Attis et al. v. Her Majesty the Queen in Right of Canada as Represented by the Minister of Health et al.; Dow Corning Corporation., Third Party

[Indexed as: Attis v. Canada (Minister of Health)]

93 O.R. (3d) 35

Court of Appeal for Ontario,

Lang, Juriansz and MacFarland JJ.A.

September 30, 2008

Torts -- Negligence -- Duty of care -- Crown not owing private law duty of care to persons who were implanted with silicone gel breast implants. [page36 ]

The plaintiffs were implanted with silicone gel breast implants. They alleged that their implants leaked or ruptured, causing catastrophic medical consequences. They commenced a proposed class action against Health Canada, alleging that the Food and Drugs Act, R.S.C. 1985, c. F-27 ("FDA") imposed a duty on Health Canada to ensure that individual members of the Canadian public were protected from devices that might cause them harm, that Health Canada knew or ought to have known about the unsuitability of the breast implants, and that it was negligent in failing to test, ban or recall the implants or warn the plaintiffs about their hazards. On a certification motion, the motion judge found that it was plain and obvious that the claim disclosed no cause of action because the underlying legislative and regulatory scheme did not support the plaintiffs' argument that the defendant owed them a private law duty of care. The proposed class action was dismissed, and the defendant was awarded costs fixed at $125,000. The plaintiffs appealed.

Held, the appeal should be dismissed.

The motion judge did not err in finding that the defendant did not owe the plaintiffs a private law duty of care. The case did not fall within a recognized or analogous category of proximate relationship. In fact, to the extent that the claim alleged breach of a statutory duty, such a claim has already been recognized as attracting immunity. Section 19 of the FDA, which deals directly with the safety of medical devices, explicitly places the obligation for the safety of the devices on the manufacturer and distributor; no obligations are placed on the government. The regulations in force at the relevant time imposed no obligation on Health Canada to undertake safety and efficacy testing, or to engage any other compliance or enforcement mechanism. The legislative scheme signalled an intention that the government's duty is owed to the public as a whole, not to the individual consumer. The absence of an immunity clause in the legislation was not indicative of a relationship of proximity between the plaintiffs and Health Canada. Given the plain language of the legislative scheme, no intention to impose a private law duty of care could be inferred. The government does not have a proximate relationship to an individual Canadian when it makes decisions of a political, social or economic nature. However, once the government has direct communication or interaction with the individual in the operation or implementation of a policy, a duty of care may arise, particularly where the safety of the individual is at risk. In this case, there was no allegation of any representations by Health Canada that were capable of supporting a relationship of proximity. It was not pleaded that Health Canada knew, or ought to have known, that the plaintiffs -- as opposed to unknown members of the public -- were relying on it to ensure product safety. Apart from a bald pleading that the plaintiffs relied on Health Canada for the safety of the breast implants, no facts were pled to support any reliance. The statutory framework included no complaints mechanism; the plaintiffs never raised, and had no procedure for registering, a complaint with Health Canada. The motion judge correctly concluded that it was plain and obvious that the plaintiffs failed to frame a cause of action capable of establishing proximity.

If that conclusion was wrong, then the imposition of a duty of care was negatived in any event under the second stage of the Anns v. Merton London Borough Council test by residual policy considerations reflecting the broad societal and legal implications of imposing a duty of care. The relevant policy considerations included the spectre of indeterminate liability, the chilling effect of the imposition of a duty of care in the public health context and the distinction between policy and operational conduct.

It was open to the motion judge to conclude that the proceeding was not in the public interest and did not raise issues of such a novel nature as to justify a [page37 ]different costs disposition. There was no error in principle in the motion judge's costs determination.

APPEAL from the order of Winkler R.S.J., [2007] O.J. No. 1744, 46 C.P.C. (6th) 129 (S.C.J.) dismissing the proposed class proceeding.

Cases referred to

Anns v. Merton London Borough Council, [1978] A.C. 728, [1977] 2 All E.R. 492, [1977] 2 W.L.R. 1024, 75 L.G.R. 555, 141 J.P. 527 (H.L.), apld Cooper v. Hobart, [2001] 3 S.C.R. 537, [2001] S.C.J. No. 76, 2001 SCC 79, 206 D.L.R. (4th) 193, 277 N.R. 113, [2002] 1 W.W.R. 221, J.E. 2001-2153, 160 B.C.A.C. 268, 96 B.C.L.R. (3d) 36, 8 C.C.L.T. (3d) 26, 110 A.C.W.S. (3d) 943; Edwards v. Law Society of Upper Canada, [2001] 3 S.C.R. 562, [2001] S.C.J. No. 77, 2001 SCC 80, 206 D.L.R. (4th) 211, 277 N.R. 145, J.E. 2001-2152, 153 O.A.C. 388, 34 Admin. L.R. (3d) 38, 8 C.C.L.T. (3d) 153, 13 C.P.C. (5th) 35, 110 A.C.W.S. (3d) 944; Eliopoulos (Litigation Trustee of) v. Ontario (Minister of Health and Long-Term Care) (2006), 2006 CanLII 37121 (ON CA), 82 O.R. (3d) 321, [2006] O.J. No. 4400, 276 D.L.R. (4th) 411, 217 O.A.C. 69, 43 C.C.L.T. (3d) 163, 35 C.P.C. (6th) 7 (C.A.); Klein v. American Medical Systems, Inc. (2006), 2006 CanLII 42799 (ON SCDC), 84 O.R. (3d) 217, [2006] O.J. No. 5181, 278 D.L.R. (4th) 722, 219 O.A.C. 49, 44 C.C.L.T. (3d) 47, 154 A.C.W.S. (3d) 376 (Div. Ct.), revg [2005] O.J. No. 4910, 37 C.C.L.T. (3d) 260, 143 A.C.W.S. (3d) 946 (S.C.J.), consd Baric v. Tomalk, [2006] O.J. No. 890, 38 C.C.L.T. (3d) 300, 146 A.C.W.S. (3d) 387 (S.C.J.); Finney v. Barreau du Québec, [2004] 2 S.C.R. 17, [2004] S.C.J. No. 31, 2004 SCC 36, 240 D.L.R. (4th) 410, 321 N.R. 361, J.E. 2004-1254, [2004] R.R.A. 713, 16 Admin. L.R. (4th) 165, 24 C.C.L.T. (3d) 1, 131 A.C.W.S. (3d) 543, REJB 2004-65746; Sauer v. Canada (Attorney General), [2007] O.J. No. 2443, 2007 ONCA 454, 225 O.A.C. 143, 31 B.L.R. (4th) 20, 49 C.C.L.T. (3d) 161, 159 A.C.W.S. (3d) 306, affg (2006), 2006 CanLII 74 (ON SC), 79 O.R. (3d) 19, [2006] O.J. No. 26, [2006] O.T.C. 13, 17 B.L.R. (4th) 319, 36 C.C.L.T. (3d) 296, 144 A.C.W.S. (3d) 1129, 147 A.C.W.S. (3d) 919 (S.C.J.) [Leave to appeal to S.C.C. refused [2007] S.C.C.A. No. 454]; Swanson Estate v. Canada, 1991 CanLII 8226 (FCA), [1991] F.C.J. No. 452, [1992] 1 F.C. 408, 80 D.L.R. (4th) 741, 124 N.R. 218, 7 C.C.L.T. (2d) 186, 26 A.C.W.S. (3d) 1217 (C.A.), distd

Other cases referred to

A.O. Farms Inc. v. Canada, 2000 CanLII 17045 (FC), [2000] F.C.J. No. 1771, 28 Admin. L.R. (3d) 315, 101 A.C.W.S. (3d) 288 (T.D.); Brown v. British Columbia (Minister of Transportation and Highways), 1994 CanLII 121 (SCC), [1994] 1 S.C.R. 420, [1994] S.C.J. No. 20, 112 D.L.R. (4th) 1, 164 N.R. 161, [1994] 4 W.W.R. 194, J.E. 94-497, 42 B.C.A.C. 1, 89 B.C.L.R. (2d) 1, 20 Admin. L.R. (2d) 1, 19 C.C.L.T. (2d) 268, 2 M.V.R. (3d) 43, 46 A.C.W.S. (3d) 797; Canada v. Saskatchewan Wheat Pool, 1983 CanLII 21 (SCC), [1983] 1 S.C.R. 205, [1983] S.C.J. No. 14, 143 D.L.R. (3d) 9, 45 N.R. 425, [1983] 3 W.W.R. 97, 23 C.C.L.T. 121, 18 A.C.W.S. (2d) 133; Childs v. Desormeaux, [2006] 1 S.C.R. 643, [2006] S.C.J. No. 18, 2006 SCC 18, 266 D.L.R. (4th) 257, J.E. 2006-986, 210 O.A.C. 315, [2006] R.R.A. 245, 39 C.C.L.T. (3d) 163, 30 M.V.R. (5th) 1, 147 A.C.W.S. (3d) 719, EYB 2006-104570; Cloud v. Canada (Attorney General) (2004), 2004 CanLII 45444 (ON CA), 73 O.R. (3d) 401, [2004] O.J. No. 4924, 247 D.L.R. (4th) 667, 192 O.A.C. 239, 27 C.C.L.T. (3d) 50, [2005] 1 C.N.L.R. 8, 2 C.P.C. (6th) 199, 135 A.C.W.S. (3d) 567 (C.A.); Donahue v. Stevenson, 1932 CanLII 536 (FOREP), [1932] A.C. 562, [1932] All E.R. Rep. 1 (H.L.); Drady v. Canada (Minister of Health), [2007] O.J. No. 2812, 2007 CanLII 27970, 159 A.C.W.S. (3d) 177 (S.C.J.); Hercules Management Ltd. v. Ernst & Young, 1997 CanLII 345 (SCC), [1997] 2 S.C.R. 165, [1997] S.C.J. No. 51, 146 D.L.R. (4th) 577, 211 N.R. 352, [1997] 8 W.W.R. 80, J.E. 97-1151, 115 Man. R. (2d) 241, 31 B.L.R. (2d) 147, 35 C.C.L.T. (2d) 115, 71 A.C.W.S. (3d) 169; Hill v. Hamilton-Wentworth Regional Police Services Board, [2007] 3 S.C.R. 129, [2007] S.C.J. No. 41, 2007 SCC 41, 285 D.L.R. (4th) 620, 368 N.R. 1, J.E. 2007-1867, 230 O.A.C. 253, [2007] R.R.A. 817, 64 Admin. L.R. (4th) 163, 50 C.C.L.T. (3d) 1, 50 C.R. (6th) 279, 40 M.P.L.R. (4th) 1, 160 A.C.W.S. (3d) 573, EYB 2007-124525; [page38 ] Holland v. Saskatchewan, [2008] S.C.J. No. 43, 2008 SCC 42, EYB 2008-136658, J.E. 2008-1434, 167 A.C.W.S. (3d) 427, 376 N.R. 316, 294 D.L.R. (4th) 193, [2008] 9 W.W.R. 193, 311 Sask. R. 197, 58 C.C.L.T. (3d) 1; Hollick v. Toronto (City), [2001] 3 S.C.R. 158, [2001] S.C.J. No. 67, 2001 SCC 68, 205 D.L.R. (4th) 19, 277 N.R. 51, J.E. 2001-1971, 153 O.A.C. 279, 42 C.E.L.R. (N.S.) 26, 13 C.P.C. (5th) 1, 24 M.P.L.R. (3d) 9, 108 A.C.W.S. (3d) 774; Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93, 74 D.L.R. (4th) 321, 117 N.R. 321, [1990] 6 W.W.R. 385, J.E. 90-1436, 49 B.C.L.R. (2d) 273, 4 C.C.L.T. (2d) 1, 43 C.P.C. (2d) 105, 23 A.C.W.S. (3d) 101; Just v. British Columbia, 1989 CanLII 16 (SCC), [1989] 2 S.C.R. 1228, [1989] S.C.J. No. 121, 64 D.L.R. (4th) 689, 103 N.R. 1, [1990] 1 W.W.R. 385, J.E. 90-18, 41 B.C.L.R. (2d) 350, 41 Admin. L.R. 161, 1 C.C.L.T. (2d) 1, 18 M.V.R. (2d) 1, 18 A.C.W.S. (3d) 527; Kamloops (City) v. Nielsen, 1984 CanLII 21 (SCC), [1984] 2 S.C.R. 2, [1984] S.C.J. No. 29, 10 D.L.R. (4th) 641, 54 N.R. 1, [1984] 5 W.W.R. 1, J.E. 84-603, 66 B.C.L.R. 273, 11 Admin. L.R. 1, 29 C.C.L.T. 97, 8 C.L.R. 1, 26 M.P.L.R. 81, 26 A.C.W.S. (2d) 453; Odhavji Estate v. Woodhouse, [2003] 3 S.C.R. 263, [2003] S.C.J. No. 74, 2003 SCC 69, 233 D.L.R. (4th) 193, 312 N.R. 305, J.E. 2004-47, 180 O.A.C. 201, 11 Admin. L.R. (4th) 45, 19 C.C.L.T. (3d) 163, 127 A.C.W.S. (3d) 178; Pearson v. Inco Ltd. (2006), 2006 CanLII 7666 (ON CA), 79 O.R. (3d) 427, [2006] O.J. No. 991, 267 D.L.R. (4th) 111, 208 O.A.C. 284, 20 C.E.L.R. (3d) 292, 25 C.P.C. (6th) 1, 146 A.C.W.S. (3d) 600 (C.A.); Rivtow Marine Ltd. v. Washington Iron Works, 1973 CanLII 6 (SCC), [1974] S.C.R. 1189, [1973] S.C.J. No. 126, 40 D.L.R. (3d) 530, [1973] 6 W.W.R. 692; Street v. Ontario Racing Commission (2008), 88 O.R. (3d) 563, [2008] O.J. No. 37, 2008 ONCA 10, 232 O.A.C. 346, 163 A.C.W.S. (3d) 670; Swinamer v. Nova Scotia (Attorney General), 1994 CanLII 122 (SCC), [1994] 1 S.C.R. 445, [1994] S.C.J. No. 21, 112 D.L.R. (4th) 18, 163 N.R. 291, J.E. 94-498, 129 N.S.R. (2d) 321, 20 Admin. L.R. (2d) 39, 19 C.C.L.T. (2d) 233, 2 M.V.R. (3d) 80, 46 A.C.W.S. (3d) 798; Syl Apps Secure Treatment Centre v. D. (B.), [2007] 3 S.C.R. 83, [2007] S.C.J. No. 38, 2007 SCC 38, 284 D.L.R. (4th) 682, 365 N.R. 302, J.E. 2007-1512, 227 O.A.C. 161, 49 C.C.L.T. (3d) 1, 39 R.F.L. (6th) 245, 159 A.C.W.S. (3d) 464, EYB 2007-122390; Wellbridge Holdings Ltd. v. Winnipeg (Greater), 1970 CanLII 1 (SCC), [1971] S.C.R. 957, [1970] S.C.J. No. 102, 22 D.L.R. (3d) 470, [1972] 3 W.W.R. 433

Statutes referred to

Class Proceedings Act, 1992, S.O. 1992, c. 6, s. 5(1)(a), (b), (e) Crown Liability Act, S.C. 1952-53, c. 30 Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50, s. 3(b)(i) Department of Health Act, S.C. 1996, c. 8, s. 4 Food and Drugs Act, S.C. 1952-53, c. 38 Food and Drugs Act, R.S.C. 1970, c. F-27, s. 2 Food and Drugs Act, R.S.C. 1985, c. F-27, ss. 18 [now s. 19], 23(1), 29(1), 30(1), 31 Health Protection and Promotion Act, R.S.O. 1990, H.7 Law Society Act, R.S.O. 1990, c. L.8

Rules and regulations referred to

Food and Drug Regulations, C.R.C., c. 55 Food and Drug Regulations, SOR/74-133 Medical Device Regulations, SOR/75-526 Medical Devices Regulations, C.R.C., c. 871 [amended to SOR/ 82-914] Medical Devices Regulations, S.O.R./98-282 Rules of Civil Procedure, R.R.O. 1990, Reg. 194, rule 21.01(1) (b)

Authorities referred to

House of Commons Debates, Vol. IV (April 21, 1953) at p. 4141 [page39 ]

Kirk M. Baert, Celeste Poltak and John Legge, for appellants. Paul J. Evraire and James Max Soldatich, for respondents. S. Wayne Morris, for third party.

The judgment of the court was delivered by

LANG J.A.: --

I. Introduction

[1] This appeal concerns government liability for negligence in relation to the government's regulation of breast implants. It arises from a certification motion under the Class Proceedings Act, 1992, S.O. 1992, c. 6 (the "CPA"), in which the motion judge, Winkler R.S.J., dismissed the appellants' proposed class proceeding and awarded costs to the respondents fixed at $125,000. He concluded that, plainly and obviously, the claim disclosed no cause of action because the underlying legislative and regulatory scheme did not support the appellants' argument that the respondent owed them a private law duty of care.

[2] The claim alleges that the respondent, Her Majesty the Queen in Right of Canada ("Health Canada"), breached its duty to properly regulate medical devices, namely, silicone breast implants. Such devices are regulated under the auspices of the Food and Drugs Act, R.S.C. 1985, c. F-27 (the "FDA" or the "Act") and the regulations under that Act.

[3] For the reasons that follow, I would dismiss the appeal. [See Note 1 below]

II. Background

The parties

[4] The appellants, Joyce Attis and Alexandra Tesluk, were implanted with silicone gel Dow Corning breast implants. Ms. Attis received one implant in 1972; it was removed in 1992. Ms. Tesluk received two implants in 1980; they were removed in 1994. Both appellants allege that their implants leaked or ruptured, causing them catastrophic medical consequences and permanent disabilities. [page40 ]

[5] Both appellants were members of a class of plaintiffs that sued Dow Corning Corporation and other breast implant manufacturers in an earlier and separate class proceeding. Ms. Attis opted out of that proceeding in 1994. In 1998, the proceeding resolved pursuant to a court-approved settlement; however, counsel advise that Ms. Tesluk only received nominal damages from the settlement. After the settlement, the appellants commenced this proceeding against Health Canada on behalf of a putative class consisting of residents of Canada (except British Columbia) who received Dow Corning breast implants between 1962 and 1992. This class is said to include approximately 29,500 individuals.

The appellants' claim

[6] In their claim and reply, the appellants plead that the FDA imposed a duty on Health Canada to ensure that individual members of the Canadian public were protected from devices that might cause them harm. The appellants plead that they relied upon Health Canada to comply with that duty, which they describe as a duty to promote and maintain the health and safety of individual Canadians, and to ensure that all medical devices are safe. The appellants allege that, to comply with that duty, Canada established a comprehensive system of regulation, which it was obliged to operate without negligence.

[7] The appellants plead that, as a result of information from various governments and organizations warning that the implants "may cause injury" or may cause varying degrees of harm to implant recipients, Health Canada knew or ought to have known about the unsuitability of the implants. This unsuitability is alleged to include the implants' predilection to failure, [See Note 2 below] deterioration, disintegration and leakage. In particular, the appellants plead that the Crown's "ministers or senior public servants" ignored warnings from "senior scientific and medical staff" regarding the implants. The appellants further plead gross negligence based on Health Canada's failures, including its failures to test, ban, recall or warn the appellants about the hazards of the implants, as well as its failure to establish a remediation program. The appellants describe the alleged negligence as relating to operational decisions made by Health Canada in the course of its operation of the statutory scheme. The appellants also claim [page41 ]that, since at least 1975, Health Canada was negligent in applying a risk-benefit analysis in assessing medical devices. They plead such an analysis is both ultra vires Health Canada's legislative mandate and grossly negligent. Finally, according to the appellants, Health Canada negligently failed to enforce the requirements of the regulations from 1988 until 1994.

The legislative scheme

[8] The umbrella legislation dealing with the administration of health in Canada is the Department of Health Act, S.C. 1996, c. 8. Section 4(1) of that Act gives the Minister of Health powers and duties relating to "the promotion and preservation of the health of the people of Canada". Section 4(2)(a) gives the Minister the authority to administer statutes and regulations related "to the health of the people of Canada". Section 4(2)(b) gives the Minister power relating to the "protection of the people of Canada against risks to health and the spreading of diseases", while s. 4(2)(d) gives the Minister the authority to establish and control "safety standards and safety information requirements for consumer products".

[9] The specific legislative scheme that addresses medical devices is the FDA and its regulations. Initially in s. 18, [See Note 3 below] and later in s. 19, the FDA provides that "[n]o person shall sell any device that, when used according to directions or under such conditions as are customary or usual, may cause injury to the health of the purchaser or user thereof". Part II of the FDA provides inspectors with the power to administer the legislative scheme. Inspectors may enter premises and examine articles (s. 23(1)) and submit a seized article to an analyst (s. 29(1)). Section 30(1) authorizes the Governor in Council to make regulations "for carrying the purposes and provisions of this Act into effect". This power includes regulating manufacturers and distributors of devices to prevent the consumer from being "deceived or misled" about a product (s. 30(1)(b)) and to promote "the prevention of injury [to] the health of the purchaser or consumer" (s. 30(1)(e)). Finally, s. 31 provides for fines and imprisonment to enforce the legislation and its regulations.

[10] The original regulations, the Food and Drug Regulations, C.R.C., c. 55 (the "FDR") were replaced by the Medical Devices Regulations (the "MDR"), S.O.R./75-526. The regulations became progressively more detailed over time. In 1972, when Ms. Attis received her implant, the FDR, C.R.C., (1955) were in [page42 ]force. [See Note 4 below] Under that regime, manufacturers were neither required to provide information to Health Canada, nor to seek authorization prior to importing or selling devices in Canada. However, inspectors and analysts had the authority to obtain samples and to examine or detain devices. In 1974, the amended FDR, SOR/74-133 allowed the regulator to request evidence regarding the safety of the device for its recommended purpose and to prohibit the sale of a device pending receipt of sufficient evidence.

[11] From 1975 to 1982, the time frame when Ms. Tesluk received her implants, the relevant provisions of the FDR were replaced by the MDR, SOR/75-526. The MDR required manufacturers to furnish Health Canada with "notification" within ten days from the date of the first sale of a medical device. The notification was required to include particulars about the device, its performance characteristics and directions for use. Before selling a device, manufacturers were required to conduct tests to justify the benefits and performance characteristics claimed. In addition, Health Canada had the discretion to require manufacturers to provide safety and efficacy evidence, failing which Health Canada could prohibit the sale of the device.

[12] From 1982 to 1998, medical implant manufacturers were obliged to submit to Health Canada safety and efficacy tests, but only regarding any "new" product (C.R.C., c. 871, SOR/ 82-914). If satisfied with the results, Health Canada would issue a Notice of Compliance regarding the device. Devices already on the market, including existing breast implant devices, were excluded from this requirement.

[13] In 1998, the regulations were amended to provide for a licensing scheme, which is not relevant to the time frame under consideration in this appeal. The licensing scheme places more requirements on the medical devices industry: see SOR/98-282. No version of the regulations required or authorized Health Canada to notify users of any product warnings. [page43 ]

The motion judge's decision

[14] The motion judge dismissed the motion for certification on the basis that the appellants' pleadings failed to disclose a cause of action as required by s. 5(1)(a) of the CPA.

[15] Usually, such a pleadings motion is decided on the basis of the statement of claim. However, in this case, the motion was heard after a complete exchange of pleadings. In argument, the appellants referred not only to their amended statement of claim, but also to their reply. No objection was taken to the additional reference to the reply, which in any event served as an amended claim for the purpose of strengthening the appellants' original statement of claim. The reply also accepted some of the pleadings in Health Canada's statement of defence.

[16] In his reasons, at para. 33, the motion judge quoted a paragraph from the statement of defence that was not admitted in the appellants' reply. Given the nature of the motion, this reference was in error. [See Note 5 below] However, there are two reasons why the reference does not affect the result. First, it appears the reference simply describes the regulatory scheme that is in any event referenced in the statement of claim and interprets that scheme in a manner consistent with the legislation's purpose. Thus, the reference is immaterial. Second, the fact that neither party raised this issue on the appeal supports the view that the extract from the statement of defence was not considered by the parties to be controversial.

[17] In the balance of his reasons, the motion judge considered the analytical framework that evolved from the House of Lords' decision in Anns v. Merton London Borough Council, [1978] A.C. 728, [1977] 2 All E.R. 492 (H.L.) including the Supreme Court of Canada's clarification of that framework in the regulatory negligence context in Cooper v. Hobart, 2001 SCC 79, [2001] 3 S.C.R. 537, [2001] S.C.J. No. 76; and Edwards v. Law Society of Upper Canada, 2001 SCC 80, [2001] 3 S.C.R. 562, [2001] S.C.J. No. 77. In particular, the motion judge noted, at para. 26, the Edwards requirement that "[f]actors giving rise to proximity must be grounded in the governing statute when there is one, as in the present case" (Edwards, at para. 9). The motion judge then determined, at para. 27, that "[n]o analogous duty of care of the nature alleged in this case had been recognized previously". He further concluded, at para. 28, that, while the statutory and regulatory scheme under the FDA imposes duties on manufacturers and importers of medical devices, it was plain and obvious that "no such obligations are attributed to the [page44 ]government so as to create a private law duty of care", as opposed to a duty of care to the public as a whole.

[18] The motion judge gave two reasons for concluding the appellants failed to establish a private law duty of care on the part of Health Canada. First, he interpreted s. 19 of the FDA as imposing a duty of care on the seller, rather than on the government. Second, he rejected the appellants' argument that Health Canada's alleged negligence arose from "operational", as opposed to "policy", decisions. The motion judge distinguished the cases of Finney v. Barreau du Québec, 2004 SCC 36, [2004] 2 S.C.R. 17, [2004] S.C.J. No. 31; Swanson Estate v. Canada, 1991 CanLII 8226 (FCA), [1991] F.C.J. No. 452, 80 D.L.R. (4th) 741 (C.A.); and Baric v. Tomalk, [2006] O.J. No. 890, 38 C.C.L.T. (3d) 300 (S.C.J.), which were relied upon by the appellants. He noted that those cases challenged specific regulatory conduct dealing with individual and corporate breaches of regulations. The motion judge distinguished Finney and Swanson on the basis that specific complaints were made to the regulator in those cases. That was not the situation in this case.

[19] The motion judge also distinguished Baric on the basis that the regulatory inspectors in that case took no action regarding the company's known numerous and specific regulatory breaches. He concluded that the essence of the appellants' claim against the government was different and that it was properly characterized as a failure to comply with a "duty to prohibit" the devices, a duty he found to be akin to a "duty to govern". Since a failure to govern or prohibit "is a manifest policy decision", the motion judge concluded that Health Canada was immune from civil liability (para. 42).

[20] The motion judge observed that two recent Ontario appellate decisions, Klein v. American Medical Systems, Inc. (2006), 2006 CanLII 42799 (ON SCDC), 84 O.R. (3d) 217, [2006] O.J. No. 5181 (Div. Ct.); and Eliopoulos (Litigation Trustee of v. Ontario (Minister of Health and Long-Term Care) (2006), 2006 CanLII 37121 (ON CA), 82 O.R. (3d) 321, [2006] O.J. No. 4400 (C.A.), "uphold the right of the government to govern in the general public interest without being subject to the threat of suit" (para. 45).

[21] In the result, the motion judge concluded that the appellants failed to establish a private law duty of care.

III. Issues

[22] The appellants argue that the motion judge erred in striking their action for failure to disclose a cause of action and in awarding costs against them in the amount of $125,000. The respondents' cross-appeal concerns other aspects of the certification motion. [page45 ]

IV. Standard of Review

[23] In Cloud v. Canada (Attorney General) (2004), 2004 CanLII 45444 (ON CA), 73 O.R. (3d) 401, [2004] O.J. No. 4924 (C.A.), this court affirmed that the test under s. 5(1)(a) of the CPA is the same as the test employed in a rule 21.01(1)(b) [of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194] motion. Accordingly, the parties agree that the respondent was required to demonstrate that it was plain and obvious that the action "cannot possibly succeed". Under this test, the motion judge was required to accept the factual pleadings as proven and to read the claim generously. In addition, the test requires that a claim not be dismissed simply because it asserts a novel cause of action: see Hollick v. Toronto (City), 2001 SCC 68, [2001] 3 S.C.R. 158, [2001] S.C.J. No. 67, at para. 25; and Hunt v. Carey Canada Inc., 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959, [1990] S.C.J. No. 93, at p. 980 S.C.R. The parties agree that, on appeal, correctness is the applicable standard of review.

V. Analysis

Anns analysis

(a) Applicable legal principles

[24] The parameters of government liability for regulatory negligence continue to evolve. We have moved from a system of complete Crown immunity to one where a government may be held liable in tort. In 1953, Canada enacted the Crown Liability Act, S.C. 1952-53, c. 30, which is now the Crown Liability and Proceedings Act, R.S.C. 1985, c. C-50. Section 3(b)(i) of that Act provides that "[t]he Crown is liable for the damages for which, if it were a person, it would be liable . . . in respect of a tort committed by a servant of the Crown".

[25] As is the case with tort liability generally, Crown liability requires the plaintiff to establish the foundational component of a duty of care. In 1977, the seminal decision of the House of Lords in Anns advanced a two-stage test for determining the presence of such a duty. The test was refined by the Supreme Court of Canada in Kamloops (City) v. Nielsen, 1984 CanLII 21 (SCC), [1984] 2 S.C.R. 2, [1984] S.C.J. No. 29, and later in Cooper and Edwards.

[26] In examining whether a duty of care is present, a court must first inquire whether the harm that occurred was the reasonably foreseeable consequence of the defendant's conduct. If foreseeability is established, the question becomes whether the parties were in a relationship of proximity to support a duty of care. If a court finds both foreseeability and proximity, it must then inquire at the second stage of the analysis whether any residual policy considerations negative the imposition of a duty of [page46 ]care. Thus, the Anns analysis affirms the "neighbour" principle, familiar from Donoghue v. Stevenson, 1932 CanLII 536 (FOREP), [1932] A.C. 562, [1932] All E.R. Rep. 1 (H.L.), in the first stage. At the second stage, it recognizes that broader policy considerations may render the imposition of liability unreasonable.

[27] This does not mean, however, that policy considerations are restricted to the second stage of the analysis. Policy considerations can apply at both stages of the analysis, although they differ in nature. In Syl Apps Secure Treatment Centre v. D. (B.), 2007 SCC 38, [2007] 3 S.C.R. 83, [2007] S.C.J. No. 38, at para. 32, Abella J. explained that policy considerations at the first stage include factors relating to the relationship between the parties, while policy considerations at the second stage address larger issues outside the parties' relationship. Further, in Hill v. Hamilton-Wentworth Regional Police Services Board, 2007 SCC 41, [2007] 3 S.C.R. 129, [2007] S.C.J. No. 41, McLachlin C.J., writing for the majority, acknowledged, at para. 31, that "there may be overlap between stage one and stage two [policy] considerations" and that "[t]he important thing is that in deciding whether a duty of care lies, all relevant concerns should be considered".

[28] The different stages of the analysis invoke different burdens of proof. The plaintiff bears the burden of establishing a prima facie duty of care by showing foreseeability and proximity at the first stage. The defendant then has the burden of demonstrating the countervailing policy considerations at the second stage: see Childs v. Desormeaux, 2006 SCC 18, [2006] 1 S.C.R. 643, [2006] S.C.J. No. 18, at para. 13.

[29] In the context of regulatory negligence, two leading decisions of the Supreme Court of Canada considered the parameters of a regulator's duty of care to the consumer in relation to a product or service. Cooper involved a proposed class action against the regulator of mortgage brokers. The representative investor, one of 3,000 investors, alleged that the registrar of the regulatory body ought to have suspended a particular mortgage broker's licence as soon as the registrar became aware of the broker's statutory violations. The registrar's failure to take prompt action, argued the investor, caused investors to incur losses for which they sought compensation. The Supreme Court of Canada concluded that the registrar owed no duty of care because the registrar did not have a proximate relationship with the investors regarding their particular investments. The regulator's duty was not to these individuals, but to the public as a whole. That duty was owed to ensure the efficient operation of the mortgage marketplace.

[30] In the companion case of Edwards, the Supreme Court also concluded that the regulator, the Law Society of Upper Canada, [page47 ]owed no private law duty of care because the parties' relationship was not proximate. In Edwards, the plaintiffs deposited funds into a lawyer's trust account; however, they did so not as legal clients, but rather as investors. Thus, the deposits were unrelated to the lawyer's professional practice. In those circumstances, there was no proximate relationship between the Law Society and the investors. The investors, the court said, at para. 18, were only "participants in a third person business promotion". Accordingly, the Law Society could owe them no duty of care under the Law Society Act, R.S.O. 1990, c. L.8.

[31] In litigation against the government, the Supreme Court of Canada specifically instructed in Cooper, at para. 43, that "the factors giving rise to proximity, if they exist, must arise from the statute" because, apart from the statute, the alleged wrongdoer is "in no different position than the ordinary man or woman on the street". However, other decisions, including Finney, also hold that the question of proximity is informed by considerations relevant to the relationship between the plaintiffs and the government, including considerations arising from the specifics of their actual interaction. I will discuss this issue further below.

[32] Cooper and Edwards also instructed that whether a government decision is operational or policy-oriented is a consideration that belongs at the second stage of the Anns analysis. Cooper explained, at para. 38, that this is because government immunity for policy decisions is not based on the parties' relationship, but "is better viewed as an immunity imposed because of considerations outside the relationship for policy reasons -- more precisely, because it is inappropriate for courts to second-guess elected legislators on policy matters". Thus, the operational/policy distinction, which was once considered the starting point for the analysis of government liability in negligence, now belongs at the second stage.

[33] The distinction between government operational decisions and policy decisions was considered by the Supreme Court of Canada in Wellbridge Holdings Ltd. v. Winnipeg (Greater), 1970 CanLII 1 (SCC), [1971] S.C.R. 957, [1970] S.C.J. No. 102. That case concerned a zoning by-law relied upon by a builder in deciding to develop an apartment building. When the by-law was subsequently declared invalid, the builder sued the municipality in negligence for damages for passing a by-law that was invalid. His action was ultimately dismissed. Laskin J. concluded that, since the passage of the by-law was an exercise of policy or legislative authority undertaken for the benefit of the general public, the decision to pass the by-law could not support a private law duty of care to the individual. In arriving at this conclusion, Laskin J. emphasized [page48 ]that the result would have been different had the challenged conduct been operational in nature.

[34] Eighteen years after Wellbridge, the Supreme Court of Canada re-examined the distinction between policy and operational decisions in Just v. British Columbia, 1989 CanLII 16 (SCC), [1989] 2 S.C.R. 1228, [1989] S.C.J. No. 121. The issue in that case was whether the province was liable in tort for negligence where a rock fell onto a highway, which the province was responsible for maintaining, and caused injury to the plaintiffs. Cory J., for the majority, concluded that the government owed a duty of care to the plaintiffs because the road maintenance at issue involved operational decisions, rather than planning or policy decisions. At p. 1245 S.C.R., he noted that, generally, "decisions concerning budgetary allotments for departments or government agencies will be classified as policy decisions". Such decisions are immune from liability, he explained at p. 1239 S.C.R., because of the difficulties inherent in governing and the basic premise that "the Crown . . . must be free to govern". In Brown v. British Columbia (Minister of Transportation and Highways), 1994 CanLII 121 (SCC), [1994] 1 S.C.R. 420, [1994] S.C.J. No. 20, at p. 441 S.C.R., Cory J., again writing for the majority, elaborated. He described policy decisions as ones usually "dictated by financial, economic, social and political factors or constraints", while operational decisions perform or carry out the policy "on the basis of administrative direction, expert or professional opinion, technical standards or general standards of reasonableness": see also Swinamer v. Nova Scotia (Attorney General), 1994 CanLII 122 (SCC), [1994] 1 S.C.R. 445, [1994] S.C.J. No. 21, at p. 465 S.C.R.

[35] Thus, a determination of whether a pleading puts forward a tenable cause of action requires consideration of foreseeability and proximity at the first stage, including policy considerations relevant to the relationship between the parties, and consideration of residual policy considerations of a broader nature at the second stage, including the question of whether the nature of the government's decision (policy or operational) supports immunity from a duty of care.

[36] However, the Supreme Court of Canada has also instructed that, if a particular relationship has already been recognized as falling into a category of duty of care, it is unnecessary to undertake a proximity analysis. As the Supreme Court stated, at para. 36 of Cooper, "When a case falls within one of these situations [where proximity has been recognized] or an analogous one and reasonable foreseeability is established, a prima facie duty of care may be posited": see also Odhavji Estate v. Woodhouse, 2003 SCC 69, [2003] 3 S.C.R. 263, [2003] S.C.J. No. 74. [page49 ]

[37] I take it from this that an allegation of a duty of care also does not require an Anns analysis if the relationship at issue has been recognized as one that attracts immunity from liability. Accordingly, as a preliminary manner, I turn to the issue of whether this case falls into a recognized category of proximity or of immunity.

(b) Does a pre-existing category of regulatory negligence give rise to a duty of care in this case?

[38] Whether a particular case falls within a recognized category is not always straightforward. Cooper, at para. 36, lists recognized categories of care. Certain categories seem to fit the circumstances of this case, at least when viewed broadly. For example, this case presents allegations of governmental operational negligence, physical harm to the plaintiffs and a breach of a duty to warn. These relationships are listed in Cooper as recognized categories. On the other hand, a category of government immunity from liability for a breach of a statutory duty was also recognized in Holland v. Saskatchewan, [2008] S.C.J. No. 43, 2008 SCC 42 and Canada v. Saskatchewan Wheat Pool, 1983 CanLII 21 (SCC), [1983] 1 S.C.R. 205, [1983] S.C.J. No. 14.

[39] Whether this case fits within or is analogous to a recognized category depends upon the characterization of the allegations and the applicability of the authorities relied upon by the appellants.

[40] In this case, the appellants argue that the government undertook to implement a program of regulation and it did so negligently. The appellants also argue that they relied on the government to protect them from any hazards posed by the medical devices that the government regulated. This type of regulatory negligence, they argue, is a recognized category of tort liability.

[41] The allegations include pleadings that Health Canada was negligent in failing to: issue a ban or warning about the devices; seize, monitor or test the devices; remediate the consequences of the failed devices; and enforce the regulations against the manufacturers and distributors. The pleadings also allege that Health Canada was negligent in applying a risk- benefit analysis to the implants. In summary, the claim alleges that Health Canada failed to take action in the face of a known risk and, in doing so, acted contrary to its duty to protect consumers.

[42] In support of their argument that regulatory negligence falls into a recognized category of liability, the appellants rely on cases where a government regulator was found to owe a private law duty of care, particularly the cases of Swanson, Finney and Baric. In my [page50 ]view, the relationships in these cases are distinguishable from the relationship in this case. As such, I am not persuaded that this case falls within a recognized or analogous category of proximate relationship.

[43] I begin with Swanson, which the appellants argue established a recognized category of a duty of care imposed on government regulators, particularly in relation to matters of public safety. In Swanson, the airline regulator learned through investigation and employee complaints that a particular air carrier was engaged in unsafe practices. The regulator, who took some action based on the complaints, nevertheless permitted the air carrier to continue to fly. A crash followed. In concluding that the regulator was liable for the resulting damages, Linden J.A., writing for the Federal Court of Appeal, observed that the regulator's challenged decisions were operational in nature. Not only did the decisions not involve any balancing of either political or economic obligations, but the regulator's own operation manuals required the regulator to take action. Accordingly, the finding of a duty in Swanson was based on the policy/operational distinction.

[44] Importantly, Swanson pre-dates the Cooper and Edwards decisions that changed the analysis, both by emphasizing the importance of proximity at the first stage and by directing that the operational/policy distinction is properly considered at the second stage of the analysis. Swanson was decided on the basis of the policy/operational distinction without a preliminary consideration of the question of proximity. Cooper and Edwards make it clear that a finding of proximity is a required element of a duty of care. Operational negligence, in the absence of a proximate relationship, is not sufficient to give rise to a duty of care. As such, Swanson does not assist the appellants' argument.

[45] In Finney, the Supreme Court imposed a duty of care on the Barreau du Québec where the Barreau, the regulator of members of the legal profession, failed to act in good faith. The Barreau failed to take action against a lawyer in the face of repeated complaints by the plaintiff to the regulator about the lawyer's misconduct. In light of the lawyer's prior poor disciplinary record, the court observed that the Barreau's failure to follow up on the plaintiff's complaints was particularly egregious. While Finney was decided under the civil law system, and in the context of a legislative immunity provision, the Supreme Court observed, at para. 46, that the result would have been the same on the basis of the Edwards and Cooper common-law analysis because "[t]he decisions made by the Barreau . . . were made in a relationship of proximity with a clearly identified complainant, where the harm was foreseeable". This interaction in Finney satisfied the [page51 ]proximity test since it occurred within the regulated professional relationship and there had been direct, close and repeated contact between the complainant and the regulator. As I will discuss below, no comparable direct interaction occurred between the appellants and Health Canada, which makes this relationship quite different from the one in Finney.

[46] Finally, the appellants rely heavily on Baric for the principle that regulatory negligence is a recognized category. In Baric, the plaintiff alleged negligence on the part of the plaintiff's doctors in relation to the implantation of a temporomandibular joint device in the plaintiff's jaw. In a third-party claim brought by the defendant doctors against Health Canada, the defendants pled that Health Canada negligently permitted the manufacturer to repeatedly breach the FDR. They also alleged operational negligence, including Health Canada's improper listing of the device as compliant, its failure to follow up on known ongoing sales of the unregulated device, its participation in an ineffective recall and its delay in enforcing the regulations. In the face of these operational allegations, the motion judge dismissed a motion to strike the third-party claim, holding that a trial was necessary to determine whether there was a cause of action. In my view, Baric presents a different factual matrix than the one advanced in this case. Moreover, I am of the opinion that the Baric motion judge would not have reached the same result today in light of the intervening case law.

[47] In arriving at her decision, the Baric motion judge relied on the motion judge's decision in Klein v. American Medical Systems, Inc., [2005] O.J. No. 4910, 37 C.C.L.T. (3d) 260 (S.C.J.), which refused to dismiss a claim for regulatory negligence against Health Canada relating to the implantation of a medical device. [See Note 6 below] At para. 77, the Baric motion judge accepted the reasoning of the Klein motion judge at para. 47 of that decision that, "having created a detailed plan to protect against such devices causing physical harm to users", it was not plain and obvious that Health Canada did not have a private law duty of care in implementing that plan. Accordingly, the Baric motion judge dismissed the motion to strike, observing, at para. 86, that "[o]nce a government chooses to occupy a regulatory field, it must do so without negligence". The Baric decision was not appealed. Klein was appealed. In Klein, Chapnik J., for the Divisional Court, struck the claim. She observed, at para. 25, that "[t]here can be no private law duty of care where the purpose of the legislative [page52 ]scheme is to facilitate a public authority to act in its discretion in the public interest". Thus, in my view, the Divisional Court in Klein effectively overruled Baric to the extent that it could be read as having recognized a category of government liability for discretionary regulatory negligence in the context of the medical device regulatory regime. In addition, the Baric decision preceded the decision of this court in Eliopoulos, a decision I will discuss later in these reasons.

[48] In addition to these three decisions, counsel provided written submissions on the Supreme Court of Canada's decision in Holland, which was released after oral argument on the appeal. Counsel also provided further submission after the Supreme Court of Canada refused leave to appeal in Sauer v. Canada (Attorney General), 2007 ONCA 454, [2007] O.J. No. 2443, 225 O.A.C. 143 (C.A.), leave to appeal to S.C.C. refused [2007] S.C.C.A. No. 454. In my view, neither case assists the appellants.

[49] Sauer concerned a proposed class action by cattle farmers relating to Canada's regulation of cattle feed to prevent mad cow disease. This court upheld the motion judge's conclusion that it was not plain and obvious that the plaintiff's allegation of a duty of care could not succeed. [See Note 7 below] The motion judge's reasons regarding the action against Canada, as opposed to the action against the manufacturer, were contained at para. 91, where he stated that whether the government's actions concerned policy or operational decisions required a more complete evidentiary record. The question of proximity was advanced on appeal. On that issue, this court found a sufficient pleading of proximity, at para. 62, on the basis of the many express "public representations by Canada that it regulates the content of cattle feed to protect commercial cattle farmers among others" (emphasis added). Accordingly, the result in Sauer depended on the allegation of specific representations by the government that it was acting in the interests of the plaintiffs. On this basis, Sauer is distinguishable because the appellants in this case do not plead any specific representations by Health Canada that it was acting to protect the particular interests of the consumers of breast implants.

[50] In Holland, the appellants, a group of game farmers, brought a claim against the federal government regarding a federal program that required each farmer to sign a broadly worded release in order to maintain his or her herd certification status. On judicial review, the releases were declared invalid; nonetheless, the [page53 ]government did not restore the farmers' certification status. The game farmers sued, seeking a remedy for their financial losses and pleading, among other causes of action, the tort of negligence. Their claim was struck and they appealed to the Supreme Court. McLachlin C.J.C., writing for the court, characterized the major focus of the claim as one for breach of statutory duty because the allegations concerned the government's failure to act within the authorizing acts and regulations. The Supreme Court ruled that this aspect of the claim disclosed no cause of action in tort, and that the proper remedy was judicial review. Even if proximity were established, wrote the Chief Justice, residual policy considerations militated against recognizing such a cause of action. At para. 9, McLachlin C.J.C. reaffirmed the principle in Saskatchewan Wheat Pool that there is no recognized category of a duty of care for breach of statutory duty. In contrast, the court held that the government's alleged breach of the order given on judicial review merited an evidentiary hearing, since it pleaded a recognized cause of action of negligent failure to implement a judicial decree.

[51] Accordingly, I would reject the appellants' claim that courts have previously recognized a duty of care arising from relationships of proximity analogous to the appellants' relationship with Health Canada. Indeed, in my view, to the extent the claim alleges breach of a statutory duty, such a claim has already been recognized as attracting immunity. Nonetheless, for completeness, I will undertake the Anns inquiry to determine whether a novel duty of care should be recognized in the circumstances of this case.

(c) Have the appellants satisfied stage one of the analysis?

[52] The first stage of the Anns test engages both foreseeability and proximity. It was reasonably foreseeable that unsafe breast implants could cause harm to consumers. Thus, the sole issue is whether the appellants' pleadings establish a relationship of proximity.

(i) Does the statutory scheme support a relationship of proximity?

[53] A relationship of proximity was described by the Supreme Court of Canada in Hercules Management Ltd. v. Ernst & Young, 1997 CanLII 345 (SCC), [1997] 2 S.C.R. 165, [1997] S.C.J. No. 51, at para. 24, as one "of such a nature that the defendant may be said to be under an obligation to be mindful of the plaintiff's legitimate interests in conducting his or her affairs". In Cooper, at para. 34, McLachlin C.J.C. and Major J. stated that determining [page54 ]the closeness of a relationship may involve "looking at expectations, representations, reliance, and the property or other interests involved". These factors help inform whether "it is just and fair having regard to that relationship to impose a duty of care in law upon the defendant": see also Syl Apps, at para. 26.

[54] However, since Cooper held that a relationship of proximity between a plaintiff and a government must be found in the governing statute, I begin with the legislative framework. As I have already noted, the umbrella statute of the Department of Health Act, at s. 4, provides that the Minister's obligations are to the people of Canada for the promotion of their health and the prevention of risk generally. Thus, under this statute, the Minister's duty is to the people of Canada as a whole, not to individual residents.

[55] The Minister of National Health and Welfare emphasized Health Canada's duty to the public as whole in 1953, when he first introduced the FDA. He also noted that the legislation depended upon the co-operation of the industry:

The purpose of the bill of course is to protect the Canadian people in matters of health . . . The administration of the measure depends upon the co-operation that the officials of the department are able to enjoy with industry . . . The bill is concerned with the prohibition of things that are injurious to health and that are unfit for use, and with the prevention of deception in the manufacture and sale of goods consumed by the public. See the House of Commons Debates, Vol. IV (April 21, 1953) at p. 4141 (Hon. Paul Martin).

[56] Importantly, s. 19 of the FDA, which deals directly with the safety of medical devices, explicitly places the obligation for the safety of the devices on the manufacturer and distributor when it says "no person shall sell" any unsafe device. As the motion judge concluded, no obligations are placed on the government.

[57] The regulations in force during the time frame defined by the appellants simply particularized and provided mechanisms to enforce compliance with the legislation's objective. A reading of the legislative history of the regulations discloses that there was no obligation on Health Canada to undertake safety and efficacy testing, or to engage any other compliance or enforcement mechanism. The regulations simply authorized Health Canada to enforce the various aspects of the compliance requirements if it chose to do so. Thus, Health Canada was akin to an overseer or watchdog, able to employ discretionary, but not mandatory, enforcement of the legislative scheme. Having the means to enforce compliance does not translate into an obligation to do so: see Street v. Ontario Racing Commission, (2008), 2008 ONCA 10, 88 O.R. (3d) 563, [2008] O.J. No. 37 (C.A.), at para. 18. Like the FDA, the regulations mandate that the medical devices industry is responsible for [page55 ]product safety, a responsibility that has become increasingly rigorous over time. The government, like the consumer, depends on the manufacturer to ensure product safety.

[58] The regulations in this case did not require proof of safety before the sale of a device. In cases of safety concerns brought to the Minister's attention, Health Canada had the discretion, not the obligation, to request specific testing. As well, the statutory scheme did not provide a complaints process that may have suggested a legislative intent to import a private law duty of care. Neither did the scheme provide for a compensation fund similar to those maintained by some professional regulatory bodies, a provision that also may have suggested an intention to assume responsibility for consumer welfare.

[59] Since an examination of the legislative scheme reveals that no duty is placed on Health Canada, and all obligations are on the industry, I conclude that the statute signals an intention that the government's duty is owed to the public as a whole, not to the individual consumer.

[60] I find support for this conclusion from two other decisions, both of which also considered circumstances that involved public safety regulation. Eliopoulos involved a claim against Ontario's Minister of Health for breach of an alleged private law duty of care to an individual plaintiff to control the spread of the West Nile Virus. Sharpe J.A., writing for this court, concluded that it was plain and obvious that there was no such duty because the Minister's powers under the Health Protection and Promotion Act, R.S.O. 1990, c. H.7 were discretionary and the Minister's duties were owed to the public at large, not to the individual. Hence, there was no proximate relationship.

[61] Similarly, in Klein, Chapnik J., writing for the Divisional Court, concluded, at para. 33:

Finally, we agree with the submission of the appellant that it is impossible for Health Canada to regulate on behalf of individuals directly. Health Canada is not the manufacturer of the device, nor a physician, hospital or supplier. The manufacturer is responsible for the manufacturing process and labeling for each particular device, as well as the conditions for its intended use . . . Health Canada is only one player in the complex regulatory and delivery scheme governing medical devices in Canada. It has no direct role in the commercial transaction or the medical decision-making that leads to individual use. The duties of care toward the patient or consumer are qualitatively different from any public duty owed by Health Canada as the government regulator.

[62] Finally, I am not persuaded that the absence of an immunity clause in the legislation is indicative of a relationship of proximity between the appellants and Health Canada. Given the plain language of the legislative scheme, no intention to impose a private law duty of care can be inferred. [page56 ]

(ii) Did Health Canada's interaction with the appellants create a relationship of proximity?

[63] I turn to consider the appellants' further argument that a relationship of proximity can be established by operational conduct outside the statutory framework based on the interaction between the parties.

[64] A discussion of the ways that plaintiffs interact with government can overlap with stage-two policy considerations because operational decisions are more likely to involve interaction than policy decisions. However, at the first stage the discussion focuses on the parties' expectations, representations and reliance, which informs the degree of closeness that is essential for a proximate relationship.

[65] When the government interacts with an individual in the context of an ordinary accident, the relationship is obviously both close and direct. In contrast, when government decides what laws to enact or how to allocate limited resources for the general good, it has neither a close nor direct relationship with the individual. The job of the government is to govern and, in the course of doing so, to make broad-based policy decisions for the benefit of the public collectively, even if those decisions may not have positive implications for all individuals. It would severely curtail the government's ability to govern if it were found to have the necessary direct and close relationship to an individual member of the public to support a claim in tort for bad government policy decisions. It is accepted that, if the government fails to make good decisions in these areas, the public will demonstrate its displeasure at election time. Thus, the law is clear that the government does not have a proximate relationship to an individual Canadian when it makes decisions of a political, social or economic nature: see A.O. Farms Inc. v. Canada, 2000 CanLII 17045 (FC), [2000] F.C.J. No. 1771, 28 Admin. L.R. (3d) 315 (T.D.).

[66] However, once the government has direct communication or interaction with the individual in the operation or implementation of a policy, a duty of care may arise, particularly where the safety of the individual is at risk. If, for example, a government decides to issue a warning about a specific danger, in this case medical devices, or to make representations about the safety of a product, the government may be liable for the manner in which it issues that warning, or the content of those representations, especially where the government disseminates the warning or representation knowing that the individual consumer will rely on its contents and the individual does so. [page57 ]

[67] For example, Goudge J.A. found that a proximate relationship was pleaded in Sauer on the basis of specific public representations made by Canada that it was acting to protect the interests of the commercial cattle farmers. The Supreme Court in Finney also found a duty of care where a clearly identifiable complainant directly interacted with the Barreau in the context of its professional complaints process. Accordingly, a duty of care can be assumed and evidenced by the interaction between the parties, depending on the closeness of the relationship.

[68] In my view, there is no allegation of such representations by Health Canada in this case that are capable of supporting a relationship of proximity. Accepting the pleading that Health Canada knew the implants were dangerous for all consumers, knowledge alone is insufficient to found a private law duty of care. In this case, it is not pleaded that Health Canada knew, or ought to have known, that the appellants -- as opposed to unknown members of the general public -- were relying on it to ensure product safety: see Rivtow Marine Ltd. v. Washington Iron Works, 1973 CanLII 6 (SCC), [1974] S.C.R. 1189, [1973] S.C.J. No. 126, at pp. 1196-97 S.C.R. In other words, a relationship of proximity is still necessary to support a duty of care.

[69] Apart from a bald pleading that the appellants relied on Health Canada for the safety of the breast implants, no facts are pled to support any reliance. Moreover, there is no suggestion of any direct reliance. Even if the appellants could be said to have placed general reliance on Health Canada based on its role as regulator, that reliance was not evidenced by any pleaded communication and was not pled to be within the reasonable expectations of the parties. Health Canada provided no direct service to the appellants and had no contact with them. This lack of a relationship is evident from the fact that Health Canada did not keep, and was not mandated to keep, any record of individuals who received implants. It had no mechanism to notify such individuals about product defects or recalls. Those responsibilities were placed on the manufacturer. Moreover, the fact that Health Canada's only method of notification to the public would be by public notice supports the conclusion that the duty was public, rather than private, in nature. In addition, as I have observed, the statutory framework included no complaints mechanism such as those often provided for professional regulatory bodies. Thus, the appellants never raised and had no procedure for registering a complaint with Health Canada.

[70] In this case, the legislation put the duty on the medical device industry to ensure the safety of its products, to track product complaints, to recall dangerous products and to warn [page58 ]consumers. Moreover, there was no interaction with Health Canada that could have led the appellants to believe Health Canada had assumed a private law duty of care for product safety. Nothing in the relationship between the parties would lead an individual to assume a government product guarantee. Rather, the appellants' expectations and reliance would have been on their medical advisors, the hospital, the manufacturer and the distributor of the device. I would conclude that the pleaded facts in this case do not support a finding of proximity through interaction.

[71] Finally, in this case, Health Canada's 2007 Web site was referenced in the appellants' factum. However, the appellants did not refer to the Web site in their pleadings or allege reliance on that Web site. Nor could they since the relationship is assessed at the earlier time of the alleged tortious conduct. Accordingly, the Web site interaction is irrelevant to this case.

(iii) Conclusion on proximity

[72] This is not a case where Health Canada is alleged to have provided a direct misrepresentation or performance assurance to the individual consumers regarding the present and long-term safety of the medical device. Rather, this is a case where Health Canada acted within its mandate in exercising its discretion regarding the enforcement of its regulatory regime. It had no interaction with the appellants in the course of that role. In those circumstances, in my view, the motion judge correctly concluded that it was plain and obvious that the appellants failed to frame a cause of action capable of establishing proximity. I observe that there was no suggestion that further amendments to the claim could correct the deficiency.

(d) Have the appellants satisfied stage two of the analysis?

[73] If I am wrong about the absence of a proximate relationship, I would find that the imposition of a duty of care is negatived in any event under the second stage of the Anns test by residual policy considerations reflecting the broad societal and legal implications of imposing a duty of care: see Cooper, at para. 37 and Holland, at para. 10. The relevant policy considerations include the spectre of indeterminate liability, the chilling effect of the imposition of a duty of care in the public health context and the distinction between policy and operational conduct.

[74] I turn first to consider the spectre of indeterminate liability. Indeterminate liability, in my view, is the most relevant policy consideration because the imposition of a duty of care in this case may result in the government becoming the virtual insurer of [page59 ]medical devices. The appellants argue that indeterminate liability is not a concern because the number of affected consumers in this proceeding is relatively contained. However, Health Canada's responsibilities extend far beyond the regulation of the specific devices at issue in this case to the regulation of thousands of other devices. In addition, potential liability could extend from medical devices to other products regulated under the FDA, such as food, drugs and cosmetics, as well as to many other regulatory regimes. It follows that the imposition of liability on the public purse would place an indeterminate strain on available resources. Accordingly, in my view, the prospect of indeterminate liability weighs against the imposition of liability in this case.

[75] A second, residual policy consideration is the potential chilling effect on public health if Health Canada is held to owe a private law duty of care to the individual consumer. In making decisions about whether medical devices should be available in Canada, Health Canada must weigh the need of some individuals to obtain relief from suffering (and sometimes death), despite the risks of a particular device, with the desire of others to avoid all risk, no matter the consequences. In doing so, Health Canada is obliged to consider the needs of the public at large in determining whether a device meets the minimum requirements for sale and/or distribution in Canada. Health Canada argues that the imposition of liability would distract it from its predominant mandate of establishing public health priorities. If liability is imposed, it argues, Health Canada may be inclined to limit the number of devices available for the consuming public in order to ensure the absolute safety of all potential individual consumers and protect itself from liability. Such a result could frustrate access to medical treatment for those who choose to assume the risk of a particular medical treatment. In addition, the imposition of liability could also discourage medical advances and innovative technologies, which often come with risks and without guarantees regarding their long-term consequences. This result would be contrary to public health principles and detrimental to the collective public interest. This argument is persuasive; however, in my view, it is weakened by the absence of information at this stage of the proceeding about any balancing of public health interests that was undertaken by the government in the pleaded circumstances of this case.

[76] Finally, I turn to the distinction between government policy and the execution or operation of that policy. It is often difficult to distinguish between the two. That is so in this case. The impugned conduct could possibly be characterized as either policy or operational conduct. At this early stage of the proceeding, [page60 ]when the only allegations are those contained in the statement of claim, it is unclear which is the more accurate characterization. However, in my view, it is unnecessary to make a final determination on this issue to reach a conclusion regarding the second stage policy considerations.

[77] Particularly, in light of the spectre of indeterminate liability, in my view, the second-stage policy considerations negative the imposition of government liability.

[78] I conclude by observing that, if regulatory bodies are held liable in negligence, and are required to pay the complainant's damages, this could lead to decreased vigilance by the regulated entity, in this case the manufacturer, importer and distributor of the product. Diminished deterrence for a regulated industry is to be avoided particularly when it is the industry, and not the regulator, that holds critical knowledge regarding product safety. Yet, as governments increase their regulatory functions, they may increasingly be seen as providing a service to members of the public upon which individuals may reasonably rely. This will particularly be the case if individuals are given governmental assurance, through Web sites, representations or otherwise, about matters such as the safety of products. In those circumstances, providing the government with immunity for regulatory negligence may be seen to act as a disincentive for responsible regulation of industry compliance. While the circumstances of this case do not directly raise these considerations, absent clear legislative guidance from Parliament, it may be necessary to address them in the appropriate case.

The costs appeal

[79] The appellants appeal the costs disposition of $125,000, arguing that the award was excessive in the circumstances, including the divided success below, the novelty of the claim and the claim's public interest nature. They also argue that the costs consequences should reflect the timing of the motion to strike. On this point, I would accept the submission of counsel for the respondents that the inclusion of the motion to strike in the certification motion was made at the direction of the class proceedings judge. Regarding quantum, while by no means determinative, I observe that the costs award, while high, was made in the context of a costs claim by the respondents for $1,074,448.20.

[80] In making his costs disposition, the motion judge was alive to and properly applied the relevant principles set out by Rosenberg J.A., for this court, in Pearson v. Inco Ltd. (2006), 2006 CanLII 7666 (ON CA), 79 O.R. (3d) 427, [2006] O.J. No. 991 (C.A.), at para. 13. In my view, it was [page61 ]open to the motion judge to conclude that the proceeding was not in the public interest and did not raise issues of such a novel nature as to justify a different costs disposition. Since the appellants have failed to persuade me of any error in principle in the motion judge's costs determination, I would not interfere with his exercise of discretion. I would dismiss the appellants' costs appeal.

VI. Conclusion

[81] For these reasons, I would dismiss the appeal. Since the appellants have advanced no basis upon which they could save their claim, and their reply has already served as an amended statement of claim, I agree with the motion judge that there is no purpose in granting leave to amend. Finally, given the result, it is unnecessary to consider the cross-appeal regarding s. 5(1)(b) through (e) of the CPA.

VII. Costs

[82] The respondents are entitled to their costs of the appeal, which I would fix at $40,000, inclusive of disbursements and Goods and Services Tax.

Appeal dismissed.

Notes

Note 1: This appeal was heard immediately after a similar appeal of Drady v. Canada (Minister of Health), [2007] O.J. No. 2812, 2007 CanLII 27970 (S.C.). The reasons in both appeals are being released together.

Note 2: The appellants plead that by the 1980s, Dow Corning's breast implants were failing 5 to 32 per cent of the time and that the high failure-rate was well known because, between 1970 and 1985, Dow Corning implemented a policy of providing free replacements for recipients.

Note 3: The FDA, S.C. 1952-53, c. 38.

Note 4: Prior to an amendment in 1969, the definition of "device" in the FDA, S.C. 1952-53, c. 38 was restricted to those items "for use in the diagnosis, treatment, mitigation or prevention of a disease, disorder, abnormal physical state, or the symptoms thereof, in man or animal". Accordingly, the Act regulated only breast implants for reconstruction, and not breast implants for augmentation. In the FDA, R.S.C. 1970, c. F-27, the definition of "device" was broadened to include those items used for "restoring, correcting or modifying a body function or the body structure of man or animal", thereby including breast implants for augmentation in the regulatory scheme.

Note 5: That referance no doubt occurred because other live issues on the certification motion made it entirely appropriate to reference all the pleadings.

Note 6: I note that the Klein decision was based on the more recent medical device licensing scheme provided for in the current regulations.

Note 7: The motion judge's reasons were reported at (2006), 2006 CanLII 74 (ON SC), 79 O.R. (3d) 19, [2006] O.J. No. 26 (S.C.J.).