COURT OF APPEAL FOR BRITISH COLUMBIA

Citation:

Wakelam v. Wyeth Consumer Healthcare/Wyeth Soins de
  Sante Inc.,

2014 BCCA 36

Date: 20140130

Dockets: CA039629;
CA039633; CA039636

Docket: CA039629

Between:

Lana Wakelam

Respondent

(Plaintiff)

And

Wyeth Consumer
Healthcare/Wyeth Soins de Sant
e
Inc.

Appellant

(Defendant)

And

Johnson &
Johnson, Johnson & Johnson Inc.,

McNeil Consumer
Healthcare Canada, Pfizer Canada Inc.,

Novartis Consumer
Health Canada Inc./

Novartis Sante
Familiale Canada Inc.,

Trillium Health
Care Products Inc.,

Vita Health
Products Inc., and Procter & Gamble Inc.

Respondents

(Defendants)

And

The Attorney
General of British Columbia

The Attorney
General of Canada

Pursuant
to the

Constitutional Question Act
,

RSBC 1996, C.68

- and -

Docket: CA039633

Between:

Lana Wakelam

Respondent

(Plaintiff)

And

Johnson
& Johnson, Johnson & Johnson Inc.,

McNeil Consumer
Healthcare Canada, and

Pfizer Canada Inc.

Appellants

(Defendants)

And

Novartis Consumer
Health Canada Inc./

Novartis Sant
e
Familiale Canada Inc.,

Wyeth Consumer
Healthcare/Wyeth Soins de Sante Inc.,

Trillium Health
Care Products Inc., and

Vita Health
Products Inc., and Procter & Gamble Inc.

Respondents

(Defendants)

And

The Attorney
General of British Columbia

The Attorney
General of Canada

Pursuant
to the

Constitutional Question Act
,

RSBC 1996, C.68

- and -

Docket: CA039636

Between:

Lana Wakelam

Respondent

(Plaintiff)

And

Novartis Consumer
Health Canada Inc./

Novartis Sante
Familiale Canada Inc.

Appellant

(Defendant)

And

Johnson &
Johnson, Johnson & Johnson Inc.,

McNeil Consumer
Healthcare Canada,

Wyeth Consumer
Healthcare/Wyeth Soins de Sante Inc.,

Pfizer Canada
Inc., Trillium Health Care Products Inc.,

Vita Health
Products Inc., and Procter & Gamble Inc.

Respondents

(Defendants)

And

The Attorney
General of British Columbia

The Attorney
General of Canada

Pursuant
to the

Constitutional Question Act
,

RSBC
1996, C.68

Before:

The Honourable Madam Justice Newbury

The Honourable Mr. Justice Frankel

The Honourable Madam Justice Garson

On appeal from:  An
order of the Supreme Court of British Columbia,
dated December 22, 2011 (
Wakelam v. Johnson & Johnson
,
2011 BCSC 1765, Vancouver Docket No. S078806).

Counsel for the Appellant Novartis Consumer Health Canada
  Inc./Novartis Sante Familiale Canada Inc.:

D. Kent, J.D. Virgin

Counsel for the Appellants Johnson & Johnson, Johnson
  & Johnson Inc., McNeil Consumer Healthcare Canada and Pfizer Canada Inc.:

D. Neave

T. Posyniak (Articled
  Student)

Counsel for the Appellant Wyeth Consumer Healthcare/Wyeth
  Soins de Sant
e
Inc.:

W.W. McNamara, S.
  Chesworth,

C. Cummins

Counsel for The Attorney General

of British Columbia:

J.G. Penner

Counsel for the Respondent:

R. Mogerman, M.
  Underhill,

M. Segal

Place and Date of Hearing:

Vancouver, British
  Columbia

December 11 and 12,
  2013

Written Submissions Received:

January 16 and 23,
  2014

Place and Date of Judgment:

Vancouver, British
  Columbia

January 30, 2014

Written Reasons by:

The Honourable Madam Justice Newbury

Concurred in by:

The Honourable Mr. Justice Frankel

Concurred in by:

The Honourable Madam Justice Garson

Summary:

The plaintiffs class action against
manufacturers of childrens cold medicines was certified by trial court, and
certification order was challenged on appeal. APPEAL ALLOWED.

In late 2008, Health Canada, acting on
new studies, decided that cold and cough medicines were not generally effective
for children or were unsafe when dosage requirements were not followed. The
ministry ordered that they were not to be marketed for children under age six,
and required re-labelling to this effect. Manufacturers, including the
defendants, duly complied with new labelling rules; but plaintiff claimed that
in selling the medicines prior to December 2008, the defendants had engaged in
deceptive acts or practices under the (provincial) Business Practices and
Consumer Protection Act (BPA) and had made misleading representations to the
public contrary to s. 36 of the (federal) Competition Act. These statutes
provide private rights of action for persons who suffer loss or damage due to
breach of the statute.

In her pleading, the plaintiff sought to
marry the (assumed) statutory breaches with restitutionary remedies, seeking
the benefits defendants had received from the sale of the medicines between
1997 and 2008. She deposed (but did not plead) that she had bought five bottles
of the medicines over a number of years, but did not allege she had given
medicine to her child or that the child had suffered any injury. The Court of
Appeal held that:

1.       As held by the certification judge, the Food and Drug Act
and ss. 171‑2 of BPA did not conflict in the constitutional sense
and accordingly, the second branch of the paramountcy doctrine (based on
frustration of the purposes of the federal legislation) did not apply to make
the BPA inapplicable to this case. The primary purpose of FDA was to protect
Canadians health and safety by regulating food and drugs, and to permit rather
than compel the sale of safe products; and this case was more analogous to the
Spraytech and Rothmans decisions of the SCC than to Mangat or Lafarge Canada
(SCC 2007). Adding further protection by applying the BPA would not frustrate
the purpose of the FDA, although it was possible a conflict might arise in
future between the two statutes on different facts.

2.       CA followed Koubi v. Mazda (BCCA) to hold that BPA is an
exhaustive code regulating consumer transactions and that restitutionary
remedies (including waiver of tort, unjust enrichment, disgorgement and
constructive trust) sought by plaintiff are not available at law for breach of
the BPA. Saskatchewan Wheat Pool applied. With respect to plaintiffs claim for
personal damages under s. 171 of the BPA, no causal connection between the
(assumed) deceptive act or practice and some loss or damage suffered by her had
been pleaded, and no material facts that would support such claim had been
pleaded. Thus no cause of action for monetary relief under the BPA had been
disclosed. However, non-monetary causes referred to in s. 172 of BPA were
available, at least in theory.

3.       Similarly, the Competition Act, enacted under the federal
criminal law and trade and commerce powers, was a well-integrated scheme and
s. 36 was not intended to create a private right of action at large, as
stated in General Motors v. City National Leasing (SCC 1989). Section 36
referred to loss or damage suffered by a plaintiff, but did not contemplate the
restitutionary remedies sought here. With respect to plaintiffs own damage
claim, s. 36 required proof of causation between the loss or damage and
the statutory breach, which again had not been pleaded here.

4.       The aggregate damage provisions of the Class Proceedings
Act (CPA), being procedural in nature (see Pro-Sys v. Microsoft
(SCC 2013)), could not provide a cause of action.

5.       The court below had not erred in principle in finding that
plaintiff had complied with s. 4(1)(b) of CPA, even though only one
plaintiff had been named in the pleading.

In the result, only the causes of action
arising under s. 172 of the BPA were left in the pleading. Certification
order was set aside, but plaintiff was free to seek the re-certification of
what remained.

Reasons for Judgment of the Honourable
Madam Justice Newbury:

[1]

On December 18, 2008, Health Canada reversed a longstanding policy that
had permitted the sale in Canada of certain non-prescription cough and cold
medicines for use by children. Manufacturers of such medicines had already voluntarily
withdrawn them from the market for use in children under age two, but Health
Canada now required them to re-label the medicines to instruct consumers that
they should not be used in children under six. As stated by the ministry in a press
release at the time:

Cough and cold medicines have a long history of use in
children; however, there is limited evidence supporting the effectiveness of
over-the-counter cough and cold medicines in children. This is partly due to the
fact that for many years it was assumed that cough and cold medicines worked
the same way in children and adults. Therefore, the products for children were
approved based on estimations from studies on adults. However, there is a
better understanding now of how the ingredients found in cough and cold
medicines can behave differently in children than adults.

Reports of misuse, overdose and rare but serious side-effects
have also raised concerns about the safety of these products in children. While
the link between the adverse events and the products cannot be definitively
proven by these reports, they are signs that Health Canada cannot ignore.

. . .

As a result of Health Canada's
decision, the labelling of cough and cold medicines for use in children must be
changed by fall 2009 to say they should not be used in children less than 6
years of age. These products will also require enhanced labelling for children
aged 6 to under 12, child resistant packaging, and the inclusion of dosing
devices for all liquid formulations. ...

There is no suggestion that the manufacturers, including the
defendants herein, failed to comply with the new labelling rules within the
nine months allowed.

[2]

Health Canadas decision was the culmination of studies that had been
ongoing for some years in connection with various categories of cold and cough
medicines in Canada and the U.S. In the late 1980s, Health and Welfare Canada
had convened an expert advisory committee to make recommendations regarding the
safety, efficacy and labelling of over-the-counter cough and cold medicines. In
two reports, the committee had found that the cold medication ingredients and
the antitussives and expectorants included in some of the medicines were
generally safe and effective; but in a third report, had made more specific
recommendations for dosing children aged two to twelve. In response, Health
Canada initiated further study by paediatric experts of issues relating to
safety, efficacy, labelling, availability, and dosage, including the concept
of standard paediatric dosing units and dosing by narrower age groups. Ultimately,
the decision of December 2008 was taken. (In fairness, I note that the
defendants strongly challenge the conclusion that their cold and cough
medicines are generally ineffective for children or unsafe in the specified
dosages. They have filed various expert reports in support of their position in
this proceeding.)

The Statement of Claim

[3]

Ms. Wakelam commenced this action by statement of claim filed on
June 5, 2008. A copy of the pleading (as subsequently amended) is appended
to these reasons. It is remarkable more for what it does
not
assert than
for what it does. Although it defines Class to mean all persons resident in
British Columbia who purchased Childrens Cough Medicine for use by children
under the age of six, that was supplied, offered for sale, advertised or
promoted by the Defendants between December 24, 1997, to present, Ms. Wakelam
does not plead directly that she purchased any of the impugned medications.
Instead she asserts that she is a member of the Class. In her supporting
affidavit she deposes:

My son was born on August 12, 2004. He is now four and a half
years old.

Over the past three years, in
British Columbia and during the Class Period as defined in the Statement of
Claim,
I have purchased approximately five bottles of cough syrup
at
Walmart and London Drugs retailers to relieve my sons cough and cold symptoms.
Attached as Exhibit A to this Affidavit are true laser photocopies of
packaging and three of the bottles of cough syrup that I have purchased.
[Emphasis added.]

Ms. Wakelam does not say she gave the cough syrup she
purchased to her son, nor that (if her son did take any) the cough syrup was
not effective, nor that it caused him any injury or harm. Indeed she makes no
allegation of physical harm, negligence, or any common law tort (other than
intentional interference with economic relations, which she concedes was
rightly struck out by the certification judge) or breach of contract. Nor does
she allege any wilful or reckless misconduct by the defendants  although she
does seek punitive damages.

[4]

The crux of Ms. Wakelams claims is that in marketing the medicines
for use in children under age six, the defendant manufacturers engaged in
deceptive acts or practices contrary to the
Business Practices and
Consumer Protection Act
, S.B.C. 2004, c. 2 (
BPA
) and made
representations to the public that were false or misleading in a material
respect, contrary to s. 52 of the
Competition Act
, R.S.C. 1985,
c. C-34. Thus the court below summarized her complaint:

Ms. Wakelam now understands
that these cough and cold medicines were ineffective for children between the
ages of 2 and 6. They are no longer marketed in Canada for that age group. Buying
it, she says, was a waste of money. Moreover, she alleges, as it offered no
benefit to balance the risks of taking the medication, it exposed her son to a
real and unnecessary risk of harm. Consequently, she asserts, the defendants
are all guilty of misrepresentation and nondisclosure. [Para. 2.]

[5]

As I understand Ms. Wakelams case, she hopes to win not just damages
or reimbursement for her waste of money, but the disgorgement of any benefits
received by the defendants as a result of their alleged contraventions of the
two statutes. Thus she hopes to marry the breaches of statute  which by their
terms require that a plaintiff have suffered a loss or damage caused by the
breach, and appear to limit recovery to the resulting damages  with
anti-harm or restitutionary remedies not contemplated by the
BPA
or
the
Competition Act
; and to do so by means of a class action.

[6]

Ms. Wakelams application for certification under the
Class
Proceedings Act
, R.S.B.C. 1996, c. 50 (
CPA
), came before the
judge below in April 2011. He issued his reasons, granting certification on
substantially the terms sought, on December 22, 2011. (See 2011 BCSC 1765.) I
do not intend to summarize his reasons at this point, partly because this
appeal turns in large measure on the release, subsequent to December 2011,
of decisions of the Supreme Court of Canada and of this court which in the
defendants submission have changed or clarified the law. In addition, the various
issues raised on the appeal are better approached separately, such that it will
be more helpful to describe the judges findings as part of the discrete
analysis of each issue.

[7]

The defendants in their factum framed their grounds of appeal as
relating to the overall question of preferability under the
CPA
. In their
oral submissions, however, they approached the issues somewhat differently. In
my view, the issues raised may best be stated as follows:

1. Did the certification judge
err in finding that the
BPA
(in particular ss. 171 and 172 thereof)
is not inconsistent with the relevant provisions of the
Food and Drugs
Act
, R.S.C. 1985, c. F-27 (
FDA
), such that the doctrine
of paramountcy does not apply to make the
BPA
inoperative in this
case?

2. Did the certification judge
err in finding that Ms. Wakelams pleading discloses a cause of action consisting
of a breach of the
BPA
for which a court might grant:

i. a restitutionary award;

ii. injunctive relief
restraining the defendants from engaging in deceptive acts or practices as
defined in the
BPA
;

iii. a declaration that the
acts or practices engaged in by the defendants contravened the
BPA
; or

iv. an order requiring the
defendants to advertise the courts judgment or declaration?

3. Did the certification judge
err in finding that the pleading discloses a cause of action consisting of a
breach of the
Competition Act
for which a court might grant a
restitutionary remedy?

4. Did the certification judge
err in finding that ss. 29-30 of the
CPA
may provide the plaintiff
with a cause of action for aggregate damages?

5. Did the certification judge
err in finding that an identifiable class of 2 or more persons existed as
required by s. 4(1)(b) of the
CPA
?

[8]

The Supreme Court of Canada has not to date commented at length on the
standards of review to be applied by appellate courts under class action
legislation. Obviously, while the court must certify an action that meets the
requirements in s. 4(1) of the
CPA
, the overall question of
preferability involves considerable discretion and the decisions of
certification judges are to be accorded deference. However, item 1 above, the
paramountcy question, is obviously one of law to be reviewed on a correctness
standard. The same is true of whether the causes of action referred to in items
2, 3 and 4 are available at law to Ms. Wakelam. (See
Koubi v. Mazda
Canada Inc.
2012 BCCA 310, at para. 15, and
Hyrniak v. Mauldin
2014 SCC 7, at para. 84.) These questions stood to be decided on the
Hunt
v. Carey
test (see [1990] 2 S.C.R. 959) that normally applies to the
striking-out of pleadings for failure to disclose a cause of action  i.e.,
whether it was plain and obvious the cause could not succeed or had no
reasonable prospect of success: see
R. v. Imperial Tobacco Canada Ltd.
2011
SCC 42 at para. 1. This is determined by reference to the statement of
claim alone, and on the assumption that what is pleaded is true. The fact that
the case is a weak one, or raises a novel point requiring investigation, is not
enough to strike it: see
Minnes v. Minnes
(1962) 39 W.W.R. 112
(B.C.C.A.) at 122, cited with approval in
Hunt v. Carey
at 978-9.

[9]

The final issue, regarding compliance with s. 4(1)(b) of the
CPA
 which requires an identifiable class of 2 or more persons  appears to involve
some discretion as well as law and fact. Canadian appellate courts have
differed on what standard of review applies to it: see
Canada (Attorney
General) v. Anderson
2011 NLCA 82 at para. 38;
Jameson Livestock
Ltd. v. Toms Grain & Cattle Co.
2006 SKCA 20 at paras. 14-18;
Soldier v. Canada (Attorney General)
2009 MBCA 12 at paras. 22-5. I
will proceed on the basis that a higher standard of review is likely applicable,
requiring an overriding error of fact or principle before this court may
interfere.

Paramountcy

The Certification
Judges Conclusions

[10]

The certification judge dealt at paras. 46-64 of his reasons with
the question of whether Ms. Wakelams claims based on an alleged breach of
the
BPA
were doomed to fail on what he called jurisdictional grounds
i.e., interjurisdictional immunity, paramountcy, or the regulated conduct
doctrine. The defendants took the position that although the
BPA
is
constitutionally valid, the
FDA
was intended by Parliament to apply to
food and drugs sold in Canada and to apply
exclusively
. The judge
explained:

The main thrust of the
defendants' argument is that Health Canada is provided with the sole authority
in this country to regulate packaging and labelling and to prosecute consumer
deception involving drugs such as the medicines.
The declaratory and
injunctive relief sought by the plaintiff would require the court to usurp the
function of Health Canada in directing the defendants as to how they may label,
market and advertise their products, and how they ought to have done so
. Thus,
assert the defendants, to allow the [
BPA
] to have the effect sought
would result in a quick descent from the expert national regulation of
medicines by Health Canada into
a morass of episodic, inconsistent and
ad
hoc
local regulation by individual judges by whom the different consumer
claims are scrutinized. This would, they argue, supersede and frustrate the
federal regulatory scheme
by which the defendants had governed their
actions. Moreover, it would put them in a position where compliance with
federal regulatory requirements exposes them to liability under provincial
legislation. These are results, they say, that the constitutional principles of
interjurisdictional immunity and paramountcy are intended to avoid. [At para. 48;
emphasis added.]

[11]

The judge accepted that the subject matter of the plaintiffs claim had
a double aspect such that the provincial and federal jurisdictions overlap  the
provincial governments jurisdiction over property and civil rights and the
federal governments criminal law power, which has been held to authorize legislation
that prohibits or regulates the manufacture, labelling and marketing of
pharmaceuticals. Given this overlap, the certification judge observed, the
preferred constitutional analysis was that of paramountcy rather than
interjurisdictional immunity. (Para. 53.) None of this is challenged on
this appeal  although as will be seen below, the
FDA
has been held to
fall under the federal trade and commerce power as well as under criminal law.

[12]

The judge noted the two forms of conflict between federal and provincial
laws which may now lead to the application of paramountcy  an operational
conflict ... where one enactment says yes and the other says no, such that
compliance with one is defiance of the other (see
Multiple Access Ltd. v.
McCutcheon
[1982] 2 S.C.R. 161 at 191); or where dual compliance is
possible but the provincial law is incompatible with the
purposes
of the
federal law. (See
Law Society of British Columbia v. Mangat
2001 SCC 67
and
Rothmans, Benson & Hedges Inc. v. Saskatchewan
2005 SCC 13 at para. 14,
both discussed in
Quebec (Attorney General) v. Canadian Owners and Pilots
Association
2010 SCC 39 at paras. 62‑74.)

[13]

The certification judge stated that both types of conflict were raised
in this case, but that as in
Jim Pattison Enterprises Ltd. v. British
Columbia (Workers Compensation Board)
2011 BCCA 35, neither succeeded as a
matter of law. (Para. 57.) First, he noted, the
FDA
and regulations
thereto did not
compel
the defendants to market the medicines as safe
and effective for children between ages two and six; rather it
permitted
them to do so  even though there was some controversy over the issue and
Health Canada recognized that further study was required. (Para. 59.) If
it could be shown that the defendants had engaged in deceptive practices, he
saw nothing in the
FDA
regulatory scheme that purported to insulate
manufacturers from answering to consumers for that conduct. He added:

In all of the circumstances, the
defendants' answer may well prove to be that the plaintiff's claim must fail
as
a matter of fact
for the same reasons that led Health Canada in 1990 to
authorize them to continue marketing the medicines. Compliance is not, however,
an answer
in law
to anything other than a criminal charge under the
Food
and Drugs Act
. Conduct that avoids exposure to criminal prosecution has
never guaranteed freedom from civil liability; nor can it be said that
compliance with the federal regulations necessarily constituted defiance of the
provincial legislation. [At para. 60.]

[14]

As for the argument based on frustration of the purpose of the
FDA
,
the Court observed that if the defendants were found to have misrepresented the
safety or effectiveness of their products despite complying with all of Health
Canadas requirements, Canadians would not be exposed to drugs that had not
been reviewed and approved by Health Canada, nor would approved drugs be
removed from the market. The federal power would be left untrammelled. The
application of the
BPA
to the medicines in issue would simply add an
additional layer of protection for the consumer by telling the marketers and
manufacturers of drugs that compliance with all that Health Canada requires may
not be enough, though difficulties of proof may abound. (Para. 61.)

[15]

In the result, the judge ruled that as a matter of law, the doctrine of
paramountcy was not engaged and that there was no constitutional basis for
concluding that Ms. Wakelams claim under the
BPA
was bound to
fail. He added that the same logic applied to the regulated conduct defence,
which he dealt with in greater detail in connection with the plaintiffs claim
under the
Competition Act
, where it was principally advanced. (At para. 101;
see para. 76 below.)

On Appeal

[16]

In this court, the defendants do not challenge the finding that no
operational conflict exists between the
BPA
and the
FDA
. They
rely on the second branch of the paramountcy doctrine, submitting that the
purposes of the
FDA
would be frustrated if the
BPA
were to apply
to the packaging, labelling and sale of the medicines in question.

[17]

On this branch (which finds its genesis in
Bank of Montreal v. Hall
[1990] 1 S.C.R. 121), the Supreme Courts decision in
Canadian Owners
and Pilots
,
supra
, provides a good starting point for analysis.
Chief Justice McLachlin there stated:

To determine whether the
impugned legislation frustrates a federal purpose, it is necessary to consider
the regulatory framework that governs the decision to establish an aerodrome.
The party seeking to invoke the doctrine of federal paramountcy bears the
burden of proof:
Lafarge Canada
, at para. 77. That party
must
prove that the impugned legislation frustrates the purpose of a federal
enactment. To do so, it must first establish the purpose of the relevant
federal statute, and then prove that the provincial legislation is incompatible
with this purpose
. The standard for invalidating provincial legislation on
the basis of frustration of federal purpose is high;
permissive federal
legislation, without more, will not establish that a federal purpose is
frustrated
when provincial legislation restricts the scope of the federal
permission: see
114957 Canada Ltée (Spraytech, Société d'arrosage) v. Hudson
(Town)
, 2001 SCC 40, [2001] 2 S.C.R. 241. [At para. 66; emphasis added.]

[18]

The Chief Justice went on at para. 69 to illustrate the distinction
between a federal purpose sufficient to attract the doctrine of paramountcy on
the one hand, and the absence of specific purpose on the other, by reference
to
114957 Canada Ltée v. Hudson (Town)
2001 SCC 40 (
Spraytech
),
and
Mangat
. In
Spraytech
, she noted, the federal pesticide
legislation in question had been
permissive
, allowing the manufacture
and use of pesticides regulated under the legislation. At issue was the
applicability of a municipal bylaw which
prohibited
the use of
pesticides in the municipality even though they were permitted under the
federal scheme. The Court reasoned that:

In this case, there is
no
barrier to dual compliance
with By-law 270 and the
Pesticides Act
,
nor any plausible evidence that the legislature intended to preclude municipal
regulation of pesticide use. The
Pesticides Act
establishes a permit and
licensing system for vendors and commercial applicators of pesticides and thus
complements the federal legislations focus on the products themselves. Along
with By-law 270, these laws establish a tri-level regulatory regime. [At para. 40;
emphasis added.]

The Court in
Spraytech
also emphasized that a
potential
conflict was not sufficient to invalidate a law  there must be a real
conflict. (At para. 47.) In the result, the frustration branch of
paramountcy was not engaged and the two laws could co-exist.

[19]

In
Mangat
, by contrast, the federal legislation had established the
Immigration and Refugee Board for the hearing of immigration appeals. The
statute specifically permitted aliens to be represented before the Board by
barristers or solicitors or other counsel for a fee. The
Legal Profession
Act
of British Columbia, however, prohibited anyone other than a barrister
and solicitor duly called to the bar from engaging in the practice of law. (Practice
of law was defined to include appearing as counsel or an advocate for a fee.) The
Court found that
both
branches of the paramountcy doctrine were engaged.
The Court reasoned as follows:

In this case,
there is an
operational conflict
as the provincial legislation prohibits non-lawyers to
appear for a fee before a tribunal but the federal legislation authorizes
non-lawyers to appear as counsel for a fee. At a superficial level, a person
who seeks to comply with both enactments can succeed either by becoming a
member in good standing of the Law Society of British Columbia or by not
charging a fee. Complying with the stricter statute necessarily involves
complying with the other statute. However, following the expanded
interpretation given in cases like
M & D Farm
and
Bank of
Montreal, supra
,
dual compliance is impossible. To require "other
counsel" to be a member in good standing of the bar of the province or to
refuse the payment of a fee would go contrary to Parliament's purpose in
enacting ss. 30 and 69(1) of the
Immigration Act
. In those
provisions, Parliament provided that aliens could be represented by non-lawyers
acting for a fee, and in this respect it was pursuing the legitimate objective
of establishing an informal, accessible (in financial, cultural, and linguistic
terms), and expeditious process, peculiar to administrative tribunals. Where
there is an enabling federal law,
the provincial law cannot be contrary to
Parliament's purpose
. Finally, it would be impossible for a judge or an
official of the IRB to comply with both acts. [Para. 72; emphasis added.]

[20]

Chief Justice McLachlin in
Canadian Owners and Pilots
described
the operation of the second branch of paramountcy in
Mangat
as following
from the express purpose of the federal legislation  to permit the informal
and expeditious determination of claims before the Immigration and Refugee
Board. (See
Mangat
at paras. 25-30.) Presumably, it had not been
the purpose of the federal pesticide legislation in
Spraytech
to
ensure that the permitted products could be sold  only to ensure that those
products permitted to be sold were safe.

[21]

What, then, is the purpose of the
FDA
? In
Canadian Owners
and Pilots
, the Chief Justice observed that the purpose of a law may be
determined by examining intrinsic evidence, such as purposive clauses and the
general structure of the Act, as well as extrinsic evidence such as Hansard. (Para. 18.)
We were not referred to any excerpts from Hansard regarding the
FDA
, and
the Act itself does not provide any statement of general purpose. As far as
pharmaceuticals are concerned, however, the most salient provisions of the
FDA
appear to be ss. 8 and 9, which provide:

8.
No person shall sell
any drug that

(
a
) was manufactured,
prepared, preserved, packaged or stored under unsanitary conditions; or

(
b
) is adulterated.

9.
(1) No person shall label, package, treat, process,
sell or advertise any drug in a manner that is false, misleading or deceptive
or is likely to create an erroneous impression regarding its character, value,
quantity, composition, merit or safety.

(2) A drug that is not labelled
or packaged as required by, or is labelled or packaged contrary to, the
regulations shall be deemed to be labelled or packaged contrary to subsection
(1).

Section 31 creates an offence and provides penalties
for contraventions of the Act and Regulations.

[22]

Part II of the
FDA
permits the Minister to designate inspectors
for enforcing the Act; to designate any person as an analyst to carry out
analyses required for enforcement purposes; and contemplates the enactment of
regulations for carrying the purposes and provisions of this Act into effect,
and in particular regulations respecting:

(i) the labelling and packaging and
the offering, exposing and advertising for sale of food, drugs, cosmetics and
devices,

(ii) the size, dimensions, fill and
other specifications of packages of food, drugs, cosmetics and devices,

(iii) the sale or the conditions of
sale of any food, drug, cosmetic or device, and

(iv) the use of any substance as an
ingredient in any food, drug, cosmetic or device,

to prevent the purchaser or
consumer thereof from being deceived or misled in respect of the design,
construction, performance, intended use, quantity, character, value,
composition, merit or safety thereof, or to prevent injury to the health of the
purchaser or consumer..[s. 30(1)(b)]

[23]

The purpose(s) of the
FDA
have been judicially considered in the
course of rulings on its constitutional validity. The seminal case is
R. v.
Wetmore
[1983] 2 S.C.R. 284, in which the Court was asked to decide
whether ss. 8, 9 and 26 (now s. 31) of the
FDA
depended on
s. 91(27) of the then
British North America Act
(the criminal
power); and if so, whether Parliament could authorize the Attorney General of
Canada to prefer indictments and conduct proceedings in respect of alleged
violations of the
FDA
. The majority of the Court,
per
Chief
Justice Laskin, began its analysis by noting that the
FDA
goes beyond
mere prohibition to bring it solely within s. 91(27) but that it also
involves a prescription of standards, including labelling and packaging as well
as control of manufacture. He continued:

The ramifications of the legislation, encompassing food,
drugs, cosmetics and devices and the emphasis on marketing standards
seem to
me to subjoin a trade and commerce aspect beyond mere criminal law alone
.
There appear to be three categories of provisions in the [
FDA
]. Those
that are in s. 8 are aimed at protecting the physical health and safety of
the public. Those that are in s. 9 are aimed at marketing and those
dealing with controlled drugs in Part III of the Act are aimed at protecting
the moral health of the public. One may properly characterize the first and
third categories as falling under the criminal law power but the second
category certainly invites the application of the trade and commerce power.

However, it is
unnecessary to
pursue this issue
and it has been well understood over many years that
protection of food and other products against adulteration and to enforce
standards of purity are properly assigned to the
criminal law
. [At
288-9; emphasis added.]

[24]

In a companion case released at the same time as
Wetmore
,
Attorney
General (Canada) v. Canadian National Transportation, Ltd.
[1983] 2 S.C.R.
206, the majority confirmed that the Attorney General of Canada could prefer
indictments and conduct prosecutions for violations of otherwise valid federal
legislation. On this point, the majority endorsed the view expressed by Spence J.
in
R. v. Hauser
[1979] 1 S.C.R. 984 that:

Indeed it is difficult to
understand how much of the federal legislative field could be dealt with
efficiently by other methods. Much of the legislation in such fields is in
essence regulatory and concerns such typically federal matters as trade and
commerce, importation and exportation and other like matters. The
administration of such fields require decisions of policy and certainly would
include the establishment of a policy as to the means of and methods of
enforcement. It would be a denial of the basic concept of federalism to permit
the provincial authorities to have exclusive control of the enforcement of such
legislation and the sole determination as to how and when the legislation
should be enforced by institution of prosecution or against whom such
prosecution should be instituted. [At 1003-4.]

[25]

In 1987, in
C.E. Jamieson & Co. (Dominion) v. Canada (Attorney
General)
(1987) 46 D.L.R. (4
th
) 582 (F.C.T.D.), ss. 8, 9
and 26 of the
FDA
were tested again. This time, the plaintiffs argued
that although these provisions fell within Parliaments authority to enact
criminal law, the Act in fact went beyond mere prohibition with penal
consequences and inter-regulation and thus beyond Parliaments powers. The
Court rejected this argument, reasoning in part:

Such a contention cannot withstand the force of reasoning in
the
Standard Sausage
judgment and the
Kripps Pharmacy
judgment,
both carefully considered by the Supreme Court of Canada. The defendants submit
that criminal law does not need to be, and has not been, interpreted in such a
narrow sense as urged by the plaintiffs. This court agrees with the defendants
submission  that where the
legitimate purpose
 that is, the pith
and substance
of the legislation is the protection of the public health
and safety, supplemented by the suppression of deception and fraud, and not an
attempt to protect or to suppress a particular trade or business, it is open to
Parliament to legislate on the footing of criminal law
.

It is noteworthy, also, that Parliament does not attempt, in
this regard, to regulate the prices or quantities of goods. The legislation,
including the regulations, is not named at one sector or market for either
promotion or derogation of another or others. Further, the regulation of
product standards is exacted only insofar as the health and safety of the
public are concerned.
When, however, it comes to the manufacturing,
labelling and marketing throughout Canada of ingestible substances which,
depending on the dosages could be poisonous, capable of altering moods or just
plain lethal, it cannot be reasoned that regulation by the Health Protection
Branch (HPB), in the protection of public health and safety including informed
buying and ingestion, is too heavy a burden for valid criminal law to bear
:
see
James Richardson & Sons Ltd. v. M.N.R.
, [1983] 1 F.C. 3 ...
regarding legislative jurisdiction.

This court finds that the
Food
and Drugs Act
in its specific provision, s. 25(1)(o), delegating the
power to make regulations, and the general tenor of the impugned regulations,
are supportable pursuant to head 27 of s. 91 of the
Constitution Act
,
1987
as criminal law and as legislation necessarily incidental to that
criminal law
. [At 607-8; emphasis added.]

(
Jamieson
was noted with apparent approval in
Canadian
Generic Pharmaceutical Assn. v. Canada (Minister of Health)
2010 FCA 334
at para. 127 (
lve. to app. dismd
[2011] S.C.C.A. No. 54) and in
Saputo Inc. v. Canada (Attorney General)
2011 FCA 69 at para. 71.)

[26]

It appears, then, that the purpose of the
FDA
insofar as
pharmaceuticals are concerned is to protect the health and safety of the public
 by testing drugs and authorizing them as safe for use by Canadians; by prohibiting
false, misleading or deceptive marketing; and by regulating the labelling and
packaging of drugs so that purchasers or consumers will not be deceived or
wrongly dosed.

[27]

The defendants in the case at bar argue, however, that the statute goes farther
and endeavours to effect a balance between the duty to protect Canadians from
unsafe drugs and the need to ensure access to safe and effective new drugs. In
support, they cite
Glaxo Canada Inc. v. Canada (Minister of National Health
and Welfare)
[1988] 1 F.C. 422 (T.D.). It concerned a ministerial decision
to approve the marketing of a new drug in Canada. In the course of its reasons,
the Court said this:

The legislative
scheme set out in the
Food and Drug Act
and the Regulations provides a
mechanism whereby the safety and efficacy of a new drug on the Canadian market
is assessed and monitored. The Regulations contemplate a process in which the
manufacturer of a new drug acquires the right to sell or advertise that drug
for sale only when the Minister is satisfied that the claims made by the
manufacturer for the drug are substantiated. The Minister signifies his
satisfaction by issuing a notice of compliance. The Ministers decision to
issue such a notice is discretionary.
In exercising his discretion, the
Minister weighs the benefit of the drug against the foreseeable risk of adverse
reaction to it.
The Ministers determination is one made in contemplation
of public health and represents
the implementation of social and

economic
policy
.
[At para. 38; emphasis added.]

[28]

Similar observations were made in
Canadian Generic
,
supra
,
where the Federal Court of Appeal observed:

It cannot be disputed that a
prohibition without any exceptions would certainly protect the public from
unsafe drugs. However, that effort would be self-defeating in that no new drug
would ever enter the market
. Hence, public health and safety would suffer
because efforts to discover and market new drugs would not materialize.
Consequently, an exception was created so as to counter the negative effects of
a total ban on new drugs whereby under the exception, drug manufacturers are
permitted to demonstrate to the Minister that their new drug is safe and
effective by submitting a [New Drug Submission] or an [Abbreviated New Drug
Submission]. In other words, the Government has attempted to
balance its
duty to protect Canadians from unsafe drugs and its duty to provide Canadians
with safe and effective new drugs.
[Para. 105.]

[29]

From this, the defendants submit that the purpose of the
FDA
is
not only to protect Canadians from unsafe or ineffective drugs, but also to
promote
Canadians access to beneficial drugs. On this view, the regulatory regime
established under the
FDA
is not merely permissive, but prescriptive:
Health Canada decides by means of appropriate testing and consulting what new drugs
are safe and appropriate for what purposes, on what terms they may be marketed,
to whom they may be given, and in what dosages. As
Canadian Generic
suggests, this involves the balancing of safety and health considerations. In
this sense, it is said, the
FDA
is unlike the federal pesticide
legislation in
Spraytech
, in respect of which the only interest of the
federal government was to prohibit or regulate rather than to encourage the
development and marketing of new products. Indeed, the defendants here suggest
that once a product has been found to be beneficial by Health Canada, the
ministry has a
duty
to ensure that it is made available to the public.

[30]

As well, the defendants note, the scheme established by the
FDA
is a comprehensive one. A single federal decisional authority is created to
oversee all aspects of drug marketing in Canada by means of a uniform set of
laws that apply across the country. This scheme, the defendants say, would be
frustrated by the application of provincial legislation. They pose the spectre
of a balkanized system of drug regulation under which a provincial regulator (or
court of law) acting under the
BPA
would become the arbiter of drug
labelling in a particular province, usurping Health Canadas decisional role
in fostering the marketing of beneficial drugs to all Canadians. In particular,
if injunctive relief could be obtained under the
BPA
in respect of the
labelling, marketing or sale of pharmaceuticals that have been approved by
Health Canada, the court would become a
de facto
drug regulator in
substitution for Health Canada. Thus the statement of the certification judge
at para. 61 of his reasons that if the defendants were found to have
misrepresented the effectiveness of their products, approved drugs (i.e.,
approved by Health Canada) would not be removed from the market, is
incorrect. (See para. 14 above.) The sale of products thought to be
beneficial by Health Canada could be enjoined in a particular province, denying
the benefit thereof to some Canadians.

[31]

Finally, the defendants point to
British Columbia (Attorney General)
v. Lafarge Canada Inc.
2007 SCC 23, one of the few cases in which paramountcy
has been applied to resolve an inconsistency between federal and provincial
laws. In
Lafarge
, the contest was between the Vancouver Port Authority,
a federal undertaking created under the
Canada Marine Act
, and a
municipal bylaw. On its face, the bylaw required that a project proposed by the
Port Authority comply with municipal requirements relating to the issuance of
development permits. These included a 30‑foot height restriction and
various requirements regarding noise and pollution that would be created by normal
port activities. The plaintiffs sought to have the bylaw enforced in respect of
the project. They contended that since the Port Authority could comply with
both laws, no conflict arose between the two.

[32]

The Supreme Court disagreed. It held that there was a conflict between
the federal legislation and the municipal bylaw, which conflict was easily
resolved on the basis of federal paramountcy. (Para. 4.) In the Courts
analysis:

(i)
The Existence of an
Operational Conflict

Operational conflict is present here. Reference has already
been made to the City's 30-foot height restriction. The record confirms other
areas of conflict in respect of noise and pollution from the offloading
activity and the subsequent loading of the aggregates.

If the Ratepayers had succeeded in persuading the City to
seek an injunction to stop the Lafarge project from going ahead without a city
permit,
the judge could not have given effect both to the federal law (which
would have led to a dismissal of the application) and the municipal law (which
would have led to the granting of an injunction). That is an operational
conflict
, as held in
M & D Farm Ltd. v. Manitoba Agricultural Credit
Corp.
, [1999] 2 S.C.R. 961.

(ii)
Frustration of Federal
Legislative Purpose

Such an application of the relevant municipal standards would
frustrate the federal purpose. Although the VPA should seek to cooperate with
the municipalities of the Greater Vancouver area, it retains the final say in
respect of all matters falling within valid federal jurisdiction, in case of
conflict.

Assistance can be drawn from
Mangat
where provincial legislation prohibited non-lawyers from appearing for a fee
before a tribunal, but the federal legislation authorized non-lawyers to appear
as counsel for a fee.
Mangat
confirms that the second prong of the test
should not be interpreted as a return to the doctrine of the occupied field.
Rather
it intends to capture those instances where it might be possible to comply with
the letter of both laws, but where such compliance would frustrate the purpose
intended by Parliament
. In
Mangat
, it was argued that both
enactments could be complied with, if would-be advocates either became a member
in good standing of the Law Society of British Columbia or refrained from
charging a fee. However, Gonthier J. held at para. 72 that "[t]o
require other counsel to be a member in good standing of the bar of the
province or to refuse the payment of a fee
would go contrary to Parliament's
purpose in enacting ss. 30 and 69(1) of the
Immigration Act
....
Where there is an enabling federal law, the provincial law cannot be contrary
to Parliaments purpose
.
Here, the
CMA
has authorized the VPA to
make its decision about the project and has enabled Lafarge to proceed on the
basis of that authorization.
[At paras. 81-4; emphasis added.]

[33]

The defendants argue that similarly here, Parliament has authorized (or
enabled) Health Canada to act as the decision-maker concerning what drugs should
and should not be marketed in Canada. The interposition of a court or other
provincial authority acting under the
BPA
would restrict both the
manufacturers right to market, and the publics right of access to, the drug
in question. In the alternative, they contend that this issue should be left
for trial when the underlying facts are known and the effect of remedies that
might be granted under the
BPA
can be assessed.

[34]

The plaintiff characterizes the defendants argument as clearly
designed to avoid the need to demonstrate any actual incompatibility between
the federal and provincial legislative provisions by suggesting that the
federal regime is meant to be exclusive and exhaustive and that therefore the
mere application of any provincial law to the subject matter would be
inconsistent with the purpose of the legislative scheme. She submits that the
trigger for paramountcy always depends on whether the actual effects of the
provincial legislation are incompatible with the federal legislation. On this
point, counsel cites this courts observation in
Jim Pattison
Enterprises
,
supra
, that paramountcy is now triggered only when
the operational effects of provincial legislation are incompatible with federal
legislation. (At para. 138, citing in turn
Canadian Western Bank v.
Alberta
2007 SCC 22, at para. 69.) The majority in
Pattison
continued:

This clarification of the "frustration
of federal purpose test" suggests that the critical factor in determining
if the doctrine is engaged is the identification of an operational conflict.  In
order to succeed, it must be shown either "that it is impossible to comply
with both laws or that to apply the provincial law would frustrate the purpose
of the federal law" . [At para. 138.]

[35]

The Courts reference in
Pattison
to operational effects, however,
is not restricted to situations in which compliance with one law necessarily
entails disobedience to the other. The Supreme Court in
Canadian Western
Bank
acknowledged that in some instances, an obligation to comply with
provincial legislation would in effect frustrate the purpose of a federal law
even though it did not entail a direct violation of the federal law's
provisions. In
Bank of Montreal v. Hall
itself, for example, the Court
ruled that a chartered bank seeking to enforce certain security under the
Bank
Act
could not be required to comply with an additional condition imposed by
the Saskatchewan
Limitation of Civil Rights Act
. Speaking for the Court,
La Forest J. reasoned:

as we have seen, dual compliance will be impossible when
application of the provincial statute can fairly be said to frustrate
Parliament's legislative purpose. In this instance, as I have already noted,
Parliament's legislative purpose in defining the unique security interest
created by ss. 178 and 179 of the
Bank Act
was manifestly that of
creating a security interest susceptible of uniform enforcement by the banks
nationwide, that is to say a lending regime
sui generis
in which, to
borrow the phrase of Muldoon J. in
Canadian Imperial

Bank of
Commerce v. R.
[(1984) 52 C.B.R. 145 (F.C.T.D.)], the "bank obtains
and may assert its right to the goods and their proceeds against the world,
except as only Parliament itself may reduce or modify those rights" . This,
of course, is merely another way of saying that
Parliament, in its wisdom,
wished to guard against creating a lending regime whereby the rights of the
banks would be made to depend solely on provincial legislation governing the
realization and enforcement of security interests.

the determination that there is no repugnancy cannot be
made to rest on the sole consideration that, at the end of the day, the bank
might very well be able to realize on its security if it defers to the
provisions of the provincial legislation
. A showing that conflict can be avoided
if a provincial Act is followed to the exclusion of a federal Act can hardly be
determinative of the question whether the provincial and federal acts are in
conflict, and, hence, repugnant. That conclusion, in my view, would simply beg
the question.
The focus of the inquiry, rather, must be on the broader
question whether operation of the provincial Act is compatible with the federal
legislative purpose. Absent this compatibility, dual compliance is impossible.
Such
is the case here. The two statutes differ to such a degree in the approach taken
to the problem of realization that the provincial cannot substitute for the
federal.

I have dealt with this case on
the basis of paramountcy to meet the arguments put forward by counsel. But the
issue can, I think, be answered more directly
. At the end of the day, I
agree with counsel for the Attorney General of Canada that this is simply a
case where Parliament, under its power to regulate banking, has enacted a
complete code that at once defines and provides for the realization of a
security interest.
There is no room left for the operation of the
provincial legislation and that legislation should, accordingly, be construed
as inapplicable to the extent that it trenches on valid federal banking
legislation. [At 154-5.]

(See also
Husky Oil Operations Ltd. v. Minister of
National Revenue
[1995] 3 S.C.R. 453 at paras. 65-79, where the Court
ruled that allowing provincial laws relating to set-off to apply in a
bankruptcy context would balkanize the scheme of bankruptcy priorities
across the country.)

[36]

The Court in
Canadian Western Bank
went on to endorse a
narrow interpretation of incompatibility and to observe that the mere
existence of a duplication of norms at the federal and provincial levels does
not itself constitute a degree of conflict capable of triggering paramountcy.
Moreover, a provincial law might in principle add requirements that supplement
the requirements of federal legislation (citing
Spraytech
as an example).
In both cases, the Court observed, the laws can apply concurrently, and
citizens can comply with either of them without violating the other. (Para. 72.)

[37]

In
Canadian Western Bank
itself, a provincial law requiring a
licence for the promotion of insurance in Alberta was held
not
to be
inconsistent with provisions of the
Bank Act
that authorized banks to
promote various types of insurance. The majority rejected the contention that
the case was analogous to
Mangat
, and continued:

Here, as in
Rothmans
,
the federal legislation is
permissive
. Section 416(1) provides that [a] bank shall not undertake the
business of insurance
except to the extent permitted
by this Act or the
regulations.
This formulation bears some similarity to the law under
consideration in
Spraytech
which held the federal law controlling
pesticides to be permissive, rather than exhaustive
(para. 35).
Parliament
did not intend to fully regulate pesticide use, nor was its purpose to
authorize their use
. The federal pesticide legislation itself envisioned
the existence of complementary municipal by-laws; see paras. 40 and 42.
Similarly, the federal legislation at issue in this case, while permitting the
banks to promote authorized insurance, contains references that assume the
relevant provincial law to be applicable. Section 7(2) of the [Regulations]
reads:

7          (2)
Notwithstanding subsection (1) and section 6, a bank may exclude from a
promotion referred to in paragraph (1)(e) or 6(b) persons

(a) in respect of whom the
promotion would contravene an Act of Parliament
or of the legislature of a
province
...

These reasons focus, as did those
of Hunt J.A., on the banks arguments on paramountcy related to the
provincial requirement of licences and the alleged conflict in the definition
of agent. Other more specific conflicts were argued before the trial judge, and
rejected by him. Those objections were not carried forward in the Court of
Appeal or this Court.
Should an issue arise in future with respect to a conflict
not dealt with here
or in the reasons of the courts below,
it would, of
course, be open to the banks to pursue a paramountcy argument on the basis of
the facts as they may then appear.
[At paras. 103 and 109; emphasis by
underlining added.]

[38]

The majority also warned against giving too broad a scope to
Bank
of Montreal
,
Mangat
and
Rothmans
, and against confusing the second
branch of the paramountcy doctrine with the occupied field test of
constitutional
vires
rejected in
OGrady v. Sparling
[1960]
S.C.R. 804. (At para. 75; see also the discussion in Peter W. Hogg,
Constitutional
Law of Canada
(2005 looseleaf) at § 16.4.) As Professor Hogg notes, it
is difficult to distinguish between cases where the provincial law frustrates the
purpose of a federal law and those in which the imputation that the federal law
intended to cover the field or foreclose supplementary provincial law is
rejected. He concludes on this point that the court must make a judgment
bearing in mind the compatibility of the provincial law not only with the
literal requirements of the federal law, but also with the purpose of the
federal law. (At 16‑14.)

[39]

The certification judge in the case at bar ruled that the effect of
applying the
BPA
in this case would simply be to add an additional
layer of protection for the consumer. This is what had occurred in
Spraytech
and in
Rothmans
, where the Court observed that because the criminal law
power is essentially prohibitory in character, statutory provisions enacted
under it (such as s. 30 of the
Tobacco Act
in
Rothmans
) do
not usually create freestanding rights that limit the ability of provinces to
legislate in the area more strictly than Parliament. (At para. 19.) Thus
in the case at bar, if the primary purpose of the
FDA
is to protect
Canadians against unsafe or ineffective drugs, it is difficult to argue that
that purpose would be frustrated by a provincial law providing
additional
protection.

[40]

The notion of valid federal laws co-existing with more restrictive
provincial laws did not save the provincial legislation in
Lafarge
or
Mangat
.
The federal legislation in those instances was regarded as enabling or having
a specific purpose inconsistent with the provincial law.
Lafarge
of
course involved a federal undertaking in connection with which the final
decisional authority rested with the Port Authority. Arguably in
this
case, the final decisional authority for the marketing of pharmaceuticals is
intended to rest with Health Canada, which commands considerable expertise in
assessing drugs. On the other hand,
Spraytech
and
Rothmans
indicate that a federal law that creates a permit and licensing system will not
be frustrated by a provincial or municipal law that imposes parallel
regulation of one aspect of the same activity. Indeed the Court at para. 38
of
Spraytech
seemed to approve a very narrow view of paramountcy said to
have been formulated in
British Columbia Lottery Corp. v. Vancouver (City)
(1999) 169 D.L.R. (4th) 141 (B.C.C.A.) to the effect that A true and outright
conflict can only be said to arise when one enactment compels what the other
forbids. (At 147-8). (With respect, I note that this court acknowledged at para. 14
that paramountcy was a misnomer in
Lottery Corp
. and that it was
referring more properly to legislative conflict.) In the case at bar, of
course, the
FDA
does not
compel
the defendants to market their
medicines; it only
permits
them to do so under specific conditions.

[41]

I share the concerns raised by the defendants concerning the possibility
of different (provincial) laws applying across Canada to the labelling and
marketing of drugs, and of beneficial drugs being denied to some Canadians as a
consequence. However, it seems to me that the case at bar is more analogous to
Spraytech
and
Rothmans
than it is to
Mangat
or
Lafarge
. Like the
Tobacco
Act
discussed in
Rothmans
, the
FDA
is rooted in the criminal
law and trade and commerce powers. Its primary purpose is to protect public
health and safety by monitoring and regulating the marketing, advertisement and
labelling of drugs, rather than to
compel
the marketing of drugs that
are judged to be safe and beneficial. As such, even though Health Canada aims
in a general sense to improve the health of Canadians, the
FDA
is primarily
permissive. It does not enable, or create a specific (or in counsels word,
positive) right in a manufacturer or in a consumer in the same way, for
example, as
Mangat
created a specific right for non-lawyers to advocate
before the Refugee Board.

[42]

The case law reviewed above indicates that the doctrine of paramountcy is
to be applied only in rare cases and that otherwise valid legislation is to be
upheld if at all possible. Given all of the foregoing, I am not persuaded that the
application of the
BPA
(and specifically ss. 171-2, discussed in
detail below) to the marketing and sale of cold medicines would necessarily frustrate
the purposes of the
FDA
. I conclude that the certification judge did not
err in rejecting the defendants paramountcy argument that the
BPA
should
be rendered inoperative (see Hogg, at § 16.06) in this context.

[43]

Having said this, I do not foreclose an inconsistency arising, at a
future time and on different facts, between the
FDA
and
BPA
. At
present, however, no real conflict (see
Spraytech
at para. 41)
has in my view been demonstrated.

Common Law Tort

[44]

I turn next to the question of whether the plaintiffs statement of
claim in the case at bar discloses a cause, or causes, of action. As mentioned
above, the only common law wrong alleged by Ms. Wakelam was the tort of unlawful
interference with economic relations. The certification judge struck out that allegation
because there was no assertion of a trade or business relationship between the
plaintiff and a third party, with which the defendants were alleged to have interfered
by unlawful means. In his words, this fundamental element of the tort was
nowhere to be found and could not be supported by any of the material facts
alleged. (Para. 106.) His order striking out this tort as bound to fail was
not challenged on appeal.

Cause(s) of Action Under BPA?

[45]

In general terms, Ms. Wakelams claim under the
BPA
is that
the defendants engaged in numerous deceptive acts or practices in supplying,
soliciting, offering, advertising and promoting the impugned medicines, and in
particular that:

i.          In
every consumer transaction in which the Class purchased Childrens Cough
Medicine, the Defendants represented that Childrens Cough Medicine provides
effective relief from cough symptoms when in fact the Childrens Cough Medicine
was not effective in children under the age of six;

ii.         the
Defendants failed to disclose the material fact that Childrens Cough medicine
is not effective for children under the age of six; and

iii.         the Defendants failed to
disclose the material fact that Childrens Cough Medicine can be dangerous when
it is used by children under the age of six.

[46]

The plaintiff asserts that the alleged representations and omissions
had the capability, tendency or effect of deceiving or misleading the plaintiff
Class and therefore constituted deceptive acts or practices as defined by
ss. 4-5 of the
BPA
:

deceptive act or practice
means, in relation to a consumer transaction,

(a) an oral,
written, visual, descriptive or other representation by a supplier, or

(b) any conduct by a supplier

that has the capability, tendency or effect of deceiving or
misleading a consumer or guarantor; ...

5 (1)  A supplier must not commit or engage in a deceptive
act or practice in respect of a consumer transaction.

(2) If it is alleged that a
supplier committed or engaged in a deceptive act or practice, the burden of
proof that the deceptive act or practice was not committed or engaged in is on
the supplier.

The plaintiff also invokes
ss. 171 and 172 of the
BPA
, which provide in material part:

171  (1) Subject to subsection (2), if a person, other than a
person referred to in paragraphs (a) to (e),
has suffered damage or loss due
to a contravention of this Act or the regulations
, the person
who
suffered damage or loss
may bring an action against a

(a) supplier,

who engaged in or acquiesced in the contravention that caused
the damage or loss.

172  (1) The director or a person other than a supplier,
whether
or not the person bringing the action has a special interest or any interest
under this Act or is affected by a consumer transaction that gives rise to the
action
, may bring an action in Supreme Court for one or both of the
following:

(a) a
declaration
that an
act or practice engaged in or about to be engaged in by a supplier in respect
of a consumer transaction contravenes this Act or the regulations;

(b) an interim or permanent
injunction
restraining a supplier from contravening this Act or the regulations.

(3) If the court grants relief under subsection (1), the
court may order one or more of the following:

(a) that the supplier restore to
any person any money or other property or thing, in which the person has an
interest, that may have been acquired because of a contravention of this Act or
the regulations;

(b) if the action is brought by the
director, that the supplier pay to the director the actual costs, or a
reasonable proportion of the costs, of the inspection of the supplier conducted
under this Act;

(c) that the supplier advertise to the public in a manner
that will assure prompt and reasonable communication to consumers, and on terms
or conditions that the court considers reasonable, particulars of any judgment,
declaration, order or injunction granted against the supplier under this
section. [Emphasis added.]

[47]

Ms. Wakelam seeks a declaration under s. 172(1)(a) that the alleged
representations and omissions were deceptive acts or practices; injunctive
relief under s. 172(1)(b) restraining the defendants from engaging in such
acts or practices; an order under s. 172(3)(c) requiring them to advertise
the particulars of any judgment; and an order under s. 172(3)(a) that they
refund all sums paid by the Class to purchase the impugned medicines or disgorge
all revenues which they made on account of Childrens Cough Medicine purchased
by the Class, together with any further relief which may be available under the
[
BPA
].

[48]

The pleading (a copy of which is appended to these reasons) goes on to
state at para. 28 a legal conclusion that should not appear in a statement
of claim:

It is unnecessary for the
Plaintiff or any member of the Class to prove that the Defendants deceptive
acts or practices caused such persons to purchase the Childrens Cough Medicine
to make out a claim for relief under sections [sic] 172 of the [
BPA
].

In the alternative, Ms. Wakelam asserts that she and
other members of the Class suffered damages because of the defendants acts or
practices and seek damages pursuant to s. 171 of the [
BPA
]. This
statement (also a conclusory one) does not state or refer to the material facts
upon which it is based.

The Certification
Judges Reasons

[49]

The certification judge began his consideration of the remedies sought
by the plaintiff under the
BPA
at para. 84 of his reasons. The
defendants submitted that Ms. Wakelams failure to plead a causal link
between the alleged contravention of the
BPA
and the remedies she
claimed, was fatal to her
BPA
claims. The judge said there was no doubt
that both ss. 171(1) and 172(3)(a) require a causal relationship between
the alleged contravention of the [
BPA
] and the damage claimed by the
consumer, or the money acquired by the supplier. (Para. 85.)

[50]

He referred to
Singer v. Schering-Plough Canada Inc.
2010 ONSC 42,
where the Court had emphasized:

the difference between the
question of whether actual reliance is necessary to establish a breach of the
statute (here a deceptive act or practice; it is not), and the question of
whether reliance on a misrepresentation is necessary to establish the required causal
link between breach and loss. [Certification judge, at para. 87.]

The Court in
Singer
had
also said this concerning a claim asserted under the
Competition Act
:

Section 52(1.1) only removes the
requirement of proving reliance for the purpose of establishing the
contravention of s. 52(1). The separate cause of action, created by
s. 36 in Part IV of the
Competition Act
, contains its own
requirement that the plaintiff must have suffered loss or damage "
as a
result
" of the defendant's conduct contrary to Part VI.
It is not
enough to plead the conclusory statement that the plaintiff suffered damages as
a result of the defendant's conduct. The plaintiff must plead a causal
connection between the breach of the statute and his damages.
In my view,
this can only be done by pleading that the misrepresentation caused him to do
something - i.e., that he relied on it to his detriment. [At para. 108;
emphasis added.]

[51]

In light of
Knight v. Imperial Tobacco Canada Limited
2005 BCSC
172, however, the certification judge ruled that this reasoning did
not
apply to the
BPA
.
Knight
involved a claim brought under the
former
Trade Practice Act
, R.S.B.C. 1996, c. 457 (the
TPA
).
The plaintiff had pleaded that ss. 18 and 22 of the
TPA
did not
require him to prove causation or actual reliance; alternatively, that reliance
should be assumed or inferred; and in the final alternative, that he and other class
members had acted in reliance on the defendants misrepresentations to their
detriment when purchasing the defendants products. (Para. 7.)

[52]

Although by the time the reasons in
Knight
were issued, the
BPA
had replaced the
TPA
, Satanove J. ruled that neither the
substantive provisions of the new statute nor its transitional provisions
operated to deprive the plaintiff of the right to continue his action under the
TPA
. (Para. 21.) She nevertheless considered both s. 18(4) of
the
TPA
and s. 172(3) of the
BPA
, observing that:

As mentioned earlier, the main difference between the [
BPA
]
and the
TPA
is in the definition of deceptive act or practice. The [
BPA
]
definition states, among other things, that a representation by a supplier that
fails to state a material fact is a deceptive act or practice
if the effect
is misleading
. Although this revised definition suggests a higher onus of
proof with respect to misrepresentation by silence or omission as opposed to
misrepresentation by express statement,
it does not materially alter the
causation requirement in s. 172(3). A restoration order under this section
will still be contingent on the suppliers [being] in breach of the statute
that resulted in the suppliers acquisition of benefits from the consumer
.

None of the cases cited to me
specifically considered what needs to be proved in order to obtain a
restoration remedy under s. 18(4) of the
TPA
or s. 172(3) of
the [
BPA
]. However,
I am satisfied on a plain reading of the statutes
that the necessary proof of causation under these sections does not mandate
proof of reliance on the deceptive act or practice by the individual consumer
.
[Paras. 32 and 33; emphasis by underlining added.]

With respect to s. 171(1),
on the other hand, Satanove J. continued:

Section 22(1)(a) of the
TPA
and s.
171(1) of
the [
BPA
] clearly require a consumer to prove loss or damage suffered by
the consumer (as an individual) in reliance upon the alleged deceptive act or
practice
(
McKay v. CDI Career Development Institutes Ltd.
(1999), 64
B.C.L.R. (3d) 386 (S.C.);
Rushak v. Henneken
(1991), 84 D.L.R. (4th) 87
(B.C.S.C.); and
Robson v. Chrysler Canada Inc.
(2002), 2 B.C.L.R. (4th)
1 (C.A.)).

The plaintiff submits that he can satisfy the onus of proof
in s. 22(1)(a) of the
TPA
or s. 171 of the [
BPA
]
without the need for individual evidence, by tendering economic and statistical
evidence showing that the entire market place was distorted by the defendants
deceptive practice, and that all class members paid too much for a product
which did not truthfully exist. In other words, the plaintiff expects to show
that all purchasers of the defendants light cigarettes paid an amount which
exceeded the products true market value (i.e. what purchasers would have paid
had they known the truth).

I am not at all convinced that
this theory of causation of damages which has had some measure of success in
American jurisdictions would succeed in a British Columbia action under the
TPA
,
but I am not prepared at the certification stage to pronounce it plain and
obvious that it will fail
. The cause of action under s. 22(1)(a) and
s. 171(1) should be allowed to proceed to trial as framed, and for the
purposes of certification I will assume that the plaintiff will not be proving
reliance on the alleged deceptive acts and practices of the defendant by
individual members of the proposed class. [At paras. 34, 35 and 36; emphasis
added.]

[53]

On appeal in
Knight
, this court stated that no issue arose as to
whether the pleadings disclosed a cause of action: see 2006 BCCA 235 at para. 22.
At issue instead were whether the suit or portions of it [were] appropriate
for the trial of common issues. (Para. 20.) The Court ultimately ruled that none
of the claims advanced under s. 18 of the
TPA
was amenable to
certification as a class action but that several of the claims under the
BPA
had been properly certified. Importantly for purposes of this case, the question
of whether the practices alleged were deceptive (which included capable of
deception) could go ahead as a common issue without reference to the
circumstances of individual class members. (Para. 26.)

[54]

The certification judge in the case at bar noted at para. 90 of his
reasons that the Court of Appeal in
Knight
had found no fault with
Satanove J.s reasoning quoted above and that Ms. Wakelams pleading
was sufficient in terms of the causal links required between the alleged
contravention of the [
BPA
] and the remedies sought. Thus in his
analysis, the pleadings
did
disclose a cause of action for breach of
the [
BPA
]. (Para. 91.)

On Appeal

[55]

As I understand the defendants argument on appeal, it is that in
addition to the
damages
that might be available to her individually under
s.171 of the
BPA
, Ms. Wakelam seeks recovery under restitutionary
principles (for unjust enrichment, waiver of tort and constructive trust)
premised on breach of the
BPA
. As Mr. Mogerman for the plaintiff
put it, she relies on the alleged statutory breach as an element (the
wrongful act) of the three purported causes of action, but the remedy sought is
the restitution or disgorgement of money received by the defendants as a result
of the alleged statutory breach, rather than her own damages or losses that are
expressly contemplated by the
BPA.

[56]

Claims of this kind have been asserted in class actions in British
Columbia before, especially in connection with the controversial creature
called waiver of tort, and have passed the low threshold of the plain and
obvious test. However, the defendants point out that in a judgment released
after the certification judges decision in the case at bar, this court in
Koubi
v. Mazda
,
supra
, unpacked the ongoing debate regarding waiver of
tort from the more fundamental issue of whether a breach of the
BPA
can
found the wrong for purposes of a claim in unjust enrichment or other
restitutionary relief not contemplated by the statute. The Court held that the
BPA
is an exhaustive code for the regulation of consumer transactions and
that so called anti-enrichment claims premised on breach of the
BPA
are
not
available in law.

[57]

The facts of
Koubi
were somewhat similar to the facts of this
case. The plaintiff complained of a defect in the door locks in certain Mazda
vehicles, one of which she had purchased before Mazda Canada announced a program
to correct the problem. Her vehicle was not broken into but she became
concerned about its security and contacted Mazda Canada about those concerns.
Soon after, she was notified that she could have a remedial device installed at
her local dealership, which she did in September 2007. Nevertheless, Ms. Koubi
initiated a class action on the basis that Mazda Canadas representations as to
the quality of its components, including door locks, were deceptive acts by a
supplier contrary to ss. 4 and 5 of the
BPA
. Madam Justice Neilson
for this court described her claims:

While Ms. Koubis claim states
individual owners have suffered damages, such as loss of use of their vehicles
and the cost of replacing stolen items or repairing vehicle damage,
it does
not seek recovery of those losses. Instead, Ms. Koubi claims
restitutionary damages and a declaration for the disgorgement of profits
earned by the Defendants arising from waiver of tort
. She alleges the
appellants engaged in a period of deceptive marketing because they did not
take timely action to notify class members of the defects after learning about
the defective locks and instead continued to produce deceptive promotional
information about the vehicles. Ms. Koubi claims the class is therefore
entitled to
restitution for any profits earned by the appellants as a result
of knowingly marketing an unfit product for profit
. [At para. 10;
emphasis added.]

[58]

The lower court in
Koubi
certified the claims pursuant to the
CPA
,
but this court allowed the appeal, ruling that in respect of the pleadings for
restitutionary damages, disgorgement of profits, and waiver of tort, no cause
of action was disclosed. The Court carried out a long and carefully reasoned
analysis, focusing first on waiver of tort. Neilson J.A. described it as
follows:

Waiver of tort is a restitutionary doctrine that permits a
plaintiff to recover benefits a defendant has obtained by its wrongdoing
instead of damages measured by the plaintiffs loss. In
Serhan v. Johnson
& Johnson
(2006), 85 O.R. (3d) 665, 269 D.L.R. (4th) 279 (Div.
Ct.), Justice Epstein, writing for the majority, defined the concept as follows
at para. 50:

I start with an explanation of the concept of
waiver of tort. Its origin lies in the expression waiver of tort and suit in
assumpsit
,
the latter being the historical antecedent of many modern common law
quasi-contract restitutionary claims. In invoking waiver of tort,
the
plaintiff gives up the right to sue in tort and elects to base the claim in
restitution
, thereby seeking to recoup the benefits the defendant has
derived from his wrongful conduct.
The practical purpose behind it is that
in certain situations, where a wrong has been committed, it may be to the
plaintiffs advantage to seek recovery of an unjust enrichment accruing to the
defendant rather than normal tort damages.

The advantage to which she refers
has been embraced in class actions and the doctrine has experienced a
resurgence in that context, since it may be used to present damages as a common
issue based on benefits obtained by the defendant through its wrongful conduct,
thereby avoiding individual proof of loss by each class member.
[At paras. 16-17;
emphasis added.]

[59]

The Court reviewed the ongoing judicial and academic debate as to
whether waiver of tort is an independent cause of action or merely parasitic
in the sense that it provides an alternative remedy once the plaintiff has
established an actionable wrong. (Paras. 27-39.) Neilson J.A. concluded
that the law on this point was unsettled and that accordingly, the court below
had not erred in ruling that the claim was not bound to fail (see para. 40;
but cf. para. 121 of
Arora v. Whirlpool Canada LP
2013 ONCA 657,
released after
Koubi
.)

[60]

Neilson J.A. then turned to the distinct issue of whether statutory
breaches (in
Koubi
, of the
BPA
and
Sale of Goods Act
)
may provide the predicate wrongdoing for claims beyond the realm of tort. In
her analysis:

Waiver of tort is historically rooted in proprietary torts
as opposed to personal torts such as assault and battery, as the latter do
not typically enrich the defendant: Maddaugh and McCamus at 24-9. That delineation
retains some currency in the authorities that recognize a distinction between
anti-enrichment and anti-harm torts:
Reid,

Strata Plan LMS 3851,

Infineon
.

The proliferation of wrongful acts that have been certified
as a potential foundation for waiver of tort, however, weaken the usefulness of
these traditional guidelines. These include not only anti-harm torts such as
negligence and nuisance, but claims beyond the realm of tort, such as breach of
contract (
Anderson v. Bell Mobility
, 2010 NWTSC 65;
Griffin
) and
breaches of the
Competition Act
(
Infineon
,
Steele
), the
SGA
(
Griffin
) and the [
BPA
]

(
Wakelam v. Johnson &
Johnson
, 2011 BCSC 1765). As Perell J. observed in
Haddad
at para. 41,
while the defendant must have done something wrong, there is great uncertainty
as to the scope of the wrongdoing that will support a claim for waiver of tort.

Unfortunately,
little express
analysis has accompanied this expansion. It appears to be generally rooted in
doctrinal uncertainty and the resulting difficulty of finding it is plain and
obvious that these novel claims will not succeed
[At paras. 42-44;
emphasis added.]

[61]

She took as her starting point the seminal case of
R. v. Saskatchewan
Wheat Pool
[1983] 1 S.C.R. 205, where the Court rejected the English
position under which a new nominate tort of statutory breach had emerged (see
London
Passenger Transport Board v. Upson
[1949] 1 All E.R. 60 (H.L.)), and ruled that
in Canada, such a breach should in general be regarded only as
evidence
of negligence. Thus Dickson J. (as he then was) stated for the Court:

The use of breach of statute as
evidence of negligence as opposed to recognition of a nominate tort of
statutory breach is, as Professor Fleming has put it, more intellectually
acceptable. It avoids, to a certain extent, the fictitious hunt for legislative
intent to create a civil cause of action which has been so criticized in
England. It also avoids the inflexible application of the legislature's
criminal standard of conduct to a civil case. Glanville Williams is of the
opinion, with which I am in agreement, that where there is no duty of care at
common law, breach of non-industrial penal legislation should not affect civil
liability unless the statute provides for it. As I have indicated above,
industrial legislation historically has enjoyed special consideration.
Recognition of the doctrine of absolute liability under some industrial
statutes does not justify extension of such doctrine to other fields,
particularly when one considers the jejune reasoning supporting the juristic
invention. [At 222‑3.]

After explaining various other
factors in favour of this result, he concluded:

For all of the above reasons I
would be adverse to the recognition in Canada of a nominate tort of statutory
breach. Breach of statute, where it has an effect upon civil liability, should
be considered in the context of the general law of negligence. Negligence and
its common law duty of care have become pervasive enough to serve the purpose
invoked for the existence of the action for statutory breach. [At 225.]

(See also
Frame v. Smith
[1987] 2 S.C.R. 99, at
113-4.)

[62]

This principle has been applied in countless cases since
Saskatchewan
Wheat Pool
. As Neilson J.A. observed, for example, these included a tobacco
case involving alleged violations of the
Trade Practices Act
of
Newfoundland,
Sparkes v. Imperial Tobacco Canada Ltd.
2008 NLTD 207 (
affd
2010 NLCA 21), and this Courts decision in
Macaraeg v. E Care Contact
Centers Ltd.
2008 BCCA 182. In the latter, Chiasson J.A. for the Court
suggested that an important factor in deciding whether an exception to the
general rule in
Saskatchewan Wheat Pool
should be made is whether the
statute provides effective enforcement of the right conferred thereby. (At para. 74;
see also Ruth Sullivan,
Sullivan on the Construction of Statutes
(2008, 5
th
ed.) at 441.)

[63]

Applying
Saskatchewan Wheat Pool
to the
BPA
, the Court in
Koubi
found that it provided an exhaustive code regulating consumer transactions,
providing for the establishment, administration and enforcement of statutory
rights and obligations and giving extensive powers and remedies to a statutory
director and an investigative staff to ensure compliance with the statutory
requirements. (Para. 63.) Nothing in the
BPA
indicated that the
Legislature intended to augment the statutory remedy by permitting consumers to
mount restitutionary actions. In Neilson J.A.s analysis:

I am satisfied the chambers judge erred in this cursory
treatment of the [
BPA
].
A close examination of the statutes
legislative objectives and provisions reveals a clear intent to provide an
exhaustive code regulating consumer transactions, directed to both protection
of consumers and fairness and consistency for all parties in the consumer
marketplace
. The Act has over 200 provisions that comprehensively
establish, administer, and enforce statutory rights and obligations directed to
the regulation of consumer transactions in a multitude of circumstances. It
provides extensive powers and remedies to a statutory director and
investigative staff to ensure compliance with its requirements. These include
investigation, collection of evidence, and enforcement through undertakings,
compliance orders, prohibition orders, court-appointed receivers or property
freezing orders, in addition to recourse to court proceedings as set out in
ss. 171 and 172. It also enacts a panoply of statutory sanctions for
suppliers and other offenders who breach the statutory rights of consumers,
including administrative penalties of up to $50,000 for a corporation, and
offences with penal consequences that include fines of up to $100,000 for a
corporate offender.

I discern nothing in the [
BPA
] to support the view
that the legislature intended to augment its statutory remedies by permitting
consumers to mount an action against a supplier for restitutionary relief based
on the novel doctrine of waiver of tort
. Such a conclusion is inconsistent
with the express language of ss. 171, 172(3)(a) and 192, which
clearly
limit recovery for pecuniary loss to restoration of the consumers own damages
or loss arising from a deceptive act
.

I conclude the chambers judge
erred in failing to comprehensively address the objectives and provisions of
the [
BPA
]. Had she done so, I am satisfied she would have recognized it
represents a comprehensive and effective scheme for the administration and
enforcement of the statutory rights and obligations it creates. In essence, it
has occupied the field of consumer rights and remedies arising from deceptive
acts by suppliers. Mazdas statutory wrongdoing under ss. 4 and 5 of the
Act cannot therefore provide the predicate unlawful act required for a cause of
action based on waiver of tort and restitutionary damages. Ms. Koubi is
restricted to the remedies provided by the Act.
I am satisfied Ms. Koubis
claim for restitutionary damages and disgorgement of profits arising from
waiver of tort does not disclose a cause of action.
[At paras. 63-65;
emphasis added.]

[64]

In so ruling, she acknowledged that it is admittedly difficult to
strike a claim as having no prospect of success in the context of recent class
action decisions. The issue was, however, a matter of law alone which did not
require a factual record for determination. (Para. 80.) As she explained:

I find support for those conclusions in the recent decision
of Justice Lax in
Andersen
[
v. St. Jude Medical, Inc.
2012 ONSC
3660], which encourages a summary appraisal of a claim in waiver of tort where
circumstances permit. Further, her final comment at para. 594 of her
decision countenances a role for the legislature in developing the doctrine, a
view consistent with the result I have reached:

Given the philosophical and policy
considerations mentioned above, it is my view that the fundamental question for
a court to answer is whether the recognition (or not) of the waiver of tort
doctrine is within the capacity of a court to resolve, or whether it has such
far-reaching and complex effects that it is best left to consideration by the
Legislature. On the basis of my experience,
the answer to this and the other
questions surrounding the waiver of tort doctrine is not dependent on a trial
with a full factual record and may require no evidence at all
.

I have considered whether this
result unreasonably interferes with the objectives of class proceedings
described by Chief Justice McLachlin in
Western Canadian Shopping Centres
Inc. v. Dutton
, 2001 SCC 46 at 27-29, [2001] 2 SCR 534. I appreciate that
while striking Ms. Koubis claim at this early stage may serve judicial
economy, it may thwart access to justice for the class and may not serve the
objective of deterring the appellants and other manufacturers and sellers from
similar actions. Nevertheless,
while one might admire the strategic and
creative use of a novel doctrine to transform individual loss to a common issue
in a class proceeding, I am satisfied it does not benefit the parties or the
court to permit such a claim to proceed when it has no hope of success
. [At
paras. 81-82; emphasis added.]

I fully agree with these observations (by which I am bound
in any event) and would add that scarce judicial resources may be squandered
when difficult questions of law are continually side-stepped in the class action
context. Certainly the
Hunt v. Carey
test is an easy one to meet, but it
is not surmounted in
all
cases. As recent decisions of the Supreme Court
of Canada discussed below illustrate, it is likely to be beneficial to all
concerned, including the justice system, if such questions are directly
addressed when raised at an early stage, rather than left for a trial that may
never take place, or for another court in another case.

[65]

The plaintiff in her factum did not attempt to distinguish
Koubi
insofar
as it applies to the
BPA
, and indeed did not take issue with the
conclusion that it is an exhaustive code that cannot underpin a claim for
waiver of tort. Ms. Wakelam was more anxious to argue that similar
reasoning does not apply to a breach of the
Competition Act
 a matter
to which I will return presently.

[66]

In my view, the reasoning in
Koubi
applies not only to the
allegation of waiver of tort advanced by Ms. Wakelam but also to her
claims for unjust enrichment and constructive trust insofar as they are based on
breach of the
BPA
. Although I might not have used the phrase occupying
the field (which has constitutional connotations), I see no legislative intent
to create restitutionary causes of action arising from or based on breaches of
the
BPA
; nor has the plaintiff sought to argue that the
BPA
provides only ineffective enforcement.

Constructive Trust

[67]

Ms. Wakelams claim for constructive trust is also foreclosed by the
decision of the Supreme Court of Canada in
Pro-Sys Consultants Ltd. v.
Microsoft Corporation
2013 SCC 57, which was released in October 2013. In
that case, the plaintiff advanced a claim in unjust enrichment and as a remedy
therefor, submitted that an amount equal to the alleged overcharge from sales
of Microsoft operating systems and applications software in British Columbia
should be held by the defendant in trust for members of the plaintiff class. (See
para. 90.) Rothstein J. for the majority explained why such a claim
could not succeed:

Kerr v. Baranow
, 2011 SCC 10, [2011] 1 S.C.R. 269, is
the relevant controlling authority on constructive trusts. In
Kerr
,
Justice Cromwell explains that in order to find that a constructive trust is
made out,
the plaintiff must be able to point to a link or causal connection
between his or her contribution and the acquisition of specific property
:

. . . the constructive trust is a broad and flexible
equitable tool used to determine beneficial entitlement to property (
Pettkus
,
at pp. 843-44 and 847-48). Where the plaintiff can demonstrate a link or
causal connection between his or her contributions and the acquisition,
preservation, maintenance or improvement of the disputed property, a share of
the property proportionate to the unjust enrichment can be impressed with a
constructive trust in his or her favour (
Pettkus
, at pp. 852-53;
Sorochan
,
at p. 50). [para. 50]

In the present case,
there is
no referential property; Pro-Sys makes a purely monetary claim
.
Constructive trusts are designed to determine beneficial entitlement to
property when a monetary award is inappropriate or insufficient (
Kerr
,
at para. 50). As Pro-Syss claim neither explains why a monetary award is
inappropriate or insufficient nor shows a link to specific property, the claim
does not satisfy the conditions necessary to ground a constructive trust. On
the pleadings, it is plain and obvious that
Pro-Syss claim that an amount
equal to the overcharge from the sale of Microsoft operating systems and
Microsoft applications software in British Columbia should be held by Microsoft
in trust for the class members cannot succeed
. The pleadings based on
constructive trust must be struck. [At paras. 91-92; emphasis added.]

(See also
Sun-Rype Products Ltd. v. Archer Daniels
Midland Company
2013 SCC 58 at paras. 39-41 and
Sun
Indalex Finance, LLC v. United Steelworkers
2013 SCC 6 at paras. 228-9,
per
Cromwell J.)

[68]

As I understand it, Ms. Wakelam concedes that the remedy of
constructive trust is not available to her in light of
Pro-Sys v. Microsoft
.
For similar reasons, I also find that a restorative order under s. 172(3)(a)
of the
BPA
is not available to her. This provision allows the court to
order the restoration of property or money only to a person
who has an
interest therein
. The pleadings do not suggest that any such interest could
arise in this case. Thus para. 27 of the statement of claim is bound to
fail.

[69]

In the result, I conclude that paras. 34-38 inclusive and subparas. (e)
and (f) of the prayer for relief in the statement of claim are bound to fail
insofar as they are based on an alleged breach or breaches of the
BPA
. In
terms of monetary relief, this leaves the claim for the plaintiffs own damages
in para. 29 of the pleading. As we have seen, however, such a claim is
dependent on proof of a causal connection between a contravention of the
BPA
by the defendants, and loss or damage suffered by the plaintiff. No such causal
connection has been pleaded, with the result that it is also bound to fail.

Injunctive and
Declaratory Relief

[70]

As for the claims for a declaratory order and injunction sought under
s. 172(1), however, I am not persuaded they are bound to fail. Certainly
an injunction is unlikely to be granted when, as in this instance, the conduct
complained of has already ceased and is unlikely to be repeated: see
Snells
Equity
(29
th
ed., 1990) at 647-48, 653-54, citing
Proctor v.
Bayley
(1889) 42 Civ. D. 390;
Wilcox v. Steel
[1904] 1 Ch. 212; and
Barber
v. Penley
[1893] 2 Ch. 447. However, the matter is discretionary and the
continuing nature of the conduct complained of is only one of many equities
to be considered. In this instance, the equities would include the public
nature of the remedies provided by s. 172: see
Seidel v. Telus
Communications Inc.
2011 SCC 15, at para. 32, where the Court
contrasted ss. 171 and 172.

[71]

With respect to declaratory relief under s. 172(1)(a), the
defendants submitted that the phrase a practice engaged in or about to be
engaged in should not be construed to include a practice that occurred in the
past but has been discontinued. Mr. Neave, counsel for the defendants, cited
no authority in support of this view, which rests on a very technical
interpretation of engaged. While again it seems unlikely a court would grant
a declaratory order regarding conduct no longer being engaged in, I cannot
say at this point that no such order would be available in law. The authorities
suggest that the key question is whether a useful purpose would be served by
granting the order: see Lord Woolf and J. Woolf,
The Declaratory Judgment
(3
rd
ed., 2002) at § 4.092; A.H. Hudson, Declaratory Judgments
in Theoretical Cases: The Reality of the Dispute, (1976‑7) 3
Dal.
L.J.
706;
Greater Vancouver Regional District v. British Columbia
(Attorney General)
2011 BCCA 345; at paras. 50-52. In theory at least,
a useful
public
purpose might be found to exist in this case.

[72]

In addition to seeking injunctive and declaratory relief under s. 172(1),
Ms. Wakelam sought an order under s. 172(3)(c) that the defendants
advertise to the public the particulars of any order granted against them under
s. 172. Such an order may be made
if
the court grants relief under
s. 172(1). Again, it cannot be said this aspect of the relief sought is
not available in law.

Cause(s) of Action Under
Competition Act?

[73]

As an alternative element (again, the wrong) underlying her claims
under unjust enrichment, waiver of tort and constructive trust, Ms. Wakelam
also asserts breaches of the
Competition Act
. The relevant sections are
ss. 36 and 52, which provide in part:

36. (1) Any person who has suffered
loss or damage as a
result
of

(a)
conduct that is contrary to
any provision of Part VI
, or

(b) the failure of any person to
comply with an order of the Tribunal or another court under this Act,

may, in any court of competent jurisdiction, sue for and
recover from the person who engaged in the conduct or failed to comply with the
order
an amount equal to the loss or damage proved to have been suffered by
him
, together with any additional amount that the court may allow not
exceeding the full cost to him of any investigation in connection with the
matter and of proceedings under this section.

. . .

(4) No action may be brought under subsection (1),

(a) in the case of an action based
on conduct that is contrary to any provision of Part VI, after two years from

(i) a day on which the conduct was
engaged in, or

(ii) the day on which any criminal
proceedings relating thereto were finally disposed of,

whichever is the later;

. . .

52. (1) No person shall, for the purpose of promoting,
directly or indirectly, the supply or use of a product or for the purpose of
promoting, directly or indirectly, any business interest, by any means
whatever,
knowingly or recklessly make a representation to the public that
is false or misleading in a material respect.

(1.1) For greater certainty, in establishing that subsection
(1) was contravened,
it is not necessary to prove that

(a)
any person was deceived or
misled
;

. . .

(1.2) For greater certainty, a reference to the making of a
representation, in this section or in section 52.1, 74.01 or 74.02, includes
permitting a representation to be made.

(2) For the purposes of this section, a representation that
is

(a) expressed on an article offered
or displayed for sale or its wrapper or container,

(b) expressed on anything attached
to, inserted in or accompanying an article offered or displayed for sale, its
wrapper or container, or anything on which the article is mounted for display
or sale,

(c) expressed on an in-store or
other point-of-purchase display,

(d) made in the course of in-store,
door-to-door or telephone selling to a person as ultimate user, or

(e) contained in or on anything
that is sold, sent, delivered, transmitted or made available in any other
manner to a member of the public,

is deemed to be made to the public by and only by the person
who causes the representation to be so expressed, made or contained, subject to
subsection (2.1).

. . .

(5)
Any person who
contravenes subsection (1) is guilty of an offence
and liable

(a) on
conviction on indictment, to a fine in the discretion of the court or to
imprisonment for a term not exceeding 14 years, or to both; or

(b) on summary conviction, to a
fine not exceeding $200,000 or to imprisonment for a term not exceeding one
year, or to both.

[Emphasis added.]

(Section 52 is in Part VI of the Act.) Section 62, also
in Part VI, clarifies that nothing in that Part is to be construed as depriving
any person of any civil right of action.

The Certification
Judges Reasons

[74]

After noting the foregoing sections of the
Competition Act
at paras. 93
and 94 of his reasons, the certification judge alluded to the following passage
from
Singer
:

As I have noted, s.
52(1) does not create a cause of
action. The cause of action, or right of action, is created by s. 36
.
The plain language of that section makes it clear, as the defendants assert,
that
the plaintiff must show both a breach of s. 52 and loss or damage
suffered by him or her as a result of that breach
. That can only be done if
there is a causal connection between the breach (the materially false or
misleading representation to the public) and the damages suffered by the
plaintiff. A consumer of sunscreen products cannot recover damages, in the abstract,
simply by proving that the manufacturer made a false and misleading
representation to the public. The failure of the plaintiff to plead a causal
link is fatal to this claim.

Section 52(1.1) only removes
the requirement of proving reliance for the purpose of establishing the
contravention of s. 52(1). The separate cause of action, created by
s. 36 in Part IV of the
Competition Act
, contains its own
requirement that the plaintiff must have suffered loss or damage
as a
result
 of the defendant's conduct contrary to Part VI. It is not enough to
plead the conclusory statement that the plaintiff suffered damages as a result
of the defendant's conduct
. The plaintiff must plead a causal connection
between the breach of the statute and his damages. In my view, this can only be
done by pleading that the misrepresentation caused him to do something  i.e.,
that he relied on it to his detriment. [At paras. 107-108; emphasis added.]

(See also
Magill v. Expedia Canada Corp.
2010 ONSC
5247 at paras. 99-107.)

[75]

However, the certification judge here noted, no case had been cited to
him in which these comments had been adopted in British Columbia. In
Holmes
v. United Furniture Warehouse LP
2009 BCSC 1805, the Court had stated
simply in connection with the
Competition Act
that the pleadings should
include an allegation that the plaintiffs had suffered loss or damage as a
result of the particular conduct in question, in order to bring the claim
within s. 36. The Court in the case at bar continued:

I am unable to see any logical
distinction between the defendants' argument of insufficient pleading of
causation in relation to section 36 of the
Competition Act
, and that
same argument in relation to the [
BPA
]. Both, in my view, are met by the
reasoning of Satanove J. in paragraphs 32 through 36 of
Knight
, as
quoted above, upheld in the Court of Appeal; see also
Steele v. Toyota
Canada Inc
., 2011 BCCA 98, and
Infineon
. In the circumstances, given
the whole of the pleadings, I am not prepared to hold that the plaintiff's pleading
in relation to section 36 of the
Competition Act
is fatal. [At para. 98.]

[76]

The certification judge also rejected the defendants submission that
the defence of regulated conduct would apply such that the claim under the
Competition
Act
was bound to fail. He noted again that the scheme created by the
FDA
permitted but did not
compel
the defendants to market the impugned
medicines as safe and effective for children between two and six. If the
plaintiff could demonstrate that the defendants marketing did give rise to the
misrepresentations and nondisclosures alleged by the plaintiff, the judge said
he was unable to conclude, as a matter of interpretation, that the scheme
under the [
FDA
] was intended to exempt the defendants from the provisions
of the
Competition Act
. (Para. 101.)

[77]

Accordingly, the pleadings were found to have disclosed a cause of
action under the
Competition Act
.

On Appeal

[78]

The defendants first argument on appeal is that Ms. Wakelams
claims for restitutionary remedies under the
Competition Act
are

juridically
indistinguishable from those advanced under the
BPA
in
Koubi
.

[79]

I turn at the outset, however, to
Pro-Sys v. Microsoft,
in which
the plaintiff not only advanced a claim under s. 36 of the
Competition
Act,
but also alleged the torts of conspiracy and unlawful interference
with economic interests (see para. 72) and sought restitution for unjust
enrichment, constructive trust, and waiver of tort (see para. 64). The
Supreme Courts judgment was concerned mainly with the question of whether a
purchaser who has not purchased directly from the defendant, but from a third
party who has passed on the losses claimed, may properly sue the overcharger
at the top of a distribution chain. Having answered that question in the
affirmative, the Court went on to rule that it was not plain and obvious the
claim in unjust enrichment could not be made out in an indirect relationship,
and that the defendants juristic reason justification should not be resolved
prior to trial. (Para. 88.) Accordingly, the claim in unjust enrichment
was allowed to proceed.

[80]

I have already described the Courts reasoning in
Pro-Sys
with
respect to the unavailability of a constructive trust remedy. (See para. 67
above.) The Court also noted the open question of whether waiver of tort is
its own cause of action intended to disgorge a defendants unjust enrichment
gained through wrongdoing, as opposed to merely a remedy for unjust enrichment.
(Para. 95.) It ruled that this question should not be decided at this stage,
and that it was not plain and obvious a cause of action in waiver of tort would
not succeed. (Para. 97.)

[81]

It will be recalled that in
Koubi
this court made a similar ruling
regarding waiver of tort. Neilson J.A. followed two earlier decisions of
this court,
Pro‑Sys Consultants Ltd. v. Infineon Technologies AG
2009
BCCA 503 and
Steele v. Toyota Canada Inc.
2011 BCCA 98. (See her
discussion at paras. 37-40 of
Koubi
.) As we have also seen, however,
the Court in
Koubi
went on to find on a review of the
BPA
that it
had been intended as an exhaustive code regulating consumer transactions and
that there was nothing to suggest the Legislature intended to provide consumers
with causes of action designed to provide restitutionary relief based on the
novel doctrine of waiver of tort. (Para. 64.)

[82]

The defendants at the case at bar contend that just as the
BPA
is
a complete code for consumer transactions, the
Competition Act
deals
comprehensively with anti-competitive and unfair trade practices. It specifies
matters that may be referred to the Competition Tribunal, and provides the
Commissioner of Competition with extensive powers of enforcement under the Act.
These include carrying out inquiries; collecting evidence; obtaining
injunctions, compliance orders, prohibition orders and publication orders;
entering into consent agreements; freezing property; and imposing penalties for
obstruction and non-compliance with orders of the Tribunal. A dense set of
regulations has been adopted under the Act supplementing these more general
provisions.

[83]

The question of whether a breach of the
Competition Act
 here,
s. 36 and by reference, s. 52  can be used to establish the element
of the wrong for a restitutionary claim has attracted much judicial attention
in recent years. Counsel referred us to
Canada Cement LaFarge Ltd. v. B.C.
Lightweight Aggregate Ltd.
[1983] 1 S.C.R. 452, which was decided before
the
Combines Investigation Act
became the
Competition Act
. At the
time, the former did not provide for any private cause of action resembling
what is now provided by s. 36. Given this fact, and given that the
respondent was suing for the common law tort of conspiracy to injure by means
of price-fixing on the part of the appellants, the decision is not of direct
assistance to us. One of the questions raised, however, was whether the element
of unlawful means for the tort of conspiracy could be provided by a breach of
the conspiracy section of the
Combines Investigation Act
. The Court declined
to comment, observing that:

On the date the writ of summons
was issued the
Combines Investigation Act
did not purport to create a
right to recover damages in civil proceedings. Neither did the statute contain
a stipulation foreclosing any such recovery by participants in an illegal
scheme. The act was entirely neutral. Section 31.1 came into force seven months
after the issuance of the writ and purports to authorize the bringing of a
civil action to recover losses suffered as a result of certain violations of
the Act. This provision has come before the courts in some provinces, and
varying views have been expressed as to its constitutionality.
This section
did not come before us for determination in these proceedings and it is not
necessary to make any further reference thereto
. [At 477-8; emphasis
added.]

(Section 31.1 of the
Combines Investigation Act
,
introduced in 1975, effectively became what is now s. 36 by virtue of
S.C. 1985, c. C-34. The
Combines Investigation Act
was renamed
as the
Competition Act
a year later by S.C. 1986, c. 26.)

[84]

The constitutionality of the
Combines Investigation Act
was
addressed in
General Motors of Canada Ltd. v. City National Leasing
[1989]
1 S.C.R. 641. In the court of first instance, the defendant had succeeded in
arguing that because s. 31.1 purported to create a civil cause of action
for certain infractions of the Act, Parliament had gone beyond its legislative
powers. The Ontario Court of Appeal had disagreed. By the time the case reached
the Supreme Court of Canada, only two questions remained for the Court: whether
the
Combines Investigation Act
, either in whole in part, was
intra
vires
Parliament under the trade and commerce power, and whether s. 31.1
was within the legislative competence of Parliament. (At 648.) The Court noted
at the outset of its analysis that in numerous cases, federal combines
legislation had been upheld as valid under the federal criminal law power. (At
654.) No criticism of these cases was suggested.

[85]

In the course of his detailed analysis of the trade and commerce power
and the proper approach to determining the constitutionality of specific
sections of a statute, Chief Justice Dickson said the first step was to
determine whether the impugned provision could be seen as encroaching on
provincial powers and if so to what extent. It was obvious, he said, that
s. 31.1 did appear to encroach on provincial power to some extent. He
continued:

In assessing the seriousness of
this encroachment, however, three facts must be taken into consideration.
The
first is that s. 31.1 is only a remedial provision; its purpose is to help
enforce the substantive aspects of the Act, but it is not in itself a
substantive part of the Act.
By their nature, remedial provisions are
typically less intrusive
vis-
ā
-vis
provincial powers. The second important fact is the limited scope of the
action.
Section 31.1 does not create a general cause of action; its
application is carefully limited by the provisions of the Act.
The third
relevant fact is that it is well-established that the federal government is not
constitutionally precluded from creating rights of civil action where such
measures may be shown to be warranted. This Court has sustained
federally-created civil actions in variety of contexts. [At 673; emphasis
added.]

[86]

The second step in the Courts analysis was to determine whether the
Combines
Investigation Act
contained a regulatory scheme. Again, this question was
not difficult to answer:

The presence of a
well-orchestrated
scheme of economic regulation
is immediately apparent on examination of the
Combines Investigation Act
. The existence of a regulatory scheme is
in evidence throughout the entire Act. [At 674; emphasis added.]

The Chief Justice reviewed
the various parts of the statute, concluding on this point that:

I have no difficulty in
concluding that
the Act as a whole embodies a complex scheme of economic
regulation. The purpose of the Act is to eliminate activities that reduce
competition in the market-place.
The entire Act is geared to achieving this
objective. The Act identifies and defines anti-competitive conduct. It
establishes an investigatory mechanism for revealing prohibited activities and
provides an extensive range of criminal and administrative redress against
companies engaging in behaviour that tends to reduce competition. In my view,
these three components, elucidation of prohibitive conduct, creation of an
investigatory procedure, and the establishment of a remedial mechanism,
constitute a
well-integrated scheme of regulation designed to discourage
forms of commercial behaviour viewed as detrimental to Canada and the Canadian
economy.
[At 676; emphasis added.]

The Court found that the statute was an example of the
genre
of legislation that could not practically or constitutionally be enacted by a
provincial government and that if competition in the single huge marketplace
of Canada was to be regulated at all, it must be regulated federally. Thus the
Act as a whole was
intra vires
Parliament as legislation in
relation to general trade and commerce. (At 682‑3, citing
Canadian
National Transportation
,
supra
.)

[87]

The Court next turned to the question of the validity of s. 31.1 in
particular. As noted above, this provision had been added to the Act as part of
a package of amendments in 1975 (see S.C. 1975, c. 76, s. 12). The
enactment followed recommendations made by the Economic Council of Canada in an
interim report on competition policy released in July 1969. Chief Justice
Dickson noted:

The Economic Council suggested in
addition to the significant deterrent role played by the threat of criminal
sanctions, Parliament should consider including a private right of civil action
in the Acts enforcement mechanism. The basic reasons given by the Economic
Council for seeking to place some of the Federal Governments economic policy
on a civil law basis were to improve its relevance to economic goals, its
effectiveness, and its acceptability to the general public. Resting the
constitutional foundation on the criminal law power contributed, in the opinion
of the Council, to the rigidity and inflexibility of the law and its
administration. Criminal offences must be proved beyond a reasonable doubt.
Charges must be expressed and proven in the categorical manner specified in the
statute. [At 687.]

[88]

The Court saw no constitutional impediment to amending remedies in the
Combines
Investigation Act
to conform with changing economic realities and
concluded that s. 31.1 was an integral part of the

scheme
regulating anti- competitive conduct. However, the Chief Justice added:

The relationship between the
section and the Act easily meets the test for the section to be upheld.
This
finding should not be interpreted as authority for upholding all provisions
creating private civil action that are attached to a valid trade and commerce
regulatory scheme
or any other particular type of scheme. Section 31.1 is
carefully
constructed and restricted
by the terms of the
Combines Investigation
Act
. [At 689; emphasis added.]

He also described s. 31.1
as one of the arsenal of remedies created by the statute to discourage
anti-competitive practices. Like other remedies  orders of the Restrictive Practices
Trade Commission under Part IV.1, interim injunctions under Part IV and
criminal sanctions under Part V  it was said to be:

intimately linked to the
Combines
Investigation Act
. It takes on meaning only by reference to other
provisions of the Act and has no independent content. As a result, the section
is
carefully bounded by the parameters of the
Combines Investigation Act
.
It provides a private remedy only for particular violations of the Act and does
not create a private right of action at large.
[At 684; emphasis
added.]

[89]

Parliament has not seen fit to amend s. 36 since its predecessor
was enacted, nor to provide additional private law remedies for contraventions
of Part VI of the Act. We were not referred to anything that suggests the
statutory remedies provided by that Part are inadequate (to use the term employed
in
Macaraeg, supra
.) The statutory right of action remains hedged about
by restrictions (to use the phrase of Glanville Williams in

The
Effects of Penal Legislation on the Law of Tort (1960) 23
M.L.R.
233,
at 244), including the two-year limitation imposed by s. 36(4). The Court
in
General Motors
was careful to emphasize that this right of action was
part of the well-integrated scheme of the whole Act, and that it did not
create a right of action at large. Had it done so, it appears the
constitutional verdict in
General Motors
might have been different.

[90]

Section 36 clearly limits recovery for pecuniary loss to the loss
or damage proved to have been suffered by the plaintiff, together with
possible investigatory costs incurred by the plaintiff. I see nothing in the
Competition
Act
to indicate that Parliament intended that the statutory right of action
should be augmented by a general right in consumers to sue in tort or to seek
restitutionary remedies on the basis of breaches of Part VI. It follows in my
view that the certification judge did err in finding that the pleading
disclosed a cause of action under the
Competition Act
for which a court
might grant restitutionary relief; and that accordingly, paras. 34-38 of Ms. Wakelams
statement of claim do not disclose a cause of action.

[91]

In terms of the
Competition Act
, this leaves Ms. Wakelams
claim for damages suffered as a result of the defendants breach of Part VI
(founded on s. 36) as well as for her costs of investigation under s. 36(1).
In this regard, I return to and respectfully agree with the Courts statement
in
Singer
, which I reproduce again for convenience:

[Section] 52(1) does not create a cause of action. The
cause of action, or right of action, is created by s. 36.
The plain
language of that section makes it clear, as the defendants assert, that the
plaintiff must show
both
a breach of s. 52
and
loss or
damage suffered by him or her as a result of that breach. That can only be done
if there is a causal connection between the breach (the materially false or
misleading representation to the public) and the damages suffered by the
plaintiff.
A consumer of sunscreen products cannot recover damages, in the
abstract, simply by proving that the manufacturer made a false and misleading
representation to the public. The failure of the plaintiff to plead a
causal link is fatal to this claim.

Section 52(1.1) only removes the
requirement of proving reliance for the purpose of establishing the
contravention of s. 52(1). The separate cause of action, created by
s. 36 in Part IV of the
Competition Act
, contains its own
requirement that the plaintiff must have suffered loss or damage "
as a
result
" of the defendant's conduct contrary to Part VI.
It is not
enough to plead the conclusory statement that the plaintiff suffered damages as
a result of the defendant's conduct. The plaintiff must plead a causal
connection between the breach of the statute and his damages.
In my view,
this can only be done by pleading that the misrepresentation caused him to do
something - i.e., that he relied on it to his detriment. [At paras. 107-8;
emphasis added.]

This reasoning seems consistent with a comment made by the
Court at para. 65 of
Pro-Sys v. Microsoft
that s. 36 of the
Competition
Act
allows anyone who has suffered loss or damage as a result of conduct
engaged in by any person contrary to Part VI to sue for and recover
that
loss or damage. (My emphasis.)

[92]

Since Ms. Wakelam has failed to plead any material facts in support
of the required causal connection, we may at this late stage infer that she is
unable to do so. Accordingly, her claims under the
Competition Act
must
be struck in their entirety.

Aggregate Provisions of the CPA

[93]

In
Infineon
,
supra
, the plaintiff had sought damages under
s. 36(1) of the
Competition Act
on an aggregate basis, and
restitutionary awards in unjust enrichment, constructive trust and waiver of
tort. (Para. 2.) Masuhara J. in the court below had ruled that the
aggregation provisions in the
Class Proceedings Act
(i.e., ss. 29
and 30) could be invoked only after liability had been established, citing
Chadha
v. Bayer Inc.
(2003) 63 O.R. (3d) 22 (C.A.), (
lve. to app. dismd
[2003] S.C.C.A. No. 106). It was this question that occupied this court on
appeal. It ultimately followed
Knight
to hold that an aggregate monetary
award under the
CPA

could
be certified as a common issue in a
claim for disgorgement of the benefits of the defendants wrongful conduct
without
an antecedent liability finding
. (Para. 39, my emphasis.)

[94]

This ruling has now been overruled by the Supreme Court in
Pro‑Sys
v. Microsoft
, which expressly disagreed with
Infineon
and
Steele
v. Toyota
on the point. In the analysis of Rothstein J. for the Court:

I agree with Feldman J.A.'s holding in
Chadha
that
aggregate damages provisions are "applicable only once liability
has been established, and provid[e] a method to assess the quantum of damages
on a global basis, but not the fact of damage"
(para. 49). I also
agree with Masuhara J. of the BCSC in
Infineon
that liability
requires that a pass-through reached the Class Members, and that that
question requires an answer before the aggregation provisions, which are
only
a tool to assist in the distribution of damages
, can be invoked (2008 BCSC
575 (CanLII), at para. 176). Furthermore, I agree with the Ontario Court
of Appeal in
Quizno's
, that [t]he majority clearly recognized that
s. 24 [of the Ontario
Class Proceedings Act,

1992
, S.O.
1992, c. 6]
is procedural and cannot be used in proving liability

(para. 55).

This reasoning reflects the
intention of the Attorney General of British Columbia. When he introduced the
CPA
in the British Columbia legislature, he stated that
the goal of the
legislation was to allow individuals who have similar claims to come together
and pursue those individual claims collectively
: In simple terms, all we
are doing here is finding a way to enable the access that individuals have to
the court to be an access that individuals combining together can have to the
court (Hon. C. Gabelmann,
Official Report of Debates of the Legislative
Assembly (Hansard)
, vol. 20, No. 20, 4th Sess., 35th Parl., June 6,
1995, 15078).
The
CPA
was not intended to allow a group to prove a
claim that no individual could. Rather, an important objective of the
CPA
is to allow individuals who have provable individual claims to band together to
make it more feasible to pursue their claims
.

The question of whether
damages assessed in the aggregate are an appropriate remedy can be certified as
a common issue. However, this common issue is only determined at the common
issues trial after a finding of liability has been made. [At paras. 132-4;
emphasis added.]

[95]

I conclude that s. 29 of the
CPA
does not avail the
plaintiff to provide
restitutionary
claims not otherwise open to her
under the
BPA
or
Competition Act
.

Identifiable Class of Two or More
Persons?

Certification
Judges Reasons

[96]

It will be recalled that s. 4(1) of the
CPA
states that the
court must certify a proceeding as a class proceeding on an application under
s. 2 if all the requirements set forth therein are met, including that
there is an identifiable class of 2 or more persons. Ms. Wakelam, the
sole named plaintiff in this proceeding, argued below that it was sufficient
for the evidence to establish that a class of people exists who would have the
same reason to complain as the plaintiff, even if no second individual can be
identified.

[97]

The defendants in response relied on
Chartrand v. General Motors
Corp.
2008 BCSC 1781. There Martinson J. had stated in part:

It is not enough to point to a group of people in British
Columbia who are owners of specific vehicles with automatic transmissions.
There
must be some evidence that two or more people have a complaint
that GM
manufactured a dangerously defective product that caused them a loss and/or
that GM was unjustly enriched at their expense.

There is no evidence of such complaints. NHTSA was satisfied
with the recall of only the manuals. Transport Canada has no concerns and has
received no complaints. The three complaints to Transport Canada relating to
parking brakes on GM vehicles had nothing to do with vehicles in the proposed
class. The three brake lining wear complaints from British Columbia in the
period of September 6, 2001 to February 12, 2007 have not been tied to the
spring clip problem and could have been caused in other ways. There is no
evidence of complaints or concerns by consumer groups.
There is, therefore,
not an identifiable class as there is not a group of two or more people with
complaints.

This requirement has been viewed
as an air of reality test, testing the reality of the linkage between the
plaintiff's claim and the proposed class:
Samos Investments Inc. v. Pattison
,
2001 BCSC 1790, 22 B.C.L.R. (3d) 46, 2003 BCCA 87, 10 B.C.L.R. (4th) 234;
Nelson
v. Hoops L.P., a Limited Partnership
, 2003 BCSC 277, 2004 BCCA 174. [At paras. 53,
54 and 61; emphasis added.]

[98]

The certification judge discussed this matter beginning at para. 121
of his reasons. He noted that although the proposed class had been adequately
defined in accordance with the relevant case authority, there was no evidence
of the existence of more than one individual member of the class who shares Ms. Wakelams
desire to see the action determined through the mechanism of a class action or
at all. It was therefore necessary, he said, to consider the extent to which
such evidence is required in the circumstances of this case. (Para. 124.) Even
though the evidentiary burden on the plaintiff in this regard was light, he
found that he was unable to draw sufficient inferences from the evidence before
him to satisfy this requirement. He continued:

Logically, on the premise of
the action, it appeared that anyone who purchased the medicines for the stated
purpose would be in the same position as the plaintiff. What did not
necessarily follow is that any such persons would have any interest in pursuing
the matter. This is not, after all, a case involving physical or psychological
harm, and the individual losses, on the premise of the claim, are not
significant. Accordingly, in the absence of evidence of other interested
parties, I was unable to find that the requirement of section 4(1)(b) of the
Class
Proceedings Act
has been met. [At para. 130.]

[99]

Counsel for the plaintiff advised the Court, however, that he had an
unfiled affidavit that identifies other interested parties. The Court granted
Ms. Wakelam leave to file the affidavit and gave the defendants an
opportunity to comment on its adequacy. Counsel filed an affidavit of Mr. Green,
a member of the law firm representing the plaintiff. The material portion of his
affidavit stated that he had been informed by the following people that each
of them are interested in and support the class proceeding. After setting
forth the names of these individuals, Mr. Green continued:

I am advised by each of the
individuals  and I verily believe this to be true, that each purchased
Childrens Cough Medicine as defined in the Amended statement of claim, for
children under the age of 6, during the Class Period. For individuals who could
not recall the specific brand(s) of Childrens Cough Medicine they purchased
this is indicated clearly [above].

[100]

The trial
judge concluded at para. 136 of his reasons that this evidence was
sufficient to correct the deficiency that had concerned him, and that the
plaintiff had met the requirement of s. 4(1)(b) of the
CPA
.

On Appeal

[101]

On appeal,
the defendants submit that the evidence relied on by the certification judge
was insufficient to satisfy the burden on the plaintiff under s. 4(1)(b)
of the
CPA
. There seems to be no direct appellate authority on this
point, but the defendants cite various decisions of the Supreme Court of
British Columbia, beginning with
Chartrand
,
supra
. As well, they
note
Lee v. Georgia Properties Partnership
2012 BCSC 1484, where
Savage J. ruled that 4(1)(b) had not been complied with in the absence of
evidence that more than one person had a complaint that they intend to pursue,
that they intend to seek an opinion of the court, or that they would find
resolution of the common issue of utility in their considerations. (At para. 42.)

[102]

Two
decisions of the Supreme Court of Canada have addressed the question of
compliance with s. 4(1)(b) (or other provincial counterparts thereof) with
reference to
whether the class of plaintiffs has been defined adequately
.
In
Hollick v. Toronto (City)
2001 SCC 68, the Court reasoned:

The appellant has defined the
class by reference to objective criteria; a person is a member of the class if
he or she owned or occupied property inside a specified area within a specified
period of time. Whether a given person is a member of the class can be
determined without reference to the merits of the action. While the appellant
has not named every member of the class, it is clear that the class is bounded
(that is, not unlimited). There is, therefore, an identifiable class within the
meaning of s. 5(1)(b): see J. H. Friedenthal, M. K. Kane and A. R. Miller,
Civil Procedure
(2nd ed. 1993), at pp. 726-27;
Bywater
,
supra
,
at pp. 175-76;
Western Canadian Shopping Centres
,
supra
, at para. 38.
[At para. 17.]

[103]

More recently in
Sun-Rype
, the majority of the Court noted that
Hollick
provides that [the] certification requirement will be satisfied by
demonstrating some basis in fact to support it  . (Para. 52.) In
Sun-Rype
,
the criterion could not be met because:

indirect purchasers, even knowing the names of the products
affected, will not be able to know whether the particular item that they
purchased did in fact contain HFCS. The appellants have not offered evidence
that could help to overcome the identification problem created by the fact that
HFCS and liquid sugar were used interchangeably.

Even Ms. Bredin testified
that she is unable to state whether the products she purchased contained HFCS.
This fact will remain unchanged because, as noted above, liquid sugar and HFCS
were used interchangeably and a generic label indicating only
"sugar/glucose-fructose" could be used for either type of sweetener. Ms. Bredin
presented no evidence to show that there is some basis in fact that she would
be able to answer this question. On the evidence presented on the application
for certification, it appears impossible to determine class membership. [At paras. 65-6.]

(See also
Western Canadian Shopping Centres Inc. v.
Dutton
2001 SCC 46 at para. 38.)

[104]

In
Singer
, the proposed classes of plaintiffs were likely to
exceed three million people in each case and there were difficulties with the
definition of the classes. In addition, Strathy J. (as he then was) observed:

The second concern is more
fundamental. The defendants submit that there is no evidence of "two or
more persons" who assert a claim, as required by s. 5(1)(b) of the
C.P.A.
They say that this criterion has not been satisfied because there is no
evidence that anyone other than Mr. Singer asserts a claim in relation to
the wrongs alleged in this proceeding. While the plaintiff's counsel has
provided some information that other individuals have recently contacted his
firm, or responded to a website,
there is no evidence about these
individuals, no evidence that they ever purchased the defendants' products or
that they actually wish to assert a claim against the defendants
. [At para. 128;
emphasis added.]

The Court referred to
Lau v.
Bayview Landmark Inc.
(1999) 40 C.P.C. (4
th
) 301 (Ont. S.C.J.);
Bellaire v. Independent Order of Foresters
(2004) 5 C.P.C. (6
th
)
68 (Ont. S.C.J.);
Chartrand
,
supra
;
Ducharme v. Solarium de
Paris Inc.
(2007) 48 C.P.C. (6
th
) 194 (Ont. S.C.J.),
affd
[2008] O.J. No. 1558 (Div. Ct.);
Poulin v. Ford Motor Co. of Canada
(2008) 65 C.P.C. (6
th
) 247 (Ont. Divl Ct.); and
Lambert v.
Guidant Corp.
(2009) 72 C.P.C. (6
th
) 120 (Ont. S.C.J.). In the
last-mentioned case:

Cullity J. observed that
not every case will require evidence that there is a group of putative class
members waiting in the wings. The nature of the claims and the circumstances of
the case may permit the court to infer the existence of a class looking for a
solution. Cullity J. suggested, however, that the analysis of the issue is
best considered together with the other factors that bear on the exercise of
the court's discretion in the "preferable procedure" analysis. In
that case Cullity J. was prepared to give plaintiff's counsel leave, if
required, to file evidence to establish that other putative class members had
expressed interest in the proceeding. [At para. 135 of
Singer
.]

In
Singer
itself, the Court said there was no
evidence of a class of two or more persons seeking access to justice,
although if the other requirements of s. 5(1) of the Ontario
CPA
had been met, it might have been appropriate to follow Cullity J.s
approach in
Lambert
. Strathy J. was of the view, however, that they
had not been met in
Singer
. (Para. 136.)

[105]

In the
case at bar, I am satisfied that the plaintiff did by means of Mr. Greens
affidavit demonstrate the existence of an identifiable class of two or more
persons in accordance with the authorities and that accordingly, the
certification judge did not err on this point.

A Further Comment

[106]

As
mentioned earlier, the grounds of appeal advanced by the defendants in this
case did not extend to the questions of commonality and preferability that are
often the subject of appeals from certification orders. Accordingly, I need not
recount the certification judges reasons for his findings that these criteria were
met in this instance. I do note, however, that in his discussion of preferability,
the judge touched on the matter of behavioural modification, which of course is
one of the principal advantages of a class action: see
Markson v. MBNA
Canada Bank
(2007) 85 O.R. (3d) 321 (C.A.) at para. 69. He said this
at para. 159:

Third, although there was a statutory and regulatory regime
in place concerning the labelling, marketing and advertising of Children's
Cough Medicine,
I am unable to find that it includes a meaningful built-in
behavioural modification process given the premise of this case.
That
premise is not that the defendants failed to comply with the statutory and
regulatory regime. If that were the case, then the regime's sanctions would
likely be sufficient. Rather, the premise here is that notwithstanding their
compliance with the statutory and regulatory regime, the defendants
misrepresented
the safety and efficacy of their products.
If that proves to be the case,
then only through a class proceeding can the defendants be obliged to answer
fully for their conduct. As the Supreme Court of Canada pointed out in
Dutton
:

[29]      ...Without class actions, those who cause
widespread but individually minimal harm might not take into account the full
costs of their conduct, because for any one plaintiff the expense of bringing
suit would far exceed the likely recovery. Cost-sharing decreases the expense
of pursuing legal recourse and accordingly deters potential defendants who
might otherwise assume that minor wrongs would not result in litigation....
[Emphasis added.]

[107]

It is not
clear whether the certification judge intended to suggest that the plaintiffs
premise is that the defendants
knowingly or negligently
misrepresented
the safety and efficacy of their cold and cough medicines. Certainly Mr. Mogerman
suggested this in his oral submissions, and s. 52 of the
Competition Act
requires that the misrepresentations have been made knowingly or recklessly. Unless
such allegations were intended, it is difficult to understand how the prosecution
of this action as framed by the plaintiff could have brought about behavioural
modification. If negligent or intentional wrongdoing
was
being asserted,
however, it seems to me that in fairness to the defendants, Ms. Wakelam should
have made that assertion and stated the material facts giving rise to it in her
pleading.

Disposition

[108]

For the
reasons given above, I would strike out paras. 34-38 of the statement of
claim with respect to breaches of both the
BPA
and the
Competition
Act
; paras. 23, 27, 28 (the latter being a conclusory statement) and para. 29;
paras. 30 and 31; and subparas. (e), (f), (g), (h), (i), (j), (k) and
(l) of the prayer for relief. Paragraphs 32-3 have already been struck out. Paragraphs
39 and 40 no longer serve any purpose and should also be struck.

[109]

This
leaves in place only Ms. Wakelams claims for a declaration, injunctive
relief, and an advertising order under s. 172 of the
BPA
. Given
this, I see no alternative but to allow the appeal and decertify this
proceeding, leaving the plaintiff at liberty to seek the certification of what
remains of her action should she so desire. I note that like
Singer
,
however, this case involves a sophisticated and scientifically-supported
regulatory system in the form of the
FDA
regime, which exists for the express
purpose of monitoring the marketing of pharmaceuticals in Canada. This system
has already brought about the prohibition of the marketing of cold and cough
medicines for children under the age of six. If the purpose of class actions is
to redress real injuries suffered by real people (see
Singer
at

para. 231), it is worth asking whether anything meaningful
is likely to be achieved by the pursuit of what remains of this lawsuit.

The
Honourable Madam Justice Newbury

I agree:

The
Honourable Mr. Justice Frankel

I agree:

The
Honourable Madam Justice Garson

Amended pursuant to Rule 24(1), 15(5) and

the Order of Madam Justice Mackenzie pronounced
February 12, 2010

Original Statement of Claim filed June 5, 2008

No. S078806

VANCOUVER REGISTRY

IN THE SUPREME
COURT OF BRITISH COLUMBIA

BETWEEN:

LANA WAKELAM

PLAINTIFF

AND:

JOHNSON & JOHNSON, JOHNSON & JOHNSON INC.,

mcneil consumer healthcare
canada, novartis consumer health

canada inc./novartis sante
familiale canada inc.,

wyeth consumer
healthcare/wyeth soins de sante inc.

pfizer canada inc., trillium
health care products inc.,

vita health products inc.,
and
procter
& gamble inc.

DEFENDANTS

Proceeding under the
Class Proceedings Act
,
R.S.B.C. 1996, c.50

AMENDED
STATEMENT OF CLAIM

DEFINED TERMS

1.         The following terms used throughout this pleading
have the following meanings:

a.
BPCPA
means the
Business
Practice and Consumer Protection Act
, S.B.C. 2004, c. 2, and all
regulations thereunder;

b.
Class
means all
persons resident in British Columbia who purchased
Childrens Cough Medicine
for use by children under the age of six, that was supplied,

2

offered for sale,
advertised or promoted by the Defendants between December 24, 1997, to present:

c.
Class Period
means December 24, 1997, to present;

d.
Childrens Cough
Medicine
means cough medicine supplied, offered, manufactured, produced,
advertised, marketed, sold or promoted by the Defendants
for use by children
under the age of six years old
between December 24, 1997, to present
containing
one or more of the following groups of drugs:

I.

Antihistamines such as brompheniramine
maleate, chlorpheniramine maleate, dexbrompheniramine maleate, clemastine
hydrogen fumerate, diphenhydramine hydrochloride, diphenylpyraline
hydrochloride, doxylamine succinate, pheniramine maleate, phenyltoloxamine
citrate, promethazine hydrochloride, pyrilamine maleate, and triprolidine hydrochloride;

II.

Antitussives such as dextromethorphan.
dextromethorphan hydrobromide, and diphenhydramine hydrochloride;

III.

Expectorants such as guiafenesin;
and/or

IV.

Decongestants such as ephedrine
hydrochloride/sulfate, phenylephrine hydrochloride/sulphate, and
pseudoephedrine hydrochloride/sulphate.

e.
Defendants
means,
collectively, Johnson & Johnson, Johnson & Johnson Inc., McNeil
Consumer Healthcare Canada, Novartis Consumer Health Canada Inc./Novartis Sante
Familiale Canada Inc., Wyeth Consumer Healthcare/Wyeth Soins De Sante Inc.,
Pfizer
Canada Inc., Trillium Health Care Products Inc., Vita Health Products Inc., and
Procter & Gamble Inc. Inc.

THE PLAINTIFF

2.         The Plaintiff, Lana
Wakelam, is a resident of New Westminster, British Columbia. The Plaintiff is a
member of the Class.

3

THE DEFENDANTS

3.         Johnson & Johnson is a
New Jersey corporation which has its principle place of business in New
Brunswick, New Jersey.

4.         Johnson & Johnson Inc.
is a federal corporation with its headquarters in Montreal, Quebec. Johnson
& Johnson Inc. is a member of the Johnson & Johnson Family of
Companies.

5.         McNeil Consumer Healthcare
Canada is a corporation incorporated pursuant to the laws of Canada with its
head office located in Guelph, Ontario.
McNeil Consumer Healthcare Canada is
a division of Johnson and Johnson Inc.

6.

McNeil Consumer Healthcare Canada, Johnson
and Johnson Inc. and Johnson & Johnson supplied, offered, manufactured,
produced, advertised, marketed, sold and/or promoted Childrens Cough Medicine
between December 24, 1997 and the present under various brand names including,
inter alia, the brand names of Tylenol, Motrin, Benylin and Sudafed.

7.         Novartis Consumer Health
Canada Inc./Novartis Sante Familiale Canada Inc. is a corporation incorporated
pursuant to the laws of Canada with its head office located in Mississauga,
Ontario.

8.

Novartis Consumer Health Canada
Inc./Novartis Sante Familiale Canada Inc. supplied, offered, manufactured, produced,
advertised, marketed, sold and/or promoted Childrens Cough Medicine between
December 24, 1997 and the present under various brand names including, inter
alia, the brand names of Buckleys Jack & Jill and Triaminic.

9.         Wyeth Consumer
Healthcare/Wyeth Soins De Sante Inc. is a corporation incorporated pursuant to
the laws of Canada with its head office located in Mississauga, Ontario.

10.

Wyeth Consumer Healthcare/Wyeth Soins De
Sante Inc. supplied, offered, manufactured, produced, advertised, marketed,
sold and/or promoted Childrens Cough Medicine between December 24, 1997 and
the present under various brand names including, inter alia, the brand names of
Robitussin, Advil and Dimetapp.

4

11.

Pfizer Canada Inc. is a corporation
incorporated pursuant to the laws of Canada with its head office located in
Kirkland, Quebec.

12.

Pfizer Canada Inc. supplied, offered,
manufactured, produced, advertised, marketed, sold and/or promoted Childrens
Cough Medicine between December 24, 1997 and 2006 under various brand names
including, inter alia, the brand names of Benylin and Sudafed.

13.

Trillium Health Care products Inc. is a
corporation incorporated pursuant to the laws of Canada with its head office
located in Brockville, Ontario.

14.

Trillium Health Care Products Inc. supplied,
offered, manufactured, produced, advertised, marketed, sold and/or promoted
Childrens Cough Medicine between December 24, 1997 and the present for certain
large chains who sold the Childrens Cough Medicine under their house brand or
private label.

15.

Vita Health Products Inc. is a corporation
incorporated pursuant to the laws of Canada with its head office located in
Toronto, Ontario.

16.

Vita Health Products Inc. supplied, offered,
manufactured, produced, advertised, marketed, sold and/or promoted Childrens
Cough Medicine between December 24, 1997 and the present for certain large
chains who sold the Childrens Cough Medicine under their house brand or
private label.

17.

Procter & Gamble Inc. is a corporation
incorporated pursuant to the laws of Canada with its head office located in
North York, Ontario.

18.

Procter & Gamble Inc. supplied, offered,
manufactured, produced, advertised, marketed, sold and/or promoted Childrens
Cough Medicine between December 24, 1997 and the present under various brand
names including, inter alia, the brand names of Vicks and Nyquil.

5

CAUSES OF ACTION

Breach of the Business Practices and
Consumer Protection Act

19.
During the Class Period, the Defendants
supplied Childrens Cough Medicine to the Class and solicited, offered,
advertised, and promoted the sale of Childrens Cough Medicine to the Class. As
such, the Defendants are suppliers within the meaning of section 1 of the
BPCPA
.

20.
Each purchase of the Defendants' Childrens
Cough Medicine by the members of the Class was for primarily personal, family,
or household uses and as such was a "consumer transaction" within the
meaning of section 1 of the
BPCPA
.

21.
The Defendants engaged in numerous deceptive
acts or practices in the supply, solicitation, offer, advertisement and
promotion of the Children's Cough Medicine. In particular:

i.          in every consumer
transaction in which the Class purchased Childrens Cough Medicine, the
Defendants represented that Children's Cough Medicine provides effective relief
from cough symptoms when in fact the Children's Cough Medicine was not
effective in children under the age of six;

ii.         the Defendants failed to
disclose the material fact that Childrens Cough Medicine is not effective for
children under the age of six; and

iii.         the Defendants failed to
disclose the material fact that Children's Cough Medicine can be dangerous when
it is used by children under the age of six.

22.
The representations and omissions set out in
paragraph
21
above had the capability, tendency or effect of deceiving
or misleading the Class and therefore constitute deceptive acts or practices
under s.4 of the
BPCPA
.

23.
The Defendants gained because of the consumer
transactions in which they made the deceptive and misleading representations
and omissions set out in paragraph
21
above.

6

24.
The Plaintiff, and the other members of the
Class, seek a declaration pursuant to s.172(1)(a) of the
BPCPA
that the
Defendants' representations and omissions described in paragraph
21
of
this
Amended
Statement of Claim are deceptive acts or practices.

25.
The Plaintiff, and the other members of the
Class, seek an interim and a permanent injunction pursuant to section 172(1)(b)
of the
BPCPA
restraining the Defendants from engaging or attempting to
engage in the deceptive acts or practices described in paragraph
21
of
this
Amended
Statement of Claim.

26.
The Plaintiff, and the other members of the
Class, seek an order pursuant to s.172(3)(c) of the
BPCPA
requiring the
Defendants to advertise to the public the particulars of any judgment,
declaration, order or injunction against it in this action on terms and
conditions the court considers reasonable and just.

27.
The Plaintiff, and the other members of the
Class, seek an order pursuant to s.172(3)(a) that the Defendants refund all
sums that the Class paid to purchase the Childrens Cough Medicine, or that the
Defendants disgorge all revenue which it made on account of Children's Cough
Medicine purchased by the Class, together with any further relief which may be
available under the
BPCPA
.

28.
It is unnecessary for the Plaintiff or any
member of the Class to prove that the Defendants deceptive acts or practices
caused such persons to purchase the Children's Cough Medicine to make out a
claim for relief under sections 172 of the
BPCPA
.

29.
In the alternative, the Plaintiff and the other
members of the Class suffered damages because of the Defendants acts or
practices and seek damages pursuant to s. 171 of the
BPCPA
.

Breach of the Competition Act

30.
The Defendants made the representations and
omissions to the public as particularized in paragraph
21
In so doing,
the Defendants breached s. 52 of the
Competition Act
, R.S.C. 1985,
c.C-34, and thereby committed an unlawful act because the representations and
omissions:

7

i.          were made for the purpose
of promoting the business interests of the Defendants;

ii.         were made to the public;
and

iii.         were false and
misleading in a material respect.

31.
The Class suffered damages as a result of the
Defendants unlawful breach of s.52 of the
Competition Act
and seek
those damages, as well as their costs of investigation, pursuant to s. 36
of the
Competition Act
.

Unlawful Interference with Economic
Relations

32.
Further, or alternatively, the acts
particularized in paragraph
21
were unlawful acts undertaken by the
Defendants with the intent to injure the Class, and the Defendants are liable
for the tort of unlawful interference with economic interests.

33.
The Class suffered damages as a result of the
Defendants unlawful interference with their economic interests.

Unjust Enrichment, Waiver of Tort and
Constructive Trust

34.
In the alternative, the Plaintiff waives the
tort and pleads that she and the other members of the Class are entitled to
recover under restitutionary principles.

35.
The Defendants have each been unjustly enriched
by the receipt of revenue from the sale of the Childrens Cough Medicine that
was purchased by the Plaintiff and other members of the Class. The Plaintiff
and other members of the Class have suffered a corresponding deprivation in the
amount of the purchase price that they paid for the Childrens Cough Medicine.

36.
Since the money that the Defendants received
resulted from the Defendants wrongful or unlawful acts, there is and can be no
juridical reason justifying the Defendants retaining any part of such revenue
and in particular, any contracts upon which the Defendants purport to rely to
receive the illegal revenue are void and illegal.

8

37.
The Defendants are constituted as constructive
trustees in favour of the members of the Class for all of the illegal revenue
because, among other reasons:

(a)        the Defendants were
unjustly enriched by receipt of the illegal revenue;

(b)        the Class suffered a
deprivation because they paid the illegal revenue;

(c)        the Defendants engaged in
criminal conduct and committed a wrongful act in making the deceptive and
misleading representations and omissions;

(d)        the illegal revenue was
acquired in such circumstances that the Defendants may not in good conscience
retain it;

(e)        justice and good
conscience require the imposition of a constructive trust; and

(f)         there are no factors that
would, in respect of the illegal revenue, render the imposition of a
constructive trust unjust.

38.
The Plaintiff pleads that equity and good
conscience requires the Defendants to hold in trust for the Plaintiff and the
other members of the Class all of the illegal revenue.

AGGREGATE DAMAGES

39.
The restitution and damages sought by the
Plaintiff and other members of the Class in paragraphs
24, 25, 26, 27, 29,
31, 33
and
36
above can be calculated on an aggregate bases for the
Class as provided by the BPCPA and ss. 29 and 30 of the Class Proceeding
Act.

PUNITIVE DAMAGES

40.
The
Plaintiff pleads that the Defendants' conduct in the design, development,
testing, manufacturing, licensing, assembly, distribution, marketing, sale,
instruction and promotion of the Childrens Cough Medicine and the
representations and omissions as pleaded above, was high-handed, outrageous,
reckless, wanton, entirely without care, deliberate, callous, disgraceful,
wilful, in intentional disregard of the rights and safety of the Class and
their children. Such conduct renders the Defendants liable to pay punitive
damages.9

WHEREFORE the Plaintiff claims
against the Defendants as follows:

a)         an order certifying the proceeding as a
class proceeding;

b)         declaration pursuant to section 172(1)(a)
of the
BPCPA
;

c)         a permanent injunction pursuant to section
172(1)(b) of the
BPCPA
;

d)         an order requiring the Defendants to
advertise any adverse findings against them pursuant to section 172(3)(c) of
the
BPCPA
;

e)         disgorgement and/or restitution by the
Defendants pursuant to section 173(3)(a) of the
BPCPA
and/or the
doctrine of waiver of tort;

f)          a constructive trust over the Defendant's
illegally obtained revenue;

g)         a declaration that the Defendants are in
breach of s. 52 of the Competition Act;

h)         damages pursuant to section 36 of the
Competition
Act
and/or section 171 of the
BPCPA
;

i)          investigation costs pursuant to section 36
of the
Competition Act
;

j)          punitive damages;

k)         the costs of administering and distributing
an aggregate damage award;

l)          interest pursuant to the
Court Order
Interest Act
, RSBC 1996, c.79; and

m)        such further relief and this Honourable
Court deems just.

PLACE OF TRIAL:  Vancouver,
British Columbia

DATED:
February
26, 2010
____________________________________

Reidar
Mogerman

Camp
Fiorante Matthews

Solicitors
for the Plaintiff

This
Amended
Statement of Claim is filed by Reidar M. Mogerman, Camp Fiorante
Matthews, Barristers and Solicitors, 400 - 555 West Georgia Street, Vancouver,
British Columbia, V6B 1Z6. Tel: (604) 689-7555 / Fax: (604) 689-7554.