Date: 20070306
Dockets: A-520-06
A-532-06
A-565-06
Citation: 2007 FCA 93
CORAM: RICHARD
C.J.
SHARLOW
J.A.
MALONE
J.A.
A-520-06
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
CANADIAN NORTH INC., CANADA POST
CORPORATION
and BRADLEY AIR SERVICES LIMITED (c.o.b.
as FIRST AIR)
Respondents
A-532-06
AND
BETWEEN:
BRADLEY AIR SERVICES LIMITED (c.o.b. as
FIRST AIR)
Applicant
and
ATTORNEY GENERAL OF CANADA, CANADIAN
NORTH INC.,
and CANADA POST CORPORATION
Respondents
A-565-06
AND
BETWEEN:
CANADA POST CORPORATION
Applicant
and
ATTORNEY GENERAL OF CANADA, BRADLEY AIR
SERVICES LIMITED
(c.o.b. as FIRST AIR), and CANADIAN NORTH
INC.
Respondents
REASONS FOR JUDGMENT
SHARLOW J.A.
[1]
This is an
application for judicial review of an interlocutory decision of the Canadian
International Trade Tribunal (CITT) dated November 9, 2006 (File No.
PR-2006-026). In that decision, the CITT dismissed the motion of the Department
of Indian Affairs and Northern Development (DIAND) for an order dismissing, for
want of jurisdiction, a procurement complaint made by Canadian North Inc. The
procurement complaint was made in relation to an agreement between Canada Post
Corporation and Bradley Air Services Limited (also known as First Air) for the
transportation of mail to certain northern communities (the First Air
Agreement).
[2]
The First
Air Agreement was awarded in November 2005 pursuant to a request for proposal (RFP)
issued by Canada Post in May 2005. Under the First Air Agreement, First Air is
obliged to provide Canada Post with certain mail transportation services,
including the transportation of ordinary mail and goods mailed under the Food
Mail Program of DIAND. The First Air Agreement has a term of more than five
years.
[3]
The Food
Mail Program has existed since the late 1960s. Its objective is to improve
nutrition and health in isolated northern communities. DIAND achieves that
objective by subsidizing the cost to Canada Post of mailing nutritious
perishable food and other essential items to specified northern communities
that lack year round ground transportation. The amount of the subsidy is
determined on the basis of an agreement between DIAND and Canada Post (the Food
Mail Agreement) which, among other things, specifies in detail which goods and
which communities are covered by the Food Mail Program. It also stipulates the
method of computing the total direct costs incurred by Canada Post in mailing
the eligible items to the specified communities. The amount of the subsidy payable
by DIAND to Canada Post under the Food Mail Agreement is the amount of the stipulated
direct costs, less the postal rates paid by the shippers through special postal
rates set out in the Food Mail Agreement.
[4]
The Food Mail Agreement that predated the First Air
Agreement was entered into in 1996 for an indefinite term. It is subject to
cancellation at any time by agreement, or by either party on six months notice.
[5]
Whether
the CITT has jurisdiction to consider the complaint of Canadian North depends
on whether the First Air Agreement is a “designated contract” as defined in section
30.1 of the Canadian International Trade Tribunal Act, R.S.C. 1985 (4th Supp.), c. 47, which reads as follows:
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"designated
contract" means a contract for the supply of goods or services that has
been or is proposed to be awarded by a government institution and that is
designated or of a class of contracts designated by the regulations;
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«contrat spécifique »
Contrat relatif à un marché de fournitures ou services qui a été accordé par
une institution fédérale — ou pourrait l’être — , et qui soit est précisé par
règlement, soit fait partie d’une catégorie réglementaire.
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[6]
Section 3 of the Canadian
International Trade Tribunal Procurement Inquiry Regulations, SOR/93-602
(the Regulations), provides further clarification, and reads in relevant
part as follows:
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3. (1) For the purposes of the definition “designed
contract” in section 30.1 of the Act, any contract or
class of contract concerning a
procurement of goods or services or any combination of goods or services, as
described in Article 1001 of NAFTA, in Article 502 of the Agreement on
Internal Trade or in Article I of the Agreement on Government Procurement, by
a government institution, is a designated contract.
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3. (1) Pour l’application de la définition de «contrat spécifique» à l’article 30.1 de la Loi,
est un contrat spécifique tout contrat relatif à un marché de fournitures ou
services ou de toute combinaison de ceux-ci, accordé par une institution
fédérale — ou qui pourrait l’être — et visé, individuellement ou au titre de
son appartenance à une catérogie, à l’article 1001 de l’ALÉNA, à l’article
502 de l’Accord sur le commerce intérieur ou à l’article premier de l’Accord
sur les marchés publics.
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(2) For the purposes of the definition "government institution" in section 30.1 of the Act,
the following are designated as government institutions:
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(2) Pour l’application de la définition de
« institution fédérale » à l’article 30.1 de la Loi, sont désignés
institutions fédérales :
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(a)
the federal government entities set out in the Schedule of Canada in Annex
1001.1a-1 of NAFTA, under the heading “CANADA” in Annex 502.1A of the
Agreement on Internal Trade or under the heading “CANADA” in Annex 1 of the
Agreement on Government Procurement […]
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a) les entités publiques fédérales énumérées dans la liste du Canada de
l’annexe 1001.1a-1 de l’ALÉNA, à l’annexe 502.1A de l’Accord sur le commerce
intérieur sous l’intertitre « CANADA » ou à l’annexe 1 de l’Accord
sur les marchés publics sous l’intertitre « CANADA » […]
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[7]
The First Air
Agreement is a “designated contract” if two conditions are met. The first condition
relates to the nature of the goods or services procured under the contract (subsection
3(1) of the Regulations). The second condition relates to the identity
of the party procuring those goods or services (subsection 3(2) of the Regulations).
[8]
The first condition
is met if the agreement concerns a procurement of goods or services that are
covered by the North American Free Trade Agreement (NAFTA), the Agreement on
Government Procurement (AGP), or the Agreement on Internal Trade (AIT). The
CITT concluded that the air transportation services that are the subject of the
First Air Agreement are not covered by NAFTA or the AGP, but are covered by the
AIT. That conclusion is not challenged.
[9]
The second
condition is met if the party procuring the services is a “government
institution” within the statutory definition. It is common ground that DIAND meets
that definition for the purposes of the AIT, but Canada Post does not.
Therefore, the CITT has no jurisdiction to consider the complaint of Canadian
North if Canada Post procured the services that are the subject of the First
Air Agreement.
[10]
There is
and can be no doubt that Canada Post procured those services. However, the CITT
concluded that it nevertheless had the requisite jurisdiction to consider the
complaint of Canadian North because of the participation of DIAND in the
procurement process. That decision is being challenged by, First Air, Canada
Post, and the Attorney General of Canada.
[11]
In
reaching the conclusion that it has the jurisdiction to consider the complaint
of Canadian North, the CITT asked itself this question (paragraph 27 of its
reasons):
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27. It is common ground between the parties that, technically
speaking, the relationship between DIAND and Canada Post is not one of
principal and agent. However, the question is whether the Tribunal should
consider that DIAND exercised sufficient control over the procurement that,
nonetheless, it is DIAND, and not Canada Post, that should be considered to
be the entity awarding the contract.
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[12]
In
other words, the CITT determined that DIAND exercised so much control
over the procurement process that it is DIAND, and not Canada Post, that should
be treated for purposes of the AIT as having procured the services. The CITT
reached that conclusion despite finding that (1) Canada Post issued the RFP,
conducted all phases of the solicitation, and received and evaluated the bids,
awarded the contract to First Air, (2) Canada Post is one of only two parties
to the contract (the other being First Air), and (3) Canada Post acted
throughout the procurement and contracting process on its own behalf and not as
an agent of DIAND.
[13]
The facts upon
which the CITT relied to assess what it characterized as DIAND’s control over
the procurement process are set out in paragraphs 34 to 41 of its reasons. It
is not necessary to recount that evidence in detail. It is enough to say that DIAND
reviewed the RFP in advance, considered it in detail, and had substantial input
into its development. The input of DIAND was driven by the specific terms of
the Food Mail Agreement, which also may have been altered in certain respects
so that the RFP and the Food Mail Agreement would be consistent with each
other. That is, DIAND was involved in the development of the parameters of the
RFP, but in a manner that is consistent with its responsibility for the Food
Mail Program and its contractual obligation to subsidize the costs incurred by
Canada Post pursuant to the Food Mail Agreement. DIAND was not involved in
receiving, reviewing or assessing the bids, choosing the successful bidder, or awarding
the contract.
[14]
Much of
the debate at the hearing of this application related to the appropriate
standard of review. I do not propose to attempt to resolve that debate because,
in my view, the challenged decision should not be allowed to stand even on the
most deferential standard of review.
[15]
The CITT
said in its reasons that it has been given jurisdiction to adjudicate
procurement disputes in order to give effect to the purposes of the procurement
rules in the NAFTA, the AGP and the AIT. The CITT reasoned that, because those
purposes are to promote trade liberalization by ensuring that tendering
procedures are applied in a non-discriminatory and transparent manner, the
types of procurement situations covered by those trade agreements should be
interpreted broadly. I agree that the CITT should interpret its governing
legislation in a purposive way. However, that cannot justify giving the
relevant statutory provisions a meaning they cannot bear.
[16]
The
procurement by Canada Post of air transportation services is outside the scope
of the AIT. Given that Canada Post did not procure the services of First Air as
agent of DIAND, the only possible conclusion in fact and law is that the
procurement of the services of First Air in this case was by Canada Post alone.
There is no statutory provision or legal principle that justifies treating
DIAND as the party that procured the services. That is so despite the substantial
involvement of DIAND in the development of the RFP, despite the fact that a
significant portion of the direct costs of the procured services, to the extent
they relate to the Food Mail Program, are borne by DIAND, and despite the fact that
DIAND may have chosen to operate the Food Mail Program by conducting its own
procurement without using the services of Canada Post at all.
[17]
The CITT
said in its reasons that a government entity that is covered by the AIT should
not be able to avoid the application of the AIT by using another government
entity that is not covered by the AIT as the instrument to conduct its
procurement. I agree. If DIAND had engaged Canada Post as its agent to conduct
the procurement of air transportation services for DIAND, then in fact and law
the procurement would have been by DIAND and not Canada Post, and the CITT
would have had the jurisdiction to consider the complaint of Canadian North. However,
that is manifestly not the case here. In that regard, this case is readily
distinguishable from Canada (Attorney General) v. Symtron Systems Inc. (C.A.), [1999] 2 F.C. 514, in which a
procurement was found to have been conducted by Defence Construction Canada as
agent for the Department of National Defence.
[18]
For these
reasons, I would allow these applications for judicial review with costs, quash
the November 9, 2006 decision of the CITT, and refer the motion of DIAND back
to the CITT with a direction to grant the motion and dismiss the complaint of Canadian
North for want of jurisdiction.
“K. Sharlow”
“I
agree
J.
Richard C.J.”
“I
agree
B.
Malone J.A.”
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