Keeping the Federal Government out of the Provincial Courts

In its 2010 decision in Telezone, the Supreme Court of Canada took a relatively relaxed approach to private law actions against the federal government in provincial court. The difficulty is that in some of these cases a court will have to adjudicate on the lawfulness -- as a public law matter -- of actions or decisions taken by federal authorities, but this is a matter reserved to the federal courts by the Federal Courts Act.

The Court's bottom line was that actions in tort, contract or trust would not always have to be preceded by an application for judicial review in federal court. Provincial superior courts have inherent jurisdiction and are thus capable of adjudicating questions of lawfulness. As Binnie J. explained:

[76]  Where a plaintiff’s pleading alleges the elements of a private cause of action, I think the provincial superior court should not in general decline jurisdiction on the basis that the claim looks like a case that should be pursued on judicial review. If the plaintiff has a valid cause of action for damages, he or she is normally entitled to pursue it. 

However, as a recent Ontario Superior Court decision indicates, Telezone should not be taken too far. In Tribute Resources Inc. v. Parks Canada Agency, 2012 ONSC 5480 the claim was that the government agency had acted negligently in including an ultra vires term in a Request for Proposals.

The problem, Wilson J. held, was that the private law claim thus depended on a finding of unlawfulness. This was essentially a matter for judicial review. Tagging on a claim for damages does not allow a plaintiff to circumvent the Federal Court Act:

[22]           TeleZone confirms, at paragraph 81, that a claim of damages, standing alone, arising from a government decision to award telecommunication licenses may be brought in the Superior Court. It states, at paragraph 46, that when a claim for damages is advanced, the Superior Court and the Federal Court have concurrent jurisdiction. It also states, at paragraph 23, that proceeding by way of judicial review is not a necessary preliminary step to recover damages from the Crown in every case if the administrative decision in question was not being challenged.

[23]           However, the Court confirms, in paragraph 80, that TeleZone’s claim was “dominated by private law considerations”. In this case, the private law claim for damages appears as a tag on to the injunctive and declaratory relief claimed. Counsel concedes that without a declaration that the Return to Crown Requirement in the Request for Proposals was ultra vires, Tribute cannot successfully advance its claim for damages. The core preliminary question is one of judicial review.

Moreover, Wilson J. recalled that in Telezone the Court had confirmed that provincial superior courts retain jurisdiction to stay actions which were, in their essential character, applications for judicial review. And so:

[29]           In the alternative, if matters raised in this case are not squarely within the exclusive jurisdiction of the Federal Court, I would exercise my inherent jurisdiction to stay this proceeding and defer to the Federal Court.

From Wilson J.'s judgment emerge two means of keeping the federal government out of provincial court: (1) demonstrate that the core of the claim is a matter for judicial review and thus within the exclusive jurisdiction of the federal courts; or (2) invoke the superior court's inherent jurisdiction to stay a proceeding.

The Court did not adopt such a two-pronged approach in Telezone but I suppose it is possible that cases may arise where a stay would be appropriate even though the core of the claim was not a matter for judicial review: for example, where an impermissible collateral attack has been mounted, or there has been delay.

In any event, it will be interesting to see if Wilson J.'s two-pronged approach catches on.