Docket: T-450-16
Citation:
2016 FC 1413
[ENGLISH
TRANSLATION]
Fredericton, New Brunswick, December 29, 2016
PRESENT: The
Honourable Mr. Justice Bell
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BETWEEN:
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LAURENTIAN
PILOTAGE AUTHORITY
(hereinafter
the “Authority”)
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Applicant
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and
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CORPORATION DES
PILOTES DU SAINT-LAURENT CENTRAL INC.
(hereinafter
the “Corporation”)
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Respondent
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JUDGMENT AND REASONS
I.
Nature of the case
[1]
The Court is hearing an application for judicial
review involving the arbitration award by the Honourable Pierre A. Michaud [the
Arbitrator], dated February 17, 2016, in which he chose the Corporation’s
final offer regarding the renewal of a contract of service. The Arbitrator
exercised the authority granted to him under section 15.2 of the Pilotage
Act, RSC 1985, c. P-14 [the Act].
[2]
For the following reasons, I am allowing the
application for judicial review.
II.
Background
[3]
The Authority is a Crown corporation that is
governed by the Act and tasked with administering and providing piloting
services in the Laurentians region, particularly in the St. Lawrence
River. In order to fulfill its mandate of ensuring safe and effective ship
navigation, the Authority retained the services of the Corporation through a
contract of service for licensed pilots and the training of apprentice pilots.
[4]
For its part, the Corporation is a legal person
established for a private interest, which provides maritime piloting services
in its district, which is between the port of Québec City and the port of
Montréal. The Corporation’s objects were specified in the contract of service
that was reached with the Authority:
[translation]
[…] the purposes of the Corporation are,
among others, to negotiate the best monetary benefits from the best contract of
service for the services of licensed pilots, to promote the advancement of the
piloting profession and to ensure safe navigation in the districts […]
[5]
The Corporation was granted a monopoly on
piloting services in its district.
[6]
The Act sets forth the objects and powers of the
Authority in sections 18 and 20, respectively, as follows:
18. The
objects of an Authority are to establish, operate, maintain and administer in
the interests of safety an efficient pilotage service within the region set out
in respect of the Authority in the schedule.
20. (1) An
Authority may, with the approval of the Governor in Council, make regulations
necessary for the attainment of its objects, including, without restricting the
generality of the foregoing, regulations:
[…]
d) prescribing the notice, if any, to be
given by a ship, of its estimated time of arrival in a compulsory pilotage area
or its estimated time of departure from a place in a compulsory pilotage area
and the manner of giving the notice.
[7]
As a result, with the approval of the Governor
in Council, the Authority can enact general regulations in order to carry out
its mission.
[8]
With the contract of service about to expire,
the Authority and the Corporation held around 29 negotiation sessions between
March 2015 and October 2015 in order to renew the contract between
the parties. The parties agreed to extend the existing contract for another
five years (until June 30, 2020) with the exception of certain contentious
issues that were raised with the Arbitrator.
[9]
Under subsection 15.2(1), the Arbitrator
had to choose one final offer or the other in its entirety. For the reasons set
forth in the arbitration award, the Arbitrator chose that of the Corporation.
The Corporation’s final offer therefore became final and binding.
III.
The Arbitrator’s decision
[10]
The Arbitrator reviewed the six disputed aspects
of the new contract. I will only mention the first and sixth aspect that are
subject to this application for judicial review. They are summarized as
follows:
[TRANSLATION]
1.
Sections 11.02 of Appendix D and 9.02
of Appendix C, which deal with the returning of a ship to its master’s
control;
2.
Letter of understanding no. 13 on notice of
night departure.
[11]
The Arbitrator correctly specified that all the
elements of the offer from one or the other parties must be valid and legal to
be reasonable, otherwise, the Arbitrator’s decision itself would be invalid.
[12]
The Authority argued before the Arbitrator that
the Corporation’s final offer was ultra vires, since the effect of the
provisions that dealt with the two above aspects would undermine the regulatory
power of the Authority and the Governor in Council, since that power came from
the Laurentian Pilotage Authority Regulations, CRC, c. 1268 [the
Regulations].
[13]
In his analysis of the legality of the
Corporation’s final offer, the Arbitrator cited Pilotes du Saint-Laurent
Central Inc. v Laurentian Pilotage Authority, 2002 FCT 846, [2002] FCJ No. 1118
[Pilotes 2002], in which this Court analyzed the effect of the agreement
that governed the relationship between these same parties. In my view, the Arbitrator
erroneously retained something that does not exist in the Authority’s
regulatory power hierarchy regarding its contractual obligations. Even though I
find that there is a hierarchy and that the regulations must always be complied
with during negotiations, I agree with the Arbitrator and Pelletier J., as
he then was, in Pilotes 2002, such that the Authority can carry out its
mission by regulation, by negotiation or by a combination of the two.
[14]
The Arbitrator concluded by saying that he chose
the Corporation’s offer in its entirety for reasons that will be discussed
later.
IV.
Issues
[15]
The issues before this Court are as follows:
1.
What is the applicable standard of review?
2.
Is the offer that was chosen by the Arbitrator
(in this case, the Corporation’s offer) ultra vires of legislation and,
as a result, unreasonable?
V.
Analysis
A.
Standard of review
[16]
The Authority maintained that, given the nature
of the reasons for disputing the arbitration award, there is no need to apply a
standard of review. I cannot support this proposal. Dunsmuir v New Brunswick,
2008 SCC 9 at para 62, [2008] 1 S.C.R. 190 [Dunsmuir] established that this
Court must ascertain whether the jurisprudence has already determined in a
satisfactory manner the degree of deference. In this case, the parties did not
refer the Court to decisions in which the standard of review was determined in
a context of arbitrational decisions resulting directly from section 15.2
of the Act; therefore, this analysis should be undertaken.
[17]
According to Dunsmuir, as above, several
factors should be considered: a privative clause, a discrete and special
administrative regime in which the decision-maker has special expertise, and
the nature and importance of the question of law. The presence of those factors
argues in favour of deference and the standard of reasonableness.
[18]
With respect to the first factor, the
Corporation argues that the Act has the equivalent of a privative clause in
subsection 15.2(3), which reads as follows:
(3) The final offer chosen by the arbitrator
is final and binding and becomes part of the new contract for services that is
effective on the day after the former contract expires.
[19]
The Corporation relies on National Gypsum
(Canada) LTD v Canadian National Railway Company, 2014 FC 869 at para 49,
[2014] FCJ No. 1293 [National Gypsum], in which Strickland J. found
that a provision of the Canada Transportation Act, SC 1996, c. 10,
under which the arbitrator was required to choose the final offer of one of the
two parties, resembled a privative clause. I believe that it is the same for subsection 15.2(3)
of the Act.
[20]
For the second factor, the Authority maintains
that the Arbitrator has no expertise with applying the Act, and that the
standard of review is correctness. However, the Arbitrator was chosen by consensus
between the two parties. Although I acknowledge that the Arbitrator does not
have the same level of expertise in applying the Act as a genuine administrative
decision-maker before his or her enabling statute, I support the position that “if an arbitrator has been selected […] and is fulfilling the
role described within that scheme, then it must be assumed that he has acquired
special expertise” (National Gypsum, above, at para 48). In
addition, it is generally the reasonableness standard of review that applies to
interpreting “statutes closely connected to its
function, with which it will have particular familiarity” (Dunsmuir,
above, at para 54). As a result, I believe that the Arbitrator has expertise
that argues in favour of the reasonableness standard of review.
[21]
Lastly, this issue does not have great
importance for the legal system. It affects the Administration and the
Corporation. Having found the presence of the first two elements and the
absence of a question of law of general importance, I find that the issues
shall be subject to the reasonableness standard of review.
B.
Is the Corporation’s offer ultra vires?
[22]
The Authority claims two aspects of the
Corporation’s final offer: the relief of the pilot by the ship’s master, and
the notice of a night departure.
(1)
Relief of the pilot by the ship’s master
[23]
Section 26 of the Act sets forth certain
instances in which the master of a ship may relieve the pilot of his duties:
26 (1)
Notwithstanding any provision of this Part, where the master of a ship believes
on reasonable grounds that the actions of a licensed pilot or holder of a
pilotage certificate on board a ship are, in any way, endangering the safety of
the ship, the master may, in the interest of the safety of the ship, take the
conduct of the ship from the licensed pilot or holder of a pilotage
certificate or relieve the licensed pilot from duty on board ship.
[Emphasis
added.]
[24]
That is the only provision that allows the
master to ensure the ship’s conduct when it is in danger. However, during
arbitration, the evidence showed that masters and/or shipowners have abused
this power. In fact, four companies had a systematic policy under which, when
the ship is getting under way and berthing, the masters ensure the ship’s
conduct even if it is not in danger. In addition, those policies remained in
force even after the Authority became aware of them and took no measures to
remedy this supposed violation of the Act. For that reason, in its final offer,
the Corporation added the following section (which is found in sections 11.02
of Appendix B and 9.02 of Appendix C):
[translation]
When the Authority is informed that a master
has relieved a pilot for reasons other than those set forth under subsection 26(1)
of the Act, if needed, it will take the necessary measures to bring an
immediate stop to this practice and to prevent any reoffending on the part of
the master and/or the shipowner.
[25]
The Authority maintains that this provision
illegally prejudiced its discretionary power to enforce compliance with the Act
by undermining the following of its powers: (i) determining whether there was a
violation of section 26 of the Act; and (ii) choosing the method for
ensuring compliance with the Act. In summary, the Authority believes that this
provision would oblige it to impose penalties in cases that, in its view, would
not justify it. On that point, the Corporation specifies that informing the
Authority of a breach of the Act does not necessarily impose the obligation of
acting upon it. In support of its claim,
the Corporation notes the presence of the words “if
needed” in the text of its offer.
[26]
The Authority has broad discretionary powers to
enforce compliance with the Act. In addition, section 48 of the Act allows
any individual to file a complaint with the civil authorities, including the Corporation.
In fact, that section sets forth penalties for contraventions of the Act. I
believe that no one, including the Authority, can or should be obliged to file
a complaint against the authorities or to take any action whatsoever against an
individual. In my point of view, this freedom to either file a complaint or not
is an integral part of our society. If the Corporation believes that a master,
shipowner or other person contravenes the Act, it is not prohibited from filing
complaints with the authorities.
[27]
If the Authority must respond to the Corporation’s
requests by taking measures against a shipowner or master who has allegedly
contravened section 26, the Authority’s discretionary power is in practice
delegated first to the pilots. Additionally, if the Authority refuses to “take the necessary measures to bring an immediate stop to
this practice and to prevent any reoffending on the part of the master and/or
the shipowner” (therefore having no other choice but to take action against
a presumed offender), and that refusal is disputed through a grievance, the
Authority’s discretionary power is delegated to an arbitrator.
[28]
The case of Happy Adventure Sea Products
(1991) Ltd v Newfoundland and Labrador (Minister of Fisheries and Aquaculture),
2006 NLCA 61 at para 24, 260 Nfld & PEIR 344 dealt with the issue of
knowing whether a public authority can sign contracts that limit its
discretionary power in law. By applying that case to this one, I conclude that
it falls to the Authority to exercise its discretionary power to take measures
to ensure compliance with section 26 of the Act. The addition of the
disputed clause undermines the Authority’s discretionary power and,
consequently, the Arbitrator’s decision for that point is not reasonable.
(2)
Notices of night departure
[29]
Section 8 of the Regulations provide for
certain timeframes that are required when a ship needs a pilot:
8 The owner,
master or agent of a ship that is to depart from a berth in the compulsory
pilotage area for any purpose, other than making a movage, shall, by calling a
pilot despatch centre,
a) give a first notice of its estimated time
of departure 12 hours before its estimated time of departure; and
b) give a final notice confirming or
correcting its estimated time of departure at least four hours before the
estimated time.
[30]
Section 10 deals with timeframes when the
owner, master or agent of a ship want to correct the time of departure.
[31]
As a reminder, the Regulations were implemented
by the Authority under section 20 of the Act, which gives it the power to
implement rules to prescribe the notice, if any, to be given by a ship, of its
estimated time of arrival in a compulsory pilotage area or its estimated time
of departure.
[32]
The Corporation maintains that letter of
understanding no. 13 sets forth more restrictive, even incompatible,
standards than those of the Regulations. It maintains that the Authority cannot
contract for the purposes of limiting its regulatory powers or committing
itself in advance to [TRANSLATION] “provide
services that limit its regulatory discretion”. In support of its
claims, the Authority notes that it requires the approval of the Governor in
Council to adopt its regulations. The Corporation is opposed to those proposals
and cites section 15 of the Act. That provision determines the steps to
take in the event that the Authority and the Corporation do not concur as to
the renewal of the contract of services for the assignment of pilots. I
highlight this last term because it will become important to the Corporation’s
position.
[33]
As previously mentioned, when the contract
renewal negotiation process raises contentious issues, section 15.2 allows
an arbitrator to choose one or the other of the final offers, which will be “final and binding and becomes part of the new contract for
services”. For that purpose, I first emphasize that the Authority
immediately knew the possible outcome of arbitration, and that it tried to
negotiate the timeframes of existing notices.
[34]
The parties even created a committee with two representatives
from each party and a chair chosen by both parties to make recommendations on
the subject of notices for night departures. The Arbitrator recalled in his
arbitration award that, as was established by the parties, he had to consider
the committee’s recommendations in his analysis of the final offers. The Arbitrator
found that [TRANSLATION] “the issues that were analyzed in the risk
review on the safe duration of a transit when done by a single pilot from
Innovation Maritime and those of the review follow-up committee are closer to
the offers of the Corporation […]”.
[35]
In addition, the Authority can legally carry out
its mission by regulation or by contract (see Pilotes 2002, above). In
that case, which involved the same parties, Pelletier J., as he then was,
reviewed Parliament’s intention in order to resolve this same issue:
38 Section 20
of the Pilotage Act does not limit the Authority’s room to manoeuvre. It
confers on the Authority the power to act by regulation in certain cases, but
does not require it to do so […]
…
46 The Act
imposes no limit on the conditions which an Authority and a representative of
the pilots may negotiate. It even requires an arbitrator to choose between
the final offers filed by each party. This example does not serve to
establish that any term in a contract for services is beyond the scope of
judicial review for excess of jurisdiction; rather, it serves to indicate that the
question of safety of navigation arises in a context in which the contractual
relationships established with the pilots’ representative are also covered by
the Act.
…
49
The jurisprudence and legal theorists both agree that a public authority has
the capacity to carry out its function by contract,
subject to the provisions of the Act governing the authority. […] Association
des juristes de l’État v. Gil Rémillard, [1994] R.J.Q. 2909, at 2915 and 2917:
[…]
[36]
The Authority claims that the disputed section
is in conflict with the notice, which is found in section 8 of the
Regulations and creates different expectations for masters of ships. In
addition, the Authority claims that masters should have some certainty
regarding their times of departure. To support its position, it referred to the
costs that can accumulate when a ship is docked. For its part, the Corporation
listed before the Arbitrator and this Court the sections in the current
contract that may contain contradictions in the Regulations and the contract
regarding the expectations of masters. For example, section 6.06, which
was negotiated in 1994, reads as follows:
[translation]
The departure of a ship from its berth,
mooring or lock cannot take place after the fourth hour before dusk and before
dawn the next day, with dusk and dawn being determined according to section 15.
[37]
It is clear that this section of the contract
may limit the departure of a ship, even if the master complies with the notices
set forth under section 8 of the Regulations.
[38]
To cite another example, in the contract signed
in 2012, the parties agreed on the following clause:
[TRANSLATION]
For tankers greater than 25,000 DWT, ships
greater than 245 m in length and ships with a draught greater than 10.3 m
for container ships and 10 m for other ships, the pilot is assigned based
on the timetable mentioned in sections 8.15 and 8.16 if they are leaving
when night is falling.
[39]
The planned timetables for those ships does not
guarantee for the masters that they can leave dock at the scheduled time, even
if they give the notice mentioned in section 8 of the Regulations.
[40]
It follows that the conditions for assigning
pilots do not undermine the Authority’s powers for implementing regulations and
are not ultra vires. In addition, given that the Corporation’s final
offer regarding the notice of night departure does not contravene the
Regulations (being only more restrictive), it was reasonable for the Arbitrator
to find that that part of the Corporation’s final offer was legal.
VI.
Conclusion
[41]
In summary, the Authority claimed before this
Court two elements that were included in the Corporation’s final offer: (i)
sections 11.02 of Appendix D and 9.02 of Appendix C, which deal
with the returning of a ship to its master’s control; and (ii) letter of
understanding no. 13 on the notice of night departure. For the reasons
stated above, I believe that sections 11.02 of Appendix D and 9.02 of
Appendix C are ultra vires because they undermine the Authority’s
discretionary powers that are conferred upon it by the Act. However, that is
not the case for letter of understanding no 13. Due to section 15.2 of the
Act, I would return the case to the Arbitrator with instructions that he choose
one or the other of the final offers: The Authority’s or the Corporation’s. The
Corporation’s offer will need to be amended to eliminate the sections that were
judged to be ultra vires.
[42]
In conclusion, I note that the Corporation
requested that the Court rule on the legality of a clause proposed by the
Authority, that is, the validity of its offer to recommend some amendments to
the Governor in Council on the issue of notice of departure. Since the Arbitrator
did not rule on this issue, I will not review it.
JUDGMENT
THE COURT ORDERS that the application
for judicial review is allowed in part. Section 11.02 of Appendix D
and 9.02 of Appendix C are declared ultra vires. As a result, the Arbitrator’s
arbitration award from February 17, 2016, is set aside and the case is
referred back to the Arbitrator so that he may choose either the Authority’s
final offer or the Corporation’s final offer, with that of the Corporation
needing to be amended to eliminate sections 11.02 from Appendix D and
9.02 from Appendix C. Since the parties claimed two issues before this
Court, and the Authority was given judgment in one and the Corporation in the
other, I consider it appropriate not to award costs. The application is allowed
under the terms noted above, without costs.
“B.
Richard Bell”
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