Federal Court - Jurisdiction. Berenguer v. Sata Internacional - Azores Airlines, S.A.
In Berenguer v. Sata Internacional - Azores Airlines, S.A. (Fed CA, 2023) the Federal Court of Appeal considers the statutory jurisdiction of the Federal Court:
A. Applicable legal principles regarding jurisdiction. Hutton v. Sayat
 The scope of the Federal Court’s jurisdiction has been considered by the Supreme Court in several decisions. The most relevant in this appeal are Quebec North Shore Paper Co. v. Canadian Pacific Ltd. (1976), 1976 CanLII 10 (SCC),  2 S.C.R. 1054, 9 N.R. 191 [Quebec North Shore]; McNamara Construction (Western) Ltd. v. The Queen, 1977 CanLII 13 (SCC),  2 S.C.R. 654; Rhine v. The Queen, 1980 CanLII 220 (SCC),  2 S.C.R. 442 [Rhine]; ITO-Int’l Terminal Operators v. Miida Electronics, 1986 CanLII 91 (SCC),  1 S.C.R. 752 at p. 766, 28 D.L.R. (4th) 641 [ITO]; and, most recently, Windsor.
 I would also note two decisions of this Court which provide a good summary of the relevant law: Peter G. White Management Ltd. v. Canada (Minister of Canadian Heritage), 2006 FCA 190 [Peter G. White] and 744185 Ontario Incorporated v. Canada, 2020 FCA 1 [Air Muskoka].
 As a result of this jurisprudence, the following principles are well established:
(a) Jurisdiction is subject to a three part test commonly known as the ITO test: (1) Does a statute grant jurisdiction to the Court? (2) Is there an existing body of federal law that nourishes the grant of jurisdiction and is essential to the disposition of the case? (3) Is the case based on a valid law of Canada (ITO). The Windsor decision adds a further principle but it is not controversial in this case. The majority in Windsor cautioned that the ITO test is to be applied to the “essential nature of the claim” regardless of how the claim is framed in the pleading. In this case, it is clear that the claim as framed in the pleading is the same as the claim’s essential nature. The claim is for breach of contract.
(b) For purposes of applying step 1 of the ITO test to s. 23 of the Federal Courts Act, the action must be created or recognized under federal law (Windsor).
(c) For purposes of applying step 2 of the ITO test to a breach of contract claim, the test may be satisfied if there is a sufficiently detailed federal regulatory scheme that applies to the contract (Rhine).
 I now turn to the ITO test, beginning with statutory grant of jurisdiction.
B. Step 1 - Statutory grant of jurisdiction
(1) Section 23 of Federal Courts Act
 The jurisdiction of the Federal Court is statutory. As such, the statutory basis for jurisdiction must be identified. In this case, the jurisdiction question rests on s. 23 of the Federal Courts Act, R.S.C. 1985, c. F-7. As set out below, s. 23 applies to specific subject matters listed in (a) – (c):
23 Except to the extent that jurisdiction has been otherwise specially assigned, the Federal Court has concurrent original jurisdiction, between subject and subject as well as otherwise, in all cases in which a claim for relief is made or a remedy is sought under an Act of Parliament or otherwise in relation to any matter coming within any of the following classes of subjects: The Federal Court determined (at para. 41) that the claim falls within (b) aeronautics, or (c) works and undertakings. It was not more specific on the issue. It is clear that the claim falls within one or both of these subject matters. As nothing turns on this in this appeal, it does not merit further discussion.
23 Sauf attribution spéciale de cette compétence par ailleurs, la Cour fédérale a compétence concurrente, en première instance, dans tous les cas — opposant notamment des administrés — de demande de réparation ou d’autre recours exercé sous le régime d’une loi fédérale ou d’une autre règle de droit en matière :
(a) bills of exchange and promissory notes, where the Crown is a party to the proceedings;
(a) de lettres de change et billets à ordre lorsque la Couronne est partie aux procédures;
(b) aeronautics; and
(c) works and undertakings connecting a province with any other province or extending beyond the limits of a province.
(c) d’ouvrages reliant une province à une autre ou s’étendant au-delà des limites d’une province.
 The dispute centres on a different aspect of s. 23: whether the “claim for relief is made or a remedy is sought under an Act of Parliament or otherwise.” Determining the meaning of this phrase is difficult, as illustrated by the split decision of the Supreme Court (5-4) in Windsor.
 The majority in Windsor described that the issue in that case was whether it is sufficient that the claim is “in relation to” a federal statute (Windsor at para. 49). The majority concluded that this is not sufficient as it does not give effect to the words “is sought under an Act of Parliament or otherwise” (Windsor at paras. 51-52). Instead, the majority concluded that “the claimant’s cause of action, or the right to seek relief, must be created or recognized by [federal law]” (Windsor at para. 41; emphasis in original).
 Three of the minority judges in Windsor favoured a broader interpretation of this phrase: “It is sufficient if the relief sought is intimately related to rights and obligations conferred by an Act of Parliament, even if the relief ultimately flows from a different legal source” (Windsor at para. 94).
In Hutton v. Sayat (Fed CA, 2023) the Federal Court of Appeal cites the court's 'plenary authority':
 Apart from the powers that derive from subsection 50(1) of the Federal Courts Act, this Court and the Federal Court are also vested with the plenary authority to regulate their proceedings and control the integrity of their own processes. Indeed, as stated on numerous occasions both by the Supreme Court and this Court, the Federal Courts must have the powers necessary to manage their own proceedings just like the provincial superior courts: see, for example, Canada (Human Rights Commission) v. Canadian Liberty Net, 1998 CanLII 818 (SCC),  1 S.C.R. 626 at paras. 35-36; R v. Cunningham, 2010 SCC 10,  1 S.C.R. 331 at para. 19; Windsor (City) v. Canadian Transit Co., 2016 SCC 54,  2 S.C.R. 617 at para. 33 (footonote 1); Lee v. Canada (Correctional Service), 2017 FCA 228,  F.C.J. No. 1131 (QL) at paras. 7-9; Dugré v. Canada (Attorney General), 2021 FCA 8,  F.C.J. No. 50 (QL) at para. 20 [Dugré]; Coote v. Canada (Human Rights Commission), 2021 FCA 150 at para. 16; Fabrikant v. Canada, 2018 FCA 171 at para. 3. This entails the power to stay a proceeding when it is necessary to deal with problematic litigation conduct: ViiV Healthcare Company v. Gilead Sciences Canada, Inc., 2021 FCA 122 at para. 24; Dugré at para. 38; Coote v. Lawyers’ Professional Indemnity Company, 2013 FCA 143, 229 A.C.W.S. (3d) 935 at para. 4 [Coote].. Coote v. Canada (Human Rights Commission)
In Coote v. Canada (Human Rights Commission) (Fed CA, 2021) the Federal Court of Appeal considered it's plenary authority to dismiss an appeal:
 In addition to the authority conferred by rule 74, the Court has jurisdiction to manage and regulate particular proceedings before it and, where appropriate, summarily dismiss an appeal by using its broad plenary powers. These powers have frequently been used, for example, to reject proceedings that are, among other things, frivolous or an abuse of the process of the Court (Fabrikant v. Canada, 2018 FCA 171, at para. 3). Recently, in Dugré v. Canada (Attorney General), 2021 FCA 8, the Court had this to say on the origin and underlying principles of its plenary powers:. Feeney v. Canada
 This Court has jurisdiction to summarily dismiss an appeal. Although the Federal Courts Rules, SOR/98-106 (the Rules) do not contain any specific provision allowing for the summary dismissal of an appeal, the Court has exercised this jurisdiction for decades (David Bull Laboratories (Canada) Inc. v. Pharmacia Inc., 1994 CanLII 3529 (FCA),  1 F.C. 588 (C.A.), at page 600).
 This power stems from the Court’s plenary jurisdiction (Canada (National Revenue) v. RBC Life Insurance Company, 2013 FCA 50, 443 N.R. 378, at para. 36; Lee v. Canada (Correctional Service), 2017 FCA 228 [Lee], at para. 6). This Court has not only the powers conferred by statute but also the powers necessary for its effective functioning (Canada (Human Rights Commission) v. Canadian Liberty Net, 1998 CanLII 818 (SCC),  1 S.C.R. 626, 224 N.R. 241; Lee, at paras. 2, 7-15; Fabrikant v. Canada, 2018 FCA 171, at para. 3 and the cases cited therein). As the Court explains in Lee, the Federal Courts, as part of the judicial branch of the government, must have the powers necessary to manage their own proceedings (Lee, at para. 8).
 This power also manifests itself in the Rules through the combined effect of Rule 74 (removal of proceedings brought without jurisdiction), Rule 4 (the gap rule) and Rule 55 (power to vary a rule, in this case Rule 74, in “special circumstances”).
In Feeney v. Canada (Fed CA, 2022) the Federal Court of Appeal, in the course upholding a dismissal of an action against the federal Crown for lack of jurisdiction, sets out the nature of the Federal Court system and it's judges. In this quotes it explains the concurrent tort jurisdiction that the federal and the provincial superior courts share over claims against the federal Crown:
 As stated in Crowe, Parliament has not granted jurisdiction to the Federal Court over the alleged tortious conduct of judges (Crowe at para. 18). That the Federal Court has concurrent jurisdiction with the superior provincial courts to entertain claims in tort against the Federal Crown through the combined effect of subsection 17(1) of the Act and subsection 21(1) of the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50 (CLPA), does not alter this.. Alberta (Attorney General) v. British Columbia (Attorney General)
In Alberta (Attorney General) v. British Columbia (Attorney General) (Fed CA, 2021) the Federal Court of Appeal considered a rare intergovernmental (province-to-province) dispute, where BC sued Alberta and there were suggestions of raw politics afoot (quoting from the minority ruling):
 In the legislative debates leading to the passage of the Act, members of the Alberta legislature made statements suggesting that the Act’s true purpose was political retaliation. That is, the Act would allow Alberta to restrict the flow of natural resources to British Columbia as a response to the latter’s opposition to the Trans Mountain pipeline expansion. ...The case focussed on this provision of the Federal Court Rules:
 On May 1, 2019, the Attorney General of British Columbia (BC) commenced an action before the Alberta Court of Queen’s Bench (the Alberta Court) seeking a declaration of invalidity in respect of the Act. Alberta responded to BC’s action by filing a motion to dismiss it on the grounds that the Alberta Court had no jurisdiction to entertain the proceedings and that BC lacked standing to bring its action.
 Pending the resolution of the above issue, BC commenced an action, pursuant to section 19 of the Federal Courts Act, R.S.C. 1985, c. F-7 (the FCA) in the Federal Court on June 14, 2019, in which it sought a declaration that the Act was unconstitutional. ....
Intergovernmental disputesQuoting from the majority ruling, the case sets out the range of cases that FCA s.19 is meant to address (more than solely Crown rights disputes) - and the fact that Alberta did not dispute that the Federal Court had such jurisdiction per se (the ITO test). The majority reached this first conclusion by reviewing the provision in light of principles of statutory interpretation [paras 115-168].
19 If the legislature of a province has passed an Act agreeing that the Federal Court, the Federal Court of Canada or the Exchequer Court of Canada has jurisdiction in cases of controversies between Canada and that province, or between that province and any other province or provinces that have passed a like Act, the Federal Court has jurisdiction to determine the controversies.
. National Benefit Authority Corporation v. Canada
In National Benefit Authority Corporation v. Canada (Fed CA, 2022) the Federal Court of Appeal confirmed that the agreement of the parties cannot bestow jurisdiction on the court:
 Both parties submit that this Court has jurisdiction to hear the appeal. However, this agreement cannot provide this Court with jurisdiction (Hillier v. Canada (Attorney General), 2019 FCA 44 at para. 4, 431 D.L.R. (4th) 556).. 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:
 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),  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.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].
 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,  1 C.T.C. 223, at para. 36; Verdicchio v. R., 2010 FC 117 (CanLII),  3 C.T.C. 80, at para. 24).
 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.
 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),  1 S.C.R. 695, at p. 707; Quebec North Shore Paper Co. v. Canadian Pacific Ltd., 1976 CanLII 10 (SCC),  2 S.C.R. 1054, at pp. 1065-66; Consolidated Distilleries, Ltd. v. The King,  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.
 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),  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),  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),  3 S.C.R. 3, at para. 18; MacMillan Bloedel Ltd. v. Simpson, 1995 CanLII 57 (SCC),  4 S.C.R. 725, at para. 15).
 The Federal Court, by contrast, has only the jurisdiction it has been conferred by statute. 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. As this Court noted in Roberts v. Canada, 1989 CanLII 122 (SCC),  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.”
. 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:
 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 " 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:
"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."
 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),  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. 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.
 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.
 In ITO [ITO-Int’l Terminal Operators v. Miida Electronics, 1986 CanLII 91 (SCC),  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),  2 S.C.R. 1054, 9 N.R. 471 and McNamara Construction (Western) Ltd. et al. v. The Queen, 1977 CanLII 13 (SCC),  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; 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,  2 S.C.R. 617]:
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.)…
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),  1 C.T.C. 223, at para. 36; Verdicchio v. R., 2010 FC 117 (CanLII),  3 C.T.C. 80, at para. 24). 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,  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),  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),  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].
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.