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Conseil québécois sur le tabac et la santé c. JTI-MacDonald Corp.

2012 QCCS 474

 

JR1353

 
SUPERIOR COURT

(Class Action Division)

CANADA

PROVINCE OF QUÉBEC

DISTRICT OF MONTREAL

N° :

500-06-000076-980

500-06-000070-983

DATE :

February 14, 2012

________________________________________________________________

PRESIDING:     THE HONORABLE BRIAN RIORDAN, J.S.C.

________________________________________________________________

No 500-06-000076-980

CONSEIL QUÉBÉCOIS SUR LE TABAC ET LA SANTÉ

and

JEAN-YVES BLAIS

Plaintiffs

v.

JTI-MACDONALD CORP. ("JTI")

and

IMPERIAL TOBACCO CANADA LTÉE ("ITL")

and

ROTHMANS, BENSON & HEDGES INC. ("RBH")

Defendants / Plaintiffs in Warranty (collectively: the "Companies")

v.

PROCUREUR GÉNÉRAL DU CANADA (the "Canada")

Defendant in Warranty

________________________________________________________________

JUDGMENT ON CANADA'S MOTION TO DISMISS THE ACTIONS IN WARRANTY

________________________________________________________________

 

AND

 

NO 500-06-000070-983

CÉCILIA LÉTOURNEAU

Plaintiff

v.

JTI-MACDONALD CORP.

and

IMPERIAL TOBACCO CANADA LTÉE

and

ROTHMANS, BENSON & HEDGES INC.

Defendants / Plaintiffs in Warranty

v.

PROCUREUR GÉNÉRAL DU CANADA

Defendant in Warranty

________________________________________________________________

JUDGMENT ON CANADA'S MOTION TO DISMISS THE ACTIONS IN WARRANTY

________________________________________________________________

THE MOTION

[1]         Following upon the heels of the July 29, 2011 judgment of the Supreme Court of Canada in two British Columbia cases involving similar facts (the "SCC Judgment"[1]), Canada brings a Motion to Dismiss the Actions in Warranty in the present files under articles 4.1, 4.2, 54.1 et seq., 163, 165(1) & (4) and 167 of the Code of Civil Procedure and article 2848 , first paragraph, of the Civil Code having the following conclusions:

REJETER les Actions en garantie de JTI-Macdonald Corp., Rothmans, Benson & Hedges inc. et Imperial Tobacco Canada Limited;

PRENDRE ACTE de la proposition du Procureur général du Canada de participer de bene esse à l’audition du procès dans les actions principales et ce jusqu’à jugement final de cette Cour ou de la Cour d’appel, le cas échéant, accueillant la requête en irrecevabilité;

LE TOUT avec les entiers dépens, y compris les frais associés aux communications de documents avant procès et les frais d’expertises.

[2]         The Companies contest.

[3]         In support of the motion, Canada raises numerous arguments.  However, before examining those, the Court must provide some background information.

PROCEDURAL BACKDROP

[4]         In both Québec and BC[2], two court cases are in issue, three of the four being class actions, with the other, the BC Costs Recovery case, being an action by the BC Government to recover health care costs from numerous defendants, including all three of the Companies here, under the provisions of the BC Tobacco Damages and Health Care Costs Recovery Act[3].  In the BC class action, the Knight case, the plaintiffs are seeking the refund of amounts paid by them to ITL (only) for the purchase of cigarettes manufactured by ITL and designated as "light", "mild" and other similar terms, as well as punitive damages.

[5]         The Quebec class actions deal with claims for moral and punitive damages by persons addicted to nicotine: the Létourneau action, and by persons stricken with medical ailments and diseases: the Blais action.  The two files have been joined for purposes of proof and hearing.

[6]         In both jurisdictions the defendants called in the Government of Canada to reimburse them for any condemnations in the principal actions, alleging Canada's implication and fault through the activities of Agriculture Canada and Health Canada in the second half of the twentieth century.  In BC, this was done by way of Third Party Notices ("TPN") and, in Québec, by way of Actions in Warranty.

[7]         Early on in the BC proceedings, Canada contested the TPN by Motions to Strike based on a number of grounds, essentially, from what the Court can tell, founded in principles of the common law.  For reasons that are not clear, Canada did not raise the principal ground upon which it relies here: the immunity provided for under the Crown Liability and Proceedings Act[4] (the "CLP Act").

[8]         The SCC Judgment allows Canada's appeal and grants its Motions to Strike on the basis that it is "plain and obvious that the tobacco companies' claims against Canada have no reasonable chance of success"[5]

[9]         By the Motion to Dismiss, Canada asks the Court to come to the same conclusion with respect to the Actions in Warranty and dismiss them now, less than two months before the opening of the trial on the merits.  At the Court's urging, Canada amended its Motion to Dismiss to add the following language:

59.  Le tribunal a invité le PGCAN à lui proposer une solution pour éviter que l’audition des actions principales ne soit retardée dans l’éventualité où la requête en irrecevabilité était accueillie et que le jugement ainsi rendu était porté en appel;

60.  Tel qu’indiqué lors de la conférence de gestion du 26 octobre 2011, dont les extraits pertinents sont communiqués sous la cote R-12, sans préjudice à ses droits, le PGCAN est disposé à :

a)   participer de bene esse au procès dans les Actions principales;

b)   faire en sorte que toute instance d’appel appelée à se prononcer sur le jugement à être rendu sur la requête en irrecevabilité le fasse le plus rapidement possible, et

c)   mettre fin à sa participation de bene esse au procès dès qu’un jugement final de la Cour d’appel accueillant la requête en irrecevabilité aura été rendu, le cas échéant;

POUR CES MOTIFS, PLAISE À CETTE HONORABLE COUR :

(…)

PRENDRE ACTE de la proposition du Procureur général du Canada de participer de bene esse à l’audition du procès dans les actions principales et ce jusqu’à jugement final de cette Cour ou de la Cour d’appel, le cas échéant, accueillant la requête en irrecevabilité;

[10]      After service of the Motion to Dismiss, ITL, but not the other Companies, sought to amend its Action in Warranty.  Canada consented to most of the amendments but contested certain ones, in particular:

a.      Paragraph 70.5, which reads:

70.5  If this new tobacco which ultimately was grown in 99% of the fields in Canada was more harmful due to its higher nicotine level and its central feature of producing lower tar when smoked (which is denied in the Defence), then it was more harmful due to the inadequate testing and experimentation by Agriculture Canada’s agents, or due to their wilful or reckless disregard of evidence of the possibility of compensation by smokers of the lower tar cigarettes and due to the suppression of this information by agents of Agriculture Canada and Health Canada.        (The Court's underlining)

b.   paragraphs 149.1 to 149.13, which allege a number of commercial and tax-related facts, including that Canada and ITL were in a de facto joint venture with respect to the manufacture of cigarettes and that Canada was unjustly enriched by its receipt of tax revenues on cigarettes and profits under certain taxing statutes, e.g., the Excise Act, 2001 and the Tobacco Manufacturers Surtax under the Income Tax Act.

[11]      At the time of the hearing on the Motion to Dismiss, the Court had not yet rendered judgment on ITL's Motion to Amend and the parties pleaded on the assumption that all the amendments would be accepted.  ITL relied heavily on the above proposed amendments in an effort to differentiate the fact pattern of the Québec cases from that in BC, where certain allegations are not made in the TPNs.  The Court rendered judgment on the Motion to Amend concurrently with the present judgment, allowing the addition of paragraph 70.5 but refusing paragraphs 149.1 through 149.13.

[12]      There is an additional procedural aspect that the Court cannot ignore when considering Canada's Motion to Dismiss: its timing.

[13]      The Companies served their Actions in Warranty on Canada in February 2008, nearly four years before Canada served the present motion.  At that time, the Superior Court of British Columbia had already granted the Motions to Dismiss based on Crown immunity and appeals had been launched.  In 2008, Canada did not hide its intention to invoke the immunity provided for in the CLP Act against the Actions in Warranty; the only question was when.

[14]      On numerous occasions, the Court invited, and then beseeched, Canada to present its Motion to Dismiss in time so that these files could follow what appeared to be an inevitable path to the Supreme Court of Canada hand in hand with the BC proceedings.  The Court's urgings fell on deaf ears.  Canada chose to invoke the point as part of its Defences in Warranty filed in June 2011.

[15]      The publication of the SCC Judgment last summer caused Canada to reconsider the wisdom of making a pre-trial Motion to Dismiss in these files, rather than waiting to have the point decided in the final judgment on the merits, as it requests in its Defences in Warranty.

ANALYSIS

[16]      For most of the latter half of the twentieth century, Health Canada and, even moreso, Agriculture Canada were directly and intimately involved in and with the tobacco and cigarette industries in Canada.  Health Canada imposed restrictions on cigarette advertising and warnings on cigarette packages and took other steps to inform Canadians of the risks of smoking, while Agriculture Canada, through its installations at Delhi in Ontario, developed new strains of tobacco that ended up being used in the majority of cigarettes produced in this country.  We shall refer to these as the "Activities" and it is in reference to them that the Companies call Canada in warranty both here and in BC.

[17]      Where its employees or agents commit a fault in Québec, Canada is subject to the regime of extra-contractual civil liability established under the Civil Code, subject to any overriding rules of public law[6].  One of the overriding rules of public law that applies in Québec is that the federal Crown is immune from liability for damage caused by the policy decisions of Canada's employees, whereas operational decisions are not protected[7].

[18]      Thus, the characterization of the Activities as operational or policy is critical to the determination of whether immunity applies to them.  For the purpose of that determination, the SCC Judgment must certainly serve as a beacon but, in light of the differences between the Actions in Warranty and the TPNs, it will not necessarily see us safely into port. 

[19]      In support of the motion, Canada advances the arguments of stare decisis and res judicata, as well as chose jugée implicite and abuse of process arising from a collateral attack on the SCC Judgment.  In fact, the nexus of Canada's argument in support of the present motion is that, for all intents and purposes, the SCC Judgment decides all the issues relevant to the Actions in Warranty and this Court is bound to follow the holdings in that judgment.

[20]      It might eventually turn out that some of these arguments have merit, but the Court is uneasy in basing such an important decision on any of those principles without a more complete view of the field.  Moreover, prima facie, there are differences between the BC cases and these in Quebec.

[21]      We have already pointed out that the Supreme Court does not deal with the CLP Act directly, although certain of its principles resemble the common law rules applied in BC.  As well, Canada did not make proof that the procedural rule used there, Rule 19(24)(a) of the BC Supreme Court Rules, has the same application as those raised here: articles 54.1 and 165(4) of the Code of Civili ProcedurePrima facie, it would appear not to, in light of the fact that the test there is whether or not it is "plain and obvious, assuming the facts pleaded to be true, that the pleading discloses no reasonable cause of action"[8], as opposed to what appears to be the more stringent Quebec test of whether or not it is "claire et évidente, ne laissant aucun doute dans l'esprit du juge sur l'irrecevabilité"[9].

[22]      There are also at least two factual allegations that could distinguish this case from the BC cases.  The elements of wilful or reckless disregard of evidence and the suppression of information alleged in paragraph 70.5 appear not to have been considered there.  In fact, in its TPN at paragraph 136, ITL describes the activities of Canada's officials as being "reasonable in all of the circumstances"

[23]      As well, although the Supreme Court rejects the allegedly commercial hue of Canada's collection of licensing fees on new tobacco strains it patented, it does so primarily within the context of the BC legislation in question.  It remains to be seen if the same result would flow from an analysis under the Civil Code.

[24]      The Supreme Court has dealt with the characterization question in other instances and recognizes that the task is no easy one.  For that reason, it favours a process by which the Court receives all information reasonably available before making the decision.  In the Canadian Food Inspection Agency[10] decision, a unanimous Supreme Court stated the following:

[27]     The fact that the federal Crown is subject to Quebec’s rules of extracontractual civil liability where damage allegedly caused by the fault of its agents is concerned does not preclude it from invoking its immunity. For example, it remains open to the federal Crown to argue that a particular decision was made by its agents acting in a policy rather than an operational capacity, which would not normally attract liability. However, such arguments are more appropriately dealt with at the hearing on the merits, not on a motion to dismiss at a preliminary stage.

[28]     The Court of Appeal relied on the approach taken in Montambault v. Hôpital Maisonneuve Rosemont [2001] R.J.Q. 893 (C.A.).  In Montambault, Deschamps J.A., as she then was, held that the issue of whether a government agency can invoke its immunity from civil liability for an admisntrative decision requires a thorough study of the case, including questions of fact, which can be completed, supported and argued only at the stage of the hearing on the merits.  The ruling in Montambault represents a sound approach to determining whether government agencies are immune from civil liability in Quebec, and it remains open to the Agency to make further submissions on this point at trial.                                                     (The Court's underlining)

[25]      Canada argues that the Supreme Court shed that cautious approach less than a year later when it, in fact, did deal with such arguments at the preliminary stage by rendering the SCC Judgment.  It is true that it chose to do so in that case - based on the TPNs it had before it at that time - but in its reasons it does not refer to the Canadian Food Inspection Agency judgment nor does it state that it is discarding the approach it had so recently espoused there.  Moreover, we note that that case originated in Québec.

[26]      The Court feels it must follow Canadian Food Inspection Agency in the present matters.  The different record and the transposition into the civil law context distinguish these cases from the BC ones.  The case for dismissal might well appear strong, but the Court cannot conclude that the Actions in Warranty have no chance of success based on the information available at this stage.  The point must be "completed, supported and argued … at the stage of the hearing on the merits".  We shall dismiss Canada's motion.

BASED ON THESE REASONS, THE COURT:

[27]      DISMISSES the Motion to Dismiss the Actions in Warranty of the Attorney General of Canada;

[28]      WITH COSTS TO FOLLOW SUIT.

 

_____________________________

BRIAN RIORDAN, J.S.C.

 

Hearing Dates:  January 11 and 12 and February 9, 2012

 



[1]      R. v. Imperial Tobacco Canada Ltd., 2011, SCC 42.

[2]      For ease of reference, we shall abbreviate "British Columbia" to BC.  No lack of respect is meant thereby to the people of this wonderful province.

[3]      S.B.C. 2000, c. 30.

[4]      R.C.S. 1985 c. C-50, sections 3, 8, 9, 10, 23 and 24.  For example, see paragraphs 359 and 360 of AGC's Defence in Warranty to ITL's claim in the Létourneau action and paragraphs 350 and 351 in the Blais action.

[5]      Op. Cit., Note 1, paragraph 151.

[6]      Canadian Food Inspection Agency v. Professional Institute of the Public Service of Canada, [2010] 3 S.C.R. 657 , para. 25-27

[7]      Ibidem, paragraph 27; See also R. v. Imperial Tobacco Canada Ltd., Op. Cit., Note 1, paragraph 85.

[8]        Op. cit., Note 1, paragraph 17.

[9]        The case law on this point is too abundant to cite, but see, for example, Cigna du Canada v. 174427 Canada Inc., B.E. 2001BE-216 (QCSC).

[10]     Op. cit., Note 6.

AVIS :
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