British Columbia v. Imperial Tobacco Canada Ltd. et al., (2006) 232 B.C.A.C. 17 (CA)

• Judge: Rowles, Hall and Smith, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: September 15, 2006
• Jurisdiction: British Columbia
• Citations: (2006), 232 B.C.A.C. 17 (CA);2006 BCCA 398

B.C. v. Imperial Tobacco (2006), 232 B.C.A.C. 17 (CA);

      385 W.A.C. 17

MLB headnote and full text

Temp. Cite: [2006] B.C.A.C. TBEd. SE.010

Her Majesty the Queen in Right of British Columbia (respondent/plaintiff) v. Imperial Tobacco Canada Limited, Rothmans, Benson & Hedges Inc., Rothmans Inc., JTI-Macdonald Corp., Canadian Tobacco Manufacturers' Council, B.A.T. Industries p.l.c., British American Tobacco (Investments) Limited, Carreras Rothmans Limited, Philip Morris Incorporated, Philip Morris International Inc., R.J. Reynolds Tobacco Company, R.J. Reynolds Tobacco International, Inc., Rothmans International Research Division and Ryesekks p.l.c. (appellants/defendants)

(CA033179; CA033180; CA033184; CA033185; CA033186; CA033187; CA033188; 2006 BCCA 398)

Indexed As: British Columbia v. Imperial Tobacco Canada Ltd. et al.

British Columbia Court of Appeal

Rowles, Hall and Smith, JJ.A.

September 15, 2006.

Summary:

The Government of British Columbia brought an action under the Tobacco Damages and Health Care Costs Recovery Act against 14 defendants for the recovery of health care expenditures incurred in treating individuals exposed to tobacco products sold in British Columbia. Ten of the defendants were served ex juris. In addition to the action brought by the Government, three Canadian cigarette manufacturers each brought an action seeking a declaration that the Act was unconstitutional on the grounds that the legislation failed to respect territorial limits on provincial legislative jurisdiction, derogated materially from the independence of the judiciary and offended the rule of law. The defendants who had been served ex juris brought applications in the Government action to set aside the service ex juris.

The British Columbia Supreme Court, per Holmes, J., in a decision reported at [2003] B.C.T.C. 877 held that the Act was unconstitutional based on extraterritoriality. The court granted declarations in the manufacturers' actions that the Act was unconstitutional. The court also granted the applications to set aside service ex juris in the Government action. The Government appealed from the orders.

The British Columbia Court of Appeal, in a decision reported at 199 B.C.A.C. 195; 326 W.A.C. 195, set aside the order declaring the Act unconstitutional. The court also ordered that the applications of the ex juris defendants to set aside service be remitted to the trial court for determination on the basis that the Act was constitutionally valid. The defendants obtained leave to appeal to the Supreme Court of Canada from the court's decision that the Act was constitutional.

The British Columbia Supreme Court, per Holmes, J., in a decision reported at [2005] B.C.T.C. 946, dismissed the applications of the ex juris defendants to set aside service ex juris or to decline jurisdiction.

The Supreme Court of Canada, in a decision reported at 339 N.R. 129; 218 B.C.A.C. 1; 359 W.A.C. 1, dismissed the defendants' appeals on the issue of the constitutional validity of the Act.

The ex juris defendants appealed from the order of Holmes, J., which dismissed their applications to set aside service ex juris. The appeals raised the issues of: (1) whether the court had jurisdiction over the ex juris defendants; (2) whether the Act was constitutionally inapplicable in relation to any of the ex juris defendants; and (3) whether the court should have exercised its discretion to decline jurisdiction over any of the ex juris defendants on the basis of the doctrine of forum conveniens.

The British Columbia Court of Appeal dismissed the appeals. The court had jurisdiction over the ex juris defendants, the Act was not constitutionally inapplicable to the ex juris defendants and British Columbia was the forum conveniens.

Conflict of Laws - Topic 603

Jurisdiction - General principles - Jurisdiction simpliciter - The Government of British Columbia brought an action under the Tobacco Damages and Health Care Costs Recovery Act against 14 defendants for the recovery of health care expenditures incurred in treating individuals exposed to tobacco products sold in British Columbia - Ten of the defendants were served ex juris - Some of the ex juris defendants sold cigarettes in British Columbia - The action against the ex juris defendants who did not manufacture cigarettes sold in British Columbia (the "joint breach defendants") was brought pursuant to s. 4 of the Act, which provided for joint and several liability where defendants jointly breached a duty or obligation described in the definition of "tobacco related wrong" in s. 1(1) - The British Columbia Court of Appeal affirmed that the British Columbia court had jurisdiction over the ex juris defendants, whether manufacturers of cigarettes sold in British Columbia or the joint breach defendants - The real and substantial connection test had been met - British Columbia was also the forum conveniens - See paragraphs 24 to 45 and 101 to 106.

Conflict of Laws - Topic 1661

Actions - General - Forum conveniens - General - [See Conflict of Laws - Topic 603 ].

Constitutional Law - Topic 772

Territorial limits - Provinces - British Columbia - The Government of British Columbia brought an action under the Tobacco Damages and Health Care Costs Recovery Act against 14 defendants for the recovery of health care expenditures incurred in treating individuals exposed to tobacco products sold in British Columbia - Ten defendants were served ex juris - The ex juris defendants argued that the Act was constitutionally inapplicable to them - They submitted that by legislating that the Act applied retroactively, the Province altered the previously acquired rights of the foreign defendants, which constituted an impermissible extraterritorial operation of the statute - They also contended that changing the rights of foreigners acquired under the proper law of the alleged wrongs would be contrary to the constitutional imperative of Canada's private international law, specifically the principle of order and fairness - The British Columbia Court of Appeal rejected the arguments - The retroactivity of the Act did not result in its inapplicability against foreign defendants - The legislation was part of the substantive law of British Columbia and it did not alter or deprive a foreigner of a right that accrued in another jurisdiction - Any rights that the foreign defendants accrued with respect to not being sued had accrued in British Columbia - The purpose of the principle of order and fairness was to ensure that the court did not arbitrarily take jurisdiction over a matter to which there was no real and substantial connection - That was not the case here - See paragraphs 54 to 55 and 75 to 90.

Constitutional Law - Topic 772

Territorial limits - Provinces - British Columbia - The Government of British Columbia brought an action under the Tobacco Damages and Health Care Costs Recovery Act against 14 defendants for the recovery of health care expenditures incurred in treating individuals exposed to tobacco products sold in British Columbia - Ten of the defendants were served ex juris - Some of the ex juris defendants sold cigarettes in British Columbia - The action against the ex juris defendants who did not manufacture cigarettes sold in British Columbia (the "joint breach defendants") was brought pursuant to s. 4 of the Act, which provided for joint and several liability where defendants jointly breached a duty or obligation described in the definition of "tobacco related wrong" in s. 1(1) - The ex juris defendants argued that the Act was constitutionally inapplicable to them - In relation to s. 4, they asserted that the Act must have extraterritorial operation because it regulated conduct that occurred outside British Columbia - The British Columbia Court of Appeal rejected the argument - The activities alleged against the joint breach defendants were wrongs situated in British Columbia and the harm that resulted was situated in British Columbia - It could also be argued that it was in the reasonable contemplation of the defendants that their wrongful conduct could cause people to smoke in British Columbia - That was enough to ground the wrongful conduct in British Columbia and to determine that the statute in its application did not reach beyond the legislative jurisdiction of the province - See paragraphs 91 to 97.

Constitutional Law - Topic 6753

Provincial jurisdiction (s. 92) - General principles - Territorial limitation - [See both Constitutional Law - Topic 772 ].

Health - Topic 1213

Public health legislation - Health care costs recovery schemes - Tobacco damages - [See Conflict of Laws - Topic 603 and both Constitutional Law - Topic 772 ].

Health - Topic 1213

Public health legislation - Health care costs recovery schemes - Tobacco damages - The Government of British Columbia brought an action under the Tobacco Damages and Health Care Costs Recovery Act against 14 defendants for the recovery of health care expenditures incurred in treating individuals exposed to tobacco products sold in British Columbia - Ten of the defendants were served ex juris - The ex juris defendants argued that s. 3(2) of the Act contained presumptions which made the Act constitutionally inapplicable to them - The British Columbia Court of Appeal rejected the argument - The court stated that what the Government was required to prove on the balance of probabilities before the presumptions could come into play defeated the argument of the ex juris defendants that no meaningful connection between the cause of action and the foreign defendant need be shown - See paragraphs 71 to 74.

Statutes - Topic 6702

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - Effect of - [See first Constitutional Law - Topic 772 ].

Statutes - Topic 9261

Territorial effect of statutes - Provincial statutes - General - [See both Constitutional Law - Topic 772 ].

Cases Noticed:

Furlan v. Shell Oil Co., [2000] 7 W.W.R. 433; 140 B.C.A.C. 235; 229 W.A.C. 235; 77 B.C.L.R.(3d) 35; 2000 BCCA 404, refd to. [para. 24].

Upper Churchill Water Rights Reversion Act, 1980, Re; Churchill Falls (Labrador) Corp. et al. v. Newfoundland (Attorney General) et al., [1984] 1 S.C.R. 297; 53 N.R. 268; 47 Nfld. & P.E.I.R. 125; 139 A.P.R. 125, consd. [para. 30].

Unifund Assurance Co. v. Insurance Corp. of British Columbia, [2003] 2 S.C.R. 63; 306 N.R. 201; 176 O.A.C. 1, consd. [para. 30].

Moran v. Pyle National (Canada) Ltd., [1975] 1 S.C.R. 393; 1 N.R. 122; 43 D.L.R.(3d) 239, refd to. [para. 32].

Harrington v. Dow Corning Corp. et al. (2000), 144 B.C.A.C. 51; 236 W.A.C. 51; 82 B.C.L.R.(3d) 1; 2000 BCCA 605, consd. [para. 33].

Robson v. Chrysler Canada Ltd. et al. (2002), 170 B.C.A.C. 60; 279 W.A.C. 60; 2 B.C.L.R.(4th) 1; 2002 BCCA 354, refd to. [para. 34].

Vitapharm Canada Ltd. v. Hoffmann-La Roche (F.) Ltd. - see Ford et al. v. Hoffmann-La Roche Ltd. et al.

Ford et al. v. Hoffmann-La Roche Ltd. et al., [2002] O.T.C. 57; 20 C.P.C.(5th) 351 (Sup. Ct.), refd to. [para. 41].

Nutreco Canada Inc. et al. v. Hoffmann-La Roche Ltd. et al., [2001] B.C.T.C. 1146; 10 C.P.C.(5th) 351; 2001 BCSC 1146, refd to. [para. 41].

WIC Premium Television Ltd. v. General Instrument Corp. et al., [2000] 2 W.W.R. 417; 243 A.R. 329 (Q.B.), affd. [2001] 2 W.W.R. 431; 266 A.R. 142; 228 W.A.C. 142; 2000 ABCA 233, refd to. [para. 41].

Muscutt et al. v. Courcelles et al. (2002), 160 O.A.C. 1; 213 D.L.R.(4th) 577 (C.A.), refd to. [para. 45].

Castillo v. Castillo, [2005] 3 S.C.R. 870; 343 N.R. 144; 376 A.R. 224; 360 W.A.C. 224; 2005 SCC 83, consd. [para. 50].

Canadian Broadcasting Corp. and Knapp v. Quebec Police Commission, [1979] 2 S.C.R. 618; 28 N.R. 541, refd to. [para. 54].

Tolofson v. Jensen and Tolofson, [1994] 3 S.C.R. 1022; 175 N.R. 161; 77 O.A.C. 81; 51 B.C.A.C. 241; 84 W.A.C. 241, refd to. [para. 78].

British Columbia v. Imperial Tobacco Canada Ltd. et al. (2005), 339 N.R. 129; 218 B.C.A.C. 1; 359 W.A.C. 1; 2005 CarswellBC 2207; 2005 SCC 49, refd to. [para. 81].

Statutes Noticed:

Tobacco Damages and Health Care Costs Recovery Act, S.B.C. 2000, c. 30, sect. 1(1), sect. 2(1), sect. 2(4), sect. 2(5), sect. 3 [para. 20]; sect. 4 [para. 21]; sect. 6(1) [para. 22]; sect. 10 [para. 23].

Authors and Works Noticed:

Hogg, Peter W., Constitutional Law of Canada (1997 Looseleaf Ed.), p. 15-25 [para. 47].

Counsel:

J. Giles, Q.C., J.J. Kay, Q.C., and D.R. Bloor, for the appellants, R.J. Reynolds Tobacco Company and R.J. Reynolds Tobacco International, Inc.;

J.A. Macaulay, Q.C., K.N. Affleck, Q.C., and I.G. Christman, for the appellant, Rothmans Inc.;

J.J.L. Hunter, Q.C., C.P. Dennis, and M.J. Westphal, for the appellants, British American Tobacco (Investments) Limited and B.A.T. Industries p.l.c.;

S. Potter and C.A. Millar, for the appellants, Philip Morris Incorporated and Philip Morris International Inc.;

P.D.K. Fraser, Q.C., and G.T. Clarke, for the appellant, Carreras Rothmans Limited;

R.B. Lindsay, Q.C., and S.A. Braun, for the appellant, Ryesekks p.l.c.;

D.A. Webster, Q.C., C.E. Jones and K.A. Kuntz, for the respondent.

These appeals were heard on February 1 to 3, 2006, at Vancouver, British Columbia, before Rowles, Hall and Smith, JJ.A., of the British Columbia Court of Appeal. The following judgment of the Court of Appeal was delivered by Rowles, J.A., on September 15, 2006.