Canada: The Supreme Court Of Canada Searches For Goldilocks: Is The Jurisdiction Of The Federal Court Narrow, Broad, Or Just Right?

One of the first lessons I remember being taught as a law student about statutory interpretation was to look at both the words of the statute and the purpose Parliament intended in enacting the statute. I quickly learned that statutory interpretation can be somewhat of a headache because, sometimes, the words and the purpose of the statute are at odds with each other. What to do then?

This somewhat classic dilemma is at the front and centre of the dispute between the majority and the dissent of the Supreme Court of Canada in Windsor (City) v. Canadian Transit Co., 2016 SCC 54. The case deals with the narrow issue of whether the Federal Court has jurisdiction to decide whether the Canadian Transit Company (the "Company") must comply with orders issued by the City of Windsor (the "City") under a City by-law to repair certain houses purchased by the Company. The disagreement between the majority and the dissent on the answer to this question is grounded in their conflicting views about whether a purposive or technical interpretation of the Federal Court's jurisdiction should dominate. One side thinks jurisdiction should be narrow, and one side thinks jurisdiction should be broad; it remains to be seen whether, going forward, the result is just right.

THE FACTS OF WINDSOR (CITY) V. CANADIAN TRANSIT CO.

The Company owns and operates the Canadian half of the Ambassador Bridge, which connects Windsor, Ontario and Detroit, Michigan. It was incorporated under a special Act of Parliament, An Act to incorporate The Canadian Transit Company (the "CTC Act"), which empowers it to construct, maintain, and operate the bridge and to "purchase, lease, or otherwise acquire and hold lands for the bridge...and construct and erect and maintain buildings and other structures required for the convenient working of traffic to, from and over the said bridge." The "works and undertaking" of the company are declared to be for the general benefit of Canada, which triggers federal jurisdiction under ss. 92(1)(c) and 91(29) of the Constitution Act, 1867.

The Company purchased certain homes in Windsor located close to the bridge with the eventual intention of demolishing the buildings and using the land to facilitate maintenance and expansion of the bridge. The buildings have not been demolished to date and became the subject of considerable tension between the Company and the City of Windsor. The City eventually issued repair orders against the properties under its Property Standards By-law, Windsor By-law No. 147-2011. The Company appealed the repair orders to the Property Standards Committee with mixed success: the Committee decided that certain properties could be demolished without repairs, but deferred decision on other properties pending further negotiation between the parties. A further appeal by the City resulted in the Committee upholding the City's original repair orders for those other properties.

The Company and the City both appealed the Committee's decisions to the Ontario Superior Court of Justice. The Company also applied to the Federal Court for four declarations:

  1. That the Ambassador Bridge, including its approaches, terminal facilities, machinery and appurtenances, is a federal undertaking;
  2. That the Company has, pursuant to the CTC Act:

    1. The right to purchase, lease or otherwise acquire and hold lands for the Ambassador Bridge and its terminal yards, including its accommodation works and facilities, as the Company thinks necessary in its discretion;
    2. The right to expropriate and take an easement in, over, under or through any lands without the necessity of acquiring a title in fee simple thereto; and
    3. An obligation, as set out in By-Law No. 1606 of The Town of Sandwich, to keep and maintain the bridge and all works connected therewith in good order and condition and of sufficient strength and capacity at all times to sustain and protect such machinery and structures and also the vehicles and traffic that may be carried or allowed thereon;
  3. That, pursuant to declarations 1 and 2 above, the City of Windsor's By-law No. 147-2011 does not apply to properties purchased, leased, or otherwise acquired and held by the Company pursuant to its enabling legislation; and
  4. That certain properties purchased by the Company which are immediately west of and/or adjacent to the bridge are necessary for the continued operation and maintenance of the bridge.

The City moved to strike the Company's notice of application on the ground that the Federal Court lacks jurisdiction to hear the application.

Shore J. of the Federal Court granted the City's motion to strike the application. He held that the Company was effectively seeking a legal opinion, i.e. declarations about the applicability of the CTC Act, and concluded the Federal Court does not have jurisdiction to grant that remedy. Section 23(1) of the Federal Courts Act confers on the Federal Court jurisdiction over certain proceedings; it does not grant a right of appeal or judicial review to any person, nor does it give the Federal Court authority to determine a purely declaratory matter.

Stratas J., writing for the Federal Court of Appeal, reversed the decision of the court below and found that the Federal Court did have jurisdiction to hear the Company's application, applying applied the three-pronged test set out by the Supreme Court in ITO-International Terminal Operators Ltd. v. Miida Electronics Inc., [1986] 1 S.C.R. 752 ("ITO"). He found that the three prongs of the ITO test for finding jurisdiction of the Federal Court had been satisfied. In particular, he found that s. 23(c) of the Federal Courts Act satisfied the first prong of the test, which requires a statutory grant of authority to the Federal Court to hear the matter.

A majority of the Supreme Court of Canada, in a decision written by Karakatsanis J., overturned the decision of the Federal Court of Appeal and restored the decision of Shore J. striking the Company's application. Moldaver and Brown JJ., writing for themselves and Côté J., would have denied the appeal and remitted the matter to the Federal Court to determine whether the Court should exercise its jurisdiction. Abella J. agreed in principle with Moldaver and Brown JJ., but disagreed that the issue should be remitted to the Federal Court to determine whether jurisdiction should be exercised. She reasoned that the Federal Court should not exercise its jurisdiction to hear the matter, and a stay of the Federal Court application should be entered so that the matter could continue in the Ontario Superior Court of Justice.

KEY POINTS OF DISPUTE BETWEEN THE MAJORITY AND DISSENT

The majority and dissent of the Supreme Court disagreed on three key issues, which led to their differing conclusions regarding whether the Federal Court has jurisdiction to hear the City's application for declaratory relief.

1. How to construe the jurisdiction of the Federal Court generally

Karakatsanis J. examined the role and jurisdiction of the Federal Court through the lens of the Constitution Act, 1867, which empowers Parliament to establish new courts to administer federal law. Since the Federal Court was created by statute, its jurisdiction is narrowly limited to that which is granted to it by statute. It has no inherent jurisdiction. It may act only within the confines of the powers granted to it by Parliament. In contrast, Moldaver and Brown JJ. reasoned that the jurisdiction of the Federal Court should be construed broadly, emphasizing the objectives of the Federal Court as found in Hansard.

2. Whether the "essential nature" of the case must be determined before applying the ITO test

The majority held that it is necessary to determine the "essential nature" of the claim before analyzing whether the ITO test is met. Determining the claim's essential nature allows the court to assess whether it falls within the scope of s. 23(c) of the Federal Courts Act. Karakatsanis J. did not explain how this analysis is supposed to be different from branch 2 of the ITO test, which asks whether the claim is made "under an Act of Parliament or otherwise". She suggested the two are related but distinct, and did not distinguish them further.

Karakatsanis J. analyzed the "essential nature" of the claim by looking to the declaratory relief sought by the Company. She concluded that of the four declarations, the third, which sought immunity from the By-law, was the true essence of the claim because the other three declarations were not worthwhile for the Company to pursue if the third were not also granted. The other three declarations were valuable to the Company only to the extent that they establish, by the doctrines of inter-jurisdictional immunity or paramountcy, that the By-law was inapplicable or inoperative as against the Company. Thus, the "real issue" was whether the Federal Court has jurisdiction to decide a claim that a municipal by-law was constitutionally inapplicable or inoperative relative to a federal undertaking or project.

Moldaver and Brown JJ. disagreed, stating that the "essential nature" of the case is not the same question as whether federal law is essential to the disposition of the case. The character of the case is relevant to whether the Federal Court should exercise its jurisdiction, once jurisdiction has been found.

3. Whether s. 23(c) of the Federal Courts Act is "a statutory grant of jurisdiction"

The ITO test for determining whether the Federal Court has jurisdiction to hear a claim has three branches:

  1. There must be a statutory grant of jurisdiction to the Federal Court;
  2. Federal law must be essential to the disposition of the case; and
  3. The law at issue must be validly federal.

The majority and dissent disagreed about whether s. 23(c) of the Federal Courts Act provides the necessary "statutory grant of jurisdiction" to the Federal Court, such that branch 1 of the ITO test is met.

Section 23(c) reads as follows:

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:

...

(c) works and undertakings connecting a province with any other province or extending beyond the limits of a province.

Karakatsanis J. construed the provision narrowly, and found that s. 23(c) was procedural only. It did not create a cause of action, but confers jurisdiction on the Federal Court to hear causes of action that independently arise under federal legislation. She focused on the words "under an Act of Parliament or otherwise", reasoning that if Parliament had intended the Federal Court to have jurisdiction whenever relief is sought in relation to an extra-provincial undertaking, regardless of whether the relief is sought under a federal law, that qualifier would not have been necessary in the first place.

Given her conclusion on the first branch of the ITO test, Karakatsanis J. concluded that there is no jurisdiction for the Federal Court to hear the Company's application for declaratory relief.

Moldaver and Brown JJ. rejected the majority's interpretation of s. 23(c) as too narrow. They disagreed that s. 23(c) of the Federal Courts Act was procedural only, which led them to reach the opposite conclusion and allow the Company's application for declaratory relief.

CONCLUSIONS

It is striking that the majority and the dissent did not, generally, attempt to engage in the other side's method of reasoning in order to bolster their own logic. Karakatsanis J. only fleetingly considered Parliament's original purpose in enacting the Federal Courts Act, while Moldaver and Brown JJ. hardly engaged with Karakatsanis J.'s argument based on the language of s. 23(c) at all. It seems at times as though the decisions are speaking at cross-hairs with each other—almost engaging with the same issues, but not quite. One is left with the somewhat uncomfortable impression that the majority's bed might be too hard, while the dissent's bed may be too soft. We will see whether in fact the Court got the issue just right in the number of disputes in the future about whether the Federal Court has jurisdiction under s. 23(c)—the mischief both sides agree should be avoided, or decreased, as much as possible.

Case Information

Windsor (City) v. Canadian Transit Co., 2016 SCC 54

Docket: 36465

Date of Decision: December 8, 2016

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