A majority of the Federal Court of Appeal in Paradis Honey Ltd. v. Canada recently allowed a group of commercial beekeepers to proceed with a proposed class action against their government regulator. The court rejected the government’s attempt to strike the beekeepers’ claim for negligence and bad faith. In obiter, the court also created a new public law cause of action under which monetary damages can be sought against government regulators for maladministration. The majority suggested that this new public law remedy should replace the current application of modified private law negligence principles to public bodies.

FACTS

The Minister of Agriculture and Agri-Food (Minister) and the Canadian Food Inspection Agency (CFIA) issued a series of regulations between the late 1980s and the end of 2006, which prohibited Canadian beekeepers from importing bees from the United States. On December 31, 2006, the last of these regulations expired and was not replaced. The Health of Animals Regulations (Regulations) allowed a company to apply to the Minister for an importation licence. The Minister was supposed to consider such applications on a case-by-case basis and issue the licence if it would not result in a disease being introduced into Canada. However, after the last bee importation ban ended, the Minister adopted a blanket policy that no importation permits would be issued for “packages” of bees. This policy was communicated to the beekeeping industry, which then sued the Minister and the CFIA for negligence.

The court addressed two key issues: Was it “plain and obvious” the beekeepers’ negligence claim against the government would fail, and could the beekeepers sue the government for damages using a public law maladministration claim?

NEGLIGENCE CLAIM AGAINST REGULATOR MAY PROCEED

The court concluded that it was not “plain and obvious” that the beekeepers’ negligence claim would fail, and so held that it survived the government’s motion to strike. It found there was “specific conduct and interactions” that supported a finding of proximity between the government and the beekeepers, supporting the existence of a duty of care. The government had assured the beekeepers that imports affecting their economic interests would only be banned if there was scientific evidence of risk. This government conduct and these interactions with the beekeepers created a relationship that was “sufficiently close and direct” to make it fair and reasonable to subject the government to a duty to respect the beekeepers’ interests by making “rational, evidence-based decisions.”

The court went on to find that there was no policy reason to prevent the beekeepers from suing the government in negligence. The Regulations stated that the Minister “shall” grant permits on a case-by-case basis if the importation will not bring a “vector, disease or toxic substance” into Canada. The beekeepers alleged that importing bee “packages” would not bring any disease into Canada, and so importation should have been allowed. On a motion to strike, such factual allegations are assumed to be true. The result was that there was no inconsistency between Canada owing the beekeepers a private law duty of care and the public duty Canada owed.

The court also rejected an argument that there is a “hard-and-fast rule” that decisions made under a government policy are protected from a negligence claim. The majority noted that recent Supreme Court of Canada (SCC) decisions create uncertainty as to when there will be a policy ban precluding negligence claims against government decision-makers.

NEW PUBLIC LAW MALADMINISTRATION CLAIM FOR DAMAGES

The majority found that although a public law maladministration claim for damages would be novel, such a claim would have a strong basis in Canadian law. The Constitution gives courts the power to grant relief against improper exercises of public power. Further, the SCC has already granted monetary relief against public authorities for improper public law decision-making, most notably in Roncarelli v. Duplessis.

The court found that where a public authority acts “unacceptably or indefensibly” in the administrative law sense, a court may exercise its discretion to grant a remedy, including damages against the public authority. When deciding whether to grant a remedy, courts look at the acceptability and defensibility of the government decision, the circumstances surrounding the decision, the decision’s effects and whether public law values would be advanced by granting a remedy. Monetary relief should not be granted merely because a public action is outside the range of acceptable and defensible government actions. Rather, damages should only be granted where the public authorities have a clear duty to fulfil, where there is significant maladministration to address, or where public law values must be vindicated. If there is a clear duty found in specific undertakings, specific reliance, or known vulnerabilities of specific persons, then courts can exercise their discretion to award damages.

In closing, the court found that it was not “plain and obvious” that a public law claim for damages by the beekeepers would fail. The Minister decided to create a blanket policy to ban the importation of bee “packages” from the United States without legal authorization or scientific support. Canada’s conduct suggested possible maladministration, bad faith and even perhaps the existence of a clear duty to act due to its interactions with the beekeepers.

CONCLUSION

The Federal Court of Appeal has opened the door to lawsuits against government regulators for negligent administration of their regulatory schemes and created the possibility of suing a regulator for damages under public law if the regulator violates a clear duty to act or exercises its public power in an “irrational” or “clearly wrong” manner. Businesses should consider pursuing lawsuits against regulators in appropriate circumstances where those regulators have negligently exercised or abused their public power.