Wednesday, January 12, 2011

A Step Closer to Claiming your Damages?

Wednesday, January 12, 2011
Patents, industrial designs, registered trade-mark rights, and copyright are federally granted rights in Canada, and generally enforceable in either the Federal or Provincial Courts.

If however the Federal Government has harmed a right holder or applicant in some manner (refusing to correct a clerical error, etc.) the challenge to the decision has usually been through the Federal Court’s judicial review process. Under this approach the rights holder seeks to overturn the decision of the “Federal Board or Tribunal” (i.e. a decision by the Commissioner of Patents) with the aim of reversing the previous decision. Compensation for harm from the decision would then require a separate action seeking damages, following the successful judicial review.

This result arose from the Federal Court of Appeal’s decision in Grenier[1] , which held that pleading a claim for compensation without first commencing a judicial review amounted to either: a collateral attack on the decision of the board or tribunal, or a ‘sham’ attempt to obtain a judicial review indirectly, and often beyond the expiry of the deadline. “In short, a decision of a federal agency … retains its legal force and authority, and remains juridically operative and legally effective so long as it has not been invalidated.”[2]

This line of case law had several downsides which limited the ability of parties to obtain compensation, such as:

  • The short timeline to file a judicial review (30 days, extendable by order in exceptional circumstances)
  • A judicial review could prove time consuming and costly, while not directly addressing the issue of whether compensation is owing or providing any relief (as even a successful judicial review does not establish entitlement to compensation).
  • Judicial reviews of Federal Government decisions can only be filed in the Federal Court, adding complication to claimants who may have wished to proceed in a provincial court to obtain their damage remedy.

This approach was particularly hard for those parties who did not seek to reverse the tribunal or board’s order, but still sought compensation. This could often arise in cases where the effect or damage caused by the order had already lapsed prior to the claimant seeking relief.

On December 23, 2010, the Supreme Court of Canada released four decisions which clearly overturned this past precedent; as a result, parties may now seek damages directly against the Federal Government, in either Provincial or the Federal Court. The Supreme Court judgments are framed from the point of view of access to justice, attempting to eliminate an often unnecessary hurdle (judicial reviews) before a potentially injured party can receive compensation.

This appeal is fundamentally about access to justice. People who claim to be injured by government action should have whatever redress the legal system permits through procedures that minimize unnecessary cost and complexity. The Court’s approach should be practical and pragmatic with that objective in mind.

If a claimant seeks to set aside the order of a federal decision maker, it will have to proceed by judicial review, as the Grenier court held. However, if the claimant is content to let the order stand and instead seeks compensation for alleged losses (as here), there is no principled reason why it should be forced to detour to the Federal Court for the extra step of a judicial review application (itself sometimes a costly undertaking) when that is not the relief it seeks. Access to justice requires that the claimant be permitted to pursue its chosen remedy directly and, to the greatest extent possible, without procedural detours.[3]

While a party seeking only compensation will now have the option to avoid pursuing a judicial review, such an approach will limit the remedies available (the underlying order can not be overturned).

As well, in the absence of a successful judicial review, the Federal Government may be able to raise the defence of “statutory authority,” and the parties may still need to determine the validity of the underlying order. However, the onus will be reversed from the position of a judicial review. In raising the defence of statutory authority the Federal Government may need to prove the alleged harmful outcome of the order was inevitable or practically impossible to avoid if following the applicable statute. This contrasts sharply with a judicial review, where the party challenging the order has the onus to prove that the order was wrongly decided or that the statute is invalid.

[1] Canada v. Grenier, 2005 FCA 348, [2006]

[2] Létourneau J.A. at para. 19, Grenier supra.

[3] Per Binnie, J. at paras. 18 and 19, Canada (Attorney General) v. TeleZone Inc., 2010 SCC 62


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