T-2526-85
Robert R. MacLeod (Plaintiff)
v.
The Queen (Defendant)
INDEXED AS: MACLEOD V. CANADA
Trial Division, McNair J.—Fredericton, January
13, 1988.
Practice — Pleadings — Motion to strike — Counterclaim
for repayment of overpayment of unemployment insurance
monies, and penalty — Plaintiff alleging Charter violations —
Motion dismissed — Counterclaim raising arguable case —
Important constitutional issues not properly disposed of on
interlocutory application — Court not prepared to assume
breach of Charter rights or go into merits of Charter argument
— Onus on plaintiff to establish prima facie case before
defendant required to establish s.1 justification — Allegations
of Charter violations should not be allowed to limit other
party's rights under Federal Court Rules.
Unemployment insurance — Counterclaim for repayment of
overpayment of unemployment insurance monies, and penalty
— Defendant entitled to treat amounts as debts due Her
Majesty and to seek to recover same in Federal Court pursu
ant to Unemployment Insurance Act, 1971, s. 49(2).
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Canadian Charter of Rights and Freedoms, being Part I
of the Constitution Act, 1982, Schedule B, Canada Act
1982, 1982, c. 11 (U.K.).
Federal Court Rules, C.R.C., c. 663, R. 419.
Unemployment Insurance Act, 1971, S.C. 1970-71-72,
c. 48, s. 49(2).
CASES JUDICIALLY CONSIDERED
APPLIED:
Waterside Ocean Navigation Co., Inc. v. International
Navigation Ltd., [1977] 2 F.C. 257 (T.D.).
CONSIDERED:
Nabisco Brands Ltd.—Nabisco Brands Ltée v. Procter &
Gamble Co. et al. (1985), 5 C.P.R. (3d) 417 (F.C.A.).
COUNSEL:
Daniel G. Pole for plaintiff.
Michael F. Donovan for defendant.
SOLICITORS:
Brewer MacPherson Quinn, Fredericton, New
Brunswick, for plaintiff.
Deputy Attorney General of Canada for
defendant.
The following are the reasons for order deliv
ered orally in English by
MCNAIR J.: The application before me is a
motion by the plaintiff to strike the defendant's
counterclaim pursuant to Rule 419 of the Federal
Court Rules [C.R.C., c. 663] on the grounds that:
(i) it discloses no reasonable cause of action in that Her
Majesty the Queen may not, under the authority of the Unem
ployment Insurance Act, S.C. 1970-71-72, C. 48 and amend
ments thereto bring a civil action for repayment of an overpay-
ment of unemployment insurance monies advanced or penalties
assessed thereupon until they have been determined to be debts
due Her Majesty;
(ii) it will prejudice the conduct of the action as described in
the Statement of Claim of the Plaintiff in that the allegations
and evidence which will be led or discovered in order to support
the Counter-Claim were obtained illegally and in violation of
the Canadian Charter of Rights and Freedoms;
(iii) it would be an abuse of the process of the Court;
(iv) it would be vexatious of the action of the Plaintiff.
The rule generally followed in motions to strike
under paragraph 419(1)(a) on grounds that the
pleading discloses no reasonable cause of action is
that the allegations pleaded are deemed to be true
and the application may not and indeed cannot be
supported by affidavit evidence.
In the case of applications to strike on the other
grounds set out in paragraphs 419(1)(b) to (f)
inclusive, the practice requires some affidavit evi
dence to support the grounds for striking the
pleading. That is not the case here.
Essentially, the submissions made by counsel for
the plaintiff in his able and ingenious argument
reduces to the following propositions.
Firstly, that the whole purpose of the counter
claim is to enable the defendant to elicit evidence
by way of discovery which should not be permitted
in a case involving allegations of Charter [Canadi-
an Charter of Rights and Freedoms, being Part I
of the Constitution Act, 1982, Schedule B, Canada
Act 1982, 1982, c. 11 (U.K.)] violations.
Alternatively, any such discovery elicited by the
defendant should be confined solely to the allega
tions pleaded by the plaintiff in its statement of
claim and should not be permitted to open the door
to matters pertaining to the alleged overpayment
and penalty which from the defendant's standpoint
are said to be debts due Her Majesty.
The real issue is whether the Court should exer
cise its discretion in granting the relief sought by
the plaintiff in its motion. In my view, that raises
the issue of whether the counterclaim has raised an
arguable case.
In my opinion, the test of that is not whether the
counterclaim raises a prima facie case, but simply
whether it raises an arguable case. It seems to me
that it does and it is primarily for that reason that
I rule against granting the motion to strike.
Another ground for so ruling arises from the
fact that this case raises constitutional issues of
considerable importance pertaining to the alleged
violation of certain of the plaintiffs rights under
the Canadian Charter of Rights and Freedoms, so
that the matter cannot be properly disposed of on
an interlocutory application of this nature.
If I were to rule that the counterclaim should be
struck on the basis of the alleged Charter viola
tions, then it seems to me that I would be required
to assume that the plaintiff's Charter rights had
been breached. I am not prepared to make any
such assumption. Nor, by the same token, am I
disposed to go into the merits of the plaintiff's
Charter argument.
While cases involving allegations of the viola
tions of a party's rights under the Charter
undoubtedly raise constitutional issues of great
importance, nevertheless the onus still rests on that
party of proving the alleged violations. Proof does
not automatically result from the mere fact of
pleading.
In other words, the plaintiff has to make out a
prima facie case. Once having done that then, in
my view, the onus shifts to the opposing party to
establish that the rights determined to have been
violated under the Charter are subject to "such
reasonable limits prescribed by law as can be
demonstrably justified in a free and democratic
society."
There is also another ground which I consider
supports the ruling I have made and it is this. If a
party brings an action then that party must face
the possibility of the action being defended by the
party sued. I speak here of a civil action within the
context of the Federal Court Rules. That being
the case, the party sued has certain rights under
the Rules with respect to defending the action,
discovery of documents, examination for discovery,
and like procedures.
In my opinion, it would be very wrong to con
clude that simply because a party in his action
raises allegations of Charter violations that that of
itself necessarily circumscribes and limits the
normal discovery procedures available to that
party in his defence of the suit.
If one were to take that proposition to its logical
conclusion the result would be that anyone by
raising a Charter violation could virtually create
an irrebuttable presumption that the violation need
not be proven by the ordinary standards of proof
applicable in a civil case, thus depriving the other
party of his reasonable means of defending the
action.
I am certainly not prepared to make any such
assumption simply because a case raises allega
tions of Charter violations. It is implicit from the
Supreme Court of Canada decisions and what has
been said by judges time and again that Charter
cases are very important cases in the context of
raising constitutional issues but, notwithstanding
that, the determination of these issues usually
requires an adjudication at trial. In short, an inter
locutory application is not the proper area or
forum in which to decide matters of that magni
tude. In any event, that is the ruling I have made.
Moreover, I agree with the submission of coun
sel for the defendant that subsection 49(2) of the
Unemployment Insurance Act, 1971 [S.C. 1970-
71-72, c. 48] applies to what the defendant is
seeking to do here by way of the counterclaim. In
my opinion, it was within the right of the defend
ant to treat the amount of overpayment claimed to
be due and the penalty claimed to be rightfully
assessed as debts due Her Majesty and to seek to
recover these debts in the Federal Court as a court
of competent jurisdiction.
The onus of proving its entitlement to what it
seeks to recover by way of counterclaim rests on
the defendant and the defendant will have to prove
that the overpayment and penalty are debts due to
Her Majesty the Queen.
On the strict procedural point, I would cite two
cases. One is Nabisco Brands Ltd.—Nabisco
Brands Ltée v. Procter & Gamble Co. et al.
(1985), 5 C.P.R. (3d) 417 (F.C.A.).
The gist of the decision is that the Court of
Appeal will not reverse a discretionary interlocuto
ry order of a trial judge on a motion given without
reasons unless it can be shown that the judge
clearly erred or proceeded on a wrong principle.
The other case is Waterside Ocean Navigation
Co., Inc. v. International Navigation Ltd., [1977]
2 F.C. 257 (T.D.) per Thurlow A.C.J. [as he then
was], at page 259:
With respect to (1) [statement of claim discloses no reasonable
cause of action], the determination must be made on the basis
of the allegations of the statement of claim. For the purpose of
(2), whether the application is made under Rule 419(1)(c) or
(f) or under the inherent jurisdiction of the Court, evidence is
admissible. In neither case, however, is the onus on the appli
cant an easy one to discharge. The Court is always slow to
strike out a statement of claim and dismiss an action under
Rule 419(1)(a) and will do so only when it is clear that by no
proper amendment can the statement of claim be revised so as
to disclose a reasonable cause of action. The test is just as
stringent, if not more so, when dismissal is sought on the
ground that the proceeding is frivolous or vexatious or an abuse
of the process of the Court. The Court will not stop a proceed
ing and deny a plaintiff the right to have a case heard unless it
is clear that the action is frivolous or vexatious or that the
plaintiff has no reasonable cause of action and that to permit
the action to proceed is an abuse of its process.
In the result, the plaintiff's motion is dismissed.
Costs to be in the cause.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.