The majority decision (Stratas and Nadon, J.A.) of the Federal Court of Appeal (“FCA”) in Paradis Honey Ltd. v. Canada, 2015 FCA 89 calls for a complete overhaul of the law governing public authority liability. In a surprising obiter, the Court expressed its view that the well-known analytical framework used for negligence is an anomaly when applied to public authorities, and that the last decades of case law using private law tools to solve public law problems should be revisited. The case can be seen as an open invitation for the Supreme Court of Canada to grant leave to appeal and elaborate a new test for negligence of public authorities.

Background and First Instance Decision

Paradis Honey Ltd. represents a group of commercial beekeepers (“Plaintiffs”) who rely on importation of honeybees to replace colonies lost during the harsh Canadian winters. Imports can take one of two forms: a “queen” (a match-box-sized container) or a “package” (a cereal-box-sized container).

Between the late 1980s and 2006, the Federal Government made a series of regulations prohibiting imports of honeybees from the United States.  Once the regulations expired at the end of 2006, they were not replaced. Instead, the Government adopted a policy guideline, which the Court defined as a blanket prohibition on the importation of packages.

In 2013, the Plaintiffs launched a negligence-based class action against the Government, claiming $200,000,000 in lost profits caused by the blanket ban on certain types of imports.  The Government filed a Motion to strike out the statement of claim.  Applying the well-known test for the existence of a duty of care set out in Anns v. Merton London Borough Council, [1978] A.C. 728 (H.L.), the Federal Court concluded that it was plain and obvious that the claim in negligence would fail, given the absence of a duty of care.

FCA Decision

The FCA majority allowed the appeal and reversed the decision to strike the statement of claim.  In a strong and captivating obiter, Stratas J.A. concluded that the current application of the law of liability for public authorities is an anomaly and that it should be governed by public law principles, not private law.  The following paragraphs of Justice Stratas’ reasoning speak for themselves:

[119] One afternoon in a small, quiet café in Paisley, Scotland, Francis Minghella served May Donoghue a bottle of ginger beer with a decomposed snail in it. So said a claim for damages, at the time so novel it was met by a motion to strike: Donoghue v. Stevenson, [1932] UKHL 100, [1932] A.C. 562. Upon the dismissal of that motion, a body of law was born. For the last eighty-three years, that body of law, with some modifications, has governed the liability of all private parties – and all public authorities too, even giant, complex ones that today serve millions.

[120] The difference between private parties and public authorities matters not. For reasons never explained, Canadian courts have followed the same analytical framework for each: we examine the duty of care, standard of care, remoteness, proximity, foreseeability, causation and damages.

[121] To make this analytical framework suitable for determining the liability of public authorities, courts have tried gamely to adapt it. And then, dissatisfied with the adaptations, they have adapted the adaptations, and then have adapted them even more, to no good end.

[…]

[126] Today, despite the best efforts of the Supreme Court and other courts, the doctrine governing the liability of public authorities remains chaotic and uncertain, with no end in sight. How come?

[127] At the root of the existing approach is something that makes no sense. In cases involving public authorities, we have been using an analytical framework built for private parties, not public authorities. We have been using private law tools to solve public law problems. So to speak, we have been using a screwdriver to turn a bolt.

Stratas J.A. queries whether it makes sense that public authorities have to consider thousands, tens of thousands or even millions of people at a time their “neighbours” when they are making decisions.  As a result, he proposes that liability for public authorities should be governed by remedies that are found in the underlying public law.

The idea would be to apply the concepts of “unacceptability” or “indefensibility” of government actions to determine whether to award monetary relief against public authorities.  Even where a public decision has been found as falling outside the range of acceptability and defensibility, monetary relief would remain discretional:

[132] […] Broadly speaking, we grant relief when a public authority acts unacceptably or indefensibly in the administrative law sense and when, as a matter of discretion, a remedy should be granted. These two components – unacceptability or indefensibility in the administrative law sense and the exercise of remedial discretion – supply a useful framework for analyzing when monetary relief may be had in an action in public law against a public authority.

[143] The compensatory objective of monetary relief must be kept front of mind. So, in some cases, the quashing of a decision or the enjoining or prohibition of conduct will suffice and monetary relief will neither be necessary nor appropriate. In other cases, quashing, prohibiting or enjoining can prevent future harm and go some way to redress past harm, reducing or eliminating the need for monetary relief. In still others, such as cases like McGillivray and Roncarelli, both above, only monetary relief can accomplish the compensatory objective.

[144] As well, the quality of the public authority’s conduct must be considered. This is because orders for monetary relief are mandatory orders against public authorities requiring them to compensate plaintiffs. And in public law, mandatory orders can be made against public authorities only to fulfil a clear duty, redress significant maladministration, or vindicate public law values: see, e.g., Canada (Public Safety and Emergency Preparedness) v. LeBon, 2013 FCA 55, 444 N.R. 93 at paragraph 14; D’Errico, above at paragraphs 15-21.

[145] The decided cases seem to reflect this. It is striking how often courts have awarded monetary relief against public authorities where they have not fulfilled a clear and specific duty to act – i.e., where, using the language of public law, the failure to act was unacceptable or indefensible in the administrative law sense and there are circumstances of specific undertakings, specific reliance or known vulnerability of specific persons that trigger or underscore an affirmative duty to act:

In this instance, Stratas J.A. concluded that it was not plain and obvious that a court would exercise its discretion against awarding the Plaintiffs beekeepers monetary relief, if the facts are indeed proven at trial.

In dissenting reasons, Pelletier J.A. concluded that the availability of remedies in administrative law prevents entirely an action in negligence. The dissenting judge would have upheld the Federal Court’s decision.

Comments

The new analytical framework for public authority liability proposed by Justice Stratas’ could have serious repercussions on many different industries dealing with governments.  We will therefore closely monitor any leave application to the Supreme Court of Canada. The question raised by Justice Pelletier in dissent, i.e. whether the availability of judicial review is a bar to an action in negligence, could also be fertile ground in the event that the Supreme Court of Canada accepts to grant leave to appeal.

Case Information

Paradis Honey Ltd. v. Canada, 2015 FCA 89

Docket: A-169-14

Date of Decision: April 8, 2015