Thursday, September 1, 2016

Housen Standard of Applies to All Types of Appellate Review

Hospira Healthcare Corporation v The Kennedy Institute of Rheumatology, 2016 FCA 215 Nadon JA: Pelletier, Rennie, de Montigny, Gleason JJA
            2,261,630 / infliximab / INFLECTRA

The Hospira decision, with Nadon JA writing for a unanimous five member panel of the FCA, is important in several respects. Most prominently, it changed the standard of review for discretionary decisions of prothonotaries, replacing the standard set out by the FCA in Canada v Aqua-Gem Investments Ltd [1993] 2 FC 425 with the Housen 2002 SCC 33 standard. Relatedly, Hospira held that the Housen standard should also apply to appellate review of a motions judge reviewing an order of a prothonotary, and to appellate review of discretionary decisions of judges [78], [83]. On the substantive point at issue, the FCA clarified the law relating to the limits on examination for discovery. Hospira also addressed broader jurisprudential questions. The Court considered when it could depart from SCC precedent, and it also implicitly overruled its own prior decision in Miller 2002 FCA 370, as to when its own decisions should be overruled. And the decision is also institutionally significant, as it was heard by a five judge panel – the first five judge panel since Aqua-Gem itself, more than 20 years ago [29]. This post will deal with the first issue.

In the underlying dispute Hospira is seeking a declaration that Kennedy’s ‘630 patent is invalid and not infringed [4]. Hospira requested two days for discovery of each of the inventors, but Kennedy refused, saying one day was sufficient. Hospira conducted one day of examination of each of the inventors, in London and New York (both inventors reside in the UK, but one happened to be in New York). At the end of the day, examination was terminated by Kennedy. Hospira then brought a motion seeking to continue the examination, in person, for one day per inventor [7], [104]. Prothonotary Milczynski heard the motion, and ordered the examination be continued for one-half day, by teleconference [8]. Hospira appealed, and the Motions Judge, Boswell J, applied the Aqua-Gem standard and dismissed the appeal [9]. Hospira then brought this appeal to the FCA.

Standard of review of discretionary orders of a prothonotary
A central question on the appeal was whether the standard of review set out in Aqua-Gem as applicable to discretionary orders of a prothonotary, should be abandoned and replaced by the standard of review set out in Housen v Nikolaisen 2002 SCC 33 [19]-[37] as being applicable to the decisions of trial judges. Under the Aqua-Gem standard, a discretionary order of a prothonotary ought not to be disturbed unless (1) the question is vital to the final issue, in which case it is subject to a de novo review; or (2) “the exercise of discretion by the prothonotary was based upon a wrong principle or upon a misapprehension of the facts” [42]. Under Housen, factual conclusions reached by a trial judge are subject to deferential review for palpable and overriding error; for questions of law and questions of mixed fact and law, where there is an extricable legal principle at issue, the applicable standard is that of correctness [66]. The FCA held that despite the different language, there was no real difference between the second branch of Aqua-Gem and the deferential standard set out Housen [26], [68]. Thus the question was whether the first branch of Aqua-Gem, which provides for de novo review on questions that are vital to the final issue, should be abandoned [26].

The FCA held that the de novo review branch of Aqua-Gem should indeed be abandoned, most importantly because it was wrong in principle [51]-[55]. The FCA adopted the reasoning of Low J in Zeitoun v. Economical Insurance Group 2008 CanLII 20996 aff’d 2009 ONCA 415, which had effected the same change in Ontario law [51]-[55]. This point boils to recognizing “a presumption of fitness that both judges and masters were capable of carrying out the mandates which the legislator had assigned to them” [53]. Masters may once have been assistants to judges, but they are now independent judicial officers [63]. There is consequently no justification for applying a different standard of review based merely on notions of judicial hierarchy [51].

The FCA further held that the Aqua-Gem standard should be replaced by the Housen standard [79]. On this point, I take the Court to be saying that even though the first branch of Aqua-Gem was substantially the same as the Housen standard, it is the Housen standard itself which should be used, and not some alternative formulation, even if putatively equivalent. The FCA also held that the Housen standard should be applied in reviewing discretionary decisions of motions judges, as was held in Imperial Manufacturing 2015 FCA 100, and doing away with the possibly conflicting formulation set out in Turmel 2016 FCA 9 [74]-[78]. The FCA also held that the same standard applies to appellate review of a motions judge reviewing a discretionary order of a prothonotary pursuant to Rule 51 [80].

Consequently, the law has been significantly simplified. There is now only one standard of review for discretionary decisions of prothonotaries and discretionary decisions of judges, which is the Housen standard [79]: absent error on a question of law or an extricable legal principle, intervention is warranted only in cases of palpable and overriding error. 

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