Canada: A Little Less Above The Law? Crown Immunity In Lantheus Medical Imaging Inc. V. Atomic Energy Of Canada Ltd

Citing the "modern legislative trend" towards "putting the Crown on an equal footing with everyone else", the Ontario Court of Appeal recently overturned an application judge's granting of legal immunity to a Crown agent. The Appellate Court held that Atomic Energy of Canada Ltd. ("AECL"), a federal Crown corporation and Crown agent, is not immune from the application of s. 60 of the Ontario Evidence Act ("OEA") which authorizes the enforcement in Ontario of a letter of request from a foreign court. The Court further held that in this particular case, "justice required" that the letter of request be enforced.

Background

AECL operates a nuclear reactor in Chalk River, Ontario. The reactor produces medical isotopes, which are used for various commercial purposes. The Appellant, Lantheus, is an American corporation that used these medical isotopes in the manufacture of its products. When AECL unexpectedly shut down the Chalk River reactor in 2009 and 2010 for 15 months, Lantheus lost an estimated $70 million. It sought indemnification from its insurer, who denied coverage. Lantheus thus launched a lawsuit against its insurer in the United States (the "U.S. Action"). Shortly thereafter, it obtained a letter of request from the court seeking Ontario's assistance "in securing documents and viva voce testimony from AECL for use at the trial of the U.S. Action" (para 5). Specifically, Lantheus sought information from AECL about why the reactor was shut down and stated that this information was critical to determining whether Lantheus's losses were covered under its insurance policy.

As such, Lantheus commenced an application here in Ontario, pursuant to s. 60 of the Ontario Evidence Act, seeking an order giving effect in Ontario to the letter of request issued in the United States. The Application Judge dismissed the application, holding that AECL, as a Crown agent, enjoyed immunity. The Application Judge further noted that even if the court had jurisdiction to enforce the letter of request, Lantheus had not satisfied the test for the enforcement of the letter.

Lantheus appealed.

The Decision

The Crown has always been treated differently by the Courts: s. 17 of the Interpretation Act stipulates that "no enactment is binding on Her Majesty... except as mentioned or referred to in the enactment." Jurisprudence has held that only express words binding the Crown will satisfy s. 17.

The Crown Liability Proceedings Act ("CLPA") outlines when a Crown may be liable for certain causes of act. Indeed, the purpose of the CLPA is, in general terms, "to create liability on the federal Crown ... and expand the jurisdiction of the courts of the provinces for proceedings involving the Crown." Section 27 of the CLPA stipulates that "the rules of practice and procedure of the court in which proceeds are taken apply in those proceedings. Section 17 therefore binds a Crown agency to the rules of "practice and procedure" of the court.

The central issue in this case then, is whether s. 60 of the Ontario Evidence Act is a rule of "practice or procedure" to which the AECL is bound, or a "rule of evidence" distinct from a "rules of practice and procedure" and therefore not binding on a Crown agency.

What is section 60 of the OEA? Section 60 authorizes a judge of a Superior Court, when it appears to the judge that a court of competent jurisdiction in a foreign country has duly authorized the obtaining of testimony, to "order the examination of such witness... or the production of a writing or other document or thing mentioned in the order." 

Writing for the Court, Hoy J.A. concluded that s. 60 is properly considered a "rule of practice or procedure", not (as the application judge found) a separate "rule of evidence." First, Justice Hor explained that the phrase "rules of practice and procedure" as it appears in the CLPA has a broad meaning. Whereas the application judge decided that the Ontario Rules of Civil Procedure are the source of procedural rules in the province, Justice Hoy concluded that the Rules are "supplementary in nature" (para 30) to the rules of court in the province and are "by no means the only rules governing the practice and procedure of Ontario's courts" (para 31). Provincial statutes may also legislate rules that govern practice and procedure in Ontario courtrooms.

Second, Justice Hoy examines the goal of s. 60 of the OEA, and finds that s. 60 is not concerned with the admissibility or common law rules of evidence, but is in fact "more akin to a procedure for obtaining pre-trial discovery than a rule of evidence" (para 37). The court therefore concludes that  s. 60 is a "rule of practice and procedure" and therefore binding on AECL.

Interestingly, Lantheus also submitted an "alternative argument" (one that it did not submit to the application judge), suggesting that because the AECL has been involved in litigation as both plaintiff and defendant, AECL has "befitted" from the OEA and cannot now refused to be bound. Put another way, Lantheus suggested that by availing itself of the OEA in other litigation, AECL has waived its immunity. Justice Hoy did not find this argument persuasive. While "sympathetic" to application of the benefit/burden principle, he stated that there was no evidence as to the benefits obtained (and no submissions made) and no evidence as to whether these benefits were connected to s. 60 of the OEA. Presumably then, this principle could be applied in other cases, where evidence as to the benefits is tendered.

Having found that the Crown is bound, the last question the Court addressed was whether the letter of request should be enforced in this particular case. The Court concluded that it should be. Applying the six non-exhaustive factors first laid out in RE Friction Divisions Products, Inc. and E.I. Du Pont de Nemours & Co. Inc. et al (No. 2) 1986 56 O.R. (2d) 722 (H.C.J), Justice Hoy concluded that in this case, the letter of request should be enforced: the evidence AECL could give is sought is relevant, necessary, not otherwise obtainable, and not contrary to public policy. Furthermore, the documents being sought are clearly identified, and the order is not unduly burdensome. These factors are but "useful guideposts" (not a rigid formula) and in the case, are met. AECL must comply with the U.S. court's letter of request.

Potential Significance

The outcome of this case will affect Crown agents called to give evidence in the United States. While Crown agents may have previously avoided pre-trial discovery or documentary production outside of Canada, Lantheus suggests that insofar as s. 60 of the Ontario Evidence Act is a rule of practice and procedure, it is binding on Crown agents. Government-owned corporations may not be able to rely on Crown immunity in all cases: at least "in commercial matters", courts are starting to consider the outer limits of Crown immunity.

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