This case involved a superior court action by a group of snow crab fish harvesters who alleged that they had a contract with the Minister of Fisheries whereby they gave up their historic right to a proportionate share of a relatively large increase in the total allowable catch of snow crab in the 1990’s in exchange for a promise from the Minister of Fisheries that he or she would maintain their traditional catch levels at the 1988-93 levels unless conservation required an overall reduction in the total allowable catch below 1993 levels. As a result of alleged failures of the Minister to honour this commitment in 2000 and thereafter, this group commenced a superior court action alleging breach of contract or alternatively negligence. They claimed damages in excess of $23,000,000.
In an application by the Crown to strike the statement of claim, one of the main issues that arose was the whether or not the superior court had jurisdiction. The Crown argued that the action was a collateral attack on the exclusive jurisdiction of the Federal Court to hear matters of judicial review under section 18 of the Federal Court Act. The plaintiffs argued that there was concurrent jurisdiction under s. 17 of the Federal Court Act and s. 21(1) of the Crown Liability Act. The Applications Judge (2008 NLTD 145 link]), after reviewing a number of authorities including Genge v. Canada (A.G.), 2007 NLCA 60, stated that since judicial review is not a pre-requisite for an action in contract or tort (see Genge para. 40), a court must determine the true nature of the application. In doing so, the court distinguished a number of cases cited by the plaintiffs, such as Keeping v. Canada (A.G.), 2003 NLCA 21, as cases not involving the exercise of ministerial discretion. Since no contractual right to quota could exist until the Minister exercised his or her discretion each year to approve a quota, the true nature of the action was an attack on the Minister’s discretionary power (para. 42 trial level decision). Similarly, no negligence in entering into an agreement could be established that was independent of the Minister’s exercise of discretion to approve quota. In characterizing the action as a matter of judicial review outside the jurisdiction of the superior court, the court concluded that "[w]here the allegations are fundamentally tied to the decision-making authority of the Minister, there is no room for an action in tort or contract because the impugned action was not independent from the exercise of ministerial authority" (para. 43). As result, the Applications Judge held the statement of claim did no disclose a reasonable cause of action and declined jurisdiction and refused to grant a stay pending a superior court action.
Upon appeal to the Court of Appeal, the decision of the Applications Court was upheld with Wells, J.A. dissenting and with partially different reasons being provided by Barry, J.A. and Welsh, J.A..
Both majority decisions agreed upon the law to be applied as summarized by Welsh, J.A: as follows:
To summarize, the above decisions support several conclusions. First, where, pursuant to legislation, a minister is authorized to exercise discretion in the public interest, that discretion may not be constrained for future use or fettered either directly or indirectly, unless the legislation otherwise provides. Indirect fettering includes exposing the minister or government to liability for damages or payment of compensation for failure to exercise the discretion in a particular way. Despite the apparent harshness of the result, an agreement, implied undertaking or representation having the effect of fettering the minister’s authority is unenforceable and damages are not available. Nonetheless, the minister must act in good faith, not arbitrarily, and must not base his or her decision on considerations irrelevant or extraneous to the statutory purpose. Finally, while damages are not available, a claim for unjust enrichment may be permitted. (para. 83)
However, the two majority judgements varied somewhat on their application of the law to the facts. Welsh J.A. applied the law similarly to that of the Applications Judge by holding that a "claim for damages for failure to exercise the discretion in a particular manner amounts to an improper indirect fettering of the Minister’s discretion. . . . The same analysis applies and the same conclusion follows whether the claim is made in contract or tort . . ." (para. 84).
Barry J.A. agreed with Welsh’s analysis of the contract claim, but with respect to the tort claim, he added that the pleadings did not set out any duty owed by the Minister to the Applicants. The Applicants must "be taken to know the law and , specifically, the rule against fettering ministerial discretion. Given that knowledge, how can this Court say the Minister owed any duty to explain the limitations on the enforceability of any commitment regarding quotas? In my opinion, no such duty existed." (para. 98).
The dissenting reasons are set out at paragraphs 1 to 58 of the judgement.
Editor’s note: Although it did not likely affect the outcome of the decision, all three judges in reviewing the jurisprudence on judicial review of discretionary decisions appear to have overlooked the fact that the requirement of the decision maker to act in good faith, not arbitrarily, and to base his or her decision on considerations irrelevant or extraneous to the statutory purpose are in addition to the needs to meet the requirements of natural justice. In this regard see the editorial comments at the end of the Arsenault digest (link).
(Attorney General) v. Telezone Inc, 2010 SCC 62
Editor’s postscript: Since this case was decided, the Supreme Court of Canada released Canada (Attorney General) v. Telezone Inc, 2010 SCC 62, which over-ruled the Genge Canada decision and stated that "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 could be pursued on judicial review" (para. 76). However, the provincial superior courts and the Federal Court do have the residual discretion to stay a damage claim if, in its essential character it is a claim for judicial review with only a thin pretence of a private wrong (para. 78).