The standard of review to be applied by a motions judge to a discretionary decision of a prothonotary of the Federal Court of Canada has caused uncertainty for the courts and practitioners for several years. In Hospira Healthcare Corporation v. The Kennedy Institute of Rheumatology, 2016 FCA 215 (“Hospira”) the Federal Court of Appeal (“FCA”) brought needed clarity and reform to the standard of review.
The Aqua-Gem Test
In Canada v. Aqua-Gem Investments Ltd.  2 FCR 425, 1993 CanLII 2939 (FCA) (“Aqua-Gem”), the five-member panel of the Federal Court of Appel (“FCA”) conducted a comprehensive review of the jurisprudence in Canada and the UK regarding the standard review of discretionary decisions made by prothonotaries and also reviewed the historical roles of prothonotaries and masters in the court system. As a result, and following the lead of the Ontario Court of Appeal’s decision in Stoicevski v. Casement (1983), 43 O.R. (3d) 436, 1983 CanLII 1679 (ON CA) (“Stoicevski”), the FCA enunciated a two-pronged standard of review, which provided as follows:
[…] discretionary orders of prothonotaries ought not to be disturbed on appeal to a judge unless: (a) they are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts, or (b) they raise questions vital to the final issue of the case.
With respect to the “vital to the final issue” part of the test, Justice MacGuigan in Aqua-Gem stated as follows:
[…] It seems to me that a decision which thus be either interlocutory or final depending on how it is decided, even if interlocutory because of the result, must nevertheless be considered vital to the final resolution of the case. Another way of putting the matter would be to say that for the test as to relevance to the final issue of the case, the issue to be decided should be looked to before the question is answered by the prothonotary, whereas that as to whether it is interlocutory or final (which is purely a pro forma matter) should be put after the prothonotary’s decision. Any other approach, it seems to me, would reduce the more substantial question of “vital to the issue of the case” to the merely procedural issue of interlocutory or final, and preserve all interlocutory rulings from attack (except in relation to errors of law).
Accordingly, if the prothonotary’s decision was clearly wrong due to a wrong principle or upon a misapprehension of the facts, then the motions judge was entitled to interfere. Alternatively, if the matter decided by the prothonotary raised questions vital to the final issue of the case, then the motions judge was to review the matter de novo.
The Supreme Court of Canada also appeared to have recognized the Aqua-Gem standard by reference in Z.I. Pompey Industrie v. ECU-Line N.V.,  1 SCR 450, 2003 SCC 27 (SCC) (“Pompey”) at para. 18.
Following Aqua-Gem, there was ongoing difficulty and uncertainty in determining whether the issue below was “vital to the final issue of the case”. In 2003, a three-member panel of the FCA in Merck & Co. v. Apotex Inc.  2FCR 459, 2003 FCA 488 (FCA) (“Merck”) sought to bring clarity to the Aqua-Gem standard as follows:
Discretionary orders of prothonotaries ought not be disturbed on appeal to a judge unless: (a) the questions raised in the motion are vital to the final issue of the case, or (b) the orders are clearly wrong, in the sense that the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts.
Nevertheless, there continued to be confusion. In some cases, the courts held that it was the nature of the question before the prothonotary that determined the “vitality” issue, and the manner in which the prothonotary dealt with the question was irrelevant. In other cases, the courts took the view that it was not what was sought but what was ordered by the Prothonotary which would be determinative of the “vitality” issue.
The Hospira Decision
In Hospira, the FCA (the first five-member panel since Aqua-Gem) took the opportunity to revisit the appropriate standard of review of discretionary decisions of prothonotaries. It concluded that the Aqua-Gem standard should no longer be applied.
At issue in Hospira was a prothonotary’s decision to limit the time that the respondent’s witnesses were to re-attend for examinations and to limit the examination to be conducted by teleconference. On appeal, the motions judge applied the Aqua-Gem standard and held that the issue of re-attendance of the witnesses was not vital to the final issue of the case and that the prothonotary’s decision was not clearly wrong. Accordingly, the motions judge declined to interfere with the prothonotary’s decision.
On appeal to the FCA, the appellant took the position that the motion judge improperly declined to interfere with the prothonotary’s decision. The respondents invited the FCA to reconsider the Aqua-Gem test as the standard of review for discretionary decisions of prothonotaries, urging the court to apply the standard of review applicable to decisions of trial judges set out by the Supreme Court in Housen v. Nikolaisen, 2002 SCC 33  2 S.C.R. 235 (SCC) (“Housen”). In Housen, the Supreme Court enunciated the standard of review applicable to decisions of trial judges, which provided that: (a) with respect to factual conclusions reached by the trial judge, the applicable standard is that of palpable and overriding error; (b) with respect to questions of law and mixed fact and law, where there is an extricable legal principle at issue, the applicable standard is that of correctness.
The issue before the prothonotary in Hospira was not one of vital importance to the final issues, and as such, the FCA was of the view that revisiting whether or not de novo review under the Aqua-Gem standard is still appropriate was not determinative of the appeal. Nevertheless, the FCA took this appeal as an opportunity to conduct a comprehensive review of the development of the law and the roles of prothonotaries since Aqua-Gem. The FCA concluded that the Aqua-Gem standard was no longer appropriate for the following reasons:
- The availability of the de novo review of prothonotary decisions has resulted in a high number of appeals of prothonotary decisions where the motions judge is required to determine whether a de novo review is appropriate based on whether or not the prothonotary’s order is vital to the final issue of the case. However, there is ongoing confusion in the courts as to what constitutes an order that raises questions vital to the final issue of the case, resulting in inconsistencies in the case law. As a result, the confusion in the process has detracted from the effective review of discretionary orders made by prothonotaries.
- There is no longer any principled basis for distinguishing between the decisions of prothonotaries and those of judges as to standard of review. The historical notions of hierarchy between judges and prothonotaries were no longer applicable. While historically the role of masters and prothonotaries in England and Canada may have been limited to assistants to judges, their roles have now expanded and evolved into that of independent judicial officers. The Aqua-Gem standard’s de novo review is also at odds with the presumption of fitness that both judges and prothonotaries are capable of carrying out the mandates assigned to them by the legislature. In essence, prothonotaries should not be considered “second class” judicial officers and are for all intents and purposes performing the same task as Federal Court judges.
- It is in the interests of justice to have a unified standard of review for judges and for prothonotaries.
In coming to the conclusion that the Aqua-Gem standard was no longer appropriate, the FCA noted that it was following the lead of the Ontario Court of Appeal in Zeitoun v. Economical Insurance, (2009) 96 OR (3d) 639, 2009 ONCA 415 (ON CA) (“Zeitoun”), which, for similar reasons, abandoned the de novo review standard for discretionary masters decisions that it had previously adopted in Stoicevski.
The FCA in Hospira also noted that, other than the availability of a de novo review when the question is vital to a final issue, the Aqua-Gem standard was otherwise essentially the same as the Housen standard – i.e. the second part of the Aqua-Gem standard provides that a discretionary decision is reviewable on appeal by a judge where it is based upon: (1) a “wrong principle” (which implies a correctness standard of review required for questions of law) and (2) a “misapprehension of the facts” (which implies the overriding and palpable error standard required for questions of fact). In other words, if the decision-maker has made an error of law, the reviewing court is entitled to intervene and substitute its own discretion or decision. With respect to factual conclusions, the reviewing court must defer unless the decision maker failed to give sufficient weight to the relevant circumstances or misapprehended the facts. Accordingly, there is no reason why the Housen standard should not be adopted to apply to the discretionary decisions of prothonotaries.
With Hospira, the FCA has successfully achieved its goal of getting the Federal Court’s “house in order” with respect to the standard of review. Under this unified house, where prothonotaries are not treated as “second class” judicial officers, the FCA has simplified the process of the standard of review to allow for more consistent and effective review of discretionary decisions of both judges and prothonotaries.