KAREN FRANCIS First Applicant And: MARY BYRNE Second Applicant And: TODD SQUIRES Third Applicant And: NEWFOUNDLAND v. LABRADOR PHARMACY BOARD, 2018 NLSC 248

court crest IN THE SUPREME COURT OF NEWFOUNDLAND AND LABRADOR GENERAL DIVISION Citation : Francis v. Newfoundland and Labrador Pharmacy Board , 2018 NLSC 248 Date : December 06, 2018 Docket : 201601G6222 Between: KAREN FRANCIS First Applicant And: MARY BYRNE Second Applicant And: TODD SQUIRES Third Applicant And: NEWFOUNDLAND AND LABRADOR PHARMACY BOARD Respondent Before: Justice David B. Orsborn Place of Hearing: St. John’s, Newfoundland and Labrador Date(

s) of Hearing: November 28, 2018

Summary:

Three pharmacists challenged the legality of certain Standards and By-Laws promulgated by the Newfoundland and Labrador PharmacyBoard. The Board applied to strike out the proceeding on the basis that the issues raised had been finally determined in a decision givenon an interlocutory application for injunctive relief. Held: The proceeding was struck. The issues raised in the originating applicationwere res judicata, having been finally and unequivocally determined by the application judge. Appearances: Cletus E. Flaherty Appearing on behalf of the Applicants Augustine F. Bruce, Q.C.

Appearing on behalf of the Respondent Authorities Cited: CASES CONSIDERED: Francis v. Newfoundland and Labrador Pharmacy Board, 2016 NLTD(G) 203; Quinlan v. Newfoundland(Minister of Natural Resources), 2000 NFCA 49; Goodman v. Newman (1988), 21 C.P.R. (3d) 260, 9 A.C.W.S. (3d) 381 (Ont. C.A.);Talbot v. Pan Ocean Oil Corp., 1977 AltaSCAD 176; Dreco Energy Services Ltd. v. Wenzel, 2003 ABQB 1067; Chlipala v. ResurrectionCredit Union Ltd., 2014 ONSC 260; M.U.N.F.A. v. Memorial University of Newfoundland (1997), (NL CA), 153Nfld. & P.E.I.R. 62, 475 A.P.R. 62 (Nfld. C.A.).

STATUTES CONSIDERED: Pharmacy Act, 2012, S.N.L. 2012, c. P-12.2. RULES CONSIDERED: Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42, Sch. D. REASONS FOR JUDGMENT Orsborn, J.: INTRODUCTION [1] Should this matter be dismissed or its pleadings struck out on the basis that all issues were finally determined in the context ofan application for an interim injunction? If no, is the matter now in any event moot? If so, is there a discretion in the Court tononetheless allow the matter to continue?

Should a recently issued notice of examination for discovery be struck? [2] In October 2016, three pharmacists filed an originating application asking the Court to declare that certain provisions of theBy-Laws and the Standards of Pharmacy Operation – Community Pharmacy, passed by the Newfoundland and Labrador PharmacyBoard (the “Board”) pursuant to its constituent legislation, were vague and unenforceable and were ultra vires—beyond the authority ofthe Board to pass.

Concurrently, they sought an interim injunction to restrain the Board from relying on or referring to the impugnedprovisions in the course of its 2017 registration of pharmacists and pharmacies. [3] In November 2016, the application judge[1] dismissed the application for an injunction. The pharmacists filed a Notice ofAppeal on December 22, 2016. [4] On March 5, 2018, the pharmacists issued a notice of examination for discovery to Margot Priddle, the Registrar of theBoard. [5] On April 4, 2018, the Board applied pursuant to Rule 14.24(1) of the Rules of the Supreme Court, 1986, S.N.L. 1986, c. 42,Sch.

D (the “Rules”) to strike the originating application on the basis that all issues had been finally determined by the application judge(res judicata / issue estoppel). The Board also sought to set aside the notice of examination for discovery. [6] On May 24, 2018, the Court of Appeal deemed the appeal abandoned. [7] The Board’s application to strike the proceeding was heard on November 28, 2018.[2]

ISSUES i. Should the originating application be struck out pursuant to one or more of the provisions of Rule 14.24(1) of the Rules or otherwise? ii. Should the notice of examination for discovery be set aside as “unnecessary, improper or vexatious”? BACKGROUND [ 8 ] To properly address the res judicata / issue estoppel argument, it is necessary to set out the essence of the originating application—the allegations and the relief sought.

This will help to define the issues brought to Court by the pharmacists and facilitate a determination of whether or not those issues were finally determined by the application judge. The Originating Application [ 9 ] The applicants are registered pharmacists and pharmacy owners. They were concerned about the legality and vagueness of certain By-Laws and Professional Standards promulgated by the Board under its constituent legislation – the Pharmacy Act, 2012 , S.N.L. 2012, c.

P-12.2. [ 10 ] They pointed to three provisions in the Standards: i. a requirement to have a connection to the provincial electronic health record through the Pharmacy Network by January 1, 2017; ii. a requirement for suitable equipment to allow the scanning of documents, including prescriptions and other patient records; and iii. a requirement to have a designated area for patient consultation. [ 11 ] Two aspects of the By-Laws were also challenged: i. Sections 84-92 of the By-Laws which provide for the issuance of a discretionary conditional license; and ii. Paragraphs 94(

j) and (

m) of the By-Laws providing for two additions to the definition of professional misconduct for the purpose of complaints and discipline proceedings: charging excessive or unreasonable fees and having a conflict of interest. [ 12 ] The application added more general complaints: 11. The Applicant further pleads that the enforcement of vague and poorly implemented Standards is improper fettering of the Respondent’s statutorily conferred discretion and that any decision to refuse registration should be measurable standards.

The law requires that each case be decided on its own merits and that it is a breach of procedural fairness to apply inflexible rules and further to not inform the Applicants what those rules are so that they may be addressed. 12. Furthermore, the Respondent owed the Applicants a duty of fairness, which requires easily to discern rules and regulations. Where the Respondent is seeking to enforce vaguely worded rules and regulations, it would breach the Applicants common law right to a duty of fairness if the current Standards and By-Laws are enforce. [ 13 ] The relief requested:

a) A declaration that sections 84-92 and 9[4](

j) and (

m) of the By-Laws are ultra vires the Respondent’s enabling legislation,

b) A declaration that the Standards impose an impracticable framework, because the Respondent is fettering its discretion and failing to treat those required to register with the Respondent in a manner that would uphold the general duty of fairness they owe to those registrants,

c) Injunctive relief pursuant to Rule 22 of the Rules of the Supreme Court, 1986 in the form of a suspension of 1.3(e), 1(4)(a)(

i) and (1)(4)(a)(iv) of the Standards and 84-92 and 9[4](

j) and (

m) of the By-Laws, from the Board’s consideration when accepting applications for registration for 2017 of pharmacies and pharmacists. [ 14 ] Concurrently, the pharmacists issued an interlocutory application seeking: Injunctive relief pursuant to Rule 22 of the Supreme Court, 1986 in the form of a suspension of 1.3(e), 1(4)(a)(

i) and (1)(4)(a)(iv) of the Standards and 84-92 and 9[4](

j) and (

m) of the By-Laws, from the Board’s consideration when accepting applications for registration for 2017 of pharmacies and pharmacists. [ 15 ] This is the injunctive relief sought in the originating application. [ 16 ] The application for injunctive relief was heard on November 30, 2016. Both parties filed affidavits. The Registrar of the

Board was cross-examined. [ 17 ] By decision filed on December 14, 2016, the application judge dismissed the claim for injunctive relief. [ 18 ] The decision first sets out the complaint of the pharmacists and later assesses each complaint. i.

The Complaint about the Pharmacy Network Connection – “is so vague as to be unenforceable” (paragraph 18) [ 19 ] The assessment – from paragraphs 46 and 48 of the decision: [46] I am not satisfied that the court has been provided with any information which would indicate that the decision of the NLPB to require all pharmacists to connect to the Pharmacy Network is a decision which is not made in the public interest and is contrary to the objects of the Board set out in

section 7 of the Act . … [48] … I am being asked to shut down this whole system simply because there are some gaps which, in the internet age, and in the realm of internet prescribing of medications cannot be covered off. [ 20 ] While the allegation of vagueness is not directly addressed, it is a reasonable inference that the application judge had no difficulty with either the vires or enforceability of the requirement. ii. The Complaint regarding Electronic Scanning and Storage – “too vague to ensure their compliance” (paragraph 20) [ 21 ] The application judge: [54] This issue is moot.

The evidence before the Court is that all of the Applicants do in fact have such scanners. I am totally satisfied that on any reasonable purposive and remedial consideration of that requirement the Standard is not vague. In addition, the Standard which references the scanning of documents, namely Standard 1.4(a)(iv) is only one

section of the Standards dealing with retention of documents. The other is

section 1.5(

c) which provides that documents may be stored with respect to patient’s pharmacy records in a hardcopy basis for a period of ten years. The Applicants deposed that pharmacies produce a lot of paperwork that is not necessary for patient files or histories. However, no examples of what were not necessary documents to record in patient files or histories were presented to the Court. I am not satisfied that scanning or storing such documents would be so onerous as to be impossible to implement. [ 22 ] The allegation of vagueness is directly addressed. iii.

Complaint regarding Patient Consultation Area – “provides no grandfathering in of older pharmacies” (paragraph 22) [ 23 ] The application judge: [53] All three of the Applicants have complained about the requirement for a patient consultation area largely on the basis that their pharmacies are long established and that there is a cost in fitting up such an area to meet the new Standards and that their pharmacies ought to have been “grandfathered” so as not to have to meet this requirement.

This issue for the three Applicants is however, moot as the evidence before me is that all three have now established patient consultation areas which have been approved by the NLPB. [ 24 ] The issue of the legality of the failure to grandfather existing pharmacies is not directly addressed. iv.

Complaint regarding By-Laws 84-92 – Conditional Licenses – “The Act does not contemplate this discretionary category of license, and is therefore ultra vires enabling legislation and regulations.” (Paragraph 23) [ 25 ] The application judge: [49] … I am satisfied that applying a broad purposive and remedial approach to the

interpretation of this

section conditional licences are a reasonable exercise of the power to grant registration and licencing powers to the NLPB. … [52] Obviously, the economics of this system are burdensome on the pharmacies. I am given to understand that the cost of a conditional licence is $695 compared to an annual licence fee of about $1,200 for a full year’s licence. I have been given to understand by counsel for the NLPB that no credit will be granted against the annual licence fee for those pharmacies which have to avail of the conditional licence. While this strikes me as somewhat unfair, the decision to charge such fees is entirely and legally intra vires the

powers of the Board and the Court has no jurisdiction to upset or overrule that decision. The allegation of invalidity is directly addressed. v. Complaint regarding By-Law 94(j) – Excessive or Unreasonable Fees – “outside the purview of the statutory powers of the NLPB and is therefore ultra vires the enabling legislation and regulations (paragraph 24) [ 26 ] The application judge: [55] Again, I am not satisfied that the passing of such a by-law is ultra vires the enabling legislation and the regulations and is not so vague as to be unenforceable. ...

What constitutes “excessive or unreasonable fees in relation to the service provided” requires an individual judgment on the nature of the fee charged and the quantum of it relative to the needs of the patient. It must be remembered that the primary purpose of all of these by-laws and regulations is in the best interest of the public. I find no merit in this argument. The allegation of invalidity is directly addressed. vi.

Complaint regarding By-Law 94(m) – Conflict of Interest as Misconduct – “so vague as to be unenforceable” (paragraph 24) [ 27 ] The application judge stated that, “The argument is disingenuous and unsupportable.” It is a fair inference that the judge found that the provision was not vague. [ 28 ] The application judge also concluded, generally: [50] Object 7(2)(

c) gives to the Board the power to establish, maintain and develop standards for the operation of pharmacies. I am satisfied that again, applying a broad purposive and remedial

interpretation to this

section is more than amply wide to cover the impugned Standards and to render those Standards intra vires the powers of the Board. … [57] … I have received no jurisprudence as to the existence of an overarching duty of fairness in the drafting of any legislation nor subordinate legislation such as the Standards and By-Laws. The appropriate remedies where there have been by-laws and standards which are too vague to be enforced is the remedy of certiorari . There is no merit to this assertion. [58] I am satisfied that the matters brought before the Court can be dealt with on the basis of a pure question of law.

Are the impugned sections intra vires the powers of the NLPB or ultra vires ? I conclude in all cases that the sections impugned by the Applicants are entirely intra vires the powers of the NLPB. [59] Therefore, I am satisfied that there is no serious issue to be tried when these complaints are reviewed on the basis of common sense. DISCUSSION [ 29 ] The application to dismiss the originating application was brought pursuant to Rule 14.24(1) of the Rules . Three rule-based grounds were put forward as the basis for the requested relief: b. An order pursuant to Rule 14.24(1)(

a) that the Applicants’ Originating Application be struck on the ground that “it discloses no reasonable cause of action”; or c. An order pursuant to Rule 14.24(1)(

b) that the [Applicants’] Originating Application be struck on the ground that it is “false, scandalous, frivolous or vexatious”, or; d. An order pursuant to Rule 14.24(1)(

d) that the [Applicants’] Originating Application be struck on the ground that it is “an abuse of the process of the Court’. [ 30 ] I think it is fair to say that Rule 14.24(1) of the Rules contemplates the striking out of a pleading on the basis of the pleading as issued and without consideration of proceedings subsequent to issuance. Evidence going to an abuse of process, vexatiousness, res judicata and the like would, I think, relate to other separate proceedings or other circumstances relevant to the institution of the pleadings sought to be struck. In Quinlan v.

Newfoundland (Minister of Natural Resources) , 2000 NFCA 49 , Green, J.A., speaking for the Court, determined that, at paragraph 6, “As a general rule, an application strike or stay a proceeding on the basis that the issue raised therein is res judicata should be brought as an application under Rule 14.24(1)(

d) of the Rules of Court, 1986 on the basis that it is an ‘abuse of the process of the Court’.” [ 31 ] At issue in Quinlan was the striking out of a statement of claim on the basis that the issues raised had been finally determined

in a prior and separate proceeding (See also, generally, Goodman v. Newman (1988), 21 C.P.R. (3d) 260, 9 A.C.W.S. (3d) 381 (Ont. C.A.) ). [ 32 ] Where it is sought, as here, to rely on findings in the same proceeding, my view is that the appropriate procedure is to apply for

summary judgment, rather than engage in a pleadings-based analysis. In this case, the question is whether the proceeding should be allowed to continue in light of the determinations that have already been made. Conceivably, as suggested by counsel for the Board, allowing the proceeding to continue if it has already been finally determined could be considered as an abuse of process or a vexatious proceeding. Nonetheless, an assessment pursuant to Rule 14.24 of the Rules does not fit comfortably into a situation like the present.

I note that in Quinlan , Green, J.A., confirmed that a claim of res judicata may be advanced other than through Rule 14.24 . He said at paragraphs 8-9: 8 Any attempt at subsequent litigation that offends these principles is beyond the right of the litigant initiating same. It will amount to an abuse of the process of the court and will accordingly be liable to be struck out under Rule 14.24(1) (d). 9 That is not to say, however, that the ability of a party to raise the issue of res judicata is limited to an application under Rule 14.24(1) (d). It may be raised by pleading it in a defence.

It may also be raised in other pre-trial procedures that may be suitable for making the type of investigations and determinations necessary to decide the issue. [ 33 ] Counsel for the pharmacists did not take issue with the procedure used, but rather focused his arguments on the substance of the application. [ 34 ] In the circumstances, I am prepared to consider the application on its merits without engaging in any further discussion on the appropriateness of the invocation of Rule 14.24 . [ 35 ] In Quinlan , Green, J.A., spoke of the principle of res judicata and its narrower cousin, issue estoppel.

He said at paragraphs 6- 7: 6 … The principles underlying the res judicata doctrine are the promotion of finality of litigation and the prevention of a multiplicity or fragmentation of proceedings.

Subject to the restrictive rules respecting reopening a case on the grounds of mistake or fraud or to allow for the reception of new evidence, a litigant ought not to be able to retry a cause of action, or to claim any relief flowing therefrom, that has already been litigated between the same parties or their privies (often referred to as "cause of action estoppel" or "merger" of the cause of action in the original judgment). 7 The doctrine also applies (sometimes referred to as "issue estoppel") to prevent a litigant from relitigating an issue that was fundamental to, and was decided in, previous litigation between the same parties or their privies even though the causes of action in the two proceedings were not identical.

Furthermore, as a subspecies of issue estoppel, the doctrine also applies to an issue that, though not actually raised, nevertheless properly belonged to the previous litigation and which could reasonably have been expected to have been brought forward at that time. This aspect of the doctrine is sometimes called the rule against "litigation by installment". [ 36 ] Counsel for the pharmacists argued that as a matter of law, findings in an interlocutory proceeding cannot be used as a basis for a plea of issue estoppel and dismissal of the main proceeding.

I do not agree. [ 37 ] It is true that, generally speaking, determinations made in the course of an interlocutory proceeding will not be considered as a final adjudication on the merits of a particular claim. This flows from the very nature of an interlocutory proceeding and its usual procedural focus. Counsel referred to Talbot v. Pan Ocean Oil Corp. , 1977 AltaSCAD 176, at paragraph 9: 9 Leaving aside special situations, interlocutory applications, in general, are not designed nor intended to adjudicate finally on issues of fact or law raised by the pleadings in an action.

Rather, they have to do with some aspect of bringing such issues to trial. Facts are stated to the best of knowledge or belief, and the court must needs act on such representations. A decision is reached and an order made, but it is not taken that the acceptance of facts by the chambers judge for the purpose of his decision on the interlocutory matter creates an estoppel by judgment of those facts on the substantive issues between the parties: but if this is not the consequence, there is no res judicata.

An interim injunction granted by a chambers judge does not foreclose examination of the facts at trial to determine whether a permanent injunction should be ordered. … I would think that great care must be taken in applying res judicata to proceedings in the same action, as distinct from separate actions between the same parties. [ 38 ] No statement of law is propounded. Further, the context of the caution was an appeal of an order for service ex juris and the factual circumstances which would ground such an order. In Dreco Energy Services Ltd. v.

Wenzel , 2003 ABQB 1067 , the defendants sought a declaration that certain restrictive covenants relied on by the plaintiff in a breach of contract case were invalid and unenforceable. They relied on an earlier decision in which a judge had dismissed the plaintiff’s request for an interim injunction on the basis that the covenants were neither valid nor enforceable. Bielby, J. found that the earlier decision was final only in the sense of determining the availability of injunctive relief.

She said at paragraph 19: 19 Justice Hembroff's decision was final in the sense that it completely determined the issue of whether interim injunctive relief was available but was not final in the sense that if further relevant evidence was or could be led subsequently, that evidence would have to be considered to arrive at an ultimate decision on the validity of the restrictive covenants. [ 39 ] However, prior to that, she noted: 15 The mere fact that an issue is decided in the course of interlocutory proceedings does not, for that reason alone, mean that the decision is not final and therefore issue estoppel does not apply.

16 Justice Fruman also discussed this situation in LSI Logic in stating at para. 67: Res judicata . . . can arise from earlier proceedings in the same action: Mire v. Northwestern Mutual Insurance Co. (No. 2) (1972), (AB CA), 31 D.L.R. (3d) 746 (Alta. C.A.), at 750. 17 At para. 68 she concluded that an order made in response to an interlocutory motion, where not procedural but rather where itcreates substantive rights between parties, is a final order where not appealed.

She found that an earlier consent order which created anirrevocable right to be paid certain sums of money founded a res judicata on the issue which was the subject of the earlier order. 18 The same conclusion was reached in Bailey v. Guaranty Trust Co. of Canada (1987), 1987 ABCA 95 , 52 Alta. L.R. (2d)289 (Alta.

C.A.), where the Court concluded issue estoppel arose from an interlocutory decision on a point of law made on the basis ofan agreed statement of facts, noting that estoppel by res judicata is created by any judicial decision which finally determines the rights ofthe parties inter se. [40] I read Dreco as addressing the finality or otherwise of the prior decision; I do not consider it as standing for the proposition oflaw advanced by counsel and indeed, if anything, paragraph 15 cited above suggests the contrary. [41] Counsel for the Board referred to Chlipala v. Resurrection Credit Union Ltd., 2014 ONSC 260.

A judge had refused a requestby a property owner to enjoin power of sale proceedings. The judge found that the property sale was “not an improvident sale”. Twoyears later, the defendant lender moved for

summary dismissal on the basis of issue estoppel. [42] The judge outlined the requirements for a claim of issue estoppel following an interlocutory injunction ruling. At paragraph 13of Chlipala:

a) the plaintiff and defendant were also parties to the injunction proceedings;

b) the same issue was addressed on the injunction (i.e., whether the sale was improvident);

c) the injunction was final — no appeal was taken from it; and,

d) the decision on the injunction was unequivocal (i.e., Justice O'Marra did not just state that there was a prima facie case — he held: "Ifind that it is not an improvident sale"). [43] Matheson, J., went on, at paragraph 14, “The plaintiff disputes the legal proposition that issue estoppel arises from aninterlocutory injunction, but puts forward no cases in support of his position.” [44] There is no dispute that the parties are the same and that an appeal, though filed, was not pursued. [45] Further, I am satisfied that the application judge’s articulation of the complaints accurately reflects the grounds on which thepharmacists relied to challenge the provisions in question.

That is, the issues addressed by the application judge in the injunctiondecision were the same issues raised in the originating application. [46] Did the application judge finally and unequivocally decide the issues raised by the originating application? In my view, he did. [47] He clearly considered the issues raised to be issues of law and determined that he could accordingly decide each of thoseissues. I find support for this conclusion in the pharmacists’ own Notice of Appeal. They put forward as grounds of appeal: 1.

The Learned Trial Judge erred in determining that all matters before him could be decided as a pure matter of law; … 7. The Trial Judge erred in finding that clauses 1.3(e), 1(4)(a)(

i) and (1)(4)(a)(iv) of the Standards of Community Pharmacy Practiceand bylaws 84-92 and 92

j) and

m) of the Pharmacy Board By-Laws are intra vires with respect to their enabling legislation.

[48] Reading his decision as a whole and noting, in particular, the extracts reproduced above, it is clear that the application judgeturned his mind to and addressed the legality and, where needed, the enforceability of each of the impugned provisions. With thepossible exception of the grandfathering complaint concerning the patient consultation area, he found that the challenged Standards wereneither vague nor unenforceable, and that the impugned By-Laws were not outside of the authority granted to the Board by the Act. [49] Whether or not I agree with those conclusions is not the point.

The fact is that final and unequivocal determinations weremade.

Any challenge to those determinations must be by way of appeal. [50] The application judge found that the grandfathering issue was moot since by the time the application was heard, the threepharmacists had established approved patient consultation areas. [51] An affidavit filed by the Registrar in support of the present application confirmed that all three pharmacists are presently fullycompliant with the Board’s By-Laws and Standards. [52] It is true that the issues engaged by the originating application are of import to the regulation of the pharmacy profession as awhole and, as a result, are of public interest.

It is also true that, notwithstanding the mootness of a particular issue, the Court has adiscretion to nonetheless allow it to proceed to adjudication—See M.U.N.F.A. v. Memorial University of Newfoundland (1997), (NL CA), 153 Nfld. & P.E.I.R. 62, 475 A.P.R. 62 (Nfld.

C.A.)). [53] However, in view both of the rather dubious legal basis for setting aside the patient consultation standard—“no grandfatheringin of older pharmacies”—and of the nature of this complaint in the context of the originating application as a whole, I am not inclined toexercise my discretion to allow this single complaint to proceed. [54] In the course of argument, counsel for the pharmacists referred a number of times to a challenge to the By-Laws and Standardson the basis of the Board’s having promulgated them “for an improper purpose”. He suggested that this issue remain for determination.

Counsel was unable to point to a challenge on this basis being raised in the originating pleading, nor was he able to suggest whatimproper purpose was being relied upon. He said simply that an amendment might be necessary. [55] In the circumstances of this case, speculation about a possible application for an unspecified amendment is not a reason to keepthe proceeding alive.

CONCLUSION [56] The issues raised in the originating application and relied upon for the relief claimed—the vagueness and unenforceability ofthe challenged Standards and the vires of the challenged By-Laws—were finally determined by the application judge. The issues raisedare res judicata. To the extent that the complaint about the patient consultation area was not finally adjudicated, it is nonetheless mootand there are no grounds upon which the Court should exercise its discretion to allow that aspect of the proceeding to continue. [57] The Board’s application is allowed.

The originating application is dismissed. The notice of examination for discovery,dependent as it is on the continuation of the proceeding, is set aside. [58] The Board is entitled to its costs—column 3 of the Scale of Costs. _____________________________ David B. Orsborn Justice