Bédard v. Canada (Attorney General)

Bédard v. Canada (Attorney General)
Court (s) Database
Federal Court Decisions
Date
2007-05-16
Neutral citation
2007 FC 516
File numbers
T-1044-05
Decision Content
Date: 20070516
Docket: T-1044-05
Citation: 2007 FC 516
Ottawa, Ontario, the 16th day of May 2007
Present: The Honourable Madam Justice Gauthier
BETWEEN:
JANIE BÉDARD
Applicant
and
KELLOGG CANADA INC.
Respondent
and
ATTORNEY GENERAL OF CANADA
Intervener
REASONS FOR JUDGMENT AND JUDGMENT
[1] Ms. Bédard is asking the Court to authorize her action as a class action. This motion was heard concurrently with that of Kellogg Canada Inc., filed several months earlier and asking the Court to strike Ms. Bédard’s statement of claim because it disclosed no reasonable cause of action (paragraph 221(1)(a) of the Federal Court Rules (1998), SOR/98-106) and the action is frivolous and vexatious (paragraph 221(1)(c) of the Rules).
[2] Alternatively, the respondent is asking the Court to strike over thirty paragraphs of the amended statement of claim because (i) they are contrary to the Rules; (ii) they are not relevant; (iii) they may prejudice the fair trial of the action and constitute an abuse of process; and (iv) the allegations they contain are scandalous, frivolous and vexatious (paragraphs 221(b), (c) and (f) of the Rules). At the hearing, however, the applicant obtained leave to amend her statement of claim again, leaving only a few paragraphs and two of the conclusions sought for consideration.
[3] Finally, Kellogg had filed a third motion[1] to strike the action based on an irregularity in the affidavit filed in support of the motion for leave. At the hearing, Kellogg indicated that the Court did not have to rule on this motion after it had been agreed that the Court would consider the facts in evidence in connection with the motion in its assessment of the criteria applicable to the motion for leave, especially regarding paragraph 299.18(1)(e) of the Rules.
[4] Despite the general rule that no costs are ordinarily awarded on a motion for leave, the two parties argued for an exception and sought such costs. Kellogg further sought costs on the motion to strike.
1. BACKGROUND
[5] The applicant Janie Bédard is the mother of four children aged 2 to 9 years old. She and her family had been eating Kellogg’s Frosted Flakes and Froot Loops (among other cereals) for several years. In 2005, she tried Frosted Flakes and Froot Loops labelled "1/3 Less Sugar than Original". She said she bought eight boxes of each of these cereals[2] before learning from a nutritionist friend that the cereals in fact had no nutritional value.
[6] On June 16, 2005, she brought an action based on section 36 of the Competition Act, R.S.C. 1985, c. C-34 (the Act). Her statement of claim was marked [TRANSLATION] "class action contemplated", and she alleged that the label "1/3 Less Sugar" was false and misleading in several respects.
[7] Ms. Bédard’s statement of claim was amended several times before the hearing and during the hearing, in response to Kellogg’s motion to strike.
[8] However, as the parties had agreed at the outset to proceed concurrently with the examination before defence and examination on Ms. Bédard’s affidavit, the affidavit in support of the motion for leave was not amended and contained the allegations of the original statement of claim rather than those of the amended statement. The Court has not considered the paragraphs of the affidavit dealing with withdrawn allegations, except in determining Ms. Bédard’s ability to act as representative of the proposed class.
[9] The grounds of the motion for leave are described as follows in the amended notice of motion (in addition to the amendments before the hearing, the applicant verbally amended the notice to give effect to amendments made at the hearing in a conference call after the hearing):
[TRANSLATION]
1. The applicant’s pleading discloses a reasonable cause of action in that:
(a) the applicant brought an action against the respondent for damages based on section 36(1) of the Competition Act, in which she claimed reimbursement of the purchase price of four boxes[3] of cereal of each of the following brands: Frosted Flakes 1/3 Less Sugar, and Froot Loops 1/3 Less Sugar;
(b) the cause of action is the promotion of the respondent’s business interests through the communication to the public of false or misleading statements in a material respect, namely the calorie content of the two aforementioned products, such conduct being prohibited by section 52 of the Competition Act;
(c) the damage results directly from the respondent’s actions: by its false or misleading representations the respondent led the consumer to purchase a product which, when compared with the original product, was supposed to have nutritional benefits in terms of its calorie content;
(d) the harm to the consumer is thus having purchased and consumed a product which is the opposite of what he or she believed was being purchased and consumed; the consumer is accordingly entitled to claim reimbursement of the purchase price of each cereal so purchased, since it was the respondent’s false or misleading representations which led the consumer to buy the said products;
(e) the respondent’s statements are misleading with respect to Frosted Flakes 1/3 Less Sugar;
(f) the respondent’s statements regarding the reduced quantity of sugar in Froot Loops cereal are not only misleading but false.[4]
2. There is an identifiable class of at least two persons:
(a) the purpose of the action is to compensate Canadian consumers who were led by the respondent’s false or misleading statements to purchase products which are the opposite of what they thought they were purchasing in terms of calorie content.[5]
3. The claims of the class members raise points of law or fact in common:
(a) all facts and points of law are in common, namely:
(i) as to facts: the purchase by the class members of two cereals, Frosted Flakes 1/3 Less Sugar or Froot Loops 1/3 Less Sugar;
(ii) as to points of law: the false or misleading statements made to class members to promote the purchase of Frosted Flakes and Froot Loops with reduced sugar content.
4. A class action is the preferable procedure for the fair and efficient resolution of the common questions of law or fact, in view of:
(a) the large number of claims;
(b) the small amount of damages;
(c) the absence of individual questions.
5. The applicant may act as representative of the class, and as such:
(a) she brought the action;
(b) she is a member of the class described in this motion and has herself sustained damage;
(c) the applicant’s individual action is closely bound up with that of the other class members;
(d) she has knowledge of all the facts pertaining to the action at bar;
(e) she is actively interested in this matter and is prepared to invest all the necessary time;
(f) she is willing to manage this class action in the interests of class members she intends to represent and is determined to proceed with the action at bar, for the benefit of all class members;
(g) she has the capacity and interest to represent all class members adequately;
(h) she will fairly and adequately represent the class’s interests;
(i) she is acting in good faith and initiating a class action proceeding solely to gain recognition of the rights of class members and obtain redress for the harm each of them has suffered;
(j) she has prepared a plan that sets out a workable method of advancing the action on behalf of the class and notifying class members of how the proceeding is progressing, namely:
(i) the action will be publicized on her counsel’s website;
(ii) she is prepared to contact members at the proper time by means of press releases sent to members through the media;
(k) she has provided a summary of agreements on fees and disbursements made between herself and her counsel.
[10] The amended conclusions, which were the subject of argument regarding striking in court, read as follows:
[TRANSLATION]
1. MAKE any orders necessary to determine monetary relief;
2. order the respondent to pay the applicant damages equivalent to reimbursement of the amount paid by the applicant to purchase eight boxes of Frosted Flakes 1/3 Less Sugar cereal, and the box of Froot Loops 1/3 Less Sugar cereal, which she has purchased since they were introduced to the Canadian market;
3. order the respondent to pay class members damages equivalent to reimbursement of the amount paid by the applicant to purchase eight boxes of Frosted Flakes 1/3 Less Sugar and the box of Froot Loops 1/3 Less Sugar which they have purchased since their introduction to the Canadian market;
4. order that monies . . . paid by the respondent be paid to various charitable organizations approved by the Court and used for the protection of the health and welfare of children proportionately in each province and territory of Canada;
5. order the respondent to make the appropriate corrections to its packaging so that consumers will be given at least equal information on the higher “sugar” and calorie content as they are on the content of “1/3 less sugar”.
[Amendments underlined]
[11] However, to properly understand Kellogg’s position, it is also worth noting the conclusions as they stood before the latest amendments:
[TRANSLATION]
1. order the respondent to file all income and profits which it has derived from the sale of Frosted Flakes 1/3 Less Sugar Than Original and Froot Loops 1/3 Less Sugar cereal since their introduction to the Canadian market;
2. order the respondent to return to the applicant the value of eight boxes of Frosted Flakes 1/3 Less Sugar cereal and eight boxes of Froot Loops 1/3 Less Sugar cereal [and] to return all income and profits made by it on the sale of the said cereal throughout Canada since its introduction to the Canadian market, as well as interest at the legal rate . . .
[12] Kellogg filed its defence on September 1, 2006. As mentioned below, the defence referred at length to Ms. Bédard's testimony in her examination (see paragraphs 59, 63, 65, 104 and 107 to 109).
[13] Under sections 174 and 175 of the Rules, every pleading shall contain a concise statement of the material facts (and may include points of law). However, it should not include evidence in support of those facts.
2. LEGISLATION
[14] At this stage, it is worth setting out the wording of sections 36 and 52 of the Act :
Competition Act, R.S.C. 1985, c. C-34
Recovery of damages
36. (1) Any person who has suffered loss or damage as a result of
(a) conduct that is contrary to any provision of Part VI, or
(b) the failure of any person to comply with an order of the Tribunal or another court under this Act,
may, in any court of competent jurisdiction, sue for and recover from the person who engaged in the conduct or failed to comply with the order an amount equal to the loss or damage proved to have been suffered by him, together with any additional amount that the court may allow not exceeding the full cost to him of any investigation in connection with the matter and of proceedings under this section.
...
Jurisdiction of Federal Court
(3) For the purposes of any action under subsection (1), the Federal Court is a court of competent jurisdiction.
False or misleading representations
52. (1) No person shall, for the purpose of promoting, directly or indirectly, the supply or use of a product or for the purpose of promoting, directly or indirectly, any business interest, by any means whatever, knowingly or recklessly make a representation to the public that is false or misleading in a material respect.
Proof of deception not required
(1.1) For greater certainty, in establishing that subsection (1) was contravened, it is not necessary to prove that any person was deceived or misled.
Representations accompanying products
(2) For the purposes of this section, a representation that is
(a) expressed on an article offered or displayed for sale or its wrapper or container,
(b) expressed on anything attached to, inserted in or accompanying an article offered or displayed for sale, its wrapper or container, or anything on which the article is mounted for display or sale,
(c) expressed on an in-store or other point-of-purchase display,
(d) made in the course of in-store, door-to-door or telephone selling to a person as ultimate user, or
(e) contained in or on anything that is sold, sent, delivered, transmitted or made available in any other manner to a member of the public,
is deemed to be made to the public by and only by the person who causes the representation to be so expressed, made or contained, subject to subsection (2.1).
…
General impression to be considered
(4) In a prosecution for a contravention of this section, the general impression conveyed by a representation as well as its literal meaning shall be taken into account in determining whether or not the representation is false or misleading in a material respect.
Offence and punishment
(5) Any person who contravenes subsection (1) is guilty of an offence and liable
(a) on conviction on indictment, to a fine in the discretion of the court or to imprisonment for a term not exceeding five years or to both; or
(b) on summary conviction, to a fine not exceeding $200,000 or to imprisonment for a term not exceeding one year, or to both.
[Emphasis added]
Loi sur la concurrence, L.R.C. 1985,
ch. C-34
Recouvrement de dommages-intérêts
36. (1) Toute personne qui a subi une perte ou des dommages par suite :
a) soit d’un comportement allant à l’encontre d’une disposition de la partie VI;
b) soit du défaut d’une personne d’obtempérer à une ordonnance rendue par le Tribunal ou un autre tribunal en vertu de la présente loi, peut, devant tout tribunal compétent, réclamer et recouvrer de la personne qui a eu un tel comportement ou n’a pas obtempéré à l’ordonnance une somme égale au montant de la perte ou des dommages qu’elle est reconnue avoir subis, ainsi que toute somme supplémentaire que le tribunal peut fixer et qui n’excède pas le coût total, pour elle, de toute enquête relativement à l’affaire et des procédures engagées en vertu du présent article.
...
Compétence de la Cour fédérale
(3) La Cour fédérale a compétence sur les actions prévues au paragraphe (1).
Indications fausses ou trompeuses
52. (1) Nul ne peut, de quelque manière que ce soit, aux fins de promouvoir directement ou indirectement soit la fourniture ou l’utilisation d’un produit, soit des intérêts commerciaux quelconques, donner au public, sciemment ou sans se soucier des conséquences, des indications fausses ou trompeuses sur un point important.
Preuve non nécessaire
(1.1) Il est entendu qu’il n’est pas nécessaire, afin d’établir qu’il y a eu infraction au paragraphe (1), de prouver que quelqu’un a été trompé ou induit en erreur.
Indications accompagnant un produit
(2) Pour l’application du présent article, sauf le paragraphe (2.1), sont réputées n’être données au public que par la personne de qui elles proviennent les indications qui, selon le cas :
a) apparaissent sur un article mis en vente ou exposé pour la vente, ou sur son emballage;
b) apparaissent soit sur quelque chose qui est fixé à un article mis en vente ou exposé pour la vente ou à son emballage ou qui y est inséré ou joint, soit sur quelque chose qui sert de support à l’article pour l’étalage ou la vente;
c) apparaissent à un étalage d’un magasin ou d’un autre point de vente;
d) sont données, au cours d’opérations de vente en magasin, par démarchage ou par téléphone, à un utilisateur éventuel;
e) se trouvent dans ou sur quelque chose qui est vendu, envoyé, livré ou transmis au public ou mis à sa disposition de quelque manière que ce soit.
[…]
Il faut tenir compte de l’impression générale
(4) Dans toute poursuite intentée en vertu du présent article, pour déterminer si les indications sont fausses ou trompeuses sur un point important il faut tenir compte de l’impression générale qu’elles donnent ainsi que de leur sens littéral.
Infraction et peine
(5) Quiconque contrevient au paragraphe
(1) commet une infraction et encourt, sur déclaration de culpabilité :
a) par mise en accusation, une amende à la discrétion du tribunal et un emprisonnement maximal de cinq ans, ou l’une de ces peines;
b) par procédure sommaire, une amende maximale de 200 000 $ et un emprisonnement maximal d’un an, ou l’une de ces peines.
[Mon souligné]
3. MOTION TO STRIKE
(a) Principal application
[15] The test applicable to a motion based on the absence of a reasonable cause of action is well settled. As the Supreme Court of Canada noted in Hunt v. Carey Canada Inc., [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93, the question is whether the outcome of the case is plain and obvious "beyond reasonable doubt" (see also Le Corre v. Canada, 2005 FCA 127, [2005] F.C.J. No. 590 (QL), at paragraph 9).
[16] As the Supreme Court indicated in Hunt, supra, "neither the length and complexity of the issues, the novelty of the cause of action nor the potential for the defendant to present a strong defence should prevent the plaintiff from proceeding with his or her case. Only if the action is certain to fail because it contains a radical defect" should the statement of claim be struck out in whole or in part.
[17] This test applies even when a party raises the Court’s lack of jurisdiction (Hodgson v. Erminesken Indian Band No. 942, [2000] F.C.J. No. 2042 (F.C.A.) (QL), leave denied by Supreme Court of Canada, [2001] S.C.C.A. No. 67).
[18] Further, for analytical purposes, the Court must take the allegations of fact in the statement of claim as proven. Accordingly, the applicant has the burden of establishing that there is no cause of action without reference to any evidence (subsection 221(2)).
[19] However, there is an exception to this general rule when a party raises the Court’s lack of jurisdiction. In such a case, the Court may consider evidence by affidavit to establish certain jurisdictional facts (MIL Davie Inc. v. Hibernia Management and Development Company Ltd., [1998] F.C.J. No. 614 (F.C.A.) (QL), paragraph 8).
[20] Although at first sight it may seem more flexible, the test applicable to a motion to strike pursuant to paragraph 221(1)(c) of the Rules (scandalous, frivolous or vexatious pleading) is not really less strict than that applicable to motions made pursuant to paragraph 221(1)(a).
[21] Just recently, in Sanofi-Aventis Canada Inc., 2007 FCA 163, [2007] F.C.J. No. 548 (QL), the Federal Court of Appeal had to review the test applicable under subsection 6(5) of the Pharmaceutical Regulations, SOR/93-133. The Court indicated that the language of the section was identical to that of the old Rule 419, now section 221 of the Rules (since the 1998 amendments). This is the reason that the Federal Court applied, to the motions made pursuant to subsection 6(5), the principles developed under the old Rule 419. In this regard, Edgar Sexton J. followed the test developed by François Lemieux J. as follows:
33. Paragraph 6(5)(b) was added to the NOC Regulations in 1998 bearing similar language to that employed in the former Rule 419 of the Federal Court Rules and that in Rule 221 of the current Federal Courts Rules, SOR/98-106. Accordingly, the Federal Court adopted the principles that had been developed under Rule 419 for striking out pleadings in an action, as explained by Lemieux J. in Pfizer Canada Inc. v. Apotex Inc. (1999), 1 C.P.R. (4th) 358 at paragraphs 29-30 (F.C.T.D.).
[28] Paragraph 6(5)(b) of the Regulations has its source in paragraphs (b), (c) and (f) of Rule 221 of the Federal Court Rules, 1998, SOR/98-106, which themselves were based on similar paragraphs of Rule 419 of the old Federal Court Rules, C.R.C. 1978, c. 663, which concerned actions rather than applications.
[29] Counsel for Apotex argued Pfizer's application was scandalous, frivolous and vexatious within the meaning of those words in paragraph 6(5)(b) of the Regulations. The test Apotex had to meet has been set out in a consistent line of cases interpreting former rule 419(1)(c).
[30] In R. v. Creaghan, [1972] F.C. 732 (T.D.), Pratte J. (as he then was), said this about that aspect of Rule 419 (page 736):
Finally, in my view, a statement of claim should not be ordered to be struck out on the ground that it is vexatious, frivolous or an abuse of the process of the Court, for the sole reason that in the opinion of the presiding judge, plaintiff's action should be dismissed. In my opinion, a presiding judge should not make such an order unless it be obvious that the plaintiff's action is so clearly futile that it has not the slightest chance of succeeding, whoever the judge may be before whom the case could be tried. It is only in such a situation that the plaintiff should be deprived of the opportunity of having "his day in Court".
[Emphasis in original.]
[22] The essential difference thus lies in the fact that, in the case of a motion made pursuant to Rule 221(1)(b), (c) and (f), the Court may consider evidence submitted by the parties in addition to the statement of claim.[6]
[23] In its motion record of March 24, 2006, the respondent had filed an affidavit by Karine Joizil (counsel with the firm representing Kellogg), the purpose of which was essentially to enter in evidence a copy of the transcript of the examination of Janie Bédard on August 31, 2006. However, in its amended motion record of September 25, 2006, the respondent did not include this affidavit or the transcript. However, the respondent referred to the transcript in its written submissions, citing several passages from the examination.
[24] When the Court noted this situation at the hearing, the applicant objected to the Court consulting the transcript. At the respondent’s request, the Court exercised its discretion under the Rules and relieved Kellogg of its failure to include Ms. Joizil’s affidavit and the transcript again in its amended motion record. The Court is satisfied that the applicant suffered no detriment in this regard and that the respondent believed in good faith that it did not have to reproduce, in its amended record, documents which were already in the Court record.
[25] In Kellogg’s submission, the applicant indicated no loss or damage in her statement of claim. The only allegation which refers to any detriment was in paragraph 64, which reads as follows:
[TRANSLATION]
On account of its misleading nature, moreover, the advertising which accompanied the respondent’s product caused certain harm by inducing children and adults who consumed the product to consume a greater quantity of sugar[7] and calories without their knowledge...
[26] The statement of claim contains no details of the type of loss or damage suffered. There is no indication as to whether this loss was financial, psychological, physical or of some other nature. Kellogg submitted that the applicant admitted in her examination that neither she nor her family suffered any physical or psychological damage. Ms. Bédard stated only that she would not have bought the cereals if she had known they contained more calories than the original cereals.
[27] At the hearing, the respondent argued that even this statement carried no weight, considering that Ms. Bédard made it on the basis of information that she later admitted was misunderstood. In particular, Ms. Bédard admitted that she thought there were more calories per bowl of 1/3 Less Sugar cereal than in a bowl of original cereal. That is what prompted her to bring her action.[8]
[28] The Court understands from the respondent’s submissions that, even if in fact the Court assumed that the allegation that the cereals had more calories by weight was proven, there was no causal link between such a fact and the alleged harm. What concerned the applicant, and what she said she understood from the representation on the 1/3 Less Sugar cereal box, was that there were fewer calories (by volume) per bowl.
[29] The respondent also said that the description of the increased consumption of calories in the statement of claim did not allow the Court to conclude that there was any actual harm.
[30] The amended statement of claim only indicated in paragraph 21 that Frosted Flakes 1/3 Less Sugar contained 69 one-thousandths of a calorie per gram more than the original Frosted Flakes, while Froot Loops 1/3 Less Sugar contained 63 one-thousandths of a calorie per gram more than the original cereal (paragraph 23 of amended statement of claim).
[31] The respondent submitted that even if this additional amount of calories was regarded as damage, it would be harm de minimis, which cannot be the basis for a court action (Bouchard v. Agropur Coopérative, 2006 QCCA 1342, [2006] J.Q. No. 11396 (Q.C.A.)).[9]
[32] On the question of relief, Kellogg submitted that, in civil law, restitution or reimbursement of the price paid is a separate and distinct concept from that of damages (see articles 1699 to 1707, 1607 to 1625 and 1728 C.C.Q.). The Court should take this distinction into account, since Janie Bédard’s cause of action, if any, arose in Quebec (section 8.1 of Interpretation Act, R.S.C. 1985, c. I-21).
[33] The respondent noted that the definition of relief in section 2 of the Federal Courts Act, R.S.C. 1985, c. F-7, also distinguishes damages from restitution.
[34] In Kellogg’s submission, in the second amended conclusion (see paragraph 10 above) the applicant sought to create a connection between the alleged harm (increased consumption of calories and sugar) and the purchase price, whereas in fact no connection exists, nor was any alleged. This distorts the remedy mentioned in section 36, which requires that the damages awarded be equal to the loss or damage actually suffered.
[35] It further appeared that Ms. Bédard and her family continue to eat the original Frosted Flakes and Froot Loops. There was no allegation that there was any difference in price between these cereals and the 1/3 Less Sugar cereals.
[36] Finally, the respondent noted that, in 2004, Bill C-19 provided for an amendment to the Act to add an additional remedy to section 74.1, allowing persons who had bought products on the basis of false or misleading representations to recover an amount not exceeding the total they had paid. In Kellogg’s submission, this was designed, not to add a kind of relief to section 36, but rather to create a new remedy pursuant to an action brought by the Competition Commissioner under section 74.1 of the Act. The working paper published by the Competition Bureau prior to this Bill referred to the remedy as an action in restitution, [10] as opposed to an action for damages under section 36 of the Act.
[37] The Court notes that these amendments also provided for the power to indicate how the monies were to be paid and setting out the criteria of eligibility for claimants. Additionally, an unclaimed or undistributed amount could on certain specific conditions be paid, in whole or in part, to a non-profit organization in Canada.
[38] However, this bill died on the Order Paper.
[39] The applicant did not deny that it was difficult to define the damages in cash or to quantify them. However, she said that the Court should give a broad and liberal interpretation to section 36 of the Act, especially to the words "loss or damage" (or "perte et dommage"), to enable the section to attain its object and create an effective remedy against the conduct prohibited here, namely false and misleading advertising (section 12 of Interpretation Act).
[40] Janie Bédard maintained that the word "damage" [11] has an elastic definition. In Black’s Law Dictionary , for example, it is defined as "compensation for loss or injury". According to Black’s, "injury" includes "the violation of a legal right". In the case at bar, the "injury" would be the violation of the applicant’s right not to be misled when she is purchasing a product.
[41] The applicant further relied on the Federal Court of Appeal’s judgment in Apotex Inc. v. Eli Lilly and Company, 2005 FCA 261, [2005] F.C.J. No. 1818 (QL), which in her submission confirmed that the idea of "damage" in section 36 must be broadly construed. Even new positions, which may seem surprising, should not be dismissed at the stage of a summary judgment on simply an interpretation of the provision. In the applicant’s submission, this is especially true in connection with a motion under paragraphs 221(1)(a) or (c).
[42] Janie Bédard further argued that the relief which she sought under section 36 was consistent with the purpose of the Act, namely to give consumers a real choice among products at competitive prices. In her submission, the Act sought to prevent merchants, such as the respondent, from deriving income and profits by marketing products sold through misleading representations. She submitted that, at common law and by virtue of its equity jurisdiction, the Court may grant relief appropriate to the conduct alleged against the respondent. The action for breach of trust and unjust enrichment was created in similar circumstances. In this regard, she cited a number of passages from various judgments: Her Majesty’s Attorney General v. Blake and Another, 2004 UKHL 43, Canson Enterprises Ltd. v. Boughton & Co., [1991] 3 S.C.R. 534, Cadbury Schweppes Inc. v. FBI Foods, [1999] 1 S.C.R. 142, paras. 20, 50 to 53, Soulos v. Korkontzilas, [1997] 2 S.C.R. 217, para. 27, Garland v. Consumers Gas Co., 2004 SCC 25, [2004] 1 S.C.R. 629, paras. 65-66.
[43] The Court has carefully examined the arguments submitted by the parties.
[44] It is true that the Court is a court of equity (section 3 of the Federal Courts Act). Although this allows the Court to apply the rules of equity in cases in which it otherwise has jurisdiction (as, for example, in admiralty matters), that does not give it a general jurisdiction in a civil action.
[45] The chief argument put forward by the applicant was recently discussed in an appeal from an Ontario decision authorizing a class action (the Sure Step System) in Serhan Estate v. Johnson & Johnson, [2006] O.J. No. 2421,[12] in which the Court concluded that the law in Canada was not clear. It appeared from that case that the various theories to which the applicant referred were either separate causes of action or a particular type of remedy.
[46] In both cases, it is quite clear that the Court does not have jurisdiction to consider them. If this is a separate cause of action from that set out in section 36, it is within provincial jurisdiction.
[47] If instead it is a type of remedy, it goes beyond what is set out in section 36, which clearly provides that the amount awarded is as compensation, that is, it is determined in accordance with the loss or damage suffered. On the contrary, the remedy in the decisions cited by the applicant is decided on in accordance with the benefit received by the respondent. Moreover, this is the basis on which, in Wong v. Sony of Canada Ltd., [2001] O.J. No. 1707 paras. 16-18, the Ontario Court concluded that it did not have jurisdiction to award punitive damages in an action pursuant to section 36.
[48] That said, however, there is still some doubt as to the interpretation of "loss or damage", and whether those words may include the purchase of a product that does not meet the expectations created by false or misleading advertising. Further, the fact that evidence is difficult to quantify does not mean that it should be ignored.
[49] Apart from Apotex, supra, the parties did not refer the Court to any precedents in which the phrase "loss or damage", as used in section 36, has been considered.
[50] This question has been discussed several times in motions for leave to bring class actions, but in none of these cases did the courts consider the question on the merits. They simply certified certain questions in this regard.
[51] As to the question of harm de minimis, the Court cannot decide the point at this stage without knowing the quantities actually involved.
[52] If the test applicable to the Kellogg motion were that which appears to be applied in Quebec (a reasonable chance of success), the answer might be quite different. However, that is not the case, and the Court is not satisfied that the action has no chance of success.
(b) Alternative application
[53] The Court will now consider Kellogg’s alternative application.
[54] The principle or test applicable to the striking of particular allegations, because they are frivolous, vexatious, irrelevant or otherwise, is as high as that applicable to striking out an entire statement of claim (see Copperhead Brewing Co. v. John Labbatt, [1995] F.C.J. No. 668 (QL), para. 13, Apotex Inc. v. Glaxo Group, 2001 FCTD 1351, [2001] F.C.J. 1863 (QL), para. 6, Premakumaran v. Canada, 2003 FCTD 635, [2003] F.C.J. No. 816 (QL)).
[55] The test is almost stricter, for as my colleague Michael A. Kelen J. indicated in Apotex v. Glaxo, supra, as a general rule the Court refuses to strike out the "surplus statements" in a statement of claim which are not prejudicial, and in case of doubt the pleading should be authorized, so that the judge of the merits may consider all relevant evidence in support of the pleading.
[56] The Court again notes that, under sections 174 and 175 of the Rules, a pleading does not have to refer to the evidence, only to the facts and points of law at issue. Contrary to what Kellogg argued, therefore, the applicant does not have to produce with her statement of claim the studies to which she referred.
[57] That said, and after examining the respondent’s arguments in detail in terms of the statement of claim as it read after the amendments made at the hearing, the Court concludes that there is no basis for striking paragraph 7, paragraph 10 as amended, paragraph 41, paragraph 60 as amended and paragraph 77 as amended.
[58] It thus remains to be seen whether, as Kellogg argued, it is clear that the Court does not have jurisdiction here to grant the following conclusions which, in the respondent’s submission, are inconsistent with the remedy provided in section 36: (i) an injunction to make corrections to packaging to inform the consumer about the sugar and calorie contents, and (ii) an order that all monies owed by the respondent be paid to certain charitable organizations.
[59] As long ago as 1986, Frank U. Collier J. of the Federal Court concluded in Aca Joe International v. 147255 Canada Inc., 10 C.P.R. (3d) 301, [1986] F.C.J. No. 427, that in an action under sections 31.1(1) and 36(1)(a) of the Combines Investigation Act, R.S.C. 1970 (the old version of sections 36 and 52 of the Act, whose wording was essentially the same), the Court did not have the power to grant a permanent injunction, as the legislature had chosen to expressly limit the relief applicable to an amount equal to the loss proven. In his analysis, Collier J. specifically considered the impact of section 44 of the Federal Courts Act as it stood at that time and concluded that it did not as such authorize the Court to expand the statutory jurisdiction conferred by the Act.
[60] This position was later adopted in 947101 Ontario Ltd. (c.o.b. Throop Drug Mart) v. Barrhaven Town Centre Inc., [1995] O.J. No. 15, in U.L. Canada Inc. v. Proctor & Gamble Inc., [1996] O.J. No. 624 (paras. 32 and 33), and in Price v. Panasonic Canada Inc., [2000] O.J. No. 3123, at para. 10.
[61] Despite these precedents, the legislature has not seen fit to change the wording of section 36. As the content of information on packaging is a complex area, which is closely regulated, the legislature has understandably decided to limit the Court’s powers in connection with the civil action mentioned in section 36.
[62] In light of this case law and analysis of the present provision, the Court concludes that it is plain and obvious that this remedy cannot be granted to Janie Bédard. This conclusion will therefore be struck out.
[63] On the second conclusion sought, the argument submitted by Kellogg has never been decided in connection with an action pursuant to section 36. However, in Dubé v. Cogéco Radio-Télévision, [1998] Q.J. No. 668 (QL), at paras. 9 to 13, in an action in defamation, Denis J. of the Quebec Superior Court struck out a similar conclusion, noting that there was no connection with the issue and no relevance to the proceeding before him.
[64] The applicant argued that the situation in the case at bar is quite different and that, in matters involving class actions, subsection 299.3(2) of the Rules gives the Court broad discretion. That provision reads as follows:
Rule 299.3(2)
(2) A judge may make any order in respect of the distribution of monetary relief, including regarding an undistributed portion of an award due to a class or subclass or its members.
Règle 299.3(2)
2) Le juge peut rendre toute ordonnance relativement à la distribution d’une réparation pécuniaire, notamment en ce qui concerne toute portion non distribuée d’une réparation qui est due au groupe, au sous-groupe ou à leurs membres.
[65] There does not appear to be any judgment in which a Court has used such a power to pay in full all the amounts awarded by the Court[13] to charitable organizations without first trying to distribute them to the victims or persons to be compensated. As the rules on class actions are procedural in nature and do not create any substantive rights, it seems once again that Kellogg’s argument depends inter alia on interpretation of section 36 of the Act.
[66] As the Court indicated, arguments of new law and even surprising positions rarely lend themselves to a final decision on a motion pursuant to section 221.
4. MOTION FOR LEAVE
(a) General principles
[67] Though there is little case law in this Court on class actions, the principles applicable at the certification stage are clear. They were summarized by my colleague Anne L. McTavish J. in Tihomirovs v. Canada (Minister of Citizenship and Immigration), 2006 FC 197, [2006] 4 F.C.R. 341, as follows:
General Principles Governing Class Actions
32 Class actions allow for improved access to justice for those who might otherwise be unable to seek vindication of their rights through the traditional litigation process. Class actions also enhance judicial economy, allowing a single action to decide large numbers of claims involving similar issues. Finally, class actions encourage behaviour modification by those who cause harm: Western Canadian Shopping Centres Inc. v. Bennett Jones Verchere, [2001] 2 S.C.R. 534, 2001 SCC 46; Hollick v. Toronto (City), [2001] 3 S.C.R. 158, 2001 SCC 68; and Rumley v. British Columbia, [2001] 3 S.C.R. 184, 2001 SCC 69.
33 In the above trilogy of cases, the Supreme Court of Canada also held that an overly restrictive approach to the application of class action certification legislation must be avoided, so that the benefits of class actions can be fully realized.
34 Moreover, as the Supreme Court noted in the Hollick case:
... the certification stage focuses on the form of the action. The question at the certification stage is not whether the claim is likely to succeed, but whether the suit is appropriately prosecuted as a class action. [at para. 16]
[Emphasis in original.]
37 Motions for the certification of class actions are governed by Rule 299.18, which states that:
299.18 (1) Subject to subsection (3), a judge shall certify an action as a class action if:
(a) the pleadings disclose a reasonable cause of action;
(b) there is an identifiable class of two or more persons;
(c) the claims of the class members raise common questions of law or fact, whether or not those common questions predominate over questions affecting only individual members;
(d) a class action is the preferable procedure for the fair and efficient resolution of the common questions of law or fact; and
(e) there is a representative plaintiff who
(i) would fairly and adequately represent the interests of the class,
(ii) has prepared a plan for the action that sets out a workable method of ad