[2000] 1 F.C. 463
99-A-34
Merck & Co., Inc., and Merck Frosst Canada & Co. (Applicants)
v.
Nu-Pharm Inc. and Attorney General of Canada and The Minister of Health (Respondents)
Indexed as: Nu-Pharm Inc. v. Canada (Attorney General) (C.A.)
Court of Appeal, Desjardins, Décary and Létourneau JJ.A.—Ottawa, August 26, 1999.
Practice — Judgments and orders — Reversal or variation — Federal Court, in exercise of equitable jurisdiction, can set aside any order made by it at request of person who ought to have been made party to proceeding — Relief available upon motion analogous to Federal Court Rules, r. 399 or Ontario Rules of Civil Procedure, r. 38.11 — Alternatively, such power necessary for Court to fully exercise jurisdiction.
Federal Court jurisdiction — Trial Division — F.C.T.D. can set aside order made by it, order new hearing at request of person who ought to have been made party to proceeding — Relief available upon motion analogous to Federal Court Rules, r. 399 or to Ontario Rules of Civil Procedure, r. 38.11 — Even if no equitable jurisdiction, even if Rules providing no remedy, and even if no inherent jurisdiction, jurisdiction in Court by virtue of “jurisdiction by implication” — Such power necessary for Court to fully exercise jurisdiction.
The applicants were seeking standing before the Federal Court of Appeal for leave to appeal an order of the Trial Division’s Cullen J. in judicial review proceedings to which the applicants had not been made a responding party and of which they had become aware only after the order was made. Trial Division Motions Judge granted applicants’ motion to be added as respondents to launch an appeal against the order of Cullen J. but the Court of Appeal subsequently held that a Trial Division Judge lacked jurisdiction to add party respondents upon an appeal to the Federal Court of Appeal. An appeal against Cullen J.s order was dismissed by the Court of Appeal without prejudice to appellants’ right to apply, under r. 369, for standing before this Court.
Held, the motion should be dismissed.
Per Décary J.A.: There was no doubt that the Federal Court, in the exercise of the equitable jurisdiction conferred upon it by Federal Court Act, section 3, has the power to set aside any order made by it at the request of a person who rightly claims that he or she ought to have been made a party to the proceeding. The only issue was by what procedural means was this power to be exercised. The Court cannot avoid the statutorily imposed duty to do equity by adopting Rules of Court which may appear to be inconsistent therewith.
The time has come to put an end, at least in procedural matters such as the present one, to the debate as to whether the powers of the Court derive from an inherent as opposed to an implied jurisdiction. Once the jurisdiction of the Federal Court is ascertained, the Court must have, vested as it is by section 3 of the Federal Court Act with the status of a superior court, all the necessary powers to exercise that jurisdiction. Where, as here, the jurisdiction at issue pertains not to substantive law over which provincial superior courts rather than the Federal Court might have jurisdiction, but to procedural matters, and once it is established, as here, that the Motions Judge had jurisdiction to make the order at issue, the need for ensuring a right of access to a court which is at the root of the doctrine of inherent jurisdiction simply does not arise.
Although the new rule 399 is phrased in broader terms than the two rules it replaced, it still cannot allow the setting aside of the order at the request of a non-party where, as here, fraud is not alleged. The Rules have formally recognized the right of a person, who ought to be a party to a proceeding, to be added as a party (rule 104(1)(b) allows the Court to do so and rule 303 requires it of the applicant). There has to be a way to sanction a violation by an applicant of his duty to name a party respondent, and one possible sanction has to be the possibility of setting aside the order made, through the application, by analogy, of rule 399. Or, if the analogy with rule 399 is found too remote, by application, by means of the “gap” rule, of rule 38.11(1) of the Ontario Rules of Civil Procedure which provides for motions to set aside or vary orders in circumstances such as those at bar.
Even if there had been no equitable jurisdiction, and even if the Rules could not be interpreted as they were, and even if the Court were to be found to be lacking “inherent jurisdiction”, the same conclusion would have been reached by using the “jurisdiction by implication” test. The existence and exercise of the power to set aside an order at the request of a person who ought to have been made a party in the proceeding is necessary for the Court to fully exercise its jurisdiction.
If the appeal were allowed to proceed in this case, the Court of Appeal would be asked to rule on issues not raised in the Trial Division and to do so on the basis of evidence not adduced below. It would therefore make more practical sense to have the application re-heard by the Trial Division. Where a remedy is available in the Trial Division, litigants should first address themselves to it. A procedure analogous to that in r. 399 is open to applicants: a Trial Division Judge would have power to entertain a motion to order a new hearing.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Code of Civil Procedure, R.S.Q., c. C-25, Art. 489.
Federal Court Act, R.S.C., 1985, c. F-7, s. 3.
Federal Court Rules, C.R.C., c. 663, RR. 330 (as am. by SOR/79-58, s. 1), 1733.
Federal Court Rules, 1998, SOR/98-106, rr. 2 “order”, 4, 104(1)(b), 303, 399.
Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rr. 38.11, 68.02.
CASES JUDICIALLY CONSIDERED
APPLIED:
Coulson v. Secure Holdings Ltd. (1976), 1 C.P.C. 168 (Ont. C.A.); Canada (Human Rights Commission) v. Canadian Liberty Net, [1998] 1 S.C.R. 626; (1998), 157 D.L.R. (4th) 385; 6 Admin. L.R. (3d) 1; 22 C.P.C. (4th) 1; 224 N.R. 241; Union Natural Gas Co. v. Chatham Gas Co. (1917), 38 D.L.R. 753 (Ont. S.C.); revd on other grounds Union Natural Gas Company v. The Chatham Gas Company (1918), 56 S.C.R. 253; 40 D.L.R. 485.
DISTINGUISHED:
Société des Acadiens du Nouveau-Brunswick Inc. and Association de Conseillers Scolaires Francophones du Nouveau-Brunswick v. Minority Language School Board No. 50 (defendant) and Association of Parents for Fairness in Education, Grand Falls District 50 Branch (intended intervenor) (1984), 54 N.B.R. (2d) 198; 8 D.L.R. (4th) 238; 8 Admin. L.R. 138 (C.A.).
REFERRED TO:
Nu-Pharm Inc. v. Canada (Attorney General), [1999] F.C.J. No. 231 (T.D.) (QL); Nu-Pharm Inc. v. Canada (Attorney General), [1999] F.C.J. No. 1004 (C.A.) (QL); New Brunswick Electric Power Commission v. Maritime Electric Company Limited, [1985] 2 F.C. 13 (1985), 60 N.R. 203 (C.A.).
MOTION by which the applicants seek standing before the Federal Court of Appeal for leave to appeal an order of the Trial Division (Nu-Pharm Inc. v. Canada (Attorney General), [1999] 1 F.C. 620 (1999), 84 C.P.R. (3d) 466; 159 F.T.R. 68). Motion dismissed.
WRITTEN REPRESENTATIONS MADE BY:
G. Alexander Macklin for applicants.
Harry B. Radomski and Andrew R. Brodkin for respondent Nu-Pharm Inc.
Frederick B. Woyiwada for respondent Attorney General of Canada and the Minister of Health
SOLICITORS OF RECORD:
Gowling Strathy & Henderson, Ottawa, for applicants.
Goodman Phillips & Vineberg, Toronto, for respondent Nu-Pharm Inc.
Deputy Attorney General of Canada for respondent Attorney General of Canada and the Minister of Health.
The following are the reasons for order rendered in English by
[1] Décary J.A.: The Court is seized with a motion of a rare nature: the applicants Merck & Co., Inc. and Merck Frosst Canada & Co. are seeking standing before the Federal Court of Appeal for leave to appeal the order of Cullen J. dated November 19, 1998 [[1999] 1 F.C. 620. That order was made in judicial review proceedings to which the applicants were not made a responding party and of which they became aware only after the final judgment had been made by Cullen J.
[2] The applicants originally made a motion in the Trial Division to be added as respondents for the purpose of launching an appeal against the judgment of Cullen J. Their motion was granted on February 17, 1999 [[1999] F.C.J. No. 231 (T.D.) (QL)] by a Motions Judge but this Court, on June 15, 1999, held that a judge of the Trial Division had no authority to add the applicants as party respondents in an appeal to be launched in the Appeal Division and quashed the decision of the Motions Judge (A-130-99) [[1999] F.C.J. No. 1004 (QL)]. This Court went on to dismiss the appeal launched against the decision of Cullen J. (A-161-99) “for lack of standing of the Appellants, without prejudice to the right of the Appellants to apply, under rule 369 of the Federal Court Rules , for standing before this Court”. In its reasons for judgment in file A-130-99 (at paragraph 11), the Court had expressed the view that:
Only the Federal Court of Appeal could, arguably, once judgment on the merit of a case has been rendered by the Trial Division, allow a third party to be added as a party for the purpose of filing a Notice of Appeal in the Court of Appeal, and only in such circumstances as were described by the Supreme Court of Canada in Société des Acadiens du Nouveau-Brunswick Inc. v. Assn. of Parents for Fairness in Education ([1986] 1 S.C.R. 549 at 584 ff.) [My emphasis.]
[3] I wish to state at the outset that there is absolutely no doubt in my mind that the Federal Court, in the exercise of the equitable jurisdiction vested in it by section 3 of the Federal Court Act [R.S.C., 1985, c. F-7], has the power to set aside any order made by it at the request of a person who rightly claims that he or she ought to have been made a party to the proceeding. The only issue, as I see it, is by what procedural means is this power to be exercised.
[4] Should the Rules of the Court appear to be inconsistent with the power referred to above, I would say, to paraphrase the words of Wilson J.A. (as she then was) in Coulson v. Secure Holdings Ltd. (1976), 1 C.P.C. 168 (Ont. C.A.), at page 172, that I do not believe that the Court can utilize its rules of practice to escape its equitable duty under section 3 of the Federal Court Act.
[5] The time has also come, it seems to me, to put an end, at least in procedural matters such as the present one, to the debate that has been going on for too many years as to whether the powers of the Court derive from an inherent as opposed to an implied jurisdiction. Once the jurisdiction of the Federal Court is ascertained, the Court must have, vested as it is by section 3 of the Federal Court Act with the status of a superior court, all the necessary powers to exercise that jurisdiction.
[6] The possible distinction that can be made between “inherent jurisdiction” and “implied jurisdiction” has been put in its proper perspective by the recent decision of the Supreme Court of Canada in Canada (Human Rights Commission) v. Canadian Liberty Net, [1998] 1 S.C.R. 626. Writing for the majority, Bastarache J. dispelled the belief that the doctrine of inherent jurisdiction could be used “as a corollary for the proposition that a federal statute granting authority to the Federal Court should be read narrowly” (at page 651). At page 658 he stated:
In my view, the doctrine of inherent jurisdiction operates to ensure that, having once analysed the various statutory grants of jurisdiction, there will always be a court which has the power to vindicate a legal right independent of any statutory grant. The court which benefits from the inherent jurisdiction is the court of general jurisdiction, namely, the provincial superior court. The doctrine does not operate to narrowly confine a statutory grant of jurisdiction; indeed, it says nothing about the proper interpretation of such a grant. As noted by McLachlin J. in Brotherhood, supra, at para. 7, it is a “residual jurisdiction”. In a federal system, the doctrine of inherent jurisdiction does not provide a rationale for narrowly reading federal legislation which confers jurisdiction of the Federal Court.
[7] Where, as here, the “jurisdiction” at issue pertains not to substantive law over which provincial superior courts instead of the Federal Court might have jurisdiction, but to procedural matters, and once it is established, as here, that Cullen J. had the jurisdiction to make the order at issue, the need for ensuring a right of access to a court which is at the root of the doctrine of inherent jurisdiction simply does not arise.
[8] Getting back to the issue which is to be decided in this motion and taking for granted that the Federal Court, in equity, must find a way to come to the rescue of the applicants if they are right in their claim that they should have been made a party to the proceeding before Cullen J., I must now determine whether the Rules of the Federal Court provide for a proper avenue and, if not, whether that suggested by the applicants (i.e. to seek leave in the Court of Appeal to be recognized as having standing to appeal an order of the Trial Division) is a valid one.
[9] I thought, at first, that the solution was to be found in rule 399 [of the Federal Court Rules, 1998, SOR/98-106] which reads:
399. (1) On motion, the Court may set aside or vary an order that was made
(a) ex parte; or
(b) in the absence of a party who failed to appear by accident or mistake or by reason of insufficient notice of the proceeding,
if the party against whom the order is made discloses a prima facie case why the order should not have been made.
(2) On motion, the Court may set aside or vary an order
(a) by reason of a matter that arose or was discovered subsequent to the making of the order; or
(b) where the order was obtained by fraud.
(3) Unless the Court orders otherwise, the setting aside or variance of an order under subsection (1) or (2) does not affect the validity or character of anything done or not done before the order was set aside or varied.
[10] Rule 399 has replaced, effective April 25, 1998, former rules 330 [as am. by SOR/79-58, s. 1] and 1733 [of the Federal Court Rules, C.R.C., c. 663], which read:
Rule 330. The Court my rescind
(a) any order that was made ex parte, or
(b) any order that was made in the absence of a party who had failed to appear through accident or mistake or by reason of insufficient notice of the application;
but no such rescission will affect the validity or character of anything done or not done before the rescinding order was made except to the extent that the Court, in its discretion, by rescission order expressly provides.
…
Rule 1733. A party entitled to maintain an action for the reversal or variation of a judgment or order upon the ground of matter arising subsequent to the making thereof or subsequently discovered, or to impeach a judgment or order on the ground of fraud, may make an application in the action or other proceeding in which such judgment or order was delivered or made for the relied claimed.
[11] The new rule is phrased in broader terms than the two Rules it replaces. Subsection 399(1), contrary to former Rule 330, is no longer restricted to “orders”, as opposed to “judgments” because “order” in the new Rules includes a judgment (see rule 2). Subsection 399(2), contrary to former Rule 1733, can be resorted to by a non-party. These are significant changes, but it would be stretching the meaning of the word “party” in subsection 399(1) to have it include a non—party who ought to have been a party—how could one say that Merck is a party “against whom the order is made”—and it would be stretching the purpose of paragraph 399(2)(b) to allow for a setting aside of the order at the request of a non-party where, as here, ”fraud” is not alleged. This is not, however, the end of our quest.
[12] The Rules have formally recognized the right of a person, who ought to be a party to a proceeding, to be added as a party. They have done so in paragraph 104(1)(b), whereby the Court is vested with the power to ”order that a person who ought to have been joined as a party or whose presence before the Court is necessary to ensure that all matters in dispute in the proceeding may be effectually and completely determined be added as a party,” and, in rule 303, whereby the applicant in an application for judicial review is requested (“shall”) to ”name as a respondent every person (a) directly affected by the order sought in the application …; or (b) required to be named as a party under an Act of Parliament pursuant to which the application is brought.”
[13] Surely, there has to be a way to sanction a violation by an applicant of his duty to name a party respondent, and one possible sanction has to be the possibility of setting aside the order made. I can see no reason in principle why a person who ought to have been made a party should not be given the same possibility as a party, for example, who was absent for the reason contemplated in paragraph 399(1)(b) of the Rules, 1998, to have the order set aside. Clearly, in my view, rule 399 should be applied by analogy to cases such as the present ones.
[14] Even if the analogy with rule 399 were found to be too remote, rule 4 allows to refer ”to the practice of the superior court of the province to which the subject-matter of the proceeding most closely relates".
[15] In the case at bar, the original application for judicial review was filed by Nu-Pharm in Toronto, Ontario. Nu-Pharm Inc. is a corporation incorporated under the laws of the province of Ontario. Merck’s own motion was also filed in Ontario, by its Ottawa counsel. The practice of the Superior Court of Justice of Ontario is the one “most closely” related for the purpose of rule 4, and the Ontario Rules of Civil Procedure [R.R.O. 1990, Reg. 194] have established a specific mechanism to resolve issues such as the present one. It is rule 38.11(1), which reads:
38.11(1) A person who is affected by a judgment on an application made without notice or who fails to appear at the hearing of an application through accident, mistake or insufficient notice may move to set aside or vary the judgment, by a notice of motion that is served forthwith after the judgment comes to the person’s attention and names the first available hearing date that is at least three days after service of the notice of motion.
[16] Rule 38.11(1) governs applications, but it is made applicable to judicial review proceedings by rule 68.02.
[17] The fact that the appeal from the Motions Judge’s decision was heard, as a matter of convenience, in Montréal, has no bearing for the purpose of the application of rule 4. In any event, the same result would be achieved if the rules of reference were those applicable in the province of Quebec. Article 489 of the Code of Civil Procedure [R.S.Q., c. C-25] allows for the revocation of a judgment at the request of “[e]very person whose interests are affected by a judgment rendered in a suit in which neither he nor his representatives were summoned.”
[18] In the end, therefore, I have reached the conclusion that the mechanism Merck should have used was a motion in the Trial Division to set aside the order made by Cullen J., analogous to that found in rule 399 of the Federal Court Rules, 1998 or, in the alternative, to that found in rule 38.11 of the Rules of Civil Procedure of Ontario.
[19] I wish to add that even if there had been no equitable jurisdiction and even if I could not have interpreted the Rules the way I did, and even if the Court were to be found to be lacking “inherent jurisdiction”, I would have reached the same conclusion by using the “jurisdiction by implication” test. Whether I applied what Bastarache J. described as “a relatively flexible approach” (Canadian Liberty Net , supra, at page 641) or the “more stringent” (these are the words of Bastarache J. in Canadian Liberty Net , supra, at page 641) approach of Stone J.A. in New Brunswick Electric Power Commission v. Maritime Electric Company Limited, [1985] 2 F.C. 13(C.A.), I would have been of the view that the existence and exercise of the power to set aside an order at the request of a person who ought to have been made a party in the proceeding is necessary for the Court to fully exercise its jurisdiction.
[20] This is precisely the same result as that reached by the Ontario Court of Appeal in Coulson v. Secure Holdings Ltd., supra, where Wilson J.A. ruled that a trial judge had jurisdiction to set aside the judgment of another trial judge at the request of persons who ought to have been made party to the action and who had learned of the judgment from a report of it in the newspaper. Wilson J.A. relied on an earlier decision of what was then the Ontario Supreme Court in Union Natural Gas Co. v. Chatham Gas Co. (1917), 38 D.L.R. 753 (reversed on other grounds (1918), 56 S.C.R. 253), where Hodgins J.A., speaking for the Court, had pointed out that the adjudication between plaintiff and defendant virtually annulled a third person’s contract and that such an injustice should not be done to an absent party. Hodgins J.A. had held that the case came within Rule 134 [of the Rules of Practice and Procedure of the Supreme Court of Ontario] (the equivalent of Federal Court rule 104) and he had ordered a new trial.
[21] In the instant case, were the appeal allowed to proceed, the Court of Appeal would be asked to rule on issues not raised in the Trial Division and to do so on the basis of evidence not adduced below. It would make more practical sense in such circumstances to have the application re-heard by the Trial Division. Where there is a remedy available in the Trial Division, litigants should normally be addressing themselves to the Trial Division first. I note that in Société des Acadiens the existence of an alternate remedy does not appear to have been raised, the interest of the parents in the proceedings were not in issue—by contrast in the present case, whether or not the applicants have an interest in the original proceeding is the very issue this Court would be called upon to decide without having the benefit of the opinion of the Trial Judge on it—and the absent party had agreed to be bound in appeal by the record in the Trial Division (see Société des Acadiens du Nouveau-Brunswick Inc. and Association de Conseillers Scolaires Francophones du Nouveau-Brunswick v. Minority Language School Board No. 50 (defendant) and Association of Parents for Fairness in Education, Grand Falls District 50 Branch (intended intervenor) (1984), 54 N.B.R. (2d) 198 (C.A.), at page 210.)
[22] It follows that if the applicants are right in their claim that they ought to have been joined as a party respondent in the proceeding before Cullen J., a procedure analogous to that set out in rule 399 is open to them and the judge of the Trial Division seized with their motion could, upon being satisfied that the applicants ought to have been so joined, set aside the order and order a new hearing.
[23] In view of the conclusion I have reached, I shall make no comment with respect to the other grounds invoked by Nu-Pharm in its motion record, i.e. that Merck has failed to demonstrate any arguable case, that to re-open the Cullen decision would result in an abusive multiplicity of proceedings and that Merck’s proposed re-opening of the Cullen decision is now moot. These issues are better left to the Motions Judge, if and when Merck seeks redress in the Trial Division in the manner defined in these reasons.
[24] The motion should be dismissed. In the circumstances, costs are not warranted.
Desjardins J.A.: I agree.
Létourneau J.A.: I agree.