section C.01A.008 of the FD Regs.
[24] In October 2014, Apotex commenced an application for judicial review of the decision to implement the Import Ban. By Judgment dated October 14, 2015 (Apotex Inc v Canada (Health), 2015 FC 1161), this Court quashed the Import Ban, finding that the Minister had acted for an improper purpose in implementing the ban (i.e., to ease media and political pressure) and had failed to act in accordance with the principles of natural justice. The Court also ordered the Minster and Health Canada to retract the Public Statements.
(3) The August 2015 Decision [25] In June 2015, Health Canada conducted inspections of the APIPL and ARPL facilities. These inspections failed to identify any concerns. On August 31, 2015, Ms. Chiponski wrote to Apotex and advised that Heath Canada had decided to amend, in part, the terms and conditions it had imposed through the Import Ban (the “August 2015 Decision”). The amended terms and conditions provided that the Import Ban remain in place for products manufactured prior to June 10, 2015, and that products manufactured after June 10 be subject to further testing in Canada prior to their sale.
[26] In September 2015, Apotex commenced a second application for judicial review seeking to quash the August 2015 Decision. By Judgment dated June 15, 2016 (Apotex Inc v Canada (Health), 2016 FC 673), this Court declared the August 15 Decision unlawful, on the basis that it was “infected” by the improper purpose that had motivated the Import Ban and that there was no evidence to support implementing or maintaining the August 15 Decision.
(4) The data integrity issue [27] On or about September 23, 2014, the then-Director General of TPD, Ms. Sabourin, received a telephone call from a colleague at the Inspectorate, regarding data integrity at ARPL and APIPL, and an electronic copy of the FDA’s Form 483. Shortly after, a draft NOC for Apotex’s Apo-Rasagiline was delivered to Ms. Sabourin, indicating that APIPL and ARPL would be responsible for manufacturing and testing the drug product. Because of the GMP and data integrity concerns that had been raised regarding APIPL and ARPL, Ms. Sabourin declined to sign the draft NOC. Ms. Sabourin also informed Apotex that NOCs would not be issued for submissions containing data from APIPL and ARPL until further notice (the “November 2014 Decision”). Although it had already applied for judicial review of the Import Ban, Apotex implemented corrective and preventative action to address these GMP and data integrity concerns.
[28] In January 2015, the TPD developed an overarching policy regarding its approach to managing submissions containing data from sites where the integrity of data had been called into question. All drug manufacturers were given formal notice of this policy on May 22, 2015. In June 2015, the TPD conducted further inspections of the APIPL and ARPL facilities. Overall, the TPD’s findings did not identify any instances of data integrity violations, which had been previously observed by the FDA. However, the TPD determined that, although the new system controls and modified procedures satisfactorily addressed the data integrity concerns, additional supervision was necessary to demonstrate the sustainability and effectiveness of these procedures during times of increased production.
[29] In the fall of 2015, Apotex began proceedings in the Federal Court challenging the November 2014 Decision, and its continuation by the new Director General of the TPD, Marion Law. By Judgment dated March 27, 2017 (Apotex v Canada, 2017 FC 315), the Court found that Health Canada’s continued refusal to grant NOCs for Apo-Varenicline and Apo-Sitagliptin, the only two products for which the TPD continued to require additional data integrity information as of the date of the hearing before the Federal Court, was neither improper nor unreasonable.
II. The Issues [30] In their written submissions in support of this motion, the Plaintiffs state that they do not object to the removal of the Attorney General of Canada as a party, provided that the Crown undertakes not to raise any issue, pursuant to section 23 of the Crown Liability and Proceedings Act, RSC 1985, c C-50, or otherwise, as to the sufficiency of naming “Her Majesty the Queen” as the proper party in respect to the Plaintiffs’ claims against the Crown.
[31] The Defendants do not dispute that the Federal Court has jurisdiction over claims against the Crown. The style of cause, in this action, is hereby ordered to be amended to delete the Attorney General of Canada.
[32] Therefore, the sole issue remaining to be determined in this motion is whether the Federal Court has jurisdiction over the claims made against the Individual Defendants.
[33] Based upon the written material before the Court and the arguments presented at the hearing by the Parties, I dismiss the motion to strike. For the reasons that follow, I find that it is not plain and obvious that the Federal Court lacks jurisdiction over the Individual Defendants.
III. Analysis A. The Applicable Test on a Motion to Strike [34] Rule 221(1)(a) governs the Defendants’ motion to strike as pleaded:
221 (1) On motion, the Court may, at any time, order that a pleading, or anything contained therein, be struck out, with or without leave to amend, on the ground that it
(a) discloses no reasonable cause of action or defence, as the case may be …
and may order the action be dismissed or judgment entered accordingly.
221 (1) À tout moment, la Cour peut, sur requête, ordonner la radiation de tout ou partie d’un acte de procédure, avec ou sans autorisation de le modifier, au motif, selon le cas :
a) qu’il ne révèle aucune cause d’action ou de défense valable;
Elle peut aussi ordonner que l’action soit rejetée ou qu’un jugement soit enregistré en conséquence.
[35] The Supreme Court of Canada, in R v Imperial Tobacco, 2011 SCC 42 at paragraph 17, laid out the applicable test on a motion to strike:
A claim will only be struck if it is plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action. Another way of putting the test is that the claim has no reasonable prospect of success. Where a reasonable prospect of success exists, the matter should be allowed to proceed to trial.
[citations omitted]
[36] The Defendants point out that the Federal Courts Rules do not contain a specific provision for striking a claim on the basis that the Federal Court does not have jurisdiction to hear the claim. They argue that the plain and obvious test is ill-suited for issues of Federal Court jurisdiction because, unlike striking a claim for other reasons, the success of a jurisdictional question rarely depends on evidence that will be adduced during discovery. The Defendants also suggest that this difference makes it appropriate to modify the standard on a motion to strike for want of jurisdiction to a balance of probabilities. Further, the Defendants suggest that the double negative situation, which is a possible result under the current test—i.e., a finding that it is not plain and obvious that the Court does not have jurisdiction—can lead to a situation where jurisdiction is not completely determined until trial, which is not ideal.
[37] The Plaintiffs submit that the plain and obvious test is the correct test for challenging Federal Court jurisdiction on a motion to strike under Rule 221(1)(a). They suggest that it is appropriate for the Court to apply a stringent test to the jurisdictional question, because the consequence of finding that the Court does not have jurisdiction deprives the Plaintiffs of their chosen forum. Moreover, they rely on relevant Federal Court of Appeal jurisprudence and the recent Supreme Court of Canada decision City of Windsor v Canadian Transit Co, 2016 SCC 54 at paragraph 24 [City of Windsor], which endorse the plain and obvious standard:
The sole issue is whether the Federal Court has jurisdiction under the ITO test to hear the Company’s application. If it is plain and obvious that the Federal Court lacks jurisdiction to hear this application, the motion to strike must succeed.
[38] While the Defendants’ concern that the jurisdictional question should not be left to be determined at trial may have merit, I disagree that the plain and obvious test is ill-suited or that the standard on a motion to strike for want of jurisdiction should be changed to a balance of probabilities. The history of the test for a motion to strike under Rule 221(1) was canvassed, in 2002, by Prothonotary Hargrave in the decision Charlie v Vuntut Gwitchin First Nation, 2002 FCT 344 [Vuntut]. In finding that the plain and obvious test, where the standard is beyond a doubt, is appropriate, he stated (Vuntut at paras 10, 16 to 18):
[10] The test for striking out for want of a cause of action, that it be plain, obvious and beyond doubt that a claim or a defence will not succeed, as in the well known trilogy of cases, Hunt v Carey Canada Inc, [1990] 2 SCR 959, Operation Dismantle Inc v The Queen, [1985] 1 SCR 441 and Canada v Inuit Tapirisat of Canada, [1980] 2 SCR 735, is so solidly established that it is no longer usually necessary to dwell on the test. However, in the present instance, the Vuntut Gwitchin Defendants say that the test for striking out for want of jurisdiction is less stringent, submitting that the approach to strike out is really akin to answering a question of law and further, that the burden shifts to the Plaintiff to show, positively, that there is jurisdiction. Here the Vuntut Gwitchin Defendants refer to several examples which they submit support the position that the test for striking out for want of jurisdiction is a preponderance of evidence or a balance of probabilities.
…
[16] Fortunately, this somewhat unproductive discussion of procedure and seeming inconsistent standards on motions to strike out for want of jurisdiction has been laid to rest in Hodgson v The Queen. In my reasons of 10 September 1999, in action T-2553-91, I set out at paragraph 28 that I would only find want of jurisdiction where a matter was plain, obvious and beyond doubt, which was not there the case.
[17] On appeal to the Trial Division, Madam Justice Reed was squarely faced with that test as a ground for appeal. In denying the appeal she found that the plain and obvious test applied:
. . . The "plain and obvious" test applies to the striking out of pleadings for lack of jurisdiction in the same manner as it applies to the striking out of any pleading on the ground that it evinces no reasonable cause of action. The lack of jurisdiction must be "plain and obvious" to justify a striking out of pleadings at this preliminary stage.
That finding was not changed when Mr. Justice of Appeal Rothstein denied the appeal. While he noted that counsel for the Defendants conceded the test, it was that test which the Court of Appeal in fact applied in allowing the action to proceed. An application in Hodgson for leave to appeal was dismissed by the Supreme Court of Canada on 6 September 2001.
[18] While some jurisdictional issues ought not to be decided until trial, when all of the facts on the question are before the Court, in other instances jurisdiction may be decided in a summary way. In such an instance it is the usual plain, obvious and beyond doubt test which applies in striking out for want of jurisdiction. Of course, to reach that conclusion, one must initially test jurisdiction on the basis of Miida Electronics Inc v Mitsui OSK Lines Ltd and ITO-International Terminal Operators Ltd, [1986] 1 SCR 752.
[39] I concur. The plain and obvious test is the correct test to use when determining whether a claim should be struck because the Federal Court lacks jurisdiction.
B. The test for Federal Court jurisdiction [40] The Parties agree that the appropriate test to determine whether the Federal Court has jurisdiction over a matter is the test articulated by the Supreme Court in ITO-International Terminal Operators v Miida Electronics Inc, [1986] 1 SCR 752 [ITO]:
1. There must be a statutory grant of jurisdiction by Parliament.
2. There must be an existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction.
3. The law on which the case is based must be “a law of Canada” as the phrase is used in section 101 of the Constitution Act, 1867.
[41] However, the Parties do not agree as to whether or how City of Windsor, above, applies to the proper determination of jurisdiction of this Court.
[42] Further, the Defendants argue that, at the time of the events pleaded, all the Individual Defendants were servants or agents of the Crown and, therefore, the Crown is vicariously liable for their actions pursuant to the Crown Liability and Proceedings Act. It is true that the Crown is vicariously liable for torts committed by the Individual Defendants as servants or agents of the Crown. However, this does not preclude the Federal Court from having jurisdiction over the Individual Defendants, should the ITO-test be satisfied.
C. Essential nature of the claim (1) Does the essential nature of the claim need to be determined? [43] The Defendants argue that, subsequent to City of Windsor, the first step in determining jurisdiction, before turning to the ITO-test, is to characterize the essential nature of the claim. They state that the essential nature of the Plaintiffs’ claims against the Individual Defendants is based in tort. The Defendants stress the personal nature of the torts claimed and assert that these private law causes of action, as pleaded by the Plaintiffs, cannot be said to arise from federal law merely because they include, as a component, an allegation of an invalid or unlawful exercise of statutory duty or power.
[44] The Plaintiffs contend that the Supreme Court’s direction to characterize the nature of the claim at issue is not applicable to this action because the claims arise under section 17(5)(b) of the Federal Courts Act, RSC 1985, c F-7, not section 23(c) as was the case in City of Windsor. They argue that the majority of the Supreme Court was only considering the test to be applied when determining whether the Federal Court has jurisdiction over a claim arising under section 23(c). Further, they submit that, because the language of section 17(5)(b) is very different from section 23(c), it is clear that the Supreme Court in City of Windsor intended for this step of determining the essential nature of the claim to be limited in application to section 23.
[45] Section 17(5) of the Federal Courts Act states:
Relief in favour of Crown or against officer
(5) The Federal Court has concurrent original jurisdiction
Actions en réparation
(5) Elle a compétence concurrente, en première instance, dans les actions en réparation intentées :
(a) in proceedings of a civil nature in which the Crown or the Attorney General of Canada claims relief; and
a) au civil par la Couronne ou le procureur général du Canada;
(b) in proceedings in which relief is sought against any person for anything done or omitted to be done in the performance of the duties of that person as an officer, servant or agent of the Crown.
b) contre un fonctionnaire, préposé ou mandataire de la Couronne pour des faits — actes ou omissions — survenus dans le cadre de ses fonctions.
[46] Section 23 of the Federal Courts Act states:
Bills of exchange and promissory notes — aeronautics and interprovincial works and undertakings
Lettres de change et billets à ordre — Aéronautique et ouvrages interprovinciaux
23 Except to the extent that jurisdiction has been otherwise specially assigned, the Federal Court has concurrent original jurisdiction, between subject and subject as well as otherwise, in all cases in which a claim for relief is made or a remedy is sought under an Act of Parliament or otherwise in relation to any matter coming within any of the following classes of subjects:
23 Sauf attribution spéciale de cette compétence par ailleurs, la Cour fédérale a compétence concurrente, en première instance, dans tous les cas — opposant notamment des administrés — de demande de réparation ou d’autre recours exercé sous le régime d’une loi fédérale ou d’une autre règle de droit en matière :
(a) bills of exchange and promissory notes, where the Crown is a party to the proceedings;
a) de lettres de change et billets à ordre lorsque la Couronne est partie aux procédures;
(b) aeronautics; and
b) d’aéronautique;
(c) works and undertakings connecting a province with any other province or extending beyond the limits of a province.
c) d’ouvrages reliant une province à une autre ou s’étendant au-delà des limites d’une province.
[47] The Parties both refer the Court to paragraph 25 of City of Windsor, wherein Justice Karakatsanis, writing for the majority, stated:
In order to decide whether the Federal Court has jurisdiction over a claim, it is necessary to determine the essential nature or character of that claim. As discussed in further detail below, s. 23(c) of the Federal Courts Act only grants jurisdiction to the Federal Court when a claim for relief has been made, or a remedy has been sought, “under an Act of Parliament or otherwise”. The conferral of jurisdiction depends on the nature of the claim or remedy sought. Determining the claim’s essential nature allows the court to assess whether it falls within the scope of s. 23(c). Jurisdiction is not assessed in a piecemeal or issue-by-issue fashion.
[citations omitted]
[48] Thus, while the preliminary characterization step is mandated, it is simply identifying the material facts needed to assess whether the claim falls within the statutory grant of jurisdiction identified in the first step of the ITO-test.
(2) Does the essential nature of a claim under section 17(5)(b) have to arise from federal law? [49] The Defendants argue that the essence of the claims against the Individual Defendants is based on alleged breaches of private law duties. They state that City of Windsor stands for the principle that in order for the Federal Court to have jurisdiction over these types of claims they must arise under a federal law that is separate from section 17(5)(b). Additionally, the Defendants rely on Canada (AG) v Telezone Inc, 2010 SCC 62 at paragraphs 28 to 30 [Telezone] to support their assertion that causes of action in tort cannot be said to arise from federal law and, therefore, do not fall within the Federal Court’s jurisdiction simply because they include allegations of invalid or unlawful exercises of statutory duty or power.
[50] The jurisdictional question in City of Windsor involved section 23, which explicitly states that the Federal Court has jurisdiction in cases where a claim for relief is sought “under an Act of Parliament or otherwise”. Justice Karakatsanis interpreted this to mean that the right to seek relief must arise directly from federal law, and not merely in relation to federal law (City of Windsor at paras 46 to 48). However, section 17(5)(b) does not have this limitation; rather, it states that the Federal Court has jurisdiction with respect to claims for relief “sought against any person for anything done or omitted to be done in the performance of the duties of that person as an officer, servant or agent of the Crown”.
[51] The Defendants are correct that breaches of statutory power do not automatically lead to related claims in tort being within the jurisdiction of the Federal Court. However, Telezone was concerned with the question of whether a claim for compensation could proceed in a Superior Court without the plaintiff having had the Federal Court, prior to the commencement of the proceedings in the Superior Court, quash the underlying decision on judicial review; not whether the Federal Court had jurisdiction to hear claims for relief arising out of tort, or how the question of jurisdiction over claims in tort should be determined
[52] Further, at paragraph 58 of Telezone, Justice Binnie, writing for the unanimous Supreme Court, quoted the following statements made by the Minister of Justice in 1989, when amendments were being made to section 17 of the Federal Courts Act:
For example, a person should be able to sue the Crown in a suitably convenient court for breach of contract to purchase goods or for negligent driving by a Crown employee that causes injuries to another motorist…
…
With this in mind, the government has proposed that both the provincial courts and the Federal Court share jurisdiction with respect to such actions, thereby generally giving a plaintiff a choice of forum.
[citations omitted, emphasis in original]
[53] Justice Binnie concluded that section 17 had to be read in such a manner that gives the Plaintiffs a choice of forum, thereby making available to the Plaintiffs relief in a court that was more “familiar” to them (Telezone at para 59). Therefore, contrary to the Defendants’ argument, Telezone stands for the principle that if an action in tort comes within the scope of section 17, the Plaintiffs should have their choice of forum.
[54] Further, nothing in City of Windsor suggests that Justice Karakatsanis was contradicting Justice Binnie’s conclusion in Telezone: the Plaintiffs have a choice of forum in the cases of a breach of contract or tort, such as negligence, which properly come before the Federal Court under section 17. In fact, an examination of the trial level decision which led to City of Windsor, Canadian Transit Company v Windsor (City), 2014 FC 461 [Canadian Transit Company], shows that the factual situation underlying City of Windsor was very different from the factual matrix in this case, and puts the Supreme Court’s decision and their comments about section 23(c) into context.
[55] In City of Windsor, the underlying claim involved a dispute between the Canadian Transit Company and the City of Windsor over 114 vacant properties that had become a blight on the community, and for which the City of Windsor had issued repair orders. The Canadian Transit Company appealed these orders to the Property Standards Committee, a municipal board that hears appeals of orders made by the City’s Property Standards Officer.
[56] At the trial level, the primary relief requested by the Canadian Transit Company was for a declaration that the Ambassador Bridge be considered a “federal undertaking” and, as such, not subject to municipal by-laws (Canadian Transit Company at para 6). The City of Windsor, in response, brought an application asking the Court to strike the claim for want of jurisdiction. In assessing the application to strike, Justice Michel Shore commented (Canadian Transit Company at paras 12 to 13, and 15):
[12] Without deciding this matter on the merits, the Court is of the view that it is plain and obvious that the application lacks a reasonable cause of action and that it is bereft of any possibility of success. Even on a generous reading of the Applicant’s Notice of Application, it is extremely unclear what exactly the Applicant is asking of the Court. The Applicant does not appear to be challenging any particular decision of the City of Windsor, the Property Standards Committee, or any order of a federal board, commission or other tribunal. Rather, the Applicant appears to be simply seeking a legal opinion regarding the applicability of the AICTC from the Court.
[13] The Court does not have the statutory authority to grant such a remedy. A reference to the Court can only be sought by the Attorney General of Canada or a federal board, commission or other tribunal over which the Court otherwise exercises judicial review functions pursuant to paragraphs 18.3 (1) and (2) of the Federal Courts Act, RSC 1985, c F-7. It cannot be used by private applicants as a tool to obtain a declaratory judgment from this Court.
…
[15] The Court also finds that it is equally unclear what legal basis the Applicant has relied upon in bringing the application to the Court. The Applicant issued the Notice of Application on the basis of paragraph 23(c) of the Federal Courts Act; however, paragraph 23(c) only constitutes a statutory grant of jurisdiction to the Court by the Federal Parliament. The provision does not grant any right of appeal or judicial review to an applicant, nor does it give the Court the authority to grant a declaratory remedy.
[citations omitted]
[57] In this case, unlike City of Windsor, it is clear what the Plaintiffs are requesting: relief against officers of the Crown for anything done or omitted, resulting from activities that are deeply rooted in the framework of the Act and Regs, which harmed the Plaintiffs. As is evident from the discussion in Telezone, this Court has the statutory authority to adjudicate claims in tort and contract which properly come before the Court under section 17 of the Federal Courts Act. Therefore, the Defendants’ statement that the private law causes of action pleaded, in this case, must arise from a separate federal law and cannot be a claim in tort in order for the Federal Court to have jurisdiction, is incorrect.
(3) What is the essential nature of the claims? [58] Justice Karakatsanis, at paragraphs 26 to 27 of City of Windsor, provided the following directions to a court determining the essentia