Docket: T-89-24
Citation: 2025 FC 886
Ottawa, Ontario, May 14, 2025
PRESENT: The Honourable Madam Justice Turley
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BETWEEN: |
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CANADIAN INSPECTION LTD |
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Applicant |
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And |
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THE ATTORNEY GENERAL OF CANADA |
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Respondent |
JUDGMENT AND REASONS
I. Overview
[1] The Applicant, Canadian Inspection Ltd [CIL] seeks judicial review of two decisions made by the Canadian Nuclear Safety Commission [Commission] concerning fees levied under Part 3 of the Canadian Nuclear Safety Commission Cost Recovery Fees Regulations, SOR/2003-212 [Regulations], for 2023–2024. CIL submitted two complaints on August 16, 2023, under the Dispute Resolution Mechanism for Fee Administration [FA Dispute] and Regulatory Activity Assignments [RA Dispute], respectively. It alleges that the Commission’s fees calculation breaches the Regulations, and that they have overcharged the CIL as a result.
[2] CIL previously filed an application for judicial review challenging fees levied by the Commission for 2022–2023: Canadian Inspection Ltd v Canadian Nuclear Safety Commission, 2023 FC 358 [CIL 2023]. In dismissing the application, Justice Strickland decided several of the very same legal questions that CIL raises in this application. Consequently, I find that CIL is estopped from relitigating these matters.
[3] With respect to the remaining issues before this Court, I find that the Commission’s decisions are unreasonable in one narrow respect. Namely, the Commission failed to explain how it sets the base hours applicable to CIL’s type of licence at 33.5 hours. In all other respects, the Commission’s decisions are reasonable and procedurally fair. I am therefore allowing CIL’s application in part.
II. Background
[4] CIL is a non-destructive testing company in Edmonton, Alberta, that provides radiographic testing services. CIL’s Chief Executive Officer and President, Mr. Donald Lucic, was granted leave to represent the company in this application pursuant to Rule 120 of the Federal Courts Rules, SOR/98-106 [Rules].
[5] The Commission is established by section 8 of the Nuclear Safety and Control Act, SC 1997, c 9 [Act]. It is responsible for regulating the development, production, and use of nuclear energy; and the production, possession, and use of nuclear substances, prescribed equipment, and prescribed information. Under subsection 24(1) of the Act, the Commission may establish classes of licences authorizing a licensee to carry on any of the activities described in paragraphs 26 (a) to (f) of the Act. The Regulations establish how the fees for each class of licence is calculated. Schedule 1, Part 1 of the Regulations lists which fee formula applies to each class of licence. The fee formulas are listed in Schedule 1, Part 2 of the Regulations.
[6] CIL holds an industrial radiography licence. It is subject to Formula 8 for its Assessment Fee, and Formula 7 for its Annual Fee. Each element of the formulas (base hours, variable hours, hourly rate, and compliance coefficient) is defined by sections 11 through 14 of the Regulations.
[7] The Commission has two dispute resolution mechanisms. The RA dispute mechanism addresses concerns regarding the types of activities conducted by the Commission as part of its oversight of licences. The FA dispute mechanism addresses concerns about how the Commission applies licence fees: Respondent’s Memorandum of Fact and Law at para 7.
[8] CIL has disputed the annual licence fees charged by the Commission since at least 2019. Justice Strickland thoroughly canvassed the history of their dealings: CIL 2023 at paras 6–23.
[9] With respect to the 2023–2024 year, CIL filed new RA and FA disputes in August 2023. These two disputes are identical and sought information on how the Commission calculates base hours, as well as a detailed breakdown of the total number of hours spent by Commission staff on its direct regulatory activities. CIL also raised concerns with respect to the Commission’s Cost Recovery Advisory Group [CRAG].
[10] The Commission responded to the RA Dispute on September 29, 2023. It made clear that the formula used to calculate the licensing fees is an average of time spent annually on all licences of that type, not the amount of time spent on each individual licence. The Commission also listed the types of activities that are considered in these calculations: Letter dated September 29, 2023, Certified Tribunal Record [CTR] at 175–176.
[11] A response to the FA Dispute on October 3, 2023, outlined much of the same information. In addition, the Commission explained the history of fee increases over the past decade and how the current hourly rate was calculated ($197 million in costs divided by 710,000 hours equals approximately $275 per hour). In response to CIL’s request to review its time sheets, the Commission stated that this would disclose third-party confidential information which could not be shared without the licensees’ express consent. The Commission, however, shared the audited revenues ($1.4 million) and costs ($2 million) associated with the industrial radiography licence type for 2022-2023: Letter dated October 3, 2023, CTR at 25–27.
[12] The Commission stated that CIL’s questions regarding the CRAG were outside the scope of the FA Dispute and that a separate response would be provided by the CRAG Secretariat. In that response, the CRAG explained that, in fact, there has been a representative from Alberta in CIL’s field since 2013, except during 2020. They included the names and companies of those representatives, as well as those of all representatives from CIL’s sector for the past five years. The CRAG further explained how members are selected, and that no members have ever been removed by the Commission for any reason let alone for raising concerns during meetings. The CRAG’s response included meeting minutes where issues raised by one CRAG member, whom CIL alleges was dismissed in retaliation, were in fact actioned: Letter dated October 16, 2023, CTR at 78–83.
[13] CIL responded that the information provided by the Commission was not sufficient: Letter dated October 27, 2023, CTR at 370–374; Letter dated November 3, 2023, CTR at 116–122.
[14] In particular, CIL questioned the inclusion of certain activities referenced in the Commission’s RA and FA dispute responses in the calculation of fees under sections 11 and 12 of the Regulations. These disputed activities are: (i) specific industry outreach activities such as the Annual Industrial Radiography meetings; (ii) the development of the annual Regulatory Oversight Report on the Use of Nuclear Substances; (iii) the development of the monthly Directorate of Nuclear Substance Regulation [DNSR] Digest; and (iv) work related to regulatory documents: Letter dated November 3, 2023, CTR at 118–119.
[15] By letters dated December 7, 2023 (FA Dispute), and December 15, 2023 (RA Dispute), the Commission maintained its position but provided additional information to clarify some of CIL’s concerns: Letter dated December 7, 2023, CTR at 152–157; Letter dated December 15, 2023, CTR at 275–286.
[16] Of particular relevance, the Commission specified which of the activities listed in the Commission’s October and November 2023 responses are included in the calculations under section 11 versus section 12 of the Regulations:
In relation to your question on sections 11 and 12 of the Cost Recovery Fees Regulations, the list of examples provided in the previous letters (reference 3 and 4) were intended as examples of [Commission] activities that are captured under those two sections of the regulations. More specifically, under paragraphs 11a) and 11b), activities related to compliance and licensing includes review of events, review of annual compliance report, all inspections conducted including the travel time and time required by the inspector to produce the reports as well as any time spent by staff on follow-up related to the above activities. In addition, all the time spent on licensing actions such as renewal, amendments, revocation, and transfers including time spent by licensing specialist and any other [Commission] specialists and other staff involved in the production and approval of each licence is also included.
Section 12 of the Cost Recovery Fees Regulations is referring to direct regulatory activities which is defined under section 1 of the Cost Recovery Fees Regulations as: “direct regulatory activities means those activities, such as assessing applications, issuing licences and certificates, granting approvals and authorizations, verifying and enforcing compliance and providing information, products and services, that are required for the Commission to fulfil its regulatory responsibilities.” This covers activities such as industry outreach, development of Regulatory Documents, Development of Regulatory Oversight reports and Digest articles for licensees.
[Emphasis in original]
Letter dated December 15, 2023, CTR at 280–281
[17] The Commission’s December 2023 responses are the two decisions under review. CIL was granted leave under Rule 302 of the Rules to challenge them both in the same application.
III. Analysis
A. Issue estoppel
[18] Prior to hearing this application, I asked the parties to file written submissions addressing the applicability of res judicata, and particularly of issue estoppel, given Justice Strickland’s decision in CIL 2023. The parties further addressed this issue in their oral submissions. While res judicata is generally raised by a party, the Court itself can raise this issue in order “to promote, enforce and vindicate certain prized values of our litigation system such as efficiency, judicial economy and finality”
: Canada v MacDonald, 2021 FCA 6 at paras 29–30.
[19] The doctrine of res judicata is grounded in the public policy consideration of finality in litigation. Issue estoppel is available to preclude an unsuccessful party from relitigating legal issues that have already been decided. It balances judicial finality and economy with considerations of fairness to the parties: Penner v Niagara (Regional Police Services Board), 2013 SCC 19 at para 29 [Penner].
[20] For issue estoppel to apply, three conditions must be met: (i) the same question has been decided; (ii) the judicial decision which is said to create the estoppel was final; and (iii) the parties to the judicial decision or their privies are the same persons as the parties to the proceedings in which the estoppel is raised or their privies: Danyluk v Ainsworth Technologies Inc, 2001 SCC 44 at para 25.
[21] Even where these three conditions are satisfied, courts nonetheless retain the discretion not to apply the doctrine where “its application would work an injustice”
: Penner at para 29. This discretion is applied less readily where the prior decision is that of a court, rather than an administrative tribunal: Eli Lilly Canada Inc v Teva Canada Limited, 2018 FCA 53 at para 67 [Eli Lilly Canada Inc].
[22] With respect to the first condition of issue estoppel, I find that Justice Strickland decided the following legal questions that CIL raises again in this application: (i) damages are not available on judicial review: CIL 2023 at paras 61–64; (ii) CIL does not qualify for a fee exemption under paragraph 2(a) of the Regulations as it is not an educational institution as defined in the Canada Student Loans Act, RSC 1985, c S-23: CIL 2023 at paras 96–103; (iii) the Commission’s interpretation of sections 11 and 12 of the Regulations as calculations based on the average time spent on classes of licences, as opposed to on individual licences, is reasonable: CIL 2023 at paras 81–84, 91; (iv) the Commission did not err in calculating or applying its hourly rate, in accordance with section 14 of the Regulations: CIL 2023 at para 94; (v) the Commission did not err in refusing to issue CIL a fee refund under subsection 6(1) of the Regulations: CIL 2023 at para 104.
[23] In oral submissions, Mr. Lucic advised that he did not intend to pursue legal issues (i) and (ii). He did not specifically address issues (iii) and (iv).
[24] With respect to issue (iii) — the legal interpretation of sections 11 and 12 of the Regulations — Justice Strickland concluded that the reference in both sections to “each type of application or licence”
meant that base and variable hours are calculated based on the hours expended by the Commission as a whole on each type of licence, as opposed to each individual licensee: CIL 2023 at para 81. This interpretative issue has thus been decided. That said, CIL raises a different issue concerning the Commission’s inclusion of certain activities in its fees calculation, which I will address.
[25] I agree with the Respondent with respect to issue (iv). While the Commission’s hourly rate may have changed since 2023, the legal question of how it is established was decided in CIL 2023. Specifically, Justice Strickland held that “although CIL also disputes the $270 hourly rate as too high, as stated by s 14 of the Regulations, this hourly rate is the full cost divided by the total number of hours spent by the Commission on its direct regulatory activities”
: CIL 2023 at para 94.
[26] Finally, CIL argued that the Court should consider issue (v) because there is more information on the record now than was before Justice Strickland. With respect, I do not agree.
[27] After reviewing the relevant legislative provisions, Justice Strickland concluded that the Commission did not err in refusing to issue a refund under section 6 of the Regulations as it is “not a general refund provision and no similar provision is found”
in the Part of the Regulations that concerns CIL’s licence type: CIL 2023 at para 104. Furthermore, Justice Strickland determined that while subsection 21(2) of the Act provides that the Commission may refund all or part of a fee under “prescribed circumstances”
, CIL did not “refer the Court to any prescribed circumstances pursuant to which annual fees payable under the Regulations will be refunded under s [21(2)]”
: CIL 2023 at para 105. In the within application, CIL has similarly not established in what prescribed situations the Commission may exercise its discretion to refund fees. There are thus no new legal arguments for the Court to consider.
[28] The second and third conditions are clearly met. Justice Strickland’s decision was final and the parties to both proceedings are the same. The three conditions for issue estoppel are therefore met in relation to the five questions listed in paragraph 22 above.
[29] Furthermore, I decline to exercise my discretion not to apply issue estoppel. Given the previous decision is a judicial one, this residual discretion should be applied less readily. In addition, the discretion is limited to “special circumstances”
: Eli Lilly Canada Inc at paras 53, 68. I am unable to find any unfairness in applying the doctrine to prevent CIL from relitigating these decided legal issues. Indeed, CIL did not advance any arguments that justify departing from the principle of finality in the circumstances of this case.
B. The Commission’s calculation of licence fees
[30] The standard of review applicable to the merits of the Commission’s decisions is that of reasonableness: CIL 2023 at para 41. A reasonable decision is “one that is based on an internally coherent and rational chain of analysis and that is justified in relation to the facts and law that constrain the decision maker”
: Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 at para 85 [Vavilov]; Mason v Canada (Citizenship and Immigration), 2023 SCC 21 at para 8 [Mason]. A decision should only be set aside if there are “sufficiently serious shortcomings”
such that it does not exhibit the requisite attributes of “justification, intelligibility and transparency”
: Vavilov at para 100; Mason at paras 59–61.
(1) The inclusion of Commission activities in the calculation of licence fees under sections 11 and 12 of the Regulations is reasonable
[31] As set out in paragraph 24 above, the proper interpretation of sections 11 and 12 was decided by Justice Strickland in CIL 2023. However, in this application, CIL questions the inclusion of certain Commission activities in the calculation of licence fees under those provisions.
[32] Sections 11 and 12 of the Regulations read as follows:
Base Hours
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Heures de base
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11 For each type of application or licence, the base hours are the number of hours spent by the Commission
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11 Pour chaque type de demande ou de permis, les heures de base correspondent au nombre d’heures consacrées par la Commission aux activités suivantes :
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(a) for the assessment of applications; and
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a) l’évaluation des demandes;
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(b) to verify the licensee’s compliance with regulatory requirements.
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b) la vérification de la conformité du titulaire de permis aux exigences réglementaires.
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Variable Hours
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Heures variables
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12 For each type of application or licence, the variable hours are the additional number of hours of direct regulatory activities as a result of the number of
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12 Pour chaque type de demande ou de permis, le nombre d’heures variables correspond au nombre d’heures additionnelles d’activités de réglementation directes qui est fonction :
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(a) treatment rooms, bunkers, laboratories and locations with separate postal addresses;
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a) du nombre de salles de traitement, de pièces blindées, de laboratoires et d’emplacements ayant des adresses postales distinctes;
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(b) devices;
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b) du nombre d’appareils;
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(c) device manufacturers; and
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c) du nombre de fabricants d’appareils;
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(d) types of Class II prescribed equipment as defined in the Class II Nuclear Facilities and Prescribed Equipment Regulations.
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d) du nombre de types d’équipement réglementé de catégorie II au sens du Règlement sur les installations nucléaires et l’équipement réglementé de catégorie II.
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[33] “Direct regulatory activities”
as referred to in section 12 is defined in section 1 of the Regulations as “those activities, such as assessing applications, issuing licences and certificates, granting approvals and authorizations, verifying and enforcing compliance and providing information, products and services, that are required for the Commission to fulfil its regulatory responsibilities”.
[34] CIL agrees that the following activities are properly included in the calculation of base hours under section 11: (i) the review of Annual Compliance Reports; (ii) the review of unplanned events reported to the [Commission] by licensees; (iii) the time spent preparing for and conducting inspections for that use type; and (iv) the assessment of licence renewals and amendments: Applicant’s Memorandum of Fact and Law at para 9.
[35] However, CIL takes issue with the Commission’s inclusion of the following activities in the calculation of fees: (i) industry outreach activities such as the Annual Industrial Radiography meetings; (ii) the development of the annual Regulatory Oversight Report on the Use of Nuclear Substances; (iii) the development of the monthly DNSR Digest; and (iv) work related to regulatory documents.
[36] CIL articulates its disagreement as follows in its memorandum:
9. […] I can agree on items listed 1 to 4 are within [Regulations] Part 3 section 11, but I do not agree with items listed 5 to 8 and asked the VP’s to please explain more on how does lines 5 to 8 relate or fall within the regulation. And neither VP for FA or RA would explain or answer my follow-up questions and I know it’s because 5 to 8 does not fall within the [Regulations] Part 3 section 11 (a) and (b) or Section 12, as it stated within the Regulation and it is not the verifying of licensees compliance the [Commission] can’t even fairly defend what they are doing. It’s too bad and sad [Commission] staff could not explain it, I would then ask the court to order lines 5 to 8 to be removed or fall under some other areas such as hourly rate and or full cost but it definitely does not fall under Section 11 and in the end this is a mistake or misuse by the [Commission] and an unreasonable cost but the reality all these hours have not been shown or disclosed either way. Lines 5 to 8 annual meetings, outreach, monthly newsletters (DNSR), and development of regulatory documents are separate from verifying licensee’s compliance with [Regulations] see below:
[Emphasis in original]
[37] Contrary to CIL’s assertions, I find that the Commission did explain which provision and corresponding fee calculation incorporates these four disputed activities. As set out in paragraph 16 above, these activities are included under the calculation of variable hours under section 12 of the Regulations, but not under the calculation of base hours under section 11. Thus, CIL’s concern that these activities are unrelated to verifying compliance is misplaced. These four activities are related to the Commission’s direct regulatory activities. As such, I find that the Commission’s inclusion of these activities under section 12 is reasonable.
(2) The Commission failed to respond to CIL’s question about the calculation of base hours
[38] In its RA and FA Disputes, CIL asked how the Commission set the base hours for CIL’s licence type at 33.5 hours, and requested corroborating data. This is not an issue that was before Justice Strickland. While she agreed with the Applicant that the Commission did not explain “how it collects, records and tabulates the information that underlies its base hour calculation for each licence type”
, she determined that “there was no evidence to suggest that this was also requested as part of the 2022 disputes”
: CIL 2023 at para 85. Consequently, Justice Strickland made “no finding on the validity of the Commission’s collection and treatment of base hours for each type of licence, or user type, or the accuracy of its determination”
: CIL 2023 at para 93.
[39] The Commission provided a general explanation in its FA Dispute response of October 3, 2023. Unsatisfied, CIL asked follow-up questions about the 33.5 base hours in its October 27 and November 3, 2023 correspondences. In particular, CIL stated that “[t]he base hours are on the invoice are 33.5 hrs and cannot be accurately accounted for or explained according to the cost recover regulations section 11(b) without more information provided by the [Commission]”
: Letter dated November 3, 2023, CTR at 116.
[40] In its December 2023 FA Dispute response, the Commission provided a thorough explanation of its methodology for calculating the hours charged: Letter dated December 7, 2023, CTR at 153–156. Notably, the Commission explained that to recover their costs, they should charge an average of 69.4 hours to each licensee. However, the Commission has been subsidizing a portion of the costs for years. As a result, in 2023–2024, CIL was charged a total of 38.70 hours (base hours of 33.5 hours + 0.65 hours per device x 6 devices + 1.25 hours per location x 1 location): Letter dated December 7, 2023, CTR at 156.
[41] Furthermore, in its RA Dispute response, the Commission replied to this issue as follows:
As previously indicated, the time spent by [Commission] staff is charged at the use type level (applicable to all licences having the same type of activities such as use type 812 – industrial radiography). In addition, the [Commission] is aware that your activities have been limited over the last few years resulting in [Commission] effort being lower for your specific licence. However, this does not translate into lower licensing fees since the fees are established based on the applicable formula for the specific use type, not the specific licence.
Letter dated December 15, 2023, CTR at 282
[42] CIL remains dissatisfied with the Commission’s response on this issue. As Mr. Lucic articulates in this application: “[a]nd for the record [the Commission] keeps saying it’s a formula, I know that, the question is how did they get the 33.5 base hours they put in the formula is what I’m asking”
: Applicant’s Memorandum of Fact and Law at para 8. He further asserts that “stakeholders”
require this information in the interests of full disclosure: Applicant’s Memorandum of Fact and Law at para 13. Mr. Lucic also reiterates that base hours should “be specific for each licence and charged the hours only used by each licence not the average as this is not reasonable and unfair”
: Applicant’s Memorandum of Fact and Law at para 15.
[43] While the Commission explained the formula, they did not address CIL’s question concerning how the base hours were set at 33.5. The Commission should have either explained how it actually calculated 33.5 base hours beyond simply referring to the formula, or provided a reason that precludes disclosure of that information. For example, when CIL asked for disclosure of the Commission’s time sheets, the latter stated that this would entail revealing third-party confidential information that could not be shared without the party’s express consent: Letter dated October 3, 2023, CTR at 26. The Commission’s failure to explain how they arrived at 33.5 base hours is not justified. Indeed, the Respondent did not even address this issue in their written or oral submissions.
[44] To be clear, however, the Court remits only this one narrow issue to the Commission. The issue of base and variable hours calculations under sections 11 and 12 of the Regulations as an average based on licence type, as opposed to by specific licensee, is not in question. As explained already, that legal issue was determined by Justice Strickland in CIL 2023, and the Commission activities that are captured within each provision has been dealt with in this application. The Commission need not further address this issue.
C. CIL’s request for relief regarding the CRAG
[45] As discussed above, CIL took issue with the makeup and selection process of the CRAG. The CRAG is a group of industry representatives that mediate discussions between the Commission and industry stakeholders. The Commission responded that CIL’s issue with the CRAG did not fall within the scope of the FA Dispute mechanism, and that, as such, the CRAG Secretariat would provide an answer to CIL directly: Letter dated October 3, 2023, CTR at 27.
[46] The CRAG Secretariat responded by letter dated October 16, 2023. CIL remained unsatisfied and posed further questions in its letters dated October 27 and November 3, 2023. The Commission reiterated in its FA and RA Dispute responses that issues with the CRAG were outside the scope of the dispute resolution mechanisms: Letter dated December 7, 2023, CTR at 157; Letter dated December 15, 2023, CTR at 285.
[47] In this application, CIL asks the Court to order the Commission to restructure the CRAG to ensure “proper representation from smaller and large companies to have balance with full disclosure and open allow stakeholders to vote CRAG member is the positions”
: Applicant’s Memorandum of Fact and Law at para 19. This relief cannot be granted by the Court. The Commission made clear that issues with the CRAG are not within the purview of the FA or RA dispute mechanisms. The decisions under those mechanisms are what is currently under review. As a result, this issue is not before the Court on this application. Furthermore, even if the CRAG’s makeup and selection process was before this Court, the only remedy available would be to remit the matter back for reconsideration by the Commission: CIL 2023 at para 65.
D. No breach of procedural fairness
[48] CIL alleges that “the Commission breached procedural fairness”
: Applicant’s Memorandum of Fact and Law at para 23. It asserts that the Commission did not follow its own dispute resolution process and that it “manipulate[d] the system to abuse their power and manipulate the stakeholder’s and give stakeholders the run around go in circles”
: Applicant’s Memorandum of Fact and Law at para 9. In addition, CIL argues that the Commission’s responses left it “hanging with no response (NR) or misdirecting to other avenues to try to dodge the specific questions”
: Applicant’s Memorandum of Fact and Law at para 10. Notably, similar allegations were made by CIL in its previous judicial review application: CIL 2023 at para 109.
[49] I have read the entire record, and I find that Justice Strickland’s conclusions are equally applicable here: CIL 2023 at para 110. Furthermore, in my view, the Commission was patient and responsive in their dealings with CIL. They remained professional despite the tone and language used in much of Mr. Lucic’s correspondence being disrespectful and hostile.
[50] I further disagree that the Commission failed to follow its own processes and misdirected CIL. The fact is that the Commission’s dispute resolution process is divided into two separate mechanisms. The Commission was simply responding to CIL’s concerns in accordance with that established process.
[51] I am unable to find that there was any breach of procedural fairness in the Commission’s decision-making process.
IV. Costs
[52] Both parties sought their costs, but did not follow the Court’s Amended Consolidated General Practice Guidelines (last amended December 20, 2023) [Amended Guidelines]. Pursuant to paragraph 74 of the Amended Guidelines, parties are expected to advise the Court whether they have reached an agreement on the disposition and/or quantum of costs at the hearing. If they are not in agreement, they are expected to make costs submissions before the presiding judge. The parties failed to do so.
[53] In accordance with Rule 400(1) of the Rules, costs are at the complete discretion of the Court. Where the result is divided, a ruling of no costs is common, but “it is not an outcome mandated by an immutable principle of law”
: Mylan Pharmaceuticals ULC v Bristol-Myers Squibb Canada Co, 2013 FCA 231 at para 6. Here, CIL succeeded on one narrow issue before the Court and the application is allowed in part. However, CIL also advanced several unmeritorious legal issues, many of which had already been decided. The Respondent’s submissions once again were “summary and largely unresponsive”
: CIL 2023 at para 112. In the circumstances, I make no order as to costs.