Date: 20130424
Docket:
T-1769-12
Citation:
2013 FC 423
Ottawa, Ontario,
April 24, 2013
PRESENT: The
Honourable Madam Justice Tremblay-Lamer
BETWEEN:
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OLA DISPLAY CORPORATION
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Applicant
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and
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NATIONAL RESEARCH COUNCIL OF CANADA
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Respondent
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REASONS FOR
JUDGMENT AND JUDGMENT
[1]
This
is an application for judicial review of a decision by the National Research
Council of Canada [NRC], rendered August 24, 2012, to deny the applicant’s
request for funds from the Industrial Research Assistance Program [IRAP].
THE IRAP
[2]
The
IRAP provides financial support to eligible small and medium-sized enterprises
in Canada to help them undertake technology innovation. To apply for funds,
potential “clients” must contact an IRAP Industrial Technology Advisor [ITA].
The ITA will determine whether the firm is eligible for IRAP financial support.
[3]
The
IRAP in the Québec Region has refined instructions for the evaluation of a
firm’s eligibility in the case of funding requests that exceed $100,000. First,
the ITA meets the firm to learn more about it and its project. If the ITA decides
that the project is interesting, the ITA fills out a Firm Eligibility Form that
gives an overview of the strengths and weaknesses of the firm. If the ITA
concludes that the firm has the necessary resources and that the project for
which the firm would like to obtain IRAP funding is sufficiently well-defined
to submit a formal request, the ITA completes a Project Eligibility Form. This
form gives an overview of the project that the firm wants to carry out. The
Director of NRC-IRAP in the Québec Region will consider the information in the
two forms and the ITA’s recommendation on the eligibility of the firm, discuss
it with the ITA, and decide if the firm and the project are eligible. If the
Director concludes that the firm is not eligible, the process ends there and
the ITA advises the firm of the decision. The Executive Director of the NRC Québec
Region is also involved in the decision regarding the firm’s eligibility if the
firm requests over $350,000 in funds.
BACKGROUND
[4]
Mr.
Raja Tuli is the president of the applicant. He is also president of
Technologies Novimage [Novimage] and Datawind Research Inc. [Datawind] and both
these companies have received contributions from the Technology Partnerships
Canada [TPC] program. The agreements made under this program are now
administered by NRC-IRAP.
[5]
On
May 28, 2012, Mr. Tuli met with an ITA at the NRC for the Québec Region. The
ITA affirms that at this meeting he mentioned that there would be no new
participation by the NRC in Mr. Tuli’s companies’ projects if he was not
willing to resolve the issues with his previous projects, including paying back
in full the repayable contributions, which neither company had done.
[6]
Mr.
Tuli and the ITA discussed new projects at this meeting and the ITA requested
more information about the capacitive touch screen project Mr. Tuli proposed
for the applicant.
[7]
On
June 1, 2012, Mr. Tuli sent the ITA what he considered to be the applicant’s
application for IRAP funding. Mr. Tuli was invited to meet with NRC
representatives to explain the applicant’s project.
[8]
The
NRC sent Mr. Tuli emailss dated July 6, 2012, August 14, 2012 and August 21,
2012, regarding the need for him to fulfill certain financial reporting
obligations on behalf of Novimage. The record does not indicate that any of the
requested documents were provided.
[9]
On
July 26, 2012, the ITA completed the Firm Eligibility Form for the applicant
and he subsequently modified it on August 14, 2012. He completed the Project
Eligibility Form on August 14, 2012 and subsequently modified it on August 24,
2012.
[10]
In
August 2012, Mr. Richard O’Shaughnessey, a Director at the NRC for the Québec
Region [the Director] searched the internet for information on Datawind UK,
another company in which Raja Tuli was involved and which would initially be
the only client for the applicant’s new capacitive screen. The Director found
that the present and future success of that company was uncertain.
[11]
A
few days before August 24, 2012, Marie Szaszkiewicz, Regional TPC Coordinator,
met with Claude Attendu, the Executive Director of the NRC Québec Region [the
Executive Director], to discuss her files on the repayable contributions from
TPC to Novimage and Datawind. She explained how it had been difficult to obtain
collaboration from these firms when it came to reporting and repayment
obligations set out in the contribution agreement with the NRC.
[12]
On
August 17, 2012, Mr. Tuli called the ITA. The ITA mentioned that he did not yet
have feedback from NRC-IRAP management on the applicant’s project, that there
was no guarantee management would accept to fund the project and negotiations
would need to take place to solve issues arising from previous projects.
[13]
The
ITA gave Mr. Tuli access to the IRAP Client Portal so he could complete the
project proposal before a decision was made on the firm and project
eligibility. The ITA affirms that he gave Mr. Tuli this access because the
project had strong technical merits with positive feedback from the NRC
representatives from the Printable Electronic Program who were present at the
July 5, 2012 meeting.
[14]
The
respondent admits that it was contrary to the procedure set out in the
additional instructions for the NRC Québec Region for the applicant to complete
the IRAP Client Portal project proposal before a decision on the eligibility of
the firm was rendered.
[15]
On
August 23, 2012, the ITA met with Mr. Tuli. The ITA affirms that they discussed
Mr. Tuli’s previous projects with the NRC, including the reimbursement of
Datawind’s repayable contribution, as well as Mr. Tuli’s proposed project for
the applicant. Mr. Tuli asked to be present at a meeting scheduled for the
following day, involving the ITA and NRC-IRAP management, but the ITA informed
him that his presence was not required and it was not standard procedure for
clients to be present at such meetings. Later that day, Mr. Tuli emailed the
ITA a three-page document regarding OLA and Datawind.
[16]
On
August 24, 2012, the ITA met with the Director and the Executive Director to
discuss the project. The ITA recommended to the Director and the Executive
Director that the applicant’s funding request to the IRAP should proceed.
THE IMPUGNED
DECISION
[17]
The
Director and Executive Director, who were the NRC-IRAP management responsible
for the decision, disagreed with the ITA’s recommendation. Therefore, on August
24, 2012, the ITA informed the applicant that it was not eligible for IRAP
funding. The ITA communicated the decision to Mr. Tuli by telephone and by two
emails. The first email stated the following:
Dear Raja,
The conclusion of the meeting today with my
management is the following: you need to clear any outstanding issues with IRAP
before we can support additional projects. As of Novimage, the agreement will
be terminated immediately. Marie Szaszkiewicz in cc will invoice the remaining
amount.
If you have any question [sic], please do not
hesitate to contact me.
Pierre Lamarre
[18]
Mr.
Tuli responded with some questions and the ITA provided the following further
information to him by email:
Dear Raja,
Following your specific question about IRAP interest
in assessing further your projects (capacitive touch screen solar
concentrator…) in the (near) future, when your files are in order, the answer
is 100% no. I did double check with my management. IRAP would not pursue any
additional association with your companies, in the context of financial
contribution.
That being said I encourage you to pursue your
innovative screen project, with or without the NRC printable electronics group.
I wish you great success with your endeavors and patents’ filing.
I take solely on me to say that a conclusive
commercial success of your new Ubislate tablets in Asia in months to come
(after so many years of effort including the difficult first product
introduction) might convince IRAP management to bet on you once more.
Best regards,
Pierre Lamarre
IRAP-NRC
[19]
The
Director and Executive Director affirm in their affidavits that in disagreeing
with the ITA’s recommendation, they considered the problematic history between
the NRC and Mr. Tuli’s other companies, mainly Novimage and Datawind, and that
they also found it problematic that the applicant’s new capacitive touch screen
project was fully dependent on a successful launch of the new tablet by
Datawind UK in India, which would be its only client to start the project.
ISSUES
[20]
This
application for judicial review raises the following issues:
1. Was the
applicant’s right to procedural fairness breached?
2. Was the decision
to deny the applicant’s request for funding reasonable?
STANDARD OF
REVIEW
[21]
The
standard of review for questions of procedural fairness is correctness (Sketchley
v Canada (Attorney General), 2005 FCA 404; Newfoundland and
Labrador Nurses' Union v Newfoundland and Labrador (Treasury Board), 2011
SCC 62 at para 19).
[22]
There
is no jurisprudence dealing with the applicable standard for reviewing a
decision to deny a funding request under the IRAP. Thus, this Court must
undertake the analysis set out in Dunsmuir v New Brunswick, 2008 SCC 9 [Dunsmuir]
at paras 52 to 62 in order to determine the applicable standard in the case at
hand.
[23]
In
the context of reviewing the substance of a decision to deny funding under the
IRAP, the expertise of the NRC and its decision-makers indicates that deference
is warranted. Moreover, the issue of whether the decision was well-founded is a
question of mixed fact and law requiring a strong understanding of the facts in
the file, which suggests that the reasonableness standard applies.
[24]
With
respect to Parliament’s intention, although a privative clause is absent,
paragraph 5(1)(e) of the National Research Council Act, RSC 1985, c N-15
[the Act] confers a broad discretionary power to the NRC in the exercise of its
mandate:
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5.
(1) Without limiting the general powers conferred on or vested in the Council
by this Act, the Council may
…
(e)
expend, for the purposes of this Act, any money appropriated by Parliament
for the work of the Council or received by the Council through the conduct of
its operations;
…
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5.
(1) Dans l’exécution de sa mission, le Conseil peut notamment :
…
e)
utiliser, dans le cadre de la présente loi, les crédits qui lui sont affectés
par le Parlement et les recettes tirées de ses activités;
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[25]
On
the whole, I am of the view that these factors point to a standard of
reasonableness in the case at bar. Accordingly, the Court will consider “the
existence of justification, transparency and intelligibility within the
decision-making process” and “whether the decision falls within a range of
possible, acceptable outcomes which are defensible in respect of the facts and
law” (Dunsmuir, above, at para 47).
ANALYSIS
1. Was the
applicant’s right to procedural fairness breached?
Applicant’s argument
[26]
The
applicant submits the NRC failed to take into account relevant evidence in
considering expectations of the applicant’s commercial success or lack thereof,
namely the applicant’s new submission concerning its commercial prospects
submitted on August 23, 2012. The ITA stated that this document was not read by
the Director or the Executive Director at the August 24, 2012 meeting.
Moreover, this document is not included in the certified record of the material
considered by the decision-makers in rendering their decision.
[27]
The
applicant further contends that the commercial viability of the project is a
reason invoked in the affidavits of the Director and Executive Director after
the fact as an attempt to bootstrap the decision (Stemijon
Investments Ltd. v Canada (Attorney General), 2011 FCA 299 at para 41 [Stemijon
Investments]). If this reason is going to be allowed to play a role in the
decision, the applicant submits it had a right to have its submission on the
issue heard.
Respondent’s argument
[28]
The
respondent contends that assuming without admitting that a duty of fairness was
owed under the circumstances, following the Supreme Court’s guidance in Baker
v Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817 at
paras 23-27 [Baker], the requirements of procedural fairness in the
context of a request for public funds to the NRC are limited to allowing firms
to present the information to support their request. In the present case, the
applicant was afforded communication and in-person meetings that far exceeded
the requirements of procedural fairness for this type of decision.
[29]
Furthermore,
the commercial prospects of the applicant were in no way determinative for the
decision-makers and the record and the decision clearly reflect the fact that
the decision was based on the past conduct of the applicant’s president.
Analysis
[30]
The
fact that a decision is administrative and affects the rights, privileges or interests
of an individual is sufficient to trigger the application of the duty of
fairness (Baker, above, at para 20, citing Cardinal v Director of
Kent Institution, [1985] 2 S.C.R. 643, at p 653; Dunsmuir, above, at
para 79; Canada (Attorney General) v Mavi, 2011 SCC 30 at para 38; see
also Knight v Indian Head School Division No. 19, [1990] 1 S.C.R. 653 at
para 24 [Knight]).
[31]
In
the circumstances of the case at bar, it is clear that the NRC is a public
authority making an administrative decision that affects the interest of firms
to receive IRAP funds. As such, the NRC owes IRAP applicants a general duty of
fairness.
[32]
However,
the content of procedural fairness is variable and must be determined in the
specific circumstances of each case (Knight, above, at para 46; Baker,
above, at para 21). The factors to consider in determining what procedural
rights the duty of fairness requires in a particular context are set out in Baker,
above, at paragraphs 21 to 28. These five factors are:
a) the nature of
the decision being made and the procedures followed in making it;
b) the nature of
the statutory scheme;
c) the
importance of the decision to the individual affected;
d) the
legitimate expectation of the individual challenging the decision; and
e) the choices
of procedure made by the agency.
a)
the nature of the decision being made and the procedures followed in making it
[33]
The
decision whether to award IRAP funding is far removed from a judicial decision-
making process. It is discretionary and purely administrative, which attracts a
minimal duty of fairness.
b)
the nature of the statutory scheme
[34]
The
Act confers a broad discretionary power to the NRC in the exercise of its
mandate and NRC-IRAP sets its own procedure to deal with a request for funds.
Although the Act provides no appeal procedure for a rejection of IRAP funding,
the Act does not bar an applicant from seeking funding again after being
rejected. Therefore, overall, this factor points to a lower duty of fairness.
c)
the importance of the decision to the individual affected
[35]
In
Baker, the Supreme Court recognized that the more profound an impact the
decision will have on an individual’s life, the more stringent the procedural
safeguards will be (Baker at para 25). For example, a proceeding that
can result in an individual’s removal from Canada or a proceeding that can
result in an individual losing their ability to practice their profession will
both attract high procedural protections than the present case. While an IRAP
funding request takes time to formulate and can be for a substantial amount of
funds, it cannot be said that an IRAP funding decision has a profound impact on
a person.
d)
the legitimate expectation of the individual challenging the decision
[36]
As
the respondent points out, the applicant had no right to a financial
contribution from IRAP and had no legitimate expectations regarding the outcome
or that a certain procedure would be followed.
[25] The legitimate
expectation of the applicant would therefore be procedural rights on the lower
end of the spectrum.
e)
the choices of procedure made by the agency
[37]
The
Act leaves to the decision-maker the ability to choose its own procedure.
Notably, the respondent notes that it is not the practice of the NRC to allow
firms to be present and make representations at a meeting between the ITA and
the decision-makers. This choice is to be respected (Baker at para 27).
[38]
Accordingly,
in the Court’s view, the requirements of procedural fairness in the
circumstances are at the low end of the spectrum.
[39]
In
Knight, above, at para 47, the Supreme Court found that an employee’s
minimal right to procedural fairness entitled him to know the reasons
underlying the termination and to be given an opportunity to be heard.
[40]
Similarly,
regarding the minimal content of the duty of procedural fairness in the
circumstances, I am persuaded that the applicant was entitled to an opportunity
to present evidence to support its project. As the requirements of procedural
fairness are minimal in the circumstances, in my opinion, an IRAP applicant has
no right to an oral hearing, nor a right to formal reasons. However, an
applicant ought to know why the decision was made the way it was. Further, a
reviewing court should be able to determine whether the conclusion is within
the range of reasonable outcomes.
[41]
The
applicant in the case at bar takes issue with the fact that the commercial
viability of the project is a reason invoked by the respondent after the fact
in the affidavits of the Director and Executive Director and accordingly,
should not be given any weight.
[42]
The
applicant refers the Court to Stemijon Investments, above, where the
Court of Appeal was faced with an affidavit by a decision-maker which attempted
to shed further light on its decision. The Court of Appeal found at paragraph
41 that this evidence was not admissible on judicial review:
[41] The Federal Court appears to have placed
no weight on this evidence. I also place no weight on it. This sort of
evidence is not admissible on judicial review: Keeprite Workers'
Independent Workers Union et al. and Keeprite Products Ltd. reflex, (1980),
114 D.L.R. (3d) 162 (Ont. C.A.). The decision-maker had made his decision
and he was functus: Chandler v. Alberta Association of Architects,
1989 CanLII 41 (SCC), [1989] 2 S.C.R. 848. After that time, he had no right,
especially after a judicial review challenging his decision had been brought,
to file an affidavit that supplements the bases for decision set out in the
decision letter. His affidavit smacks of an after-the-fact attempt to
bootstrap his decision, something that is not permitted: United Brotherhood
of Carpenters and Joiners of America v. Bransen Construction Ltd., 2002
NBCA 27 (CanLII), 2002 NBCA 27 at paragraph 33. As a matter of common sense,
any new reasons offered by a decision-maker after a challenge to a decision has
been launched must be viewed with deep suspicion: R. v. Teskey, 2007 SCC
25 (CanLII), 2007 SCC 25, [2007] 2 S.C.R. 267.
[42] In this case, the Minister was
obligated to disclose the full and true bases for his decision at the time of
decision. The decision letter, viewed alongside the proper record of the case,
is where the bases for decision must be found. In this case, the proper record
sheds no light on the bases for the Minister’s decision, and so the bases set
out in the Minister’s decision letter must speak for themselves.
(emphasis added)
[43]
Following
Stemijon Investments, above, the Court will award no weight to
the supplementary reason mentioned in the affidavits of the Director and
Executive Director regarding the commercial viability of the applicant’s
proposed project, as this reason was not alluded to in the telephone call and
two emails communicated to the applicant following the decision. The reason
communicated was the problematic history of Mr. Tuli’s other companies in
relation to their obligations arising from contribution agreements.
[44]
The
respondent submits that the following statement in the second email by the ITA
demonstrates that concern over the commercial viability of the project formed
part of the decision:
I take solely on me to say that a conclusive
commercial success of your new Ubislate tablets in Asia in months to come
(after so many years of effort including the difficult first product
introduction) might convince IRAP management to bet on you once more.
(emphasis added)
[45]
I
disagree with the respondent on this point. Given that the ITA clearly prefaced
this statement by indicating that it was his personal opinion and not that of
the decision-makers, I fail to see how this statement shows that concern over
the commercial viability of the project formed part of the decision.
[46]
Accordingly,
as I have no admissible evidence that the issue of the commercial
viability of the project was relevant to the decision, it is not necessary to
examine whether the duty of procedural fairness was violated due to the
decision-makers not consulting the applicant’s submissions on this issue which
he emailed to the ITA on August 23, 2012.
[47]
In
the Court’s view, the procedure that NRC-IRAP followed in coming to its
decision more than complied with the duty of fairness owed to the applicant in
the circumstances. As emphasized by the respondent, the record shows that in
addition to being given the opportunity to present information about the
project to the decision-makers and have it considered, the applicant was warned
that the NRC was concerned about the contribution agreements of Novimage and
Datawind. The applicant also had two in-person meetings with the ITA to discuss
his project and the ITA presented the content of the applicant’s August 23,
2012 submission to the decision-makers at the meeting held on August 24, 2012.
I cannot find that the applicant was entitled to more procedural protections
than the process he was already afforded.
2. Was the decision to deny the
applicant’s request for funding reasonable?
[48]
On
the one hand, the applicant submits that the past performance of Mr. Tuli’s
other companies was an irrelevant consideration for the decision-makers. Mr.
Tuli affirms that there is nothing in the practices and procedures employed by
the NRC, or the criteria it uses, to allow it to reject a request on the basis
of its difficulties with a different firm. In the Firm Eligibility and Project
Eligibility Forms regarding the applicant’s proposed project, there is no
justification for refusing the grant application and the recommendation in the latter
form was to proceed with the project quickly, especially in light of the
undertakings the applicant was prepared to give.
[49]
The
applicant also submits that the decision was never the subject of
a reasoned explanation. The only reasons for decisions that are not ex post
facto are in the email communications from the ITA which refer solely to
the history of the compliance of other companies with a different program.
[50]
On
the other hand, the respondent submits it was ordinary, proper, and
relevant for the NRC, in making its decision, to consider Mr. Tuli’s history of
failing to comply with previous contribution agreements and that it was
unlikely that a trusting relationship could be established in the context of a
new contribution agreement. The respondent maintains that the importance of a
trusting relationship between a firm requesting funds and NRC-IRAP is a key
factor when evaluating a request for funds and that the existence of a trusting
relationship has to be assessed by looking at the relationship with the people
associated with an applicant, particularly its management. The
fact that a corporate applicant is directed by an individual who has proven
himself to place little importance on the corporation’s obligations to the NRC
is a wholly relevant consideration and NRC could not properly ignore it.
[51]
The
respondent submits that the importance of a trusting relationship is clear in
the NRC’s policies and procedures. Section 2.0 the NRC-IRAP Field Manual
[the Manual], which was produced in 2009 to assist NRC-IRAP staff in delivering
the Program consistently across Canada, sets out the following steps for an ITA
in determining the eligibility of a firm for financial support:
…
b)
Ensure a trusting relationship exists or can be developed between the Firm and
NRC-IRAP;
…
[52]
Section
2.2 of the Manual also sets out what is required from a firm in order to ensure
a trusting relationship with NRC-IRAP, including a willingness to provide
NRC-IRAP with accurate, reliable and timely information about the firm.
[53]
The
respondent notes that Mr. Tuli is the main representative for Datawind and
Novimage when dealing with the NRC concerning their contribution agreements and
the person responsible for their reporting and repayment obligations when it
comes to their contribution agreements with the NRC. Despite being informed
early on that the issues in previous contribution agreements with Datawind and
Novimage would have a negative impact on his request for funding for the
applicant, Mr. Tuli did not remedy the problems identified.
[54]
I
agree with the respondent’s argument. In my view, it was entirely relevant for
the decision-makers to consider the failure of Novimage and Datawind to comply
with the financial and reporting requirements in their contribution agreements
with the NRC. The importance of a trusting relationship between a firm
requesting funds and NRC-IRAP is clearly set out in the Manual. Mr. Tuli does
not deny the respondent’s assertion that the Novimage and Datawind agreements
were still active and that he was in charge of ensuring the companies
complied with their obligations in the agreements.
[55]
Mr.
Tuli was also given multiple opportunities to address NRC’s concerns with
agreements relating to his other companies prior to the decision being made.
The ITA affirms that in the May 28, 2012 meeting he had with Mr. Tuli, he
addressed the need for Mr. Tuli to resolve issues with previous projects,
including paying back in full the repayable contributions, which neither
company had done. Moreover, the NRC sent Mr. Tuli three emails over the period
of July and August 2012 regarding the need for him to fulfill certain financial
reporting obligations on behalf of Novimage. The email dated August 14, 2012
even warned that the signing authority for Mr. Tuli’s new proposed project was
expected to ask about the status and track record of past NRC-supported
projects and that this needed to be cleared up as soon as possible. This email
was sent by the Regional TPC Coordinator to the ITA and the record demonstrates
that the email was forwarded to and received by the applicant, as he responded
to it on August 16, 2012. The email stated the following:
Has
Raja provided the most recent financial docs for Novimage? I haven’t received
anything.
I
expect the signing authority for [the] new proposed project will be asking
about status and track record of past supported projects. We need to have this
cleared up ASAP.
[56]
As
such, despite the very able submissions by counsel, I cannot agree with
the applicant that the reasons provided are inadequate, as they allow the Court
to understand why the decision-makers made their decision and permit me to
determine whether their conclusion is within the range of acceptable outcomes,
thereby meeting the threshold set out by the Supreme Court in Newfoundland
Nurses, above, at para 14.
[57]
For
these reasons, the application for judicial review is dismissed with costs.
JUDGMENT
THIS
COURT’S JUDGMENT is that:
The application
for judicial review is dismissed with costs.
“Danièle
Tremblay-Lamer”
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