Administrative - Collateral Attack Rule. Canada (Attorney General) v. Iris Technologies Inc.
In Canada (Attorney General) v. Iris Technologies Inc. (Fed CA, 2022) the underlying case was a judicial review (JR) brought by Iris seeking several declarations after an audit and tax reassessments. The basis of the JR were the grounds and procedures of the audit. The AG made an interlocutory motion to quash the JR, which lost twice at the Federal court (prothonotary and panel), and then appealed again to the Federal Court of Appeal. There the AG finally won.
The JR applications were challenged as a collateral attack:
 Iris Technologies Inc. was audited and assessed by the Minister of National Revenue under the Excise Tax Act, R.S.C. 1985, c. E-15 [ETA]. In response, Iris filed a notice of application in the Federal Court seeking three declarations: it was denied procedural fairness in the audit and assessment process, there was no evidentiary foundation upon which an assessment could be issued under the ETA, and the assessments were issued for the improper purpose of depriving the Federal Court of jurisdiction to hear administrative law grievances raised by Iris in a related application. .... Collins v. Canada Post Corporation
 .... When the grounds of review cited in this application are situated in the context of the legislative mandate of the Minister under the ETA and the respective jurisdictions of the Tax Court and the Federal Court, we conclude that the notice of application is, in essence, a collateral challenge to the validity of the assessments issued under the ETA, a matter within the exclusive jurisdiction of the Tax Court of Canada.
In Collins v. Canada Post Corporation (Ont CA, 2022) the Court of Appeal cited a leading SCC case on 'collateral attack':
 As concerned the claims against Canada Post in the action, the motion judge interpreted them to include the same accusations as were made against Norton Rose, which were not actionable on the basis of absolute privilege, and complaints about decisions and rulings made in the Federal Court proceeding and other proceedings, which were barred by the doctrine against collateral attack articulated by the Supreme Court in Wilson v. The Queen, 1983 CanLII 35 (SCC),  2 S.C.R. 594, at p. 599. Although some of the claims were alleged to be for defamation or conspiracy to defame, they were not tenable because all the statements alleged to be defamatory were made by Canada Post’s counsel in the Federal Court proceedings.. Fanshawe College of Applied Arts and Technology v. Hitachi
In Fanshawe College of Applied Arts and Technology v. Hitachi (Ont CA, 2022) the Court of Appeal commented on collateral attack as a tactic:
 I agree with CAC that a collateral attack argument is a defence, not a reason to quash an appeal for want of jurisdiction: Gratton-Masuy Environmental Technologies Inc. v. Ontario, 2010 ONCA 501, 101 O.R. (3d) 321, at para. 74, leave to appeal requested but appeal discontinued,  S.C.C.A. No. 397. This issue must be left to the panel hearing the appeal.. 1386444 Ontario Inc. v. 2331738 Ontario Ltd.
In 1386444 Ontario Inc. v. 2331738 Ontario Ltd. (Ont CA, 2021) the Court of Appeal holds a situation as being one of 'collateral attack', this time in a court (not an administrative tribunal) case:
 This court does not have jurisdiction to hear that part of the appeal in which the Appellants challenge the October 2020 Judgment because of the Appellants’ prior actions in respect of that judgment. The Appellants filed an appeal of the October 2020 Judgment on November 2, 2020 (the “First Appeal”). The First Appeal was dismissed for delay by order of the Registrar of this court dated January 20th, 2021 (the “Dismissal Order”). At the oral hearing of this appeal, the Appellants advised that, in fact, they abandoned the First Appeal shortly before the Dismissal Order was made. Be that as it may, the Appellants’ First Appeal has been dismissed and, consequently, this court does not have jurisdiction to adjudicate upon it again. To permit the Appellants, without more, to challenge the October 2020 Judgment through this appeal would be an impermissible collateral attack on that judgment.. R. v. Irwin
In R. v. Irwin (Ont CA, 2020) the Court of Appeal considers the 'collateral attack rule', which attempts to avoid compliance with a court order by claiming it is illegal in other proceedings:
(i) General Principles of the Collateral Attack Rule
 The jurisprudence regarding the collateral attack rule is well established. Generally, a collateral attack is defined as an attack on an order “made in proceedings other than those whose specific object is the reversal, variation, or nullification of the order”: Wilson v. The Queen, 1983 CanLII 35 (SCC),  2 S.C.R. 594, at p. 599. The rule provides that, with limited exceptions, “an order issued by a court must be obeyed unless it is set aside in a proceeding taken for that purpose”: R. v. Bird, 2019 SCC 7,  1 S.C.R. 409, at para. 21.
 The rule protects the integrity of the justice system by prohibiting a party from avoiding the consequences of an order issued against it by proceeding in another forum: Garland v. Consumers’ Gas Co., 2004 SCC 25,  1 S.C.R. 629, at para. 72 and R. v Litchfield, 1993 CanLII 44 (SCC),  4 S.C.R. 333 349. Caldwell J.A. writing for the Saskatchewan Court of Appeal, succinctly summarized the rule this way: “In practical terms, the common law rule prevents a person charged with violating a court order from saying, in his or her defence to that charge, that the order is invalid or unlawful”: R. v Envirogun Ltd., 2018 SKCA 8, 3 W.W.R. 247, at para. 43.
 While the early case law on the collateral attack rule focussed on collateral attacks of court orders, the Supreme Court developed a distinct analytical approach when considering the collateral attack of administrative orders. For such orders, the tension animating the rule is between ensuring that the legislature’s decision to assign decision-making powers to administrative bodies is not undermined and that individuals have an effective means available to them to challenge administrative orders: Maybrun at para. 44, and Bird, at paras. 25-26.
 The Supreme Court has also identified two important policy rationales that support the rule’s application to administrative orders. First, permitting parties to ignore established procedures for challenging an order would risk discrediting administrative bodies’ authority and thereby undermine their effectiveness. Second, if collateral attacks are allowed, the state will have to resort to criminal charges and sanctions to secure compliance: Maybrun, at para. 42; Bird, at paras. 27-28.
 In Maybrun, the Supreme Court directed that the analytical focus should be on whether the legislature intended to permit collateral attacks on the order, or intended instead that a party must challenge the order through other review mechanisms. The court listed five non-exhaustive factors that may be considered in determining the intent of the legislature for challenging the validity of an administrative order: (1) the wording of the statute under the authority of which the order was issued; (2) the purpose of the legislation; (3) the existence of a right of appeal; (4) the kind of collateral attack in light of the expertise or raison d’être of the administrative appeal tribunal; and (5) the penalty on a conviction for failing to comply with the order: Maybrun, at paras. 45-51. These factors “are not independent and absolute criteria, but important clues, among others, for determining the legislature’s intention”: Maybrun, at para. 46.
(ii) Residual Discretion Not to Apply the Collateral Attack Rule
 As important as the collateral attack rule is for the integrity of the administration of justice, it is not absolute. This court has recognized that because the rule was developed to advance the ends of justice, it should not be mechanically applied when court orders are attacked where doing so would result in an injustice: Amtim Capital Inc. v. Appliance Recycling Centers of America, 2014 ONCA 62, 118 O.R. (3d) 617, at para. 15.
 Not all collateral attacks on court orders offend the rule’s underlying principles, and the court has the discretion not to apply it in those circumstances. For example, in R. v. Domm, (1996) 1996 CanLII 1331 (ON CA), 31 O.R. (3d) 540 (C.A.), the question was whether an accused charged with breach of a court order banning publication of a criminal proceeding could challenge the validity of that order on non-jurisdictional grounds. In his analysis, Doherty J.A., at pp.17-18, made the following comments, which reflect the flexibility of the rule and the inherent discretion judges have in choosing whether to apply it:
The rule against collateral attack on court orders serves to reinforce the compliance component of the rule of law and enhance the repute of the administration of justice by providing for the orderly and functional administration of justice: R. v. Litchfield, supra, at pp.110-111. If a collateral attack on an order can be taken without harm to those interests, then the rule should be relaxed. Review by a trial judge of orders made on pre-trial motions provides an example of a situation in which those interests are not harmed by collateral attack: Litchfield, supra, p. 111 Dagenais, supra, at pp. 311-12See also: M.K. v. British Columbia (Attorney General), 2020 BCCA 261, R. v. Hawkins Bros. Fisheries Ltd., 2006 NBCA 114, 308 N.B.R. (2d) 163, Dalrymple v. Halifax (Regional Municipality), 2017 NSCA 6, 61 M.P.L.R. (5th) 222, Braithwaite v. Bacich, 1999 NSCA 77, 176 N.S.R. (2d) 173, and Dagenais v. Canadian Broadcasting Corp., 1994 CanLII 39 (SCC),  3 S.C.R. 835.
 While these cases affirm the existence of judicial discretion when applying the collateral attack rule to prior court orders, the role discretion plays when one is attacking a prior administrative order has received less attention.
 If the legislature has definitively prescribed a particular appeal mechanism for challenging an administrative order, a court is bound to give effect to that legislative choice, absent constitutional infirmity. The collateral attack doctrine is a common law rule of judicial creation that must yield to contrary legislative enactment: Canada (Attorney General) v. Telezone Inc., 2010 SCC 62,  3 S.C.R. 585, at paras. 61, 67.
 It may appear to be incongruous with the collateral attack rule’s underlying policy rationale of protecting the integrity of the justice system that court orders may be collaterally attacked in the interests of justice, but orders of administrative bodies are immune from such attacks regardless of their impact on the interests of justice. As David J. Mullan notes, in the context of attacks on administrative orders, “when there is an adequate alternative remedy, the Canadian position on collateral attack is more in the nature of a rule than a discretionary consideration”: David J Mullan, "The Discretionary Nature of Judicial Review," in Robert J. Sharpe and Kent Roach, eds., Taking Remedies Seriously: 2009 (2010) at p. 433.
(iii) Limits to the Application of the Collateral Attack Rule
 Before turning to the application of the jurisprudence on the collateral attack rule to the facts of the case at bar, it is helpful to have regard to another line of authority regarding the limits of the rule.
 In Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63,  3 S.C.R. 77, the court was concerned with a situation where an employee, who worked as a recreation instructor for the respondent, was convicted of sexually assaulting a boy under his supervision. The employee was subsequently dismissed from his job, and the dismissal was the subject of a labour arbitration proceeding. The arbitrator ruled that the criminal conviction was admissible as prima facie evidence that the employee had sexually assaulted the boy. However, the arbitrator found that the presumption raised by the criminal conviction had been rebutted. Thus, the employee had been dismissed without cause. The Ontario Divisional Court quashed that decision, and an appeal to this court was unsuccessful.
 On further appeal to the Supreme Court, Arbour J. found that the appeal should be dismissed on the basis that the effective relitigation of the employee’s criminal conviction before the labour arbitrator amounted to an abuse of process. She rejected the applicability of the collateral attack rule in this context. Her reasons for doing so were as follows, at paras. 33-34:
... Thus, in Wilson, supra, the Court held that an inferior court judge was without jurisdiction to pass on the validity of a wiretap authorized by a superior court. Other cases that form the basis for this rule similarly involve attempts to overturn decisions in other fora, and not simply to relitigate their facts. In R. v. Sarson, 1996 CanLII 200 (SCC),  2 S.C.R. 223, at para. 35, this Court held that a prisoner's habeas corpus attack on a conviction under a law later declared unconstitutional must fail under the rule against collateral attack because the prisoner was no longer "in the system" and because he was "in custody pursuant to the judgment of a court of competent jurisdiction." Similarly, in R. v. Consolidated Maybrun Mines Ltd., 1998 CanLII 820 (SCC),  1 S.C.R. 706, this Court held that a mine owner who had chosen to ignore an administrative appeals process for a pollution fine was barred from contesting the validity of that fine in court because the legislation directed appeals to an appellate administrative body, not to the courts. Binnie J. described the rule against collateral attack in Danyluk, supra, at para. 20, as follows: “that a judicial order pronounced by a court of competent jurisdiction should not be brought into question in subsequent proceedings except those provided by law for the express purpose of attacking it” (emphasis added). This case’s significance is that it instructs that before considering whether a collateral attack is permissible, the court should first review the defence or legal argument being asserted to determine whether it is correctly characterized as a collateral attack. If it is not, then the doctrine is inapplicable, and the court need not consider the issue further.
Each of these cases concerns the appropriate forum for collateral attacks upon the judgment itself. However, in the case at bar, the union does not seek to overturn the sexual abuse conviction itself, but simply contest, for the purposes of a different claim with different legal consequences, whether the conviction was correct. It is an implicit attack on the correctness of the factual basis of the decision, not a contest about whether that decision has legal force, as clearly it does. Prohibited “collateral attacks” are abuses of the court’s process. However, in light of the focus of the collateral attack rule on attacking the order itself and its legal effect, I believe that the better approach here is to go directly to the doctrine of abuse of process.
 Two subsequent Supreme Court cases are also of note. In Garland, the respondent gas utility, whose rates and payment policies are governed by the Ontario Energy Board, charged a penalty for late bill payments. The appellant commenced a class action seeking restitution for unjust enrichment for the respondent’s charges on the basis that they violated the criminal rate of interest provisions in the Criminal Code. The motion judge granted the respondent’s motion for summary judgment, finding that the action was a collateral attack on the Board's orders. The Court of Appeal disagreed but dismissed the appeal because the unjust enrichment claim could not be made out. The Supreme Court concluded that the collateral attack rule was inapplicable, reasoning, at para. 71:
Based on a plain reading of this rule, the doctrine of collateral attack does not apply in this case because here the specific object of the appellant’s action is not to invalidate or render inoperative the Board’s orders, but rather to recover money that was illegally collected by the respondent as a result of Board orders. Consequently, the collateral attack doctrine does not apply. Garland was applied by the Supreme Court of Canada in TeleZone. In that case, TeleZone’s application for a licence to provide telecommunications services was rejected by the Minister of Industry Canada. It sought compensation in the Ontario Superior Court of Justice against the Federal Crown, pleading breach of contract, negligence, and, in the alternative, unjust enrichment. The Attorney General challenged the Superior Court’s jurisdiction to proceed with the claim for compensation until TeleZone obtained from the Federal Court of Canada an order quashing the Minister’s decision. It submitted that TeleZone’s claim constituted an impermissible collateral attack on that decision.
 In rejecting the applicability of the collateral attack rule, the court reasoned, at paras. 64-65, and 79:
…TeleZone is not seeking to “avoid the consequences of [the ministerial] order issued against it” (Garland, at para. 72). On the contrary, the ministerial order and the financial losses allegedly consequent on that order constitute the foundation of the damages claim. This was the result in Garland itself… The Toronto analysis has also been adopted in several cases in the British Columbia Court of Appeal. The focus is on whether the legal argument actually attacked the order itself and its legal effect: Fontaine v. Canada (Attorney General), 2019 BCCA 178, 24 B.C.L.R (6th), at para. 89; Lamb v. Canada (Attorney General), 2018 BCCA 266, 10 B.C.L.R. (6th) 118, at paras 94-95; Hollander v. Mooney, 2017 BCCA 238, 27 E.T.R. (4th) 1, at paras. 71-75
Similarly in Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63,  3 S.C.R. 77 (S.C.C.), Arbour J. declined to apply the collateral attack doctrine in a case arising out of a grievance arbitration where CUPE sought to challenge the underlying facts of a conviction of one of its members for sexual assault. Arbour J. reasoned that the Union's argument was "an implicit attack on the correctness of the factual basis of the decision, not a contest about whether that decision has legal force, as clearly it does" (para. 34)
TeleZone is not attempting to nullify or set aside the Minister's order. Its case is that the Minister, in deciding not to issue a licence to TeleZone, acted in breach of his contractual and equitable duties or in breach of a duty of care. TeleZone does not say that the Minister's decision should be quashed. On the contrary, TeleZone's causes of action in contract, tort and equity are predicated on the finality of that decision excluding TeleZone from participation in the telecommunications market, thereby (it says) causing it financial loss. Nor does TeleZone seek to deprive the Minister's decision of any legal effect. It does not challenge the licences issued to its competitors. It does not seek to undo what was done. It complains about what was not done, namely fulfilment by Industry Canada of its alleged contractual and equitable duties and its duty of care towards TeleZone itself.
 In many cases, the defence or legal argument raised will be a clear collateral attack, and this issue may be dealt with summarily. However, it is essential when considering the collateral attack rule that the court first determines whether an attack on the order's validity or judgment is being made. If it is not properly characterized as such, that will be the end of the analysis.