In its recent decision, Canada (Attorney General) v Power, 1 the Supreme Court of Canada ruled that federal and provincial governments do not have absolute immunity from claims for Charter damages flowing from the adoption of unconstitutional legislation. As a result, if a law violates rights protected by the Canadian Charter of Rights and Freedoms, 2 then in certain limited circumstances, Charter damages may be claimed against the state.
Specifically, Power confirms that the state may be liable for damages caused by the adoption of an unconstitutional law if: (1) the law was "clearly unconstitutional" at the time of enactment, or (2) was enacted in bad faith, or constituted an abuse of power.
Below, we summarize the previous case law in this area. We then examine the qualified or limited immunity established by Power, and consider some practical implications that may flow from the decision.
I. Tentative Recognition of Limited Immunity in 2002
Historically, parliamentary sovereignty and parliamentary privilege meant that the only limit on parliament's legislative authority was physical impossibility. 3 This led to a common-law immunity which protected the state from damage claims based on the enactment of a law later found to be unconstitutional. For many years, this immunity was considered "absolute" because courts had not recognized any exceptions to the default position at common law.
However, since the adoption of the Charter, parties are not limited to common-law or private-law claims against the state, since the Charter itself created new public-law claims. Section 24(1) of the Charter provides that: "Anyone whose rights or freedoms, as guaranteed by this Charter, have been infringed or denied may apply to a court of competent jurisdiction to obtain such remedy as the court considers appropriate and just in the circumstances." In particular, this provision permits claims for damages against the state for violation of a Charter right. 4
The Supreme Court considered the interaction between section 24(1) of the Charter and the common-law rule of government immunity in the 2002 case, Mackin v New Brunswick (Minister of Finance). 5 There, the Supreme Court struck a balance between the traditional common-law position and the protection of fundamental rights and freedoms, holding that when the state has exercised its legislative powers in an unconstitutional manner, a qualified immunity is more appropriate than an absolute immunity. The Mackin standard was expressly described as an elevated standard, one that would be difficult to meet.
Yet despite Mackin, claims for damages against the state based on unconstitutional legislation were very rare. Practically, the Power case is the first time that the state's immunity was put to the test.
II. A Summary of the Power Case
In 1996, Mr. Power was found guilty of two indictable offences and sentenced to eight months' imprisonment. At the time that he was found guilty, it was possible to obtain a pardon and remove one's criminal record five years after finishing one's sentence.
In 2013 (i.e. more than five years later), Mr. Power applied for a pardon, but his request was denied because intervening laws had retroactively made him ineligible for a pardon. 6 This meant that he was unable to remove his criminal record, and thus was unable to find employment in his chosen profession.
The laws in question were declared unconstitutional by the courts in several cases, on the grounds that they violated sections 11(h) and 11(i) of the Charter, since they retroactively increased the penalty for a criminal offence, which is expressly prohibited by the Charter. 7
Mr. Power then brought a damages claim against the federal government, based on section 24(1) of the Charter and the Mackin case.
The federal government conceded that the legislation in question was unconstitutional, but maintained that Parliament had an absolute immunity against Charter damages claims that were based solely on the enactment of unconstitutional legislation.
A majority of the Supreme Court rejected the government's claim to possess absolute immunity, instead preferring to reaffirm and clarify the rule first set out in Mackin. The result was that Mr. Power's claim for Charter damages was allowed to proceed to trial.
The majority judges noted that in the two decades since Mackin was rendered, there had been no onslaught of cases which would compromise the effective use of legislative authority. They further held that there was no compelling reason to offer the state an absolute immunity against all possible damage claims, even in the most egregious circumstances. Indeed, the majority held that recognizing an absolute immunity would be inconsistent with the rule of law and the protection of Charter rights.
The Supreme Court thus rejected any absolute immunity, and instead reformulated the qualified immunity recognized in Mackin as follows: "the defence of immunity will be available to the state unless it is established that the law was clearly unconstitutional, or that its enactment was in bad faith or an abuse of power." 8
Beyond cases of bad faith or abuse of power, the Power case recognized the possibility of claiming damages for "clearly unconstitutional" legislation, and rejected the suggestion in Mackin that mere "negligent" adoption of an unconstitutional law by the legislature was sufficient to overcome the state's immunity.
The majority also clarified the standard of "clearly wrongful" conduct by the legislature in order to prevent confusion in how that standard was applied. Specifically, mere negligence was not sufficient to meet the high standard of "clearly wrongful" conduct. The Supreme Court confirmed that "clearly wrongful" is an objective standard and a high threshold, requiring the law to be clearly unconstitutional at the moment of its adoption, rather than merely negligently adopted. The Court confirmed that adoption in bad faith or by an abuse of power remained part of the "clearly wrongful" standard. 9
Since negligence alone did not meet the high threshold which the majority wished to establish, 10 it followed that a finding of clear unconstitutionality "will usually imply that the state either knew that the law was clearly unconstitutional, or was reckless or willfully blind as to its unconstitutionality." 11
Similarly, bad faith or abuse of power were described as "flexible" notions that covered a wide range of dishonest or illegitimate conduct. This conduct could arise at multiple stages of the legislative process or be expressed in different ways, and was not limited to the purpose of the law. 12
The majority provided some examples of cases in which a law might be clearly unconstitutional or the result of bad-faith conduct or an abuse of power, but stopped short of offering an exhaustive definition of such cases.
However, in evaluating bad faith or abuse of powers, the majority also suggested that the standard might be higher in the context of legislative powers than in the exercise of executive or administrative functions.13
III. Practical Implications of the Power Case
In theory, the Power decision merely confirmed and clarified existing case law. In practice, it is the first clear affirmation that Canadian governments can be sued for Charter damages flowing from the enactment of unconstitutional laws. The full implications of such a far-reaching principle will inevitably become clear only over time, but certain observations can be made even now.
First, the Power decision may create an asymmetry between laws that are invalidated under the Charter and those that are invalidated for violating other aspects of the Constitution (such as the division of powers between federal and provincial governments). The Power case anchored the right to claim damages in section 24(1) of the Charter, which authorizes damages only for breach of a Charter right. By contrast, Mackin spoke of damages caused by unconstitutional laws in general, and was not limited to claims based on Charter violations. 14 Future courts will need to determine whether the Power case can or should be extended to other grounds of unconstitutionality that do not depend on the Charter (and which are thus not covered by the public-law damage claim created by section 24(1)).
Second, the difficulty or impossibility of recovering damages from the state due to an unconstitutional law was a rule that often made it easier for plaintiffs seeking a stay of legislation to prove irreparable harm. Before Power, the argument ran as follows: since the state is not liable to pay for the costs of complying with, or the damages caused by, an unconstitutional law, these costs or damages constitute an irreparable harm, and that in turn supports the issuance of a stay until the constitutionality of the law can be finally determined on the merits. 15 Following Power, plaintiffs will need to evaluate whether they prefer to claim damages or allege the impossibility of obtaining such damages and plead accordingly. It is effectively quite difficult to plead both positions at once, since if damages are allegedly to be recoverable under the Power standard, then it is contradictory to claim that those same damages are an irreparable harm.
Third, since the state now faces a higher risk of financial liability flowing from the enactment of Charter-violating laws, governments may find it more attractive to invoke the notwithstanding clause than in the past. Since the notwithstanding clause immunizes a law against being struck down for breaching many of the most important rights contained in the Charter, this in turn prevents the law from being invalidated for those Charter breaches. By preventing laws from being invalidated on Charter grounds in the first place, the state thereby protects itself from damage claims under the Power standard. The notwithstanding clause is of course time-limited, but in the short run, it may well remain an attractive option. It remains to be seen whether the notwithstanding clause would apply to a claim for damages under the bad faith or abuse of power branches of the Power/Mackin framework.
If you have any questions about the Power case or how it applies to your particular situation, please do not hesitate to contact the authors.
Footnotes
1 2024 SCC 26.
2 Constitution Act, 1982, Annex B to the Canada Act 1982 (UK), 1982 c 11.
3 Henri Brun & Guy Tremblay, Droit constitutionnel, 2nd ed (Yvon Blais, 1990) at 559.
4 Vancouver (City) v Ward, 2010 SCC 27 set out a four-part test to determine if damages are a reasonable and just remedy for a breach of section 24(1) of the Charter.
5 2002 SCC 13.
6 Limiting Pardons for Serious Crimes Act, SC 2010, c 5, s 10; Safe Streets and Communities Act, SC 2012, c 1, s 161.
7 These sections of the Charter read as follows : "11 Any person charged with an offence has the right [...] (h) if finally acquitted of the offence, not to be tried for it again and, if finally found guilty and punished for the offence, not to be tried or punished for it again; and (i) if found guilty of the offence and if the punishment for the offence has been varied between the time of commission and the time of sentencing, to the benefit of the lesser punishment."
8 Power, at para 4.
9 Ibid, at para 112.
10 Ibid, at para 102.
11 Ibid, at para 105.
12 Ibid, at para 107.
13 Ibid, at para 108.
14 Mackin, at paras 79-81. The Mackin case dealt with judicial independence, many aspects of which are protected not by the Charter (which guarantees judicial independence only in criminal proceedings), but by the Constitution Act, 1867, 30 & 31 Vic, c. 3.
15 On this topic, the Supreme Court held as follows in RJR-MacDonald Inc v Canada (AG), [1994] 1 SCR 311: "In light of the uncertain state of the law regarding the award of damages for a Charter breach, it will in most cases be impossible for a judge on an interlocutory application to determine whether adequate compensation could ever be obtained at trial." The Supreme Court continued by stating that "until the law in this area has developed further," courts should presume that financial losses are not recoverable following a Charter breach, and that irreparable harm will thus be suffered. It remains to be seen if the Power case has sufficiently developed the law such that this presumption no longer holds.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.