BC Court of Appeal Upholds TDHCCRA

On May 20, 2004, the BC Court of Appeal held in a unanimous decision that the province’s Tobacco Damages and Health Care Costs Recovery Act S.B.C. 2000 c. 30 (TDHCCRA) was constitutionally valid. The Act enables the BC Government to sue to recover health care costs associated with treating tobacco-related disease. The appeal decision paves the way for the province to continue its health care costs recovery action against the tobacco industry for alleged wrongs spanning five decades.

The constitutional challenge to the legislation began when several Canadian, foreign and multinational tobacco companies named as defendants in the province’s lawsuit launched simultaneous actions and motions, arguing that the Act was impermissibly extraterritorial, that it interfered with the independence of the judiciary, and that its retroactive provisions and evidentiary rules offended the rule of law. The trial judge rejected all the arguments except that based on extraterritoriality, finding that the TDHCCRA was in pith and substance aimed at property and civil rights outside the province and therefore contravened s. 92(13) of the Constitution Act. There was a previous statute enacted by the province that had been held impermissibly extraterritorial. Instead of appealing that decision, the BC government repealed that statute and enacted the Act, which the trial judge held unconstitutional for a second time.

The Court unanimously agreed with the trial judge’s conclusion that the TDHCCRA was not unconstitutional by reason of its purported interference with the independence of the judiciary. Other arguments based on the rule of law were similarly rejected by Justice John Douglas Lambert, writing for the Court on these points. On the central question of extraterritoriality, the Court reversed the trial decision, finding that both the purpose and the effect of the TDHCCRA were intraterritorial and the Act was therefore constitutionally valid. Justice Lambert, Justice Anne Rowles and Justice Jo-Ann Prowse each wrote concurring reasons in which they found that the statute was, in pith and substance, addressed to activities and harm that occurred within the province.

BC is the first jurisdiction in the commonwealth to file a health care costs recovery action against the tobacco industry. Several other provinces have expressed an interest in following BC’s lead.

The province was represented at the Court by Thomas Berger, O.C., Q.C., Daniel Webster, Q.C., Elliott Myers, Q.C., and Craig Jones of Bull, Housser & Tupper.

Counsel for the tobacco industry defendants included: Jack Giles, Q.C., Jeffrey Kay, and Dylana Bloor of Farris for JTI-Macdonald Corp., R.J. Reynolds Tobacco Co., and R.J. Reynolds Tobacco International, Inc.; Richard Sugden, Q.C., and Craig Dennis of Sugden, McFee & Roos for British American Tobacco (Investments) Ltd.; William Berardino, Q.C., David Harris, and Andrea MacKay of Berardino & Harris for Imperial Tobacco Canada Ltd.; James Macaulay, Q.C., and Ken Affleck, Q.C., of Macaulay McColl for Rothmans, Benson & Hedges Inc.; Ross Clark and Cyndi Millar of Davis & Company for Philip Morris Inc. and Philip Morris International Inc.; and Loryl Russell of L.D. Russell & Company for the Canadian Tobacco Manufacturers’ Council.