Date: 20070926
Docket: T-277-07
Citation: 2007
FC 933
Ottawa, Ontario,
September 26, 2007
PRESENT: The Honourable Madam Justice Layden-Stevenson
BETWEEN:
IRVING
SHIPBUILDING INC. and FLEETWAY INC.
Applicants
and
THE
ATTORNEY GENERAL OF CANADA and CSMG INC.
Respondents
REASONS FOR ORDER AND ORDER
[Confidential Reasons for
Order and Order issued on September 20, 2007]
[1] By order dated July 13, 2007,
Prothonotary Tabib dismissed the Attorney General’s motion to strike a notice
of application for judicial review, filed by Irving Shipbuilding Inc. (ISI) and
Fleetway Inc. (Fleetway), for want of standing. On this motion, the Attorney
General appeals Prothonotary Tabib’s order. The respondent CSMG Inc. (CSMG)
supports the Attorney General’s position. For the reasons that follow, I
conclude that the motion should be dismissed.
[2] This
matter arises in the context of a federal government procurement process for
the Victoria Class In-Service Support Contract (the contract). In July of
2006, Public Works and Government Services Canada (PWGSC) issued a request for
proposals (RFP) on behalf of the Department of National Defence (DND) in
relation to the contract. The RFP provided that the contract would be awarded
for a term of five years, with optional extensions for an additional ten years.
[3] BAE
Systems Projects (Canada) Ltd. (BAE) entered into a
Teaming Agreement with ISI and Fleetway for the express purpose of bidding for
the contract. It was open to BAE, ISI and Fleetway to respond to the RFP as a
joint venture. Nonetheless, BAE (as the bidder) submitted the bid proposal
regarding the RFP to PWSGC. Three bids were received in response to the RFP.
CMSG, a joint venture company comprised of Devonport Management Limited (DMI)
and Weir Canada Inc. (Weir), was selected as the successful bidder.
[4] ISI
and Fleetway filed an application for judicial review of the decision awarding
the contract to CSMG and asserted that the process was flawed. Specifically,
they alleged that Weir participated in the development of the statement of work
and evaluation criteria for the contract, thereby violating conflict of
interest rules and giving CSMG an unfair advantage. ISI and Fleetway, in the
application, seek to have the decision quashed and the solicitation reissued
with a direction that it be properly conducted in a manner consistent with
procurement policies, principles of procedural fairness and applicable law.
[5] The
Attorney General’s motion to strike was premised on the submission that ISI and
Fleetway lack standing. In the alternative, the Attorney General sought
directions on how to proceed.
[6] The
standard of review with respect to an appeal of a prothonotary’s decision is
articulated in Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425;
149 N.R. 273 (F.C.A.) (Aqua-Gem) and Merck & Co., Inc. v. Apotex
Inc., [2004] 2 F.C.R. 459; (2003) 315 N.R. 175 (F.C.A.) (Merck). At
paragraph 98 of Aqua-Gem, the Court stated:
The question before the prothonotary in the case at bar can
be considered interlocutory only because the prothonotary decided it in favour
of the appellant. If he had decided it for the respondent, it would itself have
been a final decision of the case: A-G of Canada v. S.F. Enterprises Inc. et
al. (1990), 90 DTC 6195 (F.C.A.) at pages 6197-6198; Ainsworth v.
Bickersteth et al., [1947] O.R. 525 (C.A.). It seems to me that a decision
which can thus be either interlocutory or final depending on how it is decided,
even if interlocutory because of the result, must nevertheless be considered vital
to the final resolution of the case. Another way of putting the matter would be
to say that for the test as to relevance to the final issue of the case, the
issue to be decided should be looked to [page 465] before the question is
answered by the prothonotary, whereas that as to whether it is interlocutory or
final (which is purely a pro forma matter) should be put after the
prothonotary's decision. Any other approach, it seems to me, would reduce the
more substantial question of "vital to the issue of the case" to the
merely procedural issue of interlocutory or final, and preserve all
interlocutory rulings from attack (except in relation to errors of law).
[7] ISI
and Fleetway submit that, in accordance with the reasoning of Mr. Justice
Hugessen in Peter G. White Management Ltd. v. Canada, 2007 FC 686;
F.C.J. No. 931 (Peter G. White) and Mr. Justice Evans (then of the
Federal Court Trial Division) in Sierra Club of Canada v. Canada (Minister
of Finance), [1999] 2 F.C. 211 (T.D.) (Sierra Club), the prothonotary’s
decision is not vital to the final resolution of the case because she did not
strike out the application. The Attorney General and CMSG argue contra and
contend that I must, in accordance with the direction of the Federal Court of
Appeal in the earlier-noted authorities, exercise my discretion de novo.
In my view, nothing turns on this debate because, on either approach, I arrive
at the same result as the prothonotary.
[8] As
stated earlier, the prothonotary dismissed the motion to strike. In so doing,
she made the following material findings:
• although
it may be the case (in accordance with Design Services Ltd. v. Canada
(2006), 272 D.L.R. (4th) 361; 352 N.R. 157 (F.C.A.) (Design
Services)), that there is insufficient proximity between a sub-contractor
and an awarding authority in a public tendering process to support an action in
tort or contract, this does not necessarily mean that a sub-contractor cannot
have standing as a person “directly affected” by the decision of an awarding
authority to maintain a judicial review application thereof;
• an
applicant may have standing as a person directly affected if there is a direct,
substantial, immediate relationship between itself and the decision at issue,
but not necessarily the decision maker: Ogden Martin Systems of Nova
Scotia Ltd. v. Nova Scotia (Minister of the Environment) (1995), 130
D.L.R. (4th) 326; 146 N.S.R. (2d) 372 (C.A.) (Ogden);
• the
applicants have a contractual relationship with BAE and, as a result of the
decision, the contract was bound to completely disappear. Had BAE been awarded
the contract, the applicants would have immediately been entitled to specific
and significant legal rights and financial benefits.
[9] The
penultimate paragraph of the prothonotary’s order reads:
As a result, I find that the question of
whether a person who is specifically identified by a bidder in its proposal as
a necessary and contractually bound prime sub-contractor and whose contractual rights
vis-à-vis the bidder are specifically tied to whether the contract awarded to
the bidder or to a third party has sufficient interest to challenge the award
of the contract is an important and complex issue of fact and law, which has
not been conclusively determined by this Court. I therefore find that it is
not plain or obvious that the [a]pplicants have no standing to pursue this
judicial review application. The Attorney General’s motion to strike is
accordingly dismissed.
[10] Contrary
to the submissions of the Attorney General and CMSG, the prothonotary did not
conclude that ISI and Fleetway have standing. Rather, she determined that the
issue was arguable.
[11] Subsection
18.1(1) of the Federal Courts Act, R.S.C. 1985, c. F-7 (the Federal
Courts Act) provides:
|
Federal
Courts Act,
R.S.C.
1985, c. F-7
18.1
(1) An
application for judicial review may be made by the Attorney General of Canada
or by anyone directly affected by the matter in respect of which relief is
sought.
|
Loi
sur les Cours fédérales
L.R.
(1985), ch. F-7
18.1
(1) Une demande de contrôle judiciaire peut être présentée par le procureur
général du Canada ou par quiconque est directement touché par l’objet de la
demande
|
[12] The
Attorney General and CSMG contend that ISI and Fleetway are not directly
affected because they were not parties to the bid contract and are therefore
only indirectly affected. Despite the fact that they may have, in conjunction
with BAE, coined the term “Team Victoria”,
the response to the RFP was signed by BAE alone. ISI and Fleetway were listed
only as proposed subcontractors. Consequently, it is to BAE (and BAE alone)
that PWGSC has any potential obligation or liability.
[13] ISI
and Fleetway assert that they are directly affected by the PWGSC decision
because of their extensive roles in the preparation and submission of the BAE
bid, their participation with PWGCS and the specific provisions of the Teaming
Agreement with BAE, the specifics of which were known to PWGSC.
[14] The Federal
Court Rules, SOR/98-106 (the Rules) do not provide for the striking
of an application for judicial review. In David Bull Laboratories (Canada) Inc. v. Pharmacia Inc., [1995] 1 F.C. 588 (F.C.A.)
(David Bull), the Federal Court of Appeal stated that only those matters
which are so “clearly improper as to be bereft of any possibility of success”
ought to be dismissed in a summary manner. Such cases must be “very
exceptional” and cannot include those where there is a “debatable issue”. It
is common ground that the David Bull threshold is high and it applies to
the issue of standing.
[15] In Moresby
Explorers Ltd. v. Canada (Attorney General) (2006), 350 N.R. 101 (F.C.A.),
Mr. Justice Pelletier, writing for a unanimous court in the context of an
application for judicial review, described standing as a device used by the
courts to “discourage litigation by officious inter-meddlers”. He stated, at
paragraph 17, “[i]t is not intended to be a pre-emptive determination…there is
a distinction to be drawn between one’s entitlement to a remedy and one’s right
to raise a justiciable issue”.
[16] The
Attorney General and CSMG raise various arguments relating to contingent
interests, economic consequences and crystallized contracts. However, the
pivot around which their arguments turn is that ISI and Fleetway are not in a
direct relationship with PWGSC. By necessary implication, they cannot be
directly affected and are therefore beyond the parameters of subsection 18.1 of
the Federal Courts Act. In my view, the prothonotary fully appreciated
this position, as do I. Notably, ISI and Fleetway do not suggest that they are
in a direct contractual relationship with PWGSC. Rather, they claim to be
directly affected by its decision.
[17] The
problem, in my view, is that the law is not as settled as the Attorney General
and CSMG present it to be. In this respect, see: Thomas A. Cromwell, Locus
Standi: A Commentary on the Law of Standing in Canada (Toronto:
Carswell, 1986) at pages 161-164 where section 28 (the precursor to subsection
18.1 of the Federal Courts Act) is discussed. See also: Ferring Inc.
v. The Minister of Health, Apotex Inc. and Novopharm Limited, 2007
FCA 276 at para. 5 and Ogden.
[18] There
is no authority that is directly on point. The prothonotary was unable to
conclude that the issue of standing was “plain and obvious”. In the exercise
of her discretion, she determined that the notice of application should not be
summarily dismissed. Notwithstanding the forceful arguments of the Attorney
General and CSMG, I conclude that the issue of standing is at least debatable.
ISI and Fleetway may not necessarily succeed in this respect, but the issue is
arguable. Consequently, it cannot be said, at this stage, that the application
is so clearly improper as to be bereft of any possibility of success.
[19] I
reiterate that the focus in judicial review is on “moving the application along
to the hearing stage as quickly as possible” thereby ensuring that “objections
to the [application] can be dealt with promptly in the context of consideration
of the merits of the case”: David Bull at para. 11. The ultimate
adequacy of the allegations and evidence must be addressed by the judge hearing
the application on its merits.
[20] This
brings me to the Attorney General’s objection to the affidavit of Brent Holden
sworn in support of the motion before the prothonotary. Specific exception was
taken by the Attorney General to paragraphs 53 and 54 of the affidavit. I
ruled, at the hearing, that the impugned paragraphs were improper and
inadmissible. More importantly, I have had no regard to the affidavit in
arriving at my conclusion. In my view, evidence is a matter for an
applications judge, not a motions judge on a motion to strike.
[21] Finally,
I find no fault with the prothonotary’s directions as to the method of
proceeding.
[22] The
motion will be dismissed. All parties requested costs. In the exercise of my
discretion, costs will be costs in the cause.
ORDER
IT IS HEREBY ORDERED THAT the motion is dismissed.
Costs will be costs in the cause.
“Carolyn Layden-Stevenson”
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