Delivery Drugs Ltd. et al. v. Ballem et al., (2007) 248 B.C.A.C. 163 (CA)

• Judge: Ryan, Donald and Smith, JJ.A.
• Court: Court of Appeal (British Columbia)
• Case Date: November 14, 2007
• Jurisdiction: British Columbia
• Citations: (2007), 248 B.C.A.C. 163 (CA);2007 BCCA 550

Delivery Drugs Ltd. v. Ballem (2007), 248 B.C.A.C. 163 (CA);

    412 W.A.C. 163

MLB headnote and full text

Temp. Cite: [2007] B.C.A.C. TBEd. NO.045

Delivery Drugs Ltd. dba Gastown Pharmacy, 610650 B.C. Ltd. dba Priority Drugs and George Wolsey (appellants/respondents on cross-appeal/petitioners) v. Penny Ballem, Deputy Minister, Ministry of Health, Province of British Columbia and Heather Davidson, Acting Executive Director, Pharmacare (respondents/appellants on cross-appeal/respondents)

(CA034043; 2007 BCCA 550)

Indexed As: Delivery Drugs Ltd. et al. v. Ballem et al.

British Columbia Court of Appeal

Ryan, Donald and Smith, JJ.A.

November 14, 2007.

Summary:

The Deputy Minister of Health terminated the agreement that the Ministry had with two pharmacies for the delivery of subsidized drugs. The pharmacies applied for judicial review.

The British Columbia Supreme Court, in a decision reported [2006] B.C.T.C. 631, allowed the application. The court quashed the Deputy Minister's decision for failure to observe procedural fairness. The court remitted the matter to the Deputy Minister for reconsideration. The court dismissed the pharmacies' claim for an order prohibiting the Deputy Minister from asserting or relying upon certain allegedly irrelevant considerations on the reconsideration. The pharmacies appealed against the denial of the prohibition order. The Deputy Minister cross-appealed against the quashing of her decision.

The British Columbia Court of Appeal, Ryan, J.A., dissenting, dismissed the appeal and the cross-appeal.

Contracts - Topic 3663

Performance or breach - Repudiation - Conditions precedent - Two pharmacies had an agreement with the Ministry of Health (B.C.), under s. 4(1) of the Continuing Care Act (B.C.), for the delivery of subsidized drugs - The Deputy Minister of Health terminated the Ministry's agreement with the pharmacies after one of the pharmacies' principals was convicted of fraud charges that resulted from overbillings by the pharmacies in 1999 and 2000 - The pharmacies submitted that the Deputy Minister had to elect at that time to terminate the contract if she wished to do so and, having elected to affirm the contract and sue for damages, she was now precluded from terminating on that basis - The British Columbia Court of Appeal rejected this submission - The overbillings were not such repudiatory conduct as would raise a right in the Deputy Minister to elect to terminate the agreements - See paragraphs 77 and 78.

Crown - Topic 2202

Crown privilege or prerogative - General - Statutory limitations - Two pharmacies had an agreement with the Ministry of Health (B.C.), under s. 4(1) of the Continuing Care Act (B.C.), for the delivery of subsidized drugs - Section 4(5) authorized the Minister to terminate the agreement for non-compliance with an applicable standard, guideline or directive, a term or condition of the agreement, or a provision of the Act - The Deputy Minister of Health terminated the Ministry's agreement with the pharmacies after one of the pharmacies' principals was convicted of fraud - At issue was whether the Deputy Minister's decision was reviewable under the Judicial Review Procedure Act (B.C.) - The British Columbia Court of Appeal held that it was - Section 4(5) of the Continuing Care Act, together with the associated Regulation, and Termination Guidelines, provided comprehensively for the termination of contracts - By necessary implication, s. 4(5) displaced the Crown's common law power to terminate according to the private law of contract - Termination could now only be done under s. 4(5) - As a result, when it terminated the agreements, the Crown exercised a statutory power of decision, which was subject to judicial review for procedural fairness - See paragraphs 39 to 71.

Government Programs - Topic 625

Prescription drug payment - Agreements with pharmacies - Termination - Two pharmacies had an agreement with the Ministry of Health (B.C.), under s. 4(1) of the Continuing Care Act (B.C.), for the delivery of subsidized drugs - The Deputy Minister of Health terminated the Ministry's agreement with the pharmacies after one of the pharmacies' principals was convicted of fraud - A reviewing judge quashed the decision and ordered the matter remitted to the Deputy Minister for reconsideration - The reviewing judge also dismissed the pharmacies' claim for an order prohibiting the Deputy Minister, on the reconsideration, from asserting or relying upon certain allegedly irrelevant considerations, which included the fraud charges - The British Columbia Court of Appeal upheld the decision - The court agreed with the reviewing judge that the analysis had to transcend private law principles and recognize the public aspects of these agreements, including the fact that they were an integral part of a regulatory scheme to provide health care, that they were funded from the public purse, and that there was a public interest in ensuring the integrity of the subsidized drug program - These considerations placed the convictions squarely within the realm of relevance in the determination of whether there was cause to terminate the agreements - See paragraphs 76 to 79.

Government Programs - Topic 625

Prescription drug payment - Agreement with pharmacies - Termination - [See Statutes - Topic 6704 ].

Practice - Topic 9428

Appeals - Grounds of appeal - Objection to reasons for decision - Two pharmacies had an agreement with the Ministry of Health (B.C.), under s. 4(1) of the Continuing Care Act (B.C.), for the delivery of subsidized drugs - The Deputy Minister of Health terminated the Ministry's agreement with the pharmacies after one of the pharmacies' principals was convicted of fraud - A reviewing judge quashed the decision and ordered the matter remitted to the Deputy Minister for reconsideration - The reviewing judge also dismissed the pharmacies' claim for an order prohibiting the Deputy Minister, on the reconsideration, from asserting or relying upon certain allegedly irrelevant considerations, which included the fraud charges, the termination guidelines under the Act, overpayments to one pharmacy that were the subject of civil litigation, and wrongful claims for the compounding of anti-retroviral drugs, which had been resolved earlier - The pharmacies appealed, arguing that the reviewing judge had erred by refusing the prohibition order - The British Columbia Court of Appeal rejected this ground because it was not an appeal from the reviewing judge's order - Rather, it was an appeal from her reasons for judgment - See paragraphs 72 to 74.

Statutes - Topic 6704

Operation and effect - Commencement, duration and repeal - Retrospective and retroactive enactments - Presumption against retrospectivity and retroactivity - Two pharmacies had an agreement with the Ministry of Health (B.C.), under s. 4(1) of the Continuing Care Act (B.C.), for the delivery of subsidized drugs - Section 4(5) authorized the Minister to terminate the agreement for non-compliance with an applicable guideline - In 2003, Termination Guidelines were promulgated - In 2005, the Deputy Minister of Health terminated the Ministry's agreement with the pharmacies because one of the pharmacies' principals was convicted of fraud - The fraud charges arose from overbillings made before 2003 - The pharmacies argued that the Deputy Minister applied the Termination Guidelines retrospectively - The British Columbia Court of Appeal rejected the argument - The goal of the termination penalty under s. 4(5) was not to punish the person in question, but to protect the public - As a result, the Termination Guidelines did not attract the presumption against retrospective application - See paragraphs 80 to 83.

Cases Noticed:

Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817; 243 N.R. 22, refd to. [para. 22].

Ryan v. Law Society of New Brunswick, [2003] 1 S.C.R. 247; 302 N.R. 1; 257 N.B.R.(2d) 207; 674 A.P.R. 207; 2003 SCC 20, refd to. [para. 23].

Dr. Q., Re, [2003] 1 S.C.R. 226; 302 N.R. 34; 179 B.C.A.C. 170; 295 W.A.C. 170; 2003 SCC 19, refd to. [para. 23].

Attorney General v. De Keyser's Royal Hotel, [1920] A.C. 508 (H.L.), consd. [para. 44].

Ross River Dena Council Band et al. v. Canada et al., [2002] 2 S.C.R. 816; 289 N.R. 233; 168 B.C.A.C. 1; 275 W.A.C. 1; 2002 SCC 54, consd. [para. 47].

Pharmaceutical Manufacturers Association of Canada v. British Columbia (Attorney General) (1997), 96 B.C.A.C. 165; 155 W.A.C. 165; 38 B.C.L.R.(3d) 175; 149 D.L.R.(4th) 613 (C.A.), consd. [para. 49].

R. v. Criminal Injuries Compensation Board; Ex parte Lain, [1967] 2 Q.B. 864 (Q.B.D.), consd. [para. 50].

Associated Respiratory Services Inc. v. Purchasing Commission (B.C.) et al. (1994), 39 B.C.A.C. 161; 64 W.A.C. 161; 87 B.C.L.R.(2d) 70; 108 D.L.R.(4th) 577 (C.A.), refd to. [para. 56].

Wells v. Newfoundland and Board of Commissioners of Public Utilities (Nfld.), [1999] 3 S.C.R. 199; 245 N.R. 275; 180 Nfld. & P.E.I.R. 269; 548 A.P.R. 269, consd. [para. 59].

Eagleridge Bluffs & Wetlands Preservation Society v. British Columbia (Ministry of Transportation) - see Kiewit (Peter) & Sons Co. v. Perry et al.

Kiewit (Peter) & Sons Co. v. Perry et al. (2006), 228 B.C.A.C. 234; 376 W.A.C. 234; 2006 BCCA 334, dist. [para. 60].

Valley Rubber Resources Inc. v. British Columbia (Minister of Environment, Lands and Parks) (2002), 173 B.C.A.C. 85; 283 W.A.C. 85; 5 B.C.L.R.(4th) 1; 219 D.L.R.(4th) 1; 2002 BCCA 524, refd to. [para. 65].

Gendron v. Supply and Services Union of the Public Service Alliance of Canada, Local 50057 et al., [1990] 1 S.C.R. 1298; 109 N.R. 321; 66 Man.R.(2d) 81, consd. [para. 67].

ATCO Gas and Pipelines Ltd. v. Energy and Utilities Board (Alta.), [2006] 1 S.C.R. 140; 344 N.R. 293; 380 A.R. 1; 363 W.A.C. 1; 2006 SCC 4, refd to. [para. 69, footnote 2].

Haida Nation et al. v. British Columbia (Minister of Forests) et al. (1997), 98 B.C.A.C. 42; 161 W.A.C. 42 (C.A.), refd to. [para. 69, footnote 2].

Celgar Ltd. v. Star Bulk Shipping Co. (1979), 12 B.C.L.R. 62; 101 D.L.R.(3d) 61 (C.A.), refd to. [para. 78].

Barry and Brosseau v. Alberta Securities Commission, [1989] 1 S.C.R. 301; 93 N.R. 1; 96 A.R. 241, consd. [para. 82].

Statutes Noticed:

Continuing Care Act, R.S.B.C. 1996, c. 70, sect. 4 [para. 7].

Authors and Works Noticed:

Driedger, Elmer A., Construction of Statutes (2nd Ed. 1983), p. 198 [para. 81].

Hogg, Peter W., and Monahan, Patrick J., Liability of the Crown (3rd Ed. 2000), pp. 15, 16 [para. 42]; 17 [para. 43].

Hogg, Peter W., Constitutional Law of Canada (3rd Ed. 1992) (Supp.), p. 16-13 [para. 49].

Sullivan, Ruth, Sullivan and Driedger on the Construction of Statutes (4th Ed. 2002), p. 3 [para. 69, footnote 2]; 349 [para. 67]; 350 [para. 68].

Wade, H.W.R., Procedure and Prerogative in Public Law (1985), 101 L.Q.R. 180, pp. 190 to 198 [para. 50].

Counsel:

F.E. Verhoeven and D.E. Turner, for the appellants;

T.E. Callan and E.W. Hughes, for the respondents.

This appeal was heard at Vancouver, B.C., on October 4 and 5, 2006, by Ryan, Donald and Smith, JJ.A., of the British Columbia Court of Appeal. The decision of the Court of Appeal was delivered at Vancouver, B.C., on November 14, 2007, and the following reasons were filed:

Smith, J.A. (Donald, J.A., concurring) - see paragraphs 1 to 84;

Ryan, J.A. (dissenting) - see paragraphs 85 to 95.