Canada (Attorney General) v. Georgian College of Applied Arts And Technology, 2003 FCA 199

Date: 20030502

Docket: A-505-02

Citation: 2003 FCA 199

CORAM:        STONE J.A.

NOËL J.A.

SEXTON J.A.

BETWEEN:

                                            THE ATTORNEY GENERAL OF CANADA

                                                                                                                                                       Applicant

                                                                                 and

                                                GEORGIAN COLLEGE OF APPLIED

ARTS AND TECHNOLOGY

                                                                                                                                                   Respondent

                                               Heard at Toronto, Ontario, on April 7, 2003.

                                     Judgment delivered at Ottawa, Ontario, on May 2, 2003.

REASONS FOR JUDGMENT BY:                                                                                          NOËL J.A.

CONCURRED IN BY:                                                                                                             STONE J.A.

                                                                                                                                               SEXTON J.A.

Date: 20030502

Docket: A-505-02

Citation: 2003 FCA 199

CORAM:        STONE J.A.

NOËL J.A.

SEXTON J.A.

BETWEEN:

                                            THE ATTORNEY GENERAL OF CANADA

                                                                                                                                                       Applicant

                                                                                 and

                                                GEORGIAN COLLEGE OF APPLIED

ARTS AND TECHNOLOGY

                                                                                                                                                   Respondent

                                                        REASONS FOR JUDGMENT

NOËL J.A.

[1]                 This is an application for Judicial Review of a decision by the Canadian International Trade Tribunal (the Tribunal) not to award costs in favour of the applicant despite its success in overcoming the procurement complaint which had been brought by the respondent. The applicant maintains that in refusing to award costs in its favour, the Tribunal fettered its discretion by taking into account irrelevant considerations and by ignoring relevant considerations.

THE FACTS

[2]                 On February 27, 2002, the respondent Georgian College of Applied Arts & Technology filed a complaint with the Tribunal alleging that Human Resources Development Canada's (HRDC) method of selecting service providers for certain employment assistance programs pursuant to the Employment Insurance Act violated the North American Free Trade Agreement (NAFTA) and the Agreement on Internal Trade (AIT).

[3]                 On March 6, 2002, the Tribunal informed the parties that the complaint had been accepted for inquiry. At the same time, the Tribunal issued an order postponing the award of any contract in connection with the procurement pending its determination on the validity of the complaint.

[4]                 On April 2, 2002, HRDC filed a Government Institution Report in response to the complaint in which HRDC submitted that the Tribunal was without jurisdiction to hear the complaint since the selection process was not a procurement within the meaning of NAFTA or AIT.

[5]                 By letters dated May 2, 2002 and May 13, 2002, the Tribunal requested that HRDC provide additional information. HRDC complied with these requests on May 7, 2002 and on May 15, 2002 respectively.

[6]                 On May 29, 2002, the Tribunal issued a determination in which it dismissed the complaint in its entirety. In its statement of reasons released on July 16, 2002, the Tribunal indicated that it had rejected the complaint on the basis that it did not have jurisdiction. The Tribunal did not address the question of costs in either its initial determination or in its statement of reasons despite the fact that costs had been sought by HRDC.

[7]                 By letter dated July 17, 2002, HRDC again requested that the Tribunal address the issue of costs.

[8]                 On August 9, 2002, the Tribunal denied HRDC's request for costs by way of an addendum which is the subject of this application.

THE DECISION UNDER REVIEW

[9]                 The Tribunal justified its refusal to award costs on the basis that Georgian College, although its claim had been dismissed, had acted in good faith in bringing the complaint and that counsel for HRDC receive salaries for their services. The Tribunal also expressed the view that little purpose would be served by awarding costs to HRDC while this would add to the burden faced by complainants when deciding whether to file a complaint. The precise reasoning of the Tribunal (with paragraphs numbered for ease of reference) is as follows:

[1]      Subsection 30.16(1) of the CITT Act provides that the Tribunal may award "costs of, and incidental to, any proceedings before it in relation to a complaint". When a complainant is successful, the Tribunal usually awards the complainant its reasonable costs, in a manner consistent with the Tribunal's Procurement Cost Guidelines.

[2]      At times, a complaint is so apparently without merit that the Tribunal does not even commence an investigation. At other times, a complaint demonstrates a reasonable indication of a breach at the initiation stage, but, upon further investigation, it becomes clear that the complaint lacks merit. Also, a complaint may be seemingly meritorious, but, for "technical" reasons, the Tribunal cannot conclude that there has been a breach of any of the relevant agreements, or there is simply insufficient evidenced to satisfy it that an agreement has been breached.

[3]      In the Tribunal's experience, most complaints have a degree of merit and are pursued by the complainants in a forthright and candid manner. Though complainants present their cases in the most favourable light possible, the Tribunal rarely sees them acting in a way that would indicate that the complaints are improper or abusive or that the complainants lack candour.

[4]      Complainants may range from very small to very large organizations. They devote time, money and resources in preparing a bid. When they feel aggrieved and decide to file a complaint, they devote more time, money and resources. It is not unusual for complainants to retain outside counsel to assist them navigate the world of procurement law and procedures. In addition to the costs and time that they have expended, they may have lost the opportunity to win a government contract.

[5]      On the one hand, HRDC was represented by salaried counsel from the Department of Justice whose responsibilities included representing HRDC's interests in this matter. On the other, the complainant often faces a difficult decision with regard to filing a complaint but must also incur additional costs in pursuing its complaint.

[6]      Generally speaking, little purpose would be served by awarding costs to HRDC and thereby adding to the burden that a complainant already bears, except in those cases where a complainant's conduct demands it. This may arise, for example, where it becomes clear that a complaint was frivolous or vexatious, where a complainant was not candid and forthright before or during the investigation or where a complainant acted in a way that amounts to an abuse of process. This is not an exhaustive list of the circumstances in which the Tribunal may award complaint costs to a government department, but it does indicate the type of conduct that would generally warrant the award of costs.

[7]      In the present case, Georgian College presented its case in a forthright and professional manner. While Georgian College was ultimately unsuccessful, in the Tribunal's opinion, it acted in good faith. The Tribunal sees no reasons why, in the circumstances of this case, costs should be awarded to HRDC. Consequently, HRDC's request for costs is denied.

[10]            It was pointed out during the hearing that the above-quoted reasons are virtually identical to those given by the Tribunal in an earlier decision (Flolite Industries, file no. PR-97-045, May 8, 1998). As here, the government institution concerned had been successful in resisting a complaint and, upon noting that its request for costs had gone unaddressed in the Tribunal's reasons, had made a further request that costs be addressed. This resulted in the issuance of an addendum bearing the same language as the addendum issued in this case.

[11]            In the same vein, a review of the decisions reached by the Tribunal conducted by the applicant for the period of April 1, 1999 to December 2, 2002 reveals that amongst the 50 cases where complaints were dismissed in their entirety during that period, the Tribunal refused to award costs in favour of the government institution concerned in every case. Conversely, among the 37 cases where complaints were upheld, the Tribunal awarded costs to the complainant in every case. In the 19 cases where success was divided, the Tribunal awarded costs in favour of the complainant.

[12]            While the respondent did allege that the period underlying this review was arbitrarily chosen, it has placed no material before the Court which would suggest that a different pattern can be established by reference to another period. Nor has it challenged the accuracy of the reported figures with respect to the period surveyed.

[13]            Against this background, it is apparent that the Tribunal has over the years adhered to a practise of awarding costs to successful complainants while denying costs to the Crown although successful in resisting complaints; and awarding the Crown its costs only where it can be shown that the complaint was frivolous, vexatious or where some reprehensible conduct can be attributed to the complainant. It is also clear from the reasons that the Tribunal adhered to this practise in denying costs in this instance.

ANALYSIS

Standard of Review

[14]            The appropriate approach to determining the standard of review was reiterated by the Supreme Court in the recent decision of Dr. Q. v. College of Physicians and Surgeons of British Columbia, [2003] S.C.C. 19. At paragraph 26, McLachlin C.J. described the pragmatic and functional approach as follows:

In the pragmatic and functional approach, the standard of review is determined by considering four contextual factors - the presence or absence of a privative clause or statutory right of appeal; the expertise of the tribunal relative to that of the reviewing court on the issue in question; the purposes of the legislation and the provision in particular; and, the nature of the question - law, fact, or mixed law and fact. The factors may overlap. The overall aim is to discern legislative intent, keeping in mind the constitutional role of the courts in maintaining the rule of law.

[15]            Applying this approach to the present case, I note that the procurement complaint determinations made by the Tribunal are not protected by a privative clause. However, neither is there a statutory right of appeal. The Tribunal is clearly a specialized body (e.g. see Stelco Inc. v. British Steel Canada Inc., [2000] 3 F.C. 282 (C.A.) at paragraph 18) and I am willing to accept that its expertise extends to the adjudication of procurement complaints (Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services), [2002] 1 F.C. 292 (C.A.)).

[16]            Section 30.16 of the Canadian International Trade Tribunal Act (the Act) is the statutory authority under which the decision in issue was rendered. It provides:

[17]            The purpose of this provision is to grant the Tribunal the power to make determinations as to costs in procurement complaint proceedings. It gives the Tribunal the power to award costs, determine when, and by whom they should be payable. Because such costs awards are made in the context of proceedings which are within the Tribunal's specialized jurisdiction, its expertise arguably extends to the framing of these awards.

[18]            The first three factors identified by McLachlin C.J. in Dr. Q. would therefore tend to indicate that a relatively high degree of deference would be owed to the Tribunal in reviewing its decision.

[19]            The fourth factor - i.e. the nature of the question - is of particular significance in the present case. The Tribunal's determination, to the extent that it results from the simple exercise of the Tribunal's statutorily conferred discretion and considering the other factors noted above, would suggest the application of a standard of "patent unreasonableness". This was the standard proposed by the parties at the hearing.

[20]            However, the decision in this case does not involve the simple exercise of the Tribunal's discretion to award costs. What is in issue here is the Tribunal's practise of denying costs to the Crown despite its success, while awarding costs to complainants in the same circumstances. It seems clear when regard is had to the record before us and to the generic wording of the reasons given by the Tribunal that this judicial review is directed not so much against the decision denying costs, as against the practise which the Tribunal adhered to in denying such costs.

[21]            Keeping this in mind, the real question to be decided in this case is whether the practise adhered to by the Tribunal over the years, which resulted in the denial of costs in this instance, is authorized by the Act. This is a pure question of law, which indicates a lower level of deference than that which would apply to the simple exercise of discretion. Consideration must also be given to the jurisdictional nature of this decision (Chieu v. Canada (Minister of Citizenship and Immigration), [2002] S.C.C. 3, at paragraph 24, per Iacobucci J.) as well as to its obvious precedential value (Dr. Q., supra, at paragraph 34, per McLachlin C.J.). Both of these factors emphasize the appropriateness of a less deferential standard.

[22]            The nature of the question, properly understood, suggests that this Court may be in as good a position as the Tribunal to decide the issue in this case. However, I believe that the decision should nevertheless be reviewed on a standard of reasonableness, recognizing as I must that the Tribunal's expertise in procurement matters possibly extends to the awarding of costs (Canada (Deputy Minister of National Revenue - M.N.R.) V. Mattel Canada Inc. [2001] 2 S.C.R. 100, at paras. 32-33; Canada (Deputy Minister of National Revenue, Customs & Excise - M.N.R.) v. Schrader Automotive Inc. (1999), 240 N.R. 381 (F.C.A.) at paras. 4-5).

[23]            The reasonableness standard requires a determination as to whether there are reasons capable of supporting the decision. The Supreme Court recently explained that this approach should focus on the reasons provided by the decision-maker. In Law Society of New Brunswick v. Ryan, [2003] S.C.C. 20, Iacobucci J stated (paragraph 49):

...the reasonableness standard requires a reviewing court to stay close to the reasons given by the tribunal and "look to see" whether any of those reasons adequately support the decision. Curial deference involves respectful attention, though not submission to, those reasons.

[24]            Accordingly, it is incumbent upon this Court to focus on the above-quoted reasons of the Tribunal to determine whether they disclose a reasonable justification for the practise which resulted in the denial of costs in this instance. It should not be necessary to look beyond the Tribunal's reasons in this respect, particularly since it can be assumed that the Tribunal provided its full answer to the applicant's repeated requests for costs in this and in other cases dating back to 1998.

Application of the Standard

[25]            In Bell Canada v. Consumers' Association of Canada, [1986] 1 S.C.R. 190, it was held (page 207) that in the absence of words to the contrary, "costs" in section 73 of the National Transportation Act carries the same general connotation as legal costs, that is being for the purpose of indemnification or compensation. In the course of his reasons, Le Dain J. writing for a unanimous Court quoted (page 202) the following passage from Middleton J.A. in Ryan v. McGregor (1925), 58 O.L.R. 213 (C.A.):

The fundamental principle is thus clearly stated by Baron Bramwell in the case of Harold v. Smith (1860), 5 H. & N. 381, 385: "Costs as between party and party are given by the law as an indemnity to the person entitled to them: they are not imposed as punishment on the party who pays them, nor given as a bonus to the party who receives them. Therefore, if the extent of the damnification can be found out, the extent to which costs ought to be allowed is also ascertained."

[26]            An award of costs, whether made in a judicial proceeding or in a proceeding before a regulatory or other Tribunal and apart from some statute or regulation providing for the contrary, is in the discretion of the Court or the Tribunal (Re Bell Canada (1983), 147 D.L.R. (3d) 37 at 39, per Urie J.A.). Section 30.16 expressly provides the Tribunal with this discretion, and is to that extent confirmative of the case law.

[27]            In the absence of some indication to the contrary, the exercise of this discretion requires consideration of the facts connected with or leading up to the litigation with respect to which the award is made, including the outcome of the dispute (Henderson v. Laframboise (1930), 4 D.L.R. 273 (Ont. C.A.)).

[28]            In the normal course, and absent indications to the contrary, costs usually go to the successful party. Similarly, costs are not usually awarded where success is evenly divided in the absence of some factor dictating a different result (CCH Canadian Ltd. v. Law Society of Upper Canada 2000, 184 D.L.R. (4^th) 186 at 190 (F.C.T.D.)). In Donald Campbell and Company Limited v. Pollack, [1927] A.C. 732 (H.L.), Viscount Cave L.C. gave the following account of the discretion to award costs:

A successful defendant in a non-jury case has no doubt, in the absence of special circumstances, a reasonable expectation of obtaining an order for the payment of his costs by the plaintiff; but he has no right to costs unless and until the Court awards them to him, and the Court has an absolute and unfettered discretion to award or not to award them. This discretion, like any other discretion, must of course be exercised judicially, and the judge ought not to exercise it against the successful party except for some reason connected with the case. Thus, if--to put a hypothesis which in our Courts would never in fact be realized--a judge were to refuse to give a party his costs on the ground of some misconduct wholly unconnected with the cause of action or of some prejudice due to his race or religion or (to quote a familiar illustration) to the colour of his hair, then a Court of Appeal might well feel itself compelled to intervene. But when a judge, deliberately intending to exercise his discretionary powers, has acted on facts connected with or leading up to the litigation which have been proved before him or which he has himself observed during the progress of the case, then it seems to me that a Court of Appeal, although it may deem his reasons insufficient and may disagree with his conclusion, is prohibited by the statute from entertaining an appeal from it.

[29]            This Court applied the above-quoted passage in The Queen v. James Lorimer, [1984] 1 F.C. 1065 where the relevance of similar considerations was at issue. In that case, the trial division judge had exercised his discretion not to award costs to the Crown despite the Crown's success in the proceeding before him. Mahoney J.A., writing for this Court, noted that the trial judge had refused to award costs on the basis that he did not see fit to "punish" the defendant or "further [its] burden" and also because he viewed the Crown as an "unusual plaintiff" which could pay its own costs. In overturning the decision of the trial judge, Mahoney J.A. stated (page 1079):

It is trite law that costs are not awarded to punish an unsuccessful party. There was a time when the "rule of dignity" dictated that the Crown neither asked nor paid costs in the ordinary course of events. That time is long past and the position of the Crown, even if it be "unusual", is no more relevant than the colour of a litigant's hair. With respect, none of the reasons given for denying the appellant costs have anything to do with the case nor any facts connected with it or leading up to it.

[30]            Considering that the broad discretion to award (or not to award) costs must nevertheless be exercised judicially and staying close to the reasons offered by the Tribunal in support of its decision (Ryan, supra), I am unable to detect any reasonable justification for denying costs in this instance. I first note that section 30.16, which is the only statutory authority to which the Tribunal referred in its reasons (paragraph 1), does not authorize the Tribunal to adhere to a practise of denying costs to the Crown despite its success. Quite to the contrary, this provision, on the face of it, envisages that costs can be awarded to either party.

[31]            Looking at the remainder of the reasons, the fact that HRDC was represented by salaried employees (reasons, paragraph 5) is not a relevant consideration. Furthermore, the reasons give no consideration to the principle of indemnification and do not recognize the fact that costs were incurred by HRDC in resisting the complaint brought against it. I also note that paragraphs 2, 3 and 4 of the reasons relate to the Tribunal's general experience in dealing with complaints and, as such, bear no connection with the litigation with respect to which costs were sought.

[32]            In this last connection, the respondent argued that although the observations made in these paragraphs are of a general nature, some of the facts in issue in this case come within the profile of cases to which the Tribunal was alluding in making these comments. As such, the respondent argued that these observations are relevant and justify the decision of the Tribunal denying costs to the applicant.

[33]            Assuming that these paragraphs can be read as addressing the specifics of the present case, I do not believe that any of the observations which they embody can justify the denial of costs to the applicant. In particular, the fact that the respondent may have had to navigate through complex legal issues, devote time, money and resources to the pursuit of the complaint or that it presented its case in a forthright manner (reasons, paragraphs 3 and 4) does not justify a denial of costs to the successful party. After all, the end result establishes that HRDC was well advised to resist the complaint and costs were incurred in the process of doing so.

[34]            Similarly, the fact that the complaint was "seemingly meritorious" at the initial stage (reasons, paragraph 2) is not a valid reason for ultimately denying costs to the successful party. A complaint which seems meritorious at the initial stage may turn out to be devoid of any merit at the final stage. Incidentally, this question cannot be answered in this case as there was no adjudication on the merits and hence no determination as to whether the complaint was meritorious.

[35]            Finally, looking beyond what is expressly stated by the Tribunal in its reasons, the respondent argued that the Tribunal, as the "bid challenge authority" (Canada (AG) v. McNally Construction Inc. (C.A.), [2002] F.C.J. No. 689 at paragraph 8) had a duty to ensure Canada's compliance with international obligations arising under NAFTA and AIT relating to procurement matters. As such, it was submitted that the Tribunal has the authority to encourage complainants to come forward, or at least not to discourage them from doing so. The Tribunal's costs policy is said to be justified on this basis.

[36]            Although it seems clear that the practise of denying costs to the Crown despite its success has the effect of encouraging complainants to come forward, the Tribunal has alluded to no provision which would authorize it to implement measures towards that end. Indeed, the only statutory reference contained in the reasons is to section 30.16 which, as we have seen, provides for no such authority. The respondent has been unable to point to any other provision which could be construed as authorizing the Tribunal to assume a pro-active role in encouraging complaints.

[37]            I accept that Parliament has designated the Tribunal as the competent forum for adjudicating procurement complaints and that, in fulfilling this function, the Tribunal is called upon to give effect to the international obligations which bind Canada in relation to procurement matters. But there is a quantum leap between providing a forum for dispute resolution and encouraging disputes to take place. I can find nothing in the Act which would give the Tribunal authority to encourage or invite litigation in the area of procurement by adhering to a practise of denying costs to the Crown despite its success.

[38]            I therefore conclude that the Tribunal fettered its discretion by adhering to this practise in this instance.

[39]            I would allow the application for judicial review, set aside the decision of the Tribunal, and refer the matter back so that the Tribunal may exercise its discretion anew on proper principle, in the light of the foregoing reasons The applicant should be entitled to the costs of this application.

                   "Marc Noël"                   

J.A.

"I agree

A.J. Stone J.A."

"I agree

J. Edgar Sexton J.A."