Wednesday, December 14, 2016

SCC - Federal Court does not have Jurisdiction to Interpret City By-law


Windsor (City) v. Canadian Transit Co. 2016 SCC 54 

 

In a 5 – 4 decision, the Supreme Court of Canada dismissed an appeal from the Federal Court of Appeal on whether the Federal Court had jurisdiction to decide whether the Canadian Transit Co. (the “Company”) was required to comply with the City of Windsor’s by-law and repair orders.

 

The Company owns and operates the Canadian half of the Ambassador Bridge connecting Windsor, Ontario and Detroit, Michigan.   The Company was incorporated in 1921 by An Act to incorporate the Canadian Transit Co. (the “Act”).  The Act empowered the Company to construct, maintain and operate a general traffic bridge across the Detroit River, to purchase, lease or otherwise acquire and hold lands for the bridge and to construct, erect and maintain buildings and other structures required for the convenient working of traffic to, from and over the bridge.  The Act also declared the works and undertakings of the Company to be for the general advantage of Canada, triggering federal jurisdiction under the Constitution Act, 1867.

 

The Company purchased more than 100 residential properties in Windsor with the intention of eventually demolishing the houses and using the land to facilitate the maintenance and expansion of the bridge.  Most of the houses are now vacant and in varying states of disrepair.   The City of Windsor issued repair orders against the properties pursuant to a municipal by-law.  The Company has not complied with the repair orders. 

 

The parties have been engaged in litigation relating to the repair orders in the Ontario Superior Court of Justice.  In addition, the Company applied to the Federal Court for declarations saying that it has rights under the Act which supersede the by-law and the repair orders.  The City moved to strike the Company’s notice of application on the ground that the Federal Court lacked jurisdiction to hear the application.  The Federal Court struck the Company’s notice for want of jurisdiction.  The Federal Court of Appeal set aside that decision.

 

On further appeal to the Supreme Court of Canada, Justices McLachlin, Cromwell, Karakatsanis, Wagner and Gascon held that the Federal Court does not have jurisdiction to decide whether the City’s by-law applies to the Company’s properties and that the issue should be decided by the Ontario Superior Court.   

 

Justices Abella, Moldaver, Côté and Brown dissented.

 

The majority framed the question this way:  The issue is whether the Federal Court has the jurisdiction to decide a claim that a municipal by-law is constitutionally inapplicable or inoperative in relation to a federal undertaking.  The majority decision was written by Justice Karakatsanis. 

 

Justice Karakatsanis wrote that the Federal Court has only the jurisdiction that has been conferred upon it by statute.  It is a statutory court, without inherent jurisdiction.  Accordingly, the language of the Federal Courts Act is completely determinative of the scope of the court’s jurisdiction.   The majority held that the role of the Federal Court is constitutionally limited to administering federal law.  The Federal Court has jurisdiction where a federal statute grants it jurisdiction and where the claim is for relief made or a remedy sought under an Act of Parliament or otherwise.  The relief must be sought under, and not merely in relation to, federal law. 

 

In this case, the Company was not seeking relief under an Act of Parliament or otherwise as required by the Federal Courts Act.  The Company was seeking relief under the Act that created it.  The court held that the Federal Courts Act is not itself a federal law under which the Company could seek relief.  For that right, parties must look to other federal law.  Further, although the Act confers certain rights and powers on the Company, it does not give the Company any kind of right of action or right to seek the relief that it was seeking.  The Company in fact was seeking relief under constitutional law, because constitutional law confers on parties the right to seek a declaration that a law is inapplicable or inoperative.  A party seeking relief under constitutional law is not seeking relief under an Act of Parliament or otherwise within the meaning of the Federal Courts Act, therefore the applicable section of the Federal Courts Act does not grant jurisdiction over the Company’s application to the Federal Court.  As a result, the motion to strike the Company’s notice of application in the Federal Court must succeed.

 

There were two separate dissenting reasons – one by Justices Moldaver, Côté and Brown and a separate set of dissenting reasons by Justice Abella. 

Justices Moldaver and Brown held that the Federal Court’s jurisdiction should be construed broadly and that its purposes are better served by a broad construction of its jurisdiction.  The essential nature of the case is not relevant to whether the Federal Court has jurisdiction but to whether it should exercise it.  The dissenters held that requiring a federal statute to expressly create a cause of action before jurisdiction may be founded under an Act of Parliament was unduly narrow and inconsistent with Parliament’s intent in creating the Federal Court.  The court’s jurisdiction should be construed broadly so that if the claim for relief is related to a federal work or undertaking and the rights being enforced arise from an Act of Parliament, the claimants may approach the Federal Court. 

 

In separate dissenting reasons, Justice Abella held that the appeal should be dismissed in part and a stay of the Federal Court proceedings should be entered.  She held that notwithstanding that the Federal Court has concurrent jurisdiction with the Ontario Superior Court, it should not exercise it in this case.  Both the Company and the City appealed orders to the Ontario Superior Court.  Rather than wait for the outcome of the appeals before the Superior Court, the Company sought to activate the Federal Court’s intervention.  Justice Abella reasoned that the Company had attempted to divert the proceedings into a jurisdictional sideshow which added expense and delay in aid of nothing except avoiding a determination of the merits for as long as possible.  To date that jurisdictional diversion has cost the public a delay of three years.  There was no basis for further delaying the Superior Court proceedings.

Regards,

Blair

 

Tuesday, December 6, 2016

SCC - Litigation Privilege and Solicitor-Client Privilege Are Substantive Rights


The Supreme Court of Canada released two decisions last week dealing with the issue of privilege:  (1)  Lizotte v. Aviva Insurance Company of Canada 2016 SCC 52 which dealt with the issue of litigation privilege; and (2)  Alberta (Information and Privacy Commissioner) v. University of Calgary 2016 SCC 53 which dealt with the issue of solicitor-client privilege. 

 

In both cases, the court clearly emphasized the importance of both privileges as “substantive rights that are fundamental to the proper functioning of our legal system”.

 

In the Lizotte case, in the course of an inquiry into a claims adjustor, the assistant syndic of the Chambre de l’assurance de dommages (the "syndic”) asked an insurer to send her a complete copy of its claim file with respect to one of its insured.  The syndic based her request on section 337 of the Act respecting the distribution of financial products and services (“Act”).  In response, the insurer produced some documents but withheld others alleging that they were protected by either solicitor-client privilege or litigation privilege.

 

At a hearing, the syndic conceded that solicitor-client privilege could be asserted against her and therefore the issue before the court was limited to litigation privilege.  The Superior Court of Quebec concluded that litigation privilege cannot be abrogated absent an express provision and that the provision in the Act was not "express" in that sense.

 

The syndic’s appeal was dismissed by the Quebec Court of Appeal and further appeal to the Supreme Court of Canada was dismissed.  In an unanimous decision, the court held that litigation privilege is a common law rule that gives rise to an immunity from disclosure for documents and communications whose dominant purpose is preparation for litigation.  Litigation privilege differs from solicitor-client privilege in that litigation privilege is to ensure the efficacy of the adversarial process .  The purpose of solicitor-client privilege is to protect a relationship.  Solicitor-client privilege is permanent whereas litigation privilege is temporary and lapses when the litigation ends.  In addition, litigation privilege applies to unrepresented parties and to non-confidential documents.  

 

However, the court held that litigation privilege is a class privilege and gives rise to a presumption of inadmissibility for a class of communications – namely those whose dominant purpose is preparation for litigation.  Exceptions to litigation privilege include those relating to public safety, to the innocence of the accused and to criminal communications.  However, because it is a class privilege it has nothing to do with balancing competing interests on a case by case basis.   

 

In this case, none of the exceptions applied.  The court held that there is a robust line of authority according to which a party should not be denied the right to claim litigation privilege without clear and explicit legislative language to that effect.  Litigation privilege therefore cannot be abrogated by inference and the Act did not apply to do so. 

 

In the second case, in the context of a constructive dismissal claim, a delegate of the Information and Privacy Commissioner of Alberta ordered the production of records over which the University of Calgary had claimed solicitor-client privilege.  The delegate was acting in accordance with the Office of the Commissioner’s solicitor-client privilege adjudication protocol and issued a notice to produce the records.  Under section 56(3) of the Freedom of Information and Protection of Privacy Act (“Privacy Act”), a public body was required to produce required records to the Commissioner “despite…any privilege of the law of evidence”.  The University sought judicial review of the decision which upheld the Commissioner’s decision but on appeal to the Alberta Court of Appeal, it was found that “any privilege of the law of evidence” as used in the Privacy Act did not refer to solicitor-client privilege.  

 

The Supreme Court of Canada dismissed the appeal in three separate, partially concurring reasons.  In the first set of reasons written by Justice Côté (Justices Moldaver, Karakatsanis, Wagner and Gascon concurring), the court held that whether the relevant section of the Privacy Act allows a review of documents over which solicitor-client privilege is claimed is a question of central importance to the legal system as a whole and outside the Commissioner’s specialized area of expertise.  Therefore, the applicable standard of review was correctness for both the decision that the Commission had the authority to require production of the records over which solicitor-client privilege was asserted and for the decision to issue the notice to produce the records. 

 

The majority held that the phrase “any privilege of the law of evidence” does not require a public body to produce to the Commissioner documents over which the solicitor-client privilege is claimed.  Solicitor-client privilege is no longer merely a privilege of the law of evidence but a substantive right that is fundamental to the proper functioning of our legal system.

 

In separate concurring reasons Justice Cromwell held that the grammatical and ordinary meaning of the words “any privilege of the law of evidence” includes solicitor-client privilege.  Solicitor-client privilege is both an evidentiary privilege and a substantive principle and it was the evidentiary privilege that was at issue here. 

 

He held that in this case even though the Commissioner had the authority to compel production for review of records over which solicitor-client privilege was asserted and assuming, without deciding, that the correctness standard of review applied, she made a reviewable error to order production in the face of the evidence submitted in relation to the claim of privilege.  The University’s claim of privilege complied with the requirements of Alberta civil litigation practice at the time, and it was a reviewable error for the Commissioner’s delegate to impose a more onerous standard on the University in relation to its assertion of privilege than that applicable in civil litigation before the courts.

 

Justice Abella in further separate but concurring reasons held that that standard of review in this case should be reasonableness in accordance with the Supreme Court’s prior decisions.  However, she held that the Commissioner’s decision to order disclosure was unreasonable.  The Commissioner should have exercised her discretion in a manner that interfered with solicitor-client privilege only to the extent absolutely necessary to achieve the ends sought by her enabling legislation.  In ordering disclosure, she did not sufficiently take into account the fact that the University provided adequate justification for solicitor-client privilege particularly in light of the laws and practices applicable in the civil litigation context in Alberta. 

Regards,

Blair