Friday, September 2, 2016

The Limits of Stare Decisis

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

As discussed in yesterday’s post, in Hospira the FCA held that the standard of review for discretionary decisions of prothonotaries set out in Aqua-Gem should be abandoned and replaced by the standard of review set out in Housen 2002 SCC 33. As well as the issue of whether Aqua-Gem should be abandoned, there was a question as to whether Aqua-Gem could be abandoned, because the Aqua-Gem standard had been approved by the SCC, and it was established FCA law. Hospira therefore raises the question of when the FCA can depart from SCC authority, and when it should overrule its own prior decisions.

Revisiting SCC Authority

In ZI Pompey Industrie v ECU-Line NV 2003 SCC 27, the SCC explicitly approved the Aqua-Gem standard:

18 Discretionary orders of prothonotaries ought to be disturbed by a motions judge only where (a) they are clearly wrong, in the sense that the exercise of discretion was based upon a wrong principle or a misapprehension of the facts, or (b) in making them, the prothonotary improperly exercised his or her discretion on a question vital to the final issue of the case: Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (C.A.), per MacGuigan J.A., at pp. 462-63.

However, the FCA, at [62], relied on Carter 2015 SCC 5, [44], where the SCC had held that lower courts

may reconsider settled rulings of higher courts in two situations: (1) where a new legal issue is raised; and (2) where there is a change in the circumstances or evidence that “fundamentally shifts the parameters of the debate”.

The FCA held that the first branch was not applicable, as the legal issue was the same as in Aqua-Gem, but there had been a fundamental change, so that Pompey could be reconsidered by the FCA under the second branch of Carter [63].

In particular, the FCA held the second branch was applicable because “the standard of review set out in Aqua-Gem has been overtaken by a significant evolution and rationalization of standards of review in Canadian jurisprudence,” and “the role of prothonotaries of the Federal Court has continued to evolve since Aqua-Gem was decided in 1993" [63]. This invokes two kinds of changed circumstance, namely a change in the general legal framework, and a factual change in the role of prothonotaries.

In addition to Carter, the SCC has recently discussed the binding effect of its decisions in Bedford 2013 SCC 72 and Craig 2012 SCC 43. In Bedford and Carter, the SCC held that the lower court was justified in revisiting the earlier SCC precedent. In Craig the SCC held in effect that the fact that there was a widespread view that its earlier decision was wrong was not in itself sufficient reason to revisit it. Only Carter explicitly invoked the second category. In that case the SCC at [47] referred to changed evidence that could have altered the factual premises of the holding in its earlier decision. (In Bedford the trial judge had also referred to changed evidence [41] but the SCC did not specifically rely on that point in saying a departure from its precedent was warranted [47].) Thus it seems to me that the changed role of prothonotaries is the kind of change that clearly falls in to the second Carter category.

The change in the general legal framework is a bit trickier. In Bedford an entirely new legal issue had been raised [45]. In Carter, the interpretation of s 7 of the Charter had changed [46]. (Note that the SCC treated both of these changes as arising under the first branch of Carter.) In Hospira, in contrast, the FCA was referring to the trend towards a general rationalization and simplification of the law of appellate review, that made the particularized approach in Aqua-Gem appear to be more of an outlier than it would have been in 1993. While this is somewhat different from the type of change at issue in Bedford and Carter, the facts of those cases do not of course constitute a complete code; but this type of change does seem to me to fall partway between Craig and Carter.

With that said, there is another consideration. The FCA noted, at [59], that in Pompey

the Supreme Court simply gave effect to the Aqua-Gem standard. In other words, other than adopting the standard enunciated by MacGuigan J.A., the Supreme Court was silent. It is quite clear from the Supreme Court’s reasons in Pompey that the true issue before the Court in that case was the correctness of the legal determinations made below and not the applicable standard of review.

While the FCA evidently considered this to be relevant, the Court did not advert to this point in applying the Carter test, presumably because it does not fit into either branch of the Carter criteria. But I suggest that it is nonetheless properly relevant. In R v Henry, 2005 SCC 76, [57] the SCC pointed out that

All obiter do not have, and are not intended to have, the same weight. The weight decreases as one moves from the dispositive ratio decidendi to a wider circle of analysis which is obviously intended for guidance and which should be accepted as authoritative. Beyond that, there will be commentary, examples or exposition that are intended to be helpful and may be found to be persuasive, but are certainly not “binding” in the sense the Sellars principle in its most exaggerated form would have it. The objective of the exercise is to promote certainty in the law, not to stifle its growth and creativity.

Carter applies to “settled rulings of higher courts.” It is not entirely clear what the SCC meant by “settled rulings,” but Craig, Carter and Bedford were all cases in which lower courts sought to revisit the dispositive ratio decidendi of an SCC decision, or at the very least, holdings that would fall within the central circle of authoritative statements by the SCC. Read in context, it is arguable that the Carter criteria only need to be invoked when a lower court seeks to revisit an SCC holding which falls in this central circle of precedential weight. It is at least clear that the Carter criteria need not be applied before departing from an obiter statement which was intended by the SCC only to helpful.

In Pompey the affirmation of the de novo review made in passing, and it was strictly obiter dicta, because the SCC held that the decision below was “clearly wrong.” Therefore, it was perhaps not strictly necessary for the FCA to have applied the Carter criteria at all. With that said, I don’t think it would be helpful to draw a sharp line between “settled rulings,” which require application of the Carter criteria, and other statements, which do not. As the SCC made clear in Henry, its statements have a gradation of precedential weight. The degree of precedential weight must affect how readily the lower courts can depart from a statement by the SCC. In holdings as the centre of the circle of analysis, the Carter criteria must be applied. But for less authoritative statements, those criteria are perhaps more in the nature of guidelines to be applied flexibly, and at the outer limits of the circle of analysis, Carter need not be referred to at all. If Pompey had discussed and applied a de novo standard, it would have been more difficult for the FCA to have departed from it, even if it appeared obsolete in light of a changing legal framework. But a passing affirmation of the court below in dicta is at the outer reaches of the circle of analysis. As the FCA implied, it is of only somewhat more weight than the authority of the court below. The general change in the legal framework identified by the FCA strikes me as a good reason for revisiting a weakly authoritative statement of this nature.

For all these reasons, in my view the FCA was clearly correct not to treat Pompey as binding in the circumstances. As the SCC said in Henry, [57], “The notion that each phrase in a judgment of this Court should be treated as if enacted in a statute is not supported by the cases and is inconsistent with the basic fundamental principle that the common law develops by experience.”

Overruling Prior FCA Authority

There was a separate issue as to whether the FCA could, or more precisely should, overrule its own decision, which had been settled law for more than 20 years. It is clear enough that the FCA has the authority to overrule itself, so the question is when it is appropriate to do so, in light of the need for certainty and predictability in the law. In Miller 2002 FCA 370 [10] the FCA held that

the test used for overruling a decision of another panel of this Court is that the previous decision is manifestly wrong, in the sense that the Court overlooked a relevant statutory provision, or a case that ought to have been followed.

In this case, the FCA acknowledged that the Miller criteria were not satisfied; while Aqua-Gem may have been wrong, at least in light of changed circumstances, “It cannot be said that Aqua-Gem ‘is manifestly wrong’” [61]. The FCA then dismissed Miller by saying it “is not relevant to the present matter” [61]. I don’t really understand that statement. It is true that the Miller criteria were not satisfied, but this does not mean Miller is not applicable, as it was explicit in Miller that the only time settled law should be reversed is when those criteria are satisfied. In Miller the FCA went through those criteria, held they were not satisfied, and consequently refused to overrule its own prior decision. To my mind, by ignoring Miller when it was clearly applicable, the FCA has effectively departed from it – without applying the Miller test, and without explicitly overruling it. I see this as a positive development. The criteria set out in Miller are far too rigid. While predictability is very important, all the implications of a holding by the FCA will rarely be immediately apparent, even if the point is fully argued. The passage of time may show that a decision was wrong, even though it was not manifestly wrong – I would say Miller itself falls into that category. Predictability isn’t as much of a virtue if it means we are certain to get the wrong answer.

Of course, even if Miller was too rigid, this doesn’t mean that precedent means nothing, and that any panel of the FCA should overrule another panel if it feels that earlier panel was wrong. Because the FCA didn’t explicitly acknowledge that it was overruling Miller it didn’t set out any new criteria as to when it would be appropriate to overrule its own prior case law. The fact that it saw fit to overrule Aqua-Gem does give us some idea as to the circumstances where it will do so, and the law on this point will continue to develop in future cases. There is, however, one circumstance that was important, namely that by order of the Chief Justice, this appeal was heard by a panel of five judges [2], for the first time since Aqua-Gem itself [29]. The standard of appellate review is both important and contentious issue, [28], [29], and the Chief Justice presumably assigned five judges to the panel in light of the fact that overruling Aqua-Gem was at issue. As I noted in a blog post suggesting that it is time for en banc review at the FCA, an augmented panel is appropriate when overruling a prior decision of the same court is in prospect, because of the added authority of the decision.

That is not to say that only an augmented panel should overrule the Court’s own prior case law, but an augmented panel does have advantages. In this case, for example, the standard of review was not determinative, because the issue was not vital to the final outcome, and so the review would have been deferential under the old Aqua-Gem standard as well as under Housen [26], [91]. If this decision had been made by a three-judge panel, its authority would consequently have been uncertain. However, a fully reasoned holding of a five-judge panel will be authoritative even though strictly obiter. For the reasons I set out in my earlier post on en banc review, I hope this is a mechanism that the FCA will start to use, if not routinely, at least more often than every 20 years.

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