Public interest law and the commons: three cases to watch

December 1, 2014

I practise public interest law. My files often involve basic questions affecting fundamental legal and economic arrangements in our society. The issues are often daunting. Fortunately I have lots of help from talented colleagues at Sack Goldblatt Mitchell. While we do our part, the following cases reflect the determination of civil society groups and progressive trade unions to defend our commons—the institutions and economic arrangements that were built to serve the collective or public interest.

Stealing from the Canadian Wheat Board

In 1943, the Canadian Wheat Board was established in its modern incarnation as a monopoly to sell wheat and barley produced in the western provinces and intended for export or for human consumption in Canada. A half-century later, farmers were given the right to appoint a majority of directors on the board. 

With the benefit of the market power the monopoly afforded, that smart farmer-controlled board built an international brand for Canadian wheat that allowed it to claim a very substantial premium in the market, producing $600-800 million in excess profit each year. The monopoly also provided the leverage to negotiate favourable supply chain arrangements with rail companies and international grain conglomerates to move grain efficiently to markets. 

For reasons that can only be described as perverse, in late 2011 the Harper government introduced legislation destroying the board’s monopoly and firing the farmer-elected directors. Our firm, with Winnipeg-based lawyer Anders Bruun, was subsequently retained to bring a class action for damages arising from the government’s actions. 

That class action claims $17 billion in damages, an astronomical sum that actually represents a realistic estimate of the value of Canadian Wheat Board assets—its goodwill and tangible assets—that were taken from grain producers and then destroyed by the government.  

While the Wheat Board still exists, it has been run into the ground by government appointees since taking over in December 2011, and it has no marketing power. Last summer alone, the absence of supply chain arrangements to move a bumper wheat crop to market cost farmers an estimated $4 billion. In response to the producers’ legal claim, the federal government brought motions to strike the class action. 

At the center of the case was this question: Can the government simply take the assets, which include the board’s enormously valuable good will, from the farmers who paid for and built those assets, and do so without paying for them? The Court said yes. Why? Because according to the Court the farmers weren’t “shareholders” and had no proprietary interest in those assets.

The reasoning behind this decision was that unless grain farmers can prevent others from taking advantage of an institution they built, or can sell that interest to others, there is no property interest in the institution or the assets farmers built and paid for. As the Court found, the law simply won’t protect co-operative forms of ownership or the generous impulse of those who invest and create to benefit the community. 

There is much that is egregiously unjust about the Harper government’s decision to destroy the Wheat Board, including its failure to hold a vote among grain producers before fundamentally changing the board’s mandate—something that is required by the Wheat Board Act. Two years ago, the Federal Court of Appeal found that parliamentary sovereignty trumped that statutory requirement. Now the court has found that farmers have no right to be compensated for the assets the government has taken from them. 

I should note that one aspect of the class action, a claim for approximately $100 million arising from the mismanagement of revenues for the sale of grain by the government-appointed board, survived the court challenge. More importantly, the producers will be seeking leave to appeal the Court’s decision to the Supreme Court of Canada. 

The history of the Canadian Wheat Board, and the agrarian socialist movement from which it sprung, is rich and should be better known and celebrated. The same roots sprouted the Co-operative Commonwealth Federation (CCF), and many of the fundamental social reforms that define this country and that are still with us. 

Whether or not there is a future for the Canadian Wheat Board hangs on how the Supreme Court of Canada deals with the fundamental question of collective property rights at the centre of this case. 

An attempt to destroy medicare

With my Sack Goldblatt Mitchell colleagues Steven Barrett and Ethan Poskanzer, and together with co-counsel Joe Arvay, I represent the BC Health Coalition, Canadian Doctors for Medicare and others who are interveners in a constitutional challenge to the basic framework of medicare brought by Dr. Brian Day. 

As some may know, Dr. Day is the country’s most outspoken advocate of privatized health care and is not shy about using hyperbole to make his point. He has compared medicare to North Korean Airlines, and claimed that Canada has a multi-tiered system that provides privileged access for prison inmates while leaving the rest of us to languish on wait lists.  

Day operates a private hospital in Vancouver, which provides services mostly to workers compensation claimants. But increasingly, he and his colleagues are using that private health care infrastructure to serve patients who are willing to pay to jump the queue for health care services provided in the public system. 

The Day litigation seeks to build on the decision of the Supreme Court of Canada in Chaoulli vs. Quebec (2005), which opened the door to private insurance and limited private hospital care in Quebec. But this new attack goes much further, taking direct aim not only at B.C.’s ban on private insurance but any restriction on the ability of physicians to provide, and patients to purchase, health care services covered by medicare. 

If Day succeeds, physicians will be entitled to troll the public health care system for patients willing to pay for insured services, while billing both the patient and the public system. Not only would this result destroy the “need, not ability to pay” paradigm; it would add insult to injury by requiring all taxpayers to subsidize the cost of care that only a wealthy few will be able to afford. Robin Hood, Dr. Day is not. 

Moreover, the provisions of B.C. health care law that Day is targeting are similar to those all provinces and territories must establish. These rules essentially ban private payment for necessary physician and hospital services, and they give effect to the five principles of the Canada Health Act: public administration, comprehensiveness, universality, portability and accessibility. 

Because of the constitutional nature of Day’s attack, if he succeeds, the result will undermine if not destroy the cornerstone of medicare—care according to need, not the ability to pay. 

In response, the B.C. government has gathered an impressive group of expert witnesses to refute Day’s claims. On behalf of the interveners we have added the expert evidence of Dr. David Himmelstein, a leading proponent of the single-payer (medicare) model who practises and teaches in the U.S., and Marie-Claude Premont, a law professor from Quebec who describes the impact of the Chaoulli decision. 

The evidence gathered to date, which includes cross examinations of Day and his colleagues, reveals they have been involved in extensive unlawful billing practices, including charging patients thousands of dollars for services covered by the public health insurance plan and then often billing the public plan for related services. In fact, Day’s constitutional claim is a defensive move; he only brought the case forward after the province was (finally) moved to take steps to stop Day’s unlawful clinic operations.  

Faced with mounting evidence against him, and on the eve of the 24-week trial that was scheduled to begin this past September, Day asked for an adjournment so he could discuss settling the case (see “The ethics of for-profit health care in B.C.,” October 2014). 

Our clients have no desire for the case to proceed, but they are adamant that any settlement should include an unreserved and unqualified commitment by Dr. Day to respect the law, and to reimburse those, including the B.C. Medical Services Plan, from which he has unlawfully taken millions of dollars. 

Pipelines, the environment and jobs

Everyone will have heard of at least one of the pitched battles surrounding pipeline projects—Keystone XL, Energy East and Northern Gateway—that would export bitumen and synthetic crude oil from Alberta. Most will know about the battles as conflicts between large pipeline proponents and First Nations, environmental groups and landowners (see “Hardball tactics” on Page 35). 

Fewer will know that Unifor (formerly as the Communications, Energy and Paperworkers Union of Canada–CEP) has been an intervener in each of these proceedings, or that the union representing oil sands workers has opposed the Keystone and Northern Gateway projects. 

The union is committed to ensuring that Canadian oil and gas resources are developed and utilized in a manner that fosters economic development in Canada, allows Canada to meet its obligation to reduce greenhouse gas emissions, and provides secure energy supplies for Canadians in the future. Because the pipelines fundamentally undermine those goals, the CEP, and now Unifor, has been steadfast in opposing them.

Earlier this fall the Federal Court of Appeal agreed to hear applications challenging the federal government’s decision to approve the Northern Gateway project. The Court will hear from several First Nations about the failure of the government and the pipeline company to properly consult with them. It will hear from environmental groups about the impact of the pipeline on the physical environment in B.C. It will hear from Unifor about the failure of the government to consider the enabling effect of the pipeline on oil sands development that will put greenhouse gas reduction goals out of reach. 

But another central concern for the union is the adverse impact this bitumen export pipeline will have on value-added oil production. There are only a handful of jobs necessary to operate a pipeline. There are literally tens of thousands in upgrading and refining raw bitumen. But the Gateway project would see raw bitumen exported to the U.S. and China. The upgraders and refineries would be located there. 

In fact, in the case of Northern Gateway, Unifor adduced un-refuted expert evidence from Informetrica (Mike McCracken) that Canada will ‘lose’ 26,000 full-time, largely industrial jobs if the project is used, as intended, to export unrefined bitumen. 

Such an outcome confounds the industrial policies of the past century, which have required adding value in Canada as the condition of access to natural resources (e.g. raw log export bans) as well as access to our markets (e.g. the Canada-U.S. Auto Pact). In contrast, the development of the oil sands is taking place in a deregulated environment that requires no value-added processing. 

To reboot an old saying, we are now only to be hewers of wood, drawers of water, and shippers of bitumen. 

Because Unifor will be among those challenging the pipeline project, the Court will not only hear about adverse affects on First Nations and the environment, crucial in their own right, but also the adverse impact these export pipelines will have on our prospects for developing a diversified and job-intensive oil economy, one that would substantially reduce the pace and scale of oil sands development while enhancing economic benefits for Canadians. The case is expected to be argued sometime in mid-2015. 

Steven Shrybman is a lawyer with Sack, Goldblatt, Mitchell LLP. His practice focuses on international trade and public interest litigation, including issues concerning the environment, health care, human and labour rights, the protection of public services, natural resources policy and intellectual property rights.