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Federal Court

1. General
2. Jurisdiction
3. Federal Court Rules
4. Frivolous and Vexatious

Part II
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1. General

The Federal Court system deals mostly with subjects that are exclusively within 'Canada' (ie. the 'federal government') under the Constitution Act - such as airlines, telecommunications, RCMP, intellectual property and federal institutions. It is a statutory court, unlike the provincial s.96 judges ('superior court judges' who are constitutional) who operate in a court of 'inherent jurisdiction' and deal with the bulk of everyday private matters. This leads to some jurisdictional line-drawing, which is addressed here.

2. Jurisdiction

. Windsor (City) v. Canadian Transit Co.

In Windsor (City) v. Canadian Transit Co. (SCC, 2016), on appeal from the Federal Court of Appeal, the Supreme Court of Canada considered whether the federal court system had jurisdiction where a federally-incorporated company, co-owner of an international bridge, sought relief in that court against Canadian municipal property standards orders:
[25] In order to decide whether the Federal Court has jurisdiction over a claim, it is necessary to determine the essential nature or character of that claim (JP Morgan Asset Management (Canada) Inc. v. Canada (National Revenue)), 2013 FCA 250 (CanLII), [2014] 2 F.C.R. 557, at para. 50; Sifto Canada Corp. v. Minister of National Revenue, 2014 FCA 140 (CanLII), 461 N.R. 184, at para. 25). As discussed in further detail below, s. 23(c) of the Federal Courts Act only grants jurisdiction to the Federal Court when a claim for relief has been made, or a remedy has been sought, “under an Act of Parliament or otherwise”. The conferral of jurisdiction depends on the nature of the claim or remedy sought. Determining the claim’s essential nature allows the court to assess whether it falls within the scope of s. 23(c). Jurisdiction is not assessed in a piecemeal or issue-by-issue fashion.

[26] The essential nature of the claim must be determined on “a realistic appreciation of the practical result sought by the claimant” (Domtar Inc. v. Canada (Attorney General), 2009 FCA 218 (CanLII), 392 N.R. 200, at para. 28, per Sharlow J.A.). The “statement of claim is not to be blindly read at its face meaning” (Roitman v. Canada, 2006 FCA 266 (CanLII), 353 N.R. 75, at para. 16, per Décary J.A.). Rather, the court must “look beyond the words used, the facts alleged and the remedy sought and ensure . . . that the statement of claim is not a disguised attempt to reach before the Federal Court a result otherwise unreachable in that Court” (ibid.; see also Canadian Pacific Railway v. R., 2013 FC 161, [2014] 1 C.T.C. 223, at para. 36; Verdicchio v. R., 2010 FC 117 (CanLII), [2010] 3 C.T.C. 80, at para. 24).

[27] On the other hand, genuine strategic choices should not be maligned as artful pleading. The question is whether the court has jurisdiction over the particular claim the claimant has chosen to bring, not a similar claim the respondent says the claimant really ought, for one reason or another, to have brought.

.....

[31] The role and jurisdiction of the Federal Court appear most clearly when seen through the lens of the judicature provisions of the Constitution Act, 1867. Section 96 recognized the superior courts of general jurisdiction which already existed in each province at the time of Confederation. Section 101 empowered Parliament to establish “additional Courts for the better Administration of the Laws of Canada” — i.e., to establish new courts to administer federal law (R. v. Thomas Fuller Construction Co. (1958) Ltd., 1979 CanLII 187 (SCC), [1980] 1 S.C.R. 695, at p. 707; Quebec North Shore Paper Co. v. Canadian Pacific Ltd., 1976 CanLII 10 (SCC), [1977] 2 S.C.R. 1054, at pp. 1065-66; Consolidated Distilleries, Ltd. v. The King, [1933] A.C. 508, at pp. 520-22 (P.C.)). Parliament exercised this power in 1875 when it enacted legislation creating the Exchequer Court of Canada, which ultimately became the Federal Court of Canada (see The Supreme and Exchequer Court Act, S.C. 1875, c. 11). The Federal Court plays an important role in the interpretation and development of federal law in matters over which it has been granted jurisdiction.

[32] The provincial superior courts recognized by s. 96 “have always occupied a position of prime importance in the constitutional pattern of this country” (Attorney General of Canada v. Law Society of British Columbia, 1982 CanLII 29 (SCC), [1982] 2 S.C.R. 307, at p. 327, per Estey J.). Provincially administered (s. 92(14)) and federally appointed (ss. 96 and 100), they weave together provincial and federal concerns and act as a strong unifying force within our federation. As courts of general jurisdiction, the superior courts have jurisdiction in all cases except where jurisdiction has been removed by statute (Québec Téléphone v. Bell Telephone Co. of Canada, 1971 CanLII 160 (SCC), [1972] S.C.R. 182, at p. 190). The inherent jurisdiction of the superior courts can be constrained by legislation, but s. 96 of the Constitution Act, 1867 protects the essential nature and powers of the provincial superior courts from legislative incursion (Ontario v. Criminal Lawyers’ Association of Ontario, 2013 SCC 43 (CanLII), [2013] 3 S.C.R. 3, at para. 18; MacMillan Bloedel Ltd. v. Simpson, 1995 CanLII 57 (SCC), [1995] 4 S.C.R. 725, at para. 15).

[33] The Federal Court, by contrast, has only the jurisdiction it has been conferred by statute.[1] It is a statutory court, created under the constitutional authority of s. 101, without inherent jurisdiction. While the Federal Court plays a critical role in our judicial system, its jurisdiction is not constitutionally protected in the same way as that of a s. 96 court. It can act only within the constitutional boundaries of s. 101 and the confines of its statutory powers.[2] As this Court noted in Roberts v. Canada, 1989 CanLII 122 (SCC), [1989] 1 S.C.R. 322, at p. 331, “[b]ecause the Federal Court is without any inherent jurisdiction such as that existing in provincial superior courts, the language of the [Federal Court Act] is completely determinative of the scope of the Court’s jurisdiction.”
At paras 34-69 the court continues to extensively review the elements of the 'ITO' test for federal court jurisdiction, being drawn from the case of ITO-International Terminal Operators Ltd. v. Miida Electronics Inc. (SCC, 1986), which - roughly stated - requires that "(1) a statute grants jurisdiction to the court, (2) federal law nourishes the grant of jurisdiction and is essential to the disposition of the case, and (3) that federal law is constitutionally valid." [para 19].

3. Federal Court Rules

. McCain Foods Limited v. J.R. Simplot Company

In McCain Foods Limited v. J.R. Simplot Company (Fed CA, 2021) the Federal Court of Appeal explains the jurisdiction of the federal courts:
[57] The Federal Court is not like the provincial superior courts, which have inherent jurisdiction. The Federal Court was created pursuant to section 101 of The Constitution Act, 1867 (UK), 30 & 31 Victoria, c. 3, which provides as follows:
"VII. JUDICATURE "

"General Court of Appeal, etc."

"101. The Parliament of Canada may, notwithstanding anything in this Act, from Time to Time provide for the Constitution, Maintenance, and Organization of a General Court of Appeal for Canada, and for the Establishment of any additional Courts for the better Administration of the Laws of Canada."
[58] The Federal Court, and this Court, owe their existence to the Federal Courts Act, R.S.C. 1985, c. F-7. The following passage from Air Muskoka helpfully summarizes general principles governing the jurisdiction of the Federal Court that will be necessary to consider in this case:
[28] It is axiomatic that, as a statutory court, the Federal Court possesses only the jurisdiction that has been conferred upon it by statute (as well as such inherent powers of a superior court of record as are required to effectively manage and decide cases before the Court, as was noted in Canada (Human Rights Commission) v. Canadian Liberty Net, 1998 CanLII 818 (SCC), [1998] 1 S.C.R. 626 at paras. 35-38, 157 D.L.R. (4th) 385, and subsequent cases of this Court such as Canada (National Revenue) v. RBC Life Insurance Co., 2013 FCA 50 at paras. 34-36, 443 N.R. 378). Very frequently, the source of the Federal Court’s statutory jurisdiction is found in the Federal Courts Act itself.

[29] However, there are constitutional limits to such jurisdiction. Under section 101 of the Constitution Act, 1867, the federal Parliament possesses jurisdiction to establish additional Courts “for the better Administration of the Laws of Canada”. By reason of this limitation, the jurisdiction-conferring provisions in the Federal Courts Act were interpreted in conformity with the requirements of section 101 of the Constitution Act, 1867 in a trilogy of cases decided several decades ago by the Supreme Court of Canada.

[30] In ITO [ITO-Int’l Terminal Operators v. Miida Electronics, 1986 CanLII 91 (SCC), [1986] 1 S.C.R. 752, 68 N.R. 241], the Supreme Court of Canada set out what has now become the universally-applied test for Federal Court jurisdiction, drawing on the principles outlined in its earlier decisions in Quebec North Shore Paper Co. v. Canadian Pacific Ltd. (1976), 1976 CanLII 10 (SCC), [1977] 2 S.C.R. 1054, 9 N.R. 471 and McNamara Construction (Western) Ltd. et al. v. The Queen, 1977 CanLII 13 (SCC), [1977] 2 S.C.R. 654, 13 N.R. 181 [McNamara Construction]. As noted by the Prothonotary, the ITO test requires a party seeking to bring a matter within the Court’s jurisdiction to establish three things:
1. There must be a statutory grant of jurisdiction by the federal Parliament;

2. There must be an existing body of federal law which is essential to the disposition of the case and which nourishes the statutory grant of jurisdiction; and

3. The law on which the case is based must be a “law of Canada” as the phrase is used in section 101 of the Constitution Act, 1867 (U.K.)…
[31] In analyzing whether a claim meets these requirements, it is necessary to characterize the claim to determine its essential nature, or to use terminology sometimes used in the case law, to ascertain the “pith and substance” of the claim. Justice Karakatsanis described this portion of the analysis at paragraphs 26 and 27 of the majority reasons in Windsor Bridge [Windsor (City) v. Canadian Transit Co., 2016 SCC 54, [2016] 2 S.C.R. 617]:
26. The essential nature of the claim must be determined on “a realistic appreciation of the practical result sought by the claimant” (Domtar Inc. v. Canada (Attorney General), 2009 FCA 218 (CanLII), 392 N.R. 200, at para. 28, per Sharlow J.A.). The “statement of claim is not to be blindly read at its face meaning” (Roitman v. Canada, 2006 FCA 266 (CanLII), 353 N.R. 75, at para. 16, per Décary J.A.). Rather, the court must “look beyond the words used, the facts alleged and the remedy sought and ensure … that the statement of claim is not a disguised attempt to reach before the Federal Court a result otherwise unreachable in that Court” (ibid.; see also Canadian Pacific Railway v. R., 2013 FC 161 (CanLII), [2014] 1 C.T.C. 223, at para. 36; Verdicchio v. R., 2010 FC 117 (CanLII), [2010] 3 C.T.C. 80, at para. 24).

27. On the other hand, genuine strategic choices should not be maligned as artful pleading. The question is whether the court has jurisdiction over the particular claim the claimant has chosen to bring, not a similar claim the respondent says the claimant really ought, for one reason or another, to have brought.
[32] When applying this analysis to a third-party claim, the third-party claim must be characterized separately from the main claim. As Justice Evans, writing for this Court, noted at paragraph 56 of Peter G. White Management Ltd. v. Canada (Minister of Canadian Heritage), 2006 FCA 190, [2007] 2 F.C.R. 475 [Peter G. White] “[…] a claim not otherwise based on federal law is not brought within the jurisdiction of the Federal Court merely because it arises from essentially the same facts as a related claim which is within federal jurisdiction”. (See also, to similar effect, Fuller [R. v. Thomas Fuller Construction (1958) Ltd. et al., 1979 CanLII 187 (SCC), [1980] 1 S.C.R. 695, 30 N.R. 249 (S.C.C.)] at p. 711 and Canadian Forest Products Ltd. v. Canada (Attorney General), 2005 FCA 220 at paras. 50-52, (sub nom. Stoney Band v. Canada (Minister of Indian Affairs and Northern Development), [2006] 1 F.C.R. 570 [Stoney Band]).) That said, regard may nonetheless be given to the main claim to assist in ascertaining the essential nature of the third-party claim, as was done by this Court in Canada (Attorney General) v. Gottfriedson, 2014 FCA 55 at para. 34, 456 N.R. 391 [Gottfriedson].
[59] In determining whether the Federal Court has jurisdiction in respect of a particular claim, the focus should be on the basis for the cause of action or the remedy sought: Windsor Bridge at paras. 41-42.
. Sharma v. Canada (Revenue Agency)

In Sharma v. Canada (Revenue Agency) (Fed CA, 2020) the Federal Court of Appeal reviews the status of reconsiderations under Rule 397 of the Federal Court Rules:
[1] Mr. Sharma appeals from a decision of the Federal Court, dated November 1, 2018, dismissing his motion to reconsider an Order dated August 28, 2018. In that Order, Justice Bell denied his request for an extension of time to apply for judicial review of a decision by the CRA.

[2] It is well established that a motion for reconsideration pursuant to Rule 397 of the Federal Courts Rules, SOR/98-106, calls for the exercise of judicial discretion: Ruffolo v. Fraser Valley Institution for Women, 2016 FCA 91, at paras. 7-8. Accordingly, absent an error on a question of law or an extricable legal principle, this Court will only intervene with the exercise of that discretion if a palpable and overriding error can be demonstrated. No such error has been made out in the case at bar.

[3] Rule 397 provides that a party may request that the Federal Court reconsider the terms of an order on the grounds that the order does not accord with any reasons given for it, or that a matter that should have been dealt with has been overlooked or accidentally omitted. It is clearly not meant to be an appeal in disguise, allowing a litigant to re-argue an issue a second time, in the hope that the Court will change its mind: Bell Helicopters Textron Canada Limitée v. Eurocopter, 2013 FCA 261, at para. 15.
. Canada (Attorney General) v. Valero Energy Inc.

In Canada (Attorney General) v. Valero Energy Inc. (Fed CA, 2020) the Federal Court of Appeal allowed an appeal by Canada (CRA) to strike a judicial review application by a corporation challenging information and document demands imposed on it by an income tax audit:
[26] On a motion to strike a notice of application for judicial review, this Court set out the relevant test to be followed in Canada (National Revenue) v. JP Morgan Asset Management (Canada) Inc., 2013 FCA 250, [2014] 2 F.C.R. 557, at paragraph 47 [JP Morgan]: the Court will strike an application only where it is bereft of the possibility of success because there is "“an obvious, fatal flaw striking at the root of this Court’s power to entertain the application”". The Federal Court correctly cited this test (Reasons at paragraph 6).

4. Frivolous and Vexatious

. ELIZABETH BERNARD v. PROFESSIONAL INSTITUTE OF THE PUBLIC SERVICE OF CANADA

In ELIZABETH BERNARD v. PROFESSIONAL INSTITUTE OF THE PUBLIC SERVICE OF CANADA (Fed CA, 2020) the Federal Court of Appeal considered for the first time the test for a leave application by a frivolous and vexatious litigant [under s.40 of the Federal Courts Act]:
[4] Vexatious litigants almost never apply for leave. As a result, this Court has never discussed the criteria for leave, aside from some brief, passing observations in a couple of cases.

[5] Much can be gathered from the ordinary meaning of the text of subsection 40(4). It provides that the Court must be satisfied of two things before it can grant leave: "“the proceeding is not an abuse of process”" and "“there are reasonable grounds for the proceeding”".

[6] Even where the Court is satisfied the two are met, leave does not have to be granted. Subsection 40(4) provides that the Court "“may grant leave”", not "“shall grant leave”". The Court has a residual discretion not to grant leave.

[7] Vexatious litigants bear the burden of proving that leave should be granted on a balance of probabilities: Hainsworth v. Canada (Attorney General), 2011 ONSC 2642 at para. 11. In discharging that burden, they must provide evidence in a supporting affidavit.

A. The two requirements

(1) The proceeding is not an abuse of process

[8] "“Abuse of process”" can take many forms: National Bank Financial Ltd. v. Barthe Estate, 2015 NSCA 47, 359 N.S.R. (2d) 258 at paras. 214-215; Intact Insurance Company v. Federated Insurance Company of Canada, 2017 ONCA 73, 134 O.R. (3d) 241 at para. 20. Examples include relitigating issues and starting litigation to injure someone or pursue a personal vendetta rather than seeking genuinely needed remedies.

[9] Pursuing personal vendettas is often the signature move of vexatious litigants. Thus, on occasion, this Court has suggested that a vexatious litigant must show a bona fide reason for starting a new proceeding: Canada v. Olumide, 2017 FCA 42, [2018] 2 F.C.R. 328 at para. 29; Bernard v. Canada (Attorney General), 2019 FCA 144 at para. 26; Simon v. Canada (Attorney General), 2019 FCA 28 at para. 12.

[10] A proceeding started for a bona fide reason can still be prosecuted abusively. Thus, before granting leave, the Court needs an assurance that the vexatious litigant will prosecute the proceeding in an acceptable way. The vexatious litigant’s affidavit should address this.

[11] The Court will be more inclined to grant leave where the affidavit promises—with credibility-enhancing particularity—any or all of the following: a litigation plan, representation by a trustworthy agent or counsel, access to and reliance upon legal advice as the proceeding progresses, and compliance with the Rules, orders and directions of the Court. This is a non-exhaustive list.

[12] The willingness of vexatious litigants to obey the Rules, orders and directions of the Court is key. In many cases, the ungovernability of these litigants led to the finding of vexatiousness in the first place. The supporting affidavit should address this. One way is to describe with particularity what the vexatious litigant will do under the Rules to get the proposed proceeding ready for hearing, including offering a proposed schedule.

[13] Continuing non-compliance with previous orders of the Court, such as outstanding cost awards, could lead the Court to conclude that the vexatious litigant will not comply with Rules, orders and directions of the Court. To address this, vexatious litigants should offer reasons for any non-compliance and a plan to remedy it. However, great care must be taken if the non-compliance is due to poverty or impecuniosity. Those under economic pressure or without financial means should not be barred from accessing the Court to assert a viable claim for that reason alone.

(2) Reasonable grounds for the proceeding

[14] The Court must examine the basis for the proposed proceeding to assess its viability. There must be reasonable grounds on the facts and the law to suggest that the vexatious litigant’s case has some chance of success. Cases where the vexatious litigant’s walk down the pathway to success will be difficult but not impossible meet this requirement.

[15] In other words, the proposed proceeding should not be doomed to fail: for guidance on that standard, see Wenham v. Canada (Attorney General), 2018 FCA 199, 429 D.L.R. (4th) 166 at paras. 22-33 (applying relevant Supreme Court authority); Canada (National Revenue) v. JP Morgan Asset Management (Canada) Inc., 2013 FCA 250, [2014] 2 F.C.R. 557.

[16] In considering whether a proposed proceeding is doomed to fail, the Court must consider the standard of review: Apotex Inc. v. Allergan Inc., 2020 FCA 208 at paras. 9-10; Hébert v. Wenham, 2020 FCA 186 at paras. 11-14; Raincoast Conservation Foundation v. Canada (Attorney General), 2019 FCA 224 at para. 16. Where, as here, the proposed proceeding is a judicial review of an administrative decision, the standard of review is reasonableness, and the administrative decision is relatively unconstrained within the meaning of Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, 441 D.L.R. (4th) 1, the vexatious litigant faces a high hurdle. In that sort of judicial review, the vexatious litigant must point to a significant flaw that strikes at the heart of the administrative decision.

[17] It is not enough for vexatious litigants to offer bald allegations or speculations in support of their cases. Instead, they must set out in their supporting affidavit a reasonable factual and legal basis for the proceeding. The affidavit should include a draft notice of application or draft statement of claim and describe or even append the key supporting evidence. The more detailed the affidavit is, the better. But it is not necessary for vexatious litigants to come anywhere close to proving their cases: this is not a summary judgment motion. To grant leave, the Court only has to be satisfied there is some arguable substance behind the proceeding.

[18] Some vexatious litigants may repeatedly and unsuccessfully try to get leave to start various new proceedings. In that circumstance, yet another attempt to seek leave might be met with understandable scepticism on the part of the Court. But that would be wrong. The Court must remain open-minded. Vexatious litigants who have cried wolf too often in the past might actually come across a wolf one day and might genuinely need help.

[19] In this Court, motions under subsection 40(4) are determined on the basis of written materials. Sometimes a vexatious litigant’s materials fall short of the mark because the vexatious litigant lacks the capacity to litigate effectively. The Court should be alert for this. Sometimes the Court might direct the vexatious litigant to seek advice or assistance. Sometimes the Court might give the vexatious litigant an opportunity to cure deficient materials.
B. The residual discretion

[20] The two requirements under subsection 40(4) of the Act must both be met. If one or both are not, that is the end of the matter; there is no discretion to grant leave.

[21] But if both requirements are met, subsection 40(4) provides that the Court "“may”", not "“shall”", grant leave. The Court has a residual discretion.

[22] It would be unwise at this time to try to define the content of this discretion in detail. Over time, the facts of future cases will define the proper content and scope of the discretion. The discretion will be very much governed by the overall purpose of subsection 40(4), discussed below.

[23] It may be that this discretion allows the Court to grant leave on certain conditions and to revoke leave if certain terms are not met. One possible term is that the vexatious litigant propose an acceptable schedule or a litigation plan. Another possible term is that the vexatious litigant be represented by counsel.

C. Access to justice

[24] Some might think that subsection 40(4) should be interpreted in a manner that facilitates the vexatious litigant’s access to justice. But that is too simplistic a view of subsection 40(4) and ignores the plain meaning of its text.

[25] It is no part of the Court’s task to take abstract principles valued highly by many, such as access to justice, and force subsection 40(4) to conform with them: Hillier v. Canada (Attorney General), 2019 FCA 44, 431 D.L.R. (4th) 556. The Court’s job is to discern the authentic meaning of legislative provisions, not amend them: Williams v. Canada (Public Safety and Emergency Preparedness), 2017 FCA 252, [2018] 4 F.C.R. 174.

[26] Further, access to justice is a vague concept that takes on different meanings depending on the context. In the particular context of a leave motion brought under subsection 40(4) of the Act, we are dealing with vexatious litigants who have been proven to be harmful to the court system, other parties, and other cases—in other words, litigants that frustrate access to justice. See Olumide at paras. 17-34.

[27] In light of this, the question under subsection 40(4) is whether the regulation of the vexatious litigant’s access to court should be loosened just enough to permit a particular proceeding to be advanced and, if so, whether additional measures should be taken to ensure the proceeding is prosecuted responsibly and efficiently without harm to others.

[28] The Court must keep this understanding of access to justice front of mind as it applies subsection 40(4) to a particular case.


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