By Julius Melnitzer
Published in the Law Times on September 7, 2010
A recent decision of the Ontario Superior Court of Justice in Dolmage v. Ontario has made class actions against the Crown for claims of breach of fiduciary duty that occurred before 1963 viable.
"The case stands for the proposition that the Crown is subject to the same claims as a citizen unless there is a clear statutory indication that creates immunity from such liability," says Kirk Baert of Toronto's Koskie Minsky LLP, who with colleague Celeste Poltak represented the plaintiff in Domage.
It's not that Justice Maurice Cullity's judgement, released on July 28, provides an easy route to his conclusions.
"The reasons are a road map - albeit one as convoluted as can be imagined and one that goes all the way back to the Magna Carta - that clarifies the right of citizens to sue the Crown for pre-1963 breaches of fiduciary duty," says Alan Farrer, managing partner at Thomson Rogers.
The case arose from allegations of mistreatment between 1876 and 2009 of class members at the Huronia Regional Centre residential facility for individuals with developmental disabilities. The Crown argued it was immune from liability for all claims for breach of fiduciary duty that arose before Sept. 1, 1963, when the Proceedings Against the Crown Act came into force.
As Cullity saw it, however, the question was a complicated one.
"The difficulty relates to the claims for breach of fiduciary duty," he wrote. Such claims are not mentioned specifically in the act and, unless they fall within section 3 (which allows claims that could be enforced by petition of right before passage of legislation), there is nothing in the statute to authorise them to be asserted and enforced in proceedings against the Crown.
"The possible consequences would appear to me that proceedings for breach of fiduciary duty either are brought outside - and not under - the act and are not subject to (it); or cannot be brought unless they could have been enforced by petition of right if (the act) had not been enacted."
Adding complexity to the issue was the fact that breach of fiduciary duty against the Crown was an unknown cause of action when the act came about. Robert Ratcliffe of the Ministry of the Attorney General's Crown law office submitted, therefore, that the claim wasn't one that could have been enforced by petition of right before passage of the legislation.
But Cullity disagreed. The appropriate question wasn't whether a court sitting in 1963 would have granted a petition of right for a claim for breach of fiduciary duty but rather "to ask what the position would now be if the act had not been passed."
For the purposes of the motion, the Crown accepted that it had no immunity from liability for breaches of fiduciary duty that occurred after the act's passage.
"If it is now the law that claims for damages of fiduciary can be made, it must follow that declaratory relief is also available in respect of such breaches," Cullity wrote.
It was inconceivable, he added, that the petition-of-right procedure wouldn't have been adapted to accommodate judicial recognition of the Crown's new fiduciary duties.
"Such a development would be far less momentous than the rejection of Crown immunity for direct liability in tort that has otherwise deprived the rule that the Crown can do no wrong of any continuing influence," he wrote.
According to Baert, Dolmage opens the Crown to claims that couldn't have been advanced to date.
"The reason why we didn't have many decisions on this issue was because it was only the advent of class actions that made these cases possible," he says. "So whether or not the Crown had legal immunity, it had effective immunity because of the practical barriers to bringing these cases on an individual basis regardless of their merits."