Class actions against the Crown: a substitution for judicial review on administrative law grounds?

AuthorSossin, Lorne
PositionCanada

INTRODUCTION

Class actions against the Crown do not fit neatly in existing private law or public law paradigms. Private law liability tends to flow from discrete duties owed to specific individuals or groups, while judicial review at public law is premised on public duties such as the obligation of decision-makers to exercise their statutory authority in a fair and reasonable fashion. Class actions typically are brought on private law grounds alleging discrete duties but in contexts where the decision-makers were exercising broad statutory authority in the public interest. Class actions against the Crown often compel courts to draw artificial distinctions between private and public law paradigms. In these paradigms, either the Crown owed a specific private law duty and may be subject to liability for damages and/or declaratory relief, or it owed only a general public law duty and the Crown may be subject to only judicial review on administrative law grounds leading to administrative law remedies (usually quashing the impugned decision). In this brief article, I wish to explore frameworks that are capable of surmounting this dichotomy--Put differently, I am interested in developing approaches to the relationship between class actions against the Crown and administrative law proceedings against the Crown which do not devolve inexorably into private law and public law spheres. This article will argue that class actions against the Crown can only be properly understood as a site of convergence between private law and public law spheres.

While class actions against the Crown are not new, they are taking on unprecedented prominence as an alternative to judicial review on administrative law grounds. It is hardly surprising that the Crown has been a frequent defendant in class actions. Given the state's presence in the economic and social life in this country, together with the state's deep pockets, litigation against the Crown is to be expected. Increasingly, however, these class actions seek to impose civil liability for government decision-making, based on regulatory negligence or a breach of a minister's fiduciary or other equitable obligations, in circumstances where judicial review could also be available. (1) In other words, rather than seeking to invalidate government decisions, parties are opting to pursue compensation and vindication through civil liability. Whether seeking a declaration against the Crown or substantial damages, the aggregate nature of class actions may mirror the public accountability sought through judicial review.

Seeking accountability from the Crown through a civil action is certainly not unprecedented (for example, Roncarelli v. Duplessis, (2) often invoked as a foundation for Canadian judicial review of executive discretion, was an action for damages). It is the arresting size and scope of modern class actions against the Crown that has led many observers to raise concerns. (3) To take just one example, the class action against the Government of Canada for its handling of the "Mad Cow" crisis of 2003-2005 involves a putative class of at least 100,000 farmers, and claims for damages in excess of $20 billion. (4) While this may provide a form of legal accountability, I believe that in many if not most of these cases, class actions are not well-suited to reviewing government action, and in some cases, class actions may result in privatizing key aspects of the policy process with deleterious consequences. (5)

In several distinctive respects, the Crown does not behave as other defendants tend to in the face of class actions. For example, the Crown has access to funds to meet judgments, even extremely large judgments. Unlike large corporate defendants who may be vulnerable to the threat of huge damage awards (and may even be vulnerable to the publicity surrounding disclosure of contingent liability if huge damages are sought), the Crown is not easily intimidated in this fashion. (6) Some observers have commented on the culture of the Crown (in particular, the federal Crown) as averse to settlements and aggressive in the use of procedural mechanisms in an attempt to strike out virtually all claims that seek to impose liability for policy choices. (7) Furthermore, if push comes to shove, the government retains the ultimate trump card, which is simply to legislate itself retroactively out of liability for civil damages, a tactic discussed in more detail below.

Governments are driven by political and not economic bottom lines (although the two certainly may be intertwined). For example, in the "tainted blood" litigation, the Federal Government agreed to extend the number of people subject to a settlement beyond what any reasonable likelihood of liability might have justified because it was politically expedient to do so. (8) In other settings, such as the Chinese "head tax" class action, the Crown eventually settled with unsuccessful classes following the negative press arising from government success in the courtroom. (9) Part of the consequence of political rather than economic bottom lines is often an emphasis on short-term solutions. This dynamic is compounded by the fact that the government who decides on a strategy to use in defence against a class action may not be the same government that has to live with the results of the decision.

I conclude that class actions against the Crown which seek to attribute liability on the Crown for the preferences pursued by government may have distorting effects for public policy and for public law. Both judicial and government responses to the rise of class actions against the Crown are justified to address these challenges. Those responses, however, must be tempered by recognition of why litigants turn to class actions in the first place--accountability for alleged wrongdoing or harm caused by executive action. The goal of judicial and government initiatives in this area should not be to immunize government action from judicial scrutiny or to further ossify the categories of judicial review; rather, the goal should be a more coherent, rigorous and responsive set of avenues for holding the government accountable for its actions. It is possible and desirable for administrative law to develop in a manner that acknowledges and addresses the public and private motivations behind administrative law litigation.

This analysis is divided into three sections. In the first section, I examine class actions against the Crown as a form of administrative law by other means, highlighting the public/private dichotomy used by the Court to distinguish class actions from judicial review of administrative action. In the second section, I consider whether judicial review should form a condition precedent for some class actions against the Crown. Finally, in the third section, I turn to an analysis of the range of government responses to class actions against the Crown. I conclude that class actions against the Crown should not be artificially divorced from judicial review against the Crown--each of these should serve as mutually reinforcing forms of legal accountability for public action. To accomplish this end, each avenue for redress against the Crown must be reformed, and to some extent, reconceptualized.

  1. Administrative Law by Class Actions

    The conventional view is that private law duties are inconsistent with review of government decision-making because private law duties presuppose a duty owed to a discrete group, whereas the nature of public law authority presupposes a duty owed to the public as a whole. A Minister deciding on funding cannot be said to owe a specific duty to act in the interests of a particular constituency; rather, it is in the nature of policy-making to choose from among worthy recipients for public benefits and burdens. This dichotomy between public and private duties owed by the Crown was taken up by the Supreme Court in the context of regulatory negligence in Cooper v. Hobart (10) and Edward v. Law Society of Upper Canada. (11)

    Both Cooper and Edward involved class actions brought by investors who lost money due to the mishandling of their investment by mortgage brokers (Cooper) or lawyers (Edward). These investors then sought recovery from the relevant regulators on the grounds that the regulators had violated their duty of care by not taking steps to prevent the misdeeds at issue. In both cases, the Supreme Court found that the regulators were not liable. The basis for this finding in each case was that nothing in the governing statutes indicated that the regulators owed a special duty to these investors as opposed to the general duties owed by the regulators to the public as a whole. McLachlin C.J.C. and Major J., writing jointly for a unanimous Court, explained this logic succinctly:

    In this case, the statute does not impose a duty of care on the Registrar to investors with mortgage brokers regulated by the Act. The Registrar's duty is rather to the public as a whole. Indeed, a duty to individual investors would potentially conflict with the Registrar's overarching duty to the public. (12) This passage reflects a common judicial response to allegations of civil liability against the Crown. Courts attempt to demarcate a zone of deference to policy-making from a zone of intervention for the breach of recognized private law duties. In this sense, the approach taken to the discretion exercised by the Registrar of Mortgage Brokers in Cooper is akin to the notion of deference from administrative law. They explain that another reason why no civil liability should attach to the policy choices made by the Registrar is the distinction between government policy and the execution of policy: "As stated, the Registrar must make difficult discretionary decisions in the area of public policy, decisions which command deference." (13) In other words, even when considering the application of liability in the private law sense, courts may...

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