Suing for Damages Rather than Quashing the Regulatory Decision

It is a general principle that where a legislative scheme provides a route to challenge a regulatory decision, that route must be followed. For example, judicial review to a court is generally not permitted where there is an appeal available, even when the deadline for the appeal has passed: Savic v. College of Physicians and Surgeons of Ontario, 2021 ONSC 4756 (CanLII), https://canlii.ca/t/jgr2k. Similarly, courts have often found it to be an abuse of process to sue a regulator for damages for a decision made by a regulator that was (or could have been) upheld on appeal: Kamalanathan v. CAMH, 2019 ONSC 56 (CanLII), https://canlii.ca/t/hwtt6. This is viewed as a collateral attack on the regulatory decision.

A recent decision by Saskatchewan’s highest court appears to permit individuals to sue regulators for damages more easily in situations where the adverse regulatory decision still stands: Solgi v College of Physicians and Surgeons of Saskatchewan, 2022 SKCA 96 (CanLII), https://canlii.ca/t/jrrj9. In that case, an internationally-trained physician was issued a provisional licence while qualifying for registration. Through several events including the regulator’s change in the rules for qualification and the registrant’s move to another province, the provisional licence was suspended. Rather than challenge the suspension, the physician sued for damages alleging that the regulator had acted in bad faith, deliberately using its regulatory powers to harm the physician. The regulator brought a motion to dismiss the claim on several bases, the one of most interest to regulators being that the action was a collateral attack on the validity of the regulatory decision.

The Court discussed that the collateral attack argument was an assertion of an abuse of process. To establish an abuse of process one must look at all the surrounding circumstances. The Court made a distinction between a claim that was, in essence, an attempt to set aside the regulatory decision and a claim that seeks a remedy (e.g., damages) that does not set aside the regulatory decision (even if the remedy assumes that the regulatory decision was wrong). The Court characterized the claim as not “an attempt to relitigate the licensing decision, but rather an attempt to obtain a judgment for the damages alleged to have been caused by that decision.”

This distinction is a difficult one to comprehend. Indeed, in this case the physician did seek, as additional relief, the reinstatement of their licence. That claim for relief was struck from the pleadings. The Court ruled that the action could proceed. The Court was careful to state that the registrant still had to establish that the regulator deliberately and unlawfully misused its authority when making the licence suspension decision.

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