Date:
20131126
Docket:
T-488-13
Citation:
2013 FC 1191
[UNREVISED
ENGLISH CERTIFIED TRANSLATION]
Ottawa, Ontario, November 26, 2013
PRESENT: The Honourable Mr. Justice Simon Noël
BETWEEN:
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7687567 CANADA INC.
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Applicant
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and
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FOREIGN AFFAIRS AND
INTERNATIONAL TRADE
CANADA
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Respondent
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REASONS
FOR ORDER AND ORDER
I. Introduction
[1]
This
is an application for judicial review under section 18.1 of the Federal Courts Act, RSC, 1985, c F-7, to quash a
decision rendered on February 20, 2013, on behalf of the Minister by the Trade
Controls Policy Division of the Department of Foreign Affairs and International
Trade Canada, represented in this proceeding by the Attorney General of Canada [the respondent, the Minister or the decision maker], regarding
Flavio Corneli, Director, 7687567 Canada Inc. [the applicant]. In that
decision, the respondent stated that it was unable to consider the application
for a share of the portion of the tariff rate quota allocation for chicken products
not included in the Import Control List (ICL) for the year 2013, on the
grounds that the applicant was allegedly related to an entity that already had
an allocation, in which case only one allocation is allowed. For the reasons
that follow, the application for judicial review is allowed.
II. Facts
[2]
The
applicant was incorporated on October 27, 2010, in accordance with an
agreement entered into on December 9, 2010, by three companies: MTY Tiki
Ming Inc. [MTY], Les Aliments Flavio Inc. [Aliments Flavio] and Nipun Inc.
[Nipun]. Under this agreement, these companies became shareholders in the
applicant so that the applicant could expand and acquire new facilities.
[3]
As
a result of this agreement, MTY became majority shareholder and now holds 51%
of the shares, while Aliments Flavio and Nipun respectively hold 40% and 9%
of the shares.
[4]
MTY
is a franchisor in the food industry, whereas Nipun is solely an investor.
[5]
The
applicant, which does business under the name “Aliment Flavio Foods”,
manufactures and distributes food products, continuing the activities of Aliments
Flavio, which operated in the same fields before the new facilities were
acquired.
[6]
Every
year since 2006, Aliments Flavio has received from the respondent, under Export and Import Permits Act, RSC,
1985, c E-19 [the EIPA], a share of the portion of the chicken tariff rate
quota for processors of non-ICL products.
[7]
The holder of a share of this portion may import
chickens duty free for processing and distribution in Canada, without having to
pay an import tax of 238%.
[8]
On or about November 24, 2011, the applicant
submitted to the respondent an application for a share of the portion of the
2012 chicken tariff rate quota for processors.
[9]
On July 26, 2012, the Department refused the
application on the grounds that, for the purposes of Notice to Importers
No. 792, the applicant is considered to be related to MTY, the holder of a
share of the portion of the chicken tariff rate quota reserved for the
food-service group, and that a processor that is considered to be related to a
food-service company is not normally eligible for a share of the portion of the
chicken tariff rate quota for processors of non-ICL products.
[10]
On
September 24, 2012, the applicant sent the respondent a five-page letter
asking the respondent to review its decision and to hold a meeting on the
matter.
[11]
On October 15, 2012, the respondent issued
Notice to Importers No. 815, which replaced Notice to Importers No. 792.
[12]
Like Notice to Importers No. 792, Notice to
Importers No. 815 contains a provision, section 10.1, stipulating
that where two or more applicants are considered to be related, “they shall
normally be eligible for only one allocation” [the related persons policy].
[13]
In
the meantime, on November 29, 2012, the applicant applied for a share of
the portion of the 2013 chick tariff rate quota for processors. In that
application, the applicant stated that it was not related to any other persons.
[14]
The
related persons policy was discussed by the Chicken Tariff Rate Quota Advisory
Committee, the body responsible for this issue. The matter was then submitted
directly to the Minister, who decided to confirm the related persons policy.
[15]
On
February 20, 2013, the respondent refused to consider the 2013 application
on the grounds that the Minister had confirmed the policy. This decision is the
subject of the present application for judicial review.
III. Impugned
decision
[16]
In
a brief letter dated February 20, 2013, after noting that the matter had
been referred to the Minister, the respondent informed the applicant that the
Minister intended to maintain the policy prescribed in section 9.2 of
Notice to Importers No. 815 regarding processors and was therefore unable
to consider the application for 2013. Section 9.2 of the Notice to Importers
indicates, however, that exceptions may be made.
[17]
The
impugned decision was signed by Guy Giroux, Trade Controls Policy Division.
However, in connection with these proceedings, the respondent filed in support
of its arguments an affidavit by Katharine Funtek, the Division’s
director. This affidavit will be discussed later on.
IV. Applicant’s
arguments
[18]
The
applicant relies primarily on three arguments which, in its opinion, invalidate
the respondent’s decision: (1) the respondent did not exercise its delegated
discretion on a case-by-case basis; (2) insufficient reasons were given for the
ultimate decision; and (3) the decision is unreasonable, having regard to the
Department’s objectives.
[19]
First,
the applicant submits that the respondent, in rendering its decision, did not
exercise its discretion on a case-by-case basis and therefore breached its duty
of procedural fairness.
[20]
According
to the applicant, the language itself of the applicable legislation and the
policy at issue in this application for judicial review gives the respondent
discretion, that is, the option to decide whether or not to follow the general
statement of the policy, on a case-by-case basis, depending on the particular
circumstances of an application. The applicant also argues that its case met
all the regulatory requirements for issuing an import allocation and that, as
an entity responsible for making individual decisions, the respondent was
supposed to exercise its discretion on a case-by-case basis and could not
fetter its discretion by transforming its discretion into a systematically
applied rule.
[21]
The
respondent had to inquire into whether there are any special circumstances in
this case that would justify allocating a share as an exception to the general
policy. However, in the present case, the question submitted to the
Minister—the answer to which is, in all likelihood, the basis for the impugned
decision—dealt precisely with this general policy, not the particular
circumstances of the applicant’s case, and the respondent then relied on the
Minister’s decision to maintain the policy and refuse to consider the
application. Since it did not take into account the unique characteristics of
the applicant’s case, as it was supposed to do, the respondent erred in not
exercising its discretion on a case-by-case basis.
[22]
Second,
the applicant argues that the respondent did not give sufficient reasons for
its decision and this on its own warrants quashing the decision.
[23]
The
applicant submits that the respondent’s decision sets out no grounds for refusing
the application in issue, as the respondent merely stated that it was unable to
consider the applicant’s case because the Minister had decided to maintain the policy
regarding the eligibility of processors related to a food-service company for a
share of the portion of the chicken tariff rate
quota for processors of non-ICL products. Indeed, the Minister’s finding
regarding the policy became the ground for not considering the applicant’s 2013
application for a share of the allocation.
[24]
The
applicant adds that the respondent tried to make up for the insufficient
reasons for its decision by introducing new evidence upon judicial review,
particularly through the affidavit filed by Ms. Funtek in support of the
respondent’s position, thereby unduly adding grounds to those set out in the
decision dated February 20, 2013, according to the applicant. The
affidavit in question sets out the factors that the respondent had supposedly
taken into account in making its decision. However, these factors do not appear
in the reasons for the decision, and the respondent was required to disclose
the supporting grounds for its decision. It is not allowed to improve on its
answer after the fact.
[25]
Finally,
the applicant argues that the respondent’s decision is unreasonable in light of
the respondent’s own objectives, that is, the Department’s objectives.
[26]
When
it submitted the matter to the Minister, the respondent recommended that the
Minister eliminate the policy at the heart of this dispute so as to allow
processors related to food-service companies to receive a share of the portion of the chicken tariff rate quota for processors of non-ICL
products.
The Department itself called this policy restrictive, even arbitrary, deeming
it likely to give rise to applications for judicial review. The Department made
this recommendation on the basis of the three main objectives of its related
companies policy. However, the Minister decided to ignore the Department’s
recommendation and instead chose the contrary option, that is, to maintain the
existing policy.
[27]
In
short, the applicant is of the view that the decision dated February 20,
2013, should be set aside because the decision is not the product of a
case-by-case exercise of the respondent’s discretion, and because the decision
is not supported by sufficient reasons and does not comply with the
Department’s objectives.
V. Respondent’s
arguments
[28]
The
respondent argues that the applicant’s situation is not only unexceptional, but
precisely the type of situation contemplated by the related persons policy.
[29]
As
regards procedural fairness requirements, the respondent submits that the
process that it has adopted goes far beyond the demands of the common law in
this regard. It argues that the applicant was consulted several times, was
allowed to submit five pages of written representations and was even granted a
meeting with the decision maker. It adds that the duty of procedural fairness
is minimal in the present case, for the following reasons:
1. Approvals
of allocations under the chicken tariff rate quota are part of a complex
supply-management system involving at times conflicting policy considerations,
and the approval process is policy-based and discretionary, not adjudicative.
2. The
decision is final, but the Minister has an ongoing power of review.
3. The
decision only involves economic interests, which are not rights.
4. The
applicant cannot claim any legitimate expectation, except that the published
policy be followed.
5. Parliament
has given the Minister the discretion to make allocations under the tariff rate
quota in accordance with criteria that the Minister sets. The Department had to
process more than 560 import permit applications for chicken in 2013.
[30]
Next,
as regards the exercise of its discretion, the respondent claims that the
decision dated February 20, 2013, is reasonable because it is entirely
legal for the holder of such a power to set policies to guide it in exercising
its discretion. The respondent adds that adopting such policies is not only
normal, but also desirable, to ensure that applications are handled in a just
and equitable manner. Moreover, it is completely appropriate for a decision
maker to attach considerable weight to policy thus adopted, since to do
otherwise without valid reason would expose it to accusations of bias.
[31]
Regarding
the sufficiency of the reasons, the respondent states that this Court should
not limit its analysis of the reasons to the letter dated February 20,
2013, but should instead consider the entire record and all the facts as a whole.
The Court should try to supplement the reasons in light of the decision maker’s
record before finding the reasons deficient, especially since the decision
maker’s discretion does not entail any duty to provide reasons, owing to the
mainly legislative, as opposed to judicial, nature of the decision.
[32]
The
respondent submits that, contrary to what the applicant states, the application
was given serious consideration before it was refused, as appears from the
decision maker’s record. Ms. Funtek personally met with the applicant and,
after completing her analysis, found that the only equitable way to render a
decision in the applicant’s favour would require the Minister to revise the
policy. However, the Minister did not share Ms. Funtek’s view and decided
to maintain the policy. Ms. Funtek was nevertheless open to the
possibility of making an exception for some companies; in the applicant’s case,
however, there were no factors entitling it to an exception. Moreover,
Ms. Funtek did not present any new grounds in her affidavit; rather, she
confirmed the evidence already on record, that is, that the application had
been considered but it was determined that the applicant was related to another
applicant, MTY. The applicant simply disagrees with the outcome of the policy’s
application.
[33]
Therefore,
the respondent is of the view that the intervention of this Court is
unwarranted with regard to the decision dated February 20, 2013, to refuse
the application because it is the product of a discretionary authority exercised
in accordance with the related persons policy, which very clearly applied in
the circumstances of the application in issue.
VI. Issues
[34]
This
application for judicial review raises the following two issues, which are
intimately linked:
1. Are
there sufficient reasons for the impugned decision?
2. Did
the respondent breach its duty of procedural fairness by applying the policy
set out in section 9.2 of Notice to Importers No. 815 systematically,
thereby unduly fettering its discretion?
VII. Standard
of review
[35]
The
two issues are subject to different standards of review. The issue of the
sufficiency of the reasons given by the decision maker must be examined in
accordance with the reasonableness standard (Newfoundland and Labrador
Nurses’ Union v Newfoundland and Labrador (Treasury Board), 2011 SCC 62 at
para 22, [2011] 3 S.C.R. 708 [Newfoundland Nurses]). This Court must
therefore afford a high degree of deference to this aspect of the decision.
[36]
However,
the parties disagree on how to characterize the second issue, that is, the one
regarding discretion. The respondent argues that the issue should be subject to
the reasonableness standard because it merely involves an assessment of an
exercise of discretion (Dunsmuir v New Brunswick, 2008 SCC 9 at
paras 51 and 53, [2008] 1 S.C.R. 190 [Dunsmuir]). However, as the
applicant correctly points out, the issue here is not whether or not the
respondent had discretion, nor is it an issue of how the respondent exercised
this discretion. The issue raised in this case is whether the respondent did
indeed breach its duty of procedural fairness in systematically applying the
policy set out in section 9.2 of Notice to Importers No. 815 such
that it unduly fettered its discretion. In short, did it or did it not exercise
its discretion, or in other words, did it transform its discretion into a rule?
This question of procedural fairness may be examined in accordance with the
correctness standard (Dunsmuir, above, at para 129; Sketchley v
Canada (Attorney General), 2005 FCA 404 at para 53, [2005] FCJ No. 2056;
and see for example Lopez v Canada (Minister of Citizenship and Immigration),
2007 FC 359 at para 9, [2007] FCJ No. 497; and Zabsonre v Canada (Minister
of Citizenship and Immigration), 2013 FC 499 at para 18, [2013] FCJ No. 586).
VIII. Analysis
A. Preliminary
remarks for the purposes of the analysis
[37]
At
the outset, at the hearing, the applicant consented to the respondent’s motion
to strike certain pieces of evidence which it argued were inadmissible. An
order in this regard was delivered from the Bench and is confirmed in the
present proceedings. Accordingly, the Court will disregard the exhibit and the
paragraphs of the applicant’s memorandum of fact and law that are described in
the motion to strike.
[38]
It
is important to take note of the following to properly understand the analysis.
[39]
In
this case, the Minister is acting through two (2) persons. The person who
signed the decision is Guy Giroux of the Department’s Trade Controls Policy
Division, and the affiant is Ms. Funtek, the Division’s director. Her
affidavit explains at length Mr. Giroux’s decision dated February 20,
2013 (see paragraph 66, as well paragraphs 43 et seq. dealing
with the applicant). The case law of the federal courts on this subject do not
recognize this as the way to proceed: a decision must be reviewed on the basis
of the record as it was at the time of the decision (Association of Universities and Colleges of Canada v
Canadian Copyright Licensing Agency (Access Copyright), 2012 FCA 22 at
paras 19 to 22, [2012] FCJ No. 93;
Bekker v
Canada, 2004 FCA 186 at
para 11, [2004] FCJ No. 819).
The record does not contain any notes by the Minister’s representatives; it
consists instead of a series of letters, an investigation report, etc. From
this, the Court infers that the respondent made a deliberate effort to improve
on its record and even add to it with the affidavit.
[40]
For
information purposes, it should be noted that the decision maker’s record
contains documents regarding not only the share application for 2012, but the 2013
application as well. There was no reply to the request to review the 2012
refusal decision even though it advised the Department of the applicant’s share
capital and control and included a declaration that the applicant did not sell
meals containing chicken to its shareholder, MTY. When she was cross-examined
on her affidavit, Ms. Funtek confirmed that she did not have any
information in this regard (see page 96 of the transcript of the
cross-examination). To sum up, the decision maker’s record consists of a
collection of documents dealing with two separate applications but contains no
notes by the decision makers explaining their reasoning and the decision made.
The respondent asks the Court to do this in the decision maker’s place.
[41]
Ms.
Funtek acknowledged that the format of the decision dated February 20,
2013, is “unfortunate” (see paragraph 66 of her affidavit) and then tried
to make it acceptable for the purposes of this judicial review. Moreover, if
the decision dated February 20, 2013, refusing the 2013 application is
compared with the decision refusing the 2012 application, it becomes clear that
the latter is more explanatory. For example, reference is made to section 2(1)(b)(i)
of Appendix 11 to Notice to Importers No. 792. However, the decision
dated February 20, 2013, contains no such reference, despite the fact that
the decision in question is based on the notion of related persons. The
respondent is of the opinion that it is up to the Court to compensate for such
an omission by examining the decision maker’s record so as to make up for it.
[42]
On
this point, paragraph 83 of the respondent’s memorandum of fact and law
says it all:
[translation]
If the Court were to limit its analysis to the text
of this letter (i.e., the one dated February 20, 2013), it could be argued
that it would be wise to refer the case back to the decision maker so that it could
exercise its discretion.
However, in the respondent’s view,
the Court should consider the decision maker’s record [translation] “in its entirety” before finding that the
application was not considered on its merits.
[43]
During
the respondent’s oral arguments, the Court summarized the respondent’s position
as follows:
[translation]
The reasons for the February 20 decision do not need
editing because procedural fairness does not require this, and although the
EIPA and Notice to Importers No. 8l5 involve discretion, the decision
maker does not have to prove that it exercised any. Therefore, on judicial
review, the Court merely has to look over the decision maker’s record and note
whether or not the decision is reasonable.
Counsel agreed with this summary,
stating that the discretion to be exercised was found in the EIPA.
[44]
I
find that this is asking a lot of the Court in such circumstances. The reasons
that follow explain the decision and the conclusion that the Court has reached.
B. Does
such a decision require supporting reasons for the conclusion?
[45]
The
Court is perfectly aware that the decision dated February 20, 2013, is
administrative in nature, not judicial or quasi-judicial. Accordingly, the
reasons do not have to be as exhaustive as those of a court or a tribunal. An
administrative decision of this sort must nonetheless, at minimum, outline the
reasons for refusing the application and show on its face that the relevant
discretion was at least taken into consideration on the basis of the facts
presented. This does not have to be a detailed exercise, but in general, the
decision maker should explain, in a succinct manner, the factual basis for the
conclusion and the extent to which the particular situation was taken into
consideration.
[46]
In
our case, the decision of February 20, 2013, states a conclusion without
giving a factual basis for it or referring to the relevant legislation. In addition,
there is no indication that the particular situation of the applicant was taken
into consideration or that discretion was exercised. According to the
respondent, it is up to the judge to read the record and draw from it the
appropriate findings.
[47]
The
respondent submits that in the present case, the decision maker was under no
obligation to give anything more than a summary explanation for its decision.
On this point, the respondent argues that the procedural fairness requirements
are minimal here, and it is of the opinion that the applicant was given the
opportunity to attend meetings, make written representations and have the
Notice to Importers reviewed by the Minister, which in the respondent’s view
goes well beyond what is required in such circumstances. It is interesting to
note that the meetings, the written representations and the Minister’s
intervention took place in the context of the contested refusal of the 2012
application, not the 2013 application under review here.
[48]
All
the while persistently arguing that the chicken share allocation is part of a
complex supply-management system involving often conflicting policy
considerations, the respondent states that, although the system is complex,
there was no need to give reasons for the Minister’s decision. However, it was
necessary, in the course of this process, to hold meetings, exchange points of
view and even ask the Minister to intervene, but when it came time to render
the decision, the applicant was not entitled to any reasons or explanations for
it. In my view, the complex decision-making process followed is inconsistent
with the fact that the decision is not limited to a simple conclusion. If the
decision-making process required taking all these steps, would it not be more
logical for the decision to include an explanatory component taking into
account the particular situation of the applicant? In its current form, the
decision is impersonal, in that it could apply to many other importers. Nothing
in the decision, apart from the name of the letter’s recipient and the
reference in the first paragraph to Aliments Flavio Foods, speaks to the
particular circumstances of the applicant’s application. As I stated above, it
is noteworthy that the decision attesting to the refusal of the 2012 application
was more explanatory than the decision regarding the 2013 application.
[49]
The
respondent concludes that the procedural fairness requirements are minimal,
relying on the factors set out at paragraphs 23 to 28 of Baker v Canada
(Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817. Here is my
analysis of these factors in the context of the present case:
A. The
nature of the decision being made, which in our case is administrative and
discretionary, not adjudicative.
B. The
nature of the statutory scheme, which leads to a determinative decision not
subject to appeal. (It is important to note that no response was ever given to
the request to review the decision to refuse the 2012 application, even though the
applicant submitted a five-page letter explaining why there should be a review.)
It is also informative to note that Notice to Importers No. 815, at section 9.2,
was referred to in a memorandum to the Minister written by the Deputy Minister
as possibly being [translation] “too
restrictive, possibly arbitrary and vulnerable to judicial review”. Section 9.2
is the legal basis for the decision of February 20, 2013, now under review.
C. The
importance of the decision to those affected. It is true, as the respondent
submits, that the decision involves economic interests and therefore does not
create rights per se. However, one should nonetheless bear in mind that
the fact that the refused applications for an allocation share represent for
each year, 2012 and 2013, sales of products including less than 10% chicken,
which is not negligible for the applicant. It is inconceivable that the
applicant should have to pay an import tax of 238% instead of being able to
import the products duty free, as some of its competitors do. The decision is therefore
a significant factor affecting procedural fairness, a factor that is not to be
overlooked when one must ask whether explanations should have been given for
this decision.
D. The
legitimate expectations of the person challenging the decision. The respondent
argues that there was no legitimate expectation, apart from the fact that Notice
to Importers No. 815 would be followed. This goes without saying, but the
respondent seems to forget that this same notice, by virtue of how it is
worded, creates an exception to the rule. Sections 9.2 and 10.1 state that
where entities are related within the meaning of Appendix 11 to the Notice
to Importers, they will “normally” be eligible for only one allocation.
E. Notice
to Importers No. 815, as it is worded, creates an expectation that the
particular circumstances of a case will be considered. Here, the applicant
alleged that although it might appear to be related to MTY, a food-service
company, because of how its share capital is distributed, MTY is in no way
involved in the applicant’s daily operations, and the applicant does not sell
any of the items listed in its application or any of the products in its
facilities to MTY (see the letter dated November 8, 2012). When
cross-examined on her affidavit, Ms. Funtek acknowledged that the Minister
could make an exception to the rule laid down in Notice to Importers No. 815.
The letter dated November 8, 2012, was a request for an exception, but it
went unanswered. It may be that the request for an exception was considered,
but neither the letter dated February 20, 2013, nor any other document
says so explicitly. In my view, the applicant could legitimately expect in such
circumstances that its particular situation be taken into consideration and
that it be able to understand, upon reading the decision, why the exception was
granted or not. The letter dated February 20, 2013, expressly states that
the 2013 application for a share of the allocation was refused on the basis of
section 9.2 of Notice to Importers No. 815 and that the applicant’s
particular situation would not be considered.
F. The
analysis of what procedures the duty of fairness requires. On this point, the
respondent simply states that Parliament gives the Minister discretion to
allocate shares in accordance with his own criteria. In addition, there were
more than 560 share applications in 2013, which in the respondent’s view
justifies not having to issue reasons for the decision. I state once again that
there is no need to give reasons comparable to those given by a court or a
tribunal. All that is required is to explain the rationale for the decision,
including the legal basis, according to the facts of the case, and, if
necessary, an explanation, again according to the facts of the case, as to why
an exception should or should not apply here. In such circumstances, the
Minister simply has to give a comprehensible justification for his decision.
This is not asking too much. I note that the letter dated February 20,
2013, invites the applicant to telephone the Department if it has any questions.
A sufficiently explanatory letter would make such calls unnecessary.
[50]
In
Baker, above, Justice l’Heureux-Dubé, writing on behalf of the Court,
recognized that the duty of procedural fairness includes, depending on the
circumstances, the requirement to give written reasons for a decision. She
wrote the following at paragraph 43:
43 . . . The
strong arguments demonstrating the advantages of written reasons suggest that,
in cases such as this where the decision has important significance for the individual,
when there is a statutory right of appeal, or in other circumstances, some
form of reasons should be required. . . . It would be unfair
for a person subject to a decision such as this one which is so critical to
their future not to be told why the result was reached.
[Emphasis added.]
These comments are highly
applicable to the circumstances in the present case, although such decisions
are not subject to appeal and the consequences for the applicant are not just
economic ones. A preceding review of the factors from Baker, above,
leads me to conclude that the Minister must explain his decisions and state how
he went about considering the request for an exception and arrived at the
conclusion he made.
[51]
I
also note that in Baker, above, no reasons were given but the notes in
the decision maker’s record met the requirement of giving reasons in the
decision. In our case, there is absolutely nothing comparable in the record: no
notes, comments or anything whatsoever from the decision maker that might explain
its conclusion or confirm that the special request for an exception was taken
into consideration.
[52]
The
respondent relies on Canada (Attorney General) v Mavi, 2011 SCC 30, in
support of its argument that the duty of procedural fairness does not require
giving reasons in the present case. That judgment concerned an administrative
decision to collect a debt arising out of an immigration sponsorship
undertaking. Citizens and permanent residents may sponsor family members who
want to immigrate to Canada, provided that they sign an undertaking to support
them. If the family member receives social assistance, the citizen or permanent
resident is deemed to have breached the undertaking and therefore becomes
liable for costs incurred by the Crown. As Justice Binnie wrote on behalf of
the Court, in such circumstances, the duty of procedural fairness is minimal
because the collection procedure is not a complicated process. However, there
is a procedure to be followed which does not entail a duty to give reasons, as
the very existence of the debt is the only justification needed for the
collection action.
[53]
Mavi cannot
be compared to the present case. By the respondent’s own admission, the share
allocation and the process it entails are complex and may require, as in the
present case, an application, meetings, written submissions in support of the
application and a request to the Minister concerning the possibility of
changing the Notice to Importers. There is also discretion involved in deciding
whether to make an exception to the rule laid down by the Notice to Importers.
This process cannot be compared to a debt collection action for the breach of
an undertaking. What remains at stake and subject to discretion in such a case
are the terms of repayment; in the case under review, we have the
interpretation to be given to the notion of related persons, the legal basis supporting
the conclusion, and the consideration of the requested exception.
C. Did the respondent give
sufficient reasons for its decision dated February 20, 2013?
[54]
The
decision dated February 20, 2013, does not provide sufficient reasons. Truth
be told, I do not see in the decision any grounds on which to base a rational
argument for it. The answer given to the applicant is such that it warrants the
intervention of the Court regardless of the assessment of the reasonableness of
the decision as a whole. The case will have to be referred back to the decision
maker for redetermination.
[55]
At
this stage in the analysis, there is a point that needs to be clarified on the
subject of the impugned decision, specifically as regards the somewhat
confusing exchange of correspondence between the parties. On November 8,
2012, after its 2012 application for a share of the chicken tariff rate quota
was refused, the applicant asked the Minister to review that decision. In a
letter dated January 2, 2013, a Department employee informed the applicant
that the question of whether processors considered to be related to
food-service companies should be eligible for a share of the portion of the
chicken tariff rate quota for processors of non-ICL products had
been submitted to the Chicken Tariff Rate Quota Advisory Committee and that the
Minister was reviewing the Notice to Importers. The facts on record show that
the question was presented to the Minister, who decided to maintain the policy.
[56]
At
the hearing, the parties agreed that the impugned decision, that is, the one
dated February 20, 2013, relates to the 2013 application, not the review
request concerning the 2012 refusal. In this letter, the respondent states that
the Minister intends to maintain the policy set out in section 9.2 of Notice
to Importers No. 815 and gives a final answer to the 2013 application in
the last paragraph of the decision, which is apparently based on the Minister’s
decision. This paragraph is so short that I will reproduce it here in its
entirety: [translation] “Consequently,
the Minister is unable to consider your application for a share of the 2013
chicken tariff rate quota”. Moreover, as was mentioned above, regardless of
whether it gave rise to communications between the parties, the respondent gave
no final answer to the request to review the 2012 refusal.
[57]
As
has already been explained, by the respondent’s own admission, if the Court
limited its analysis to a plain reading of the impugned decision, it might be
more prudent to refer the case back to the decision maker so that it could
exercise its discretion appropriately. The respondent correctly points out that
the Court’s analysis is not limited to this letter; on the contrary, the Court
may not substitute its own reasons for those of the decision maker, but it may
look to the record that was available to the respondent when it made its
decision, for the purpose of “assessing the reasonableness of the outcome” (Newfoundland
Nurses, above, at para 15).
[58]
However,
I am of the opinion that it would be appropriate to make the work of a
reviewing court such as this Court easier by applying this principle laid down
in Newfoundland Nurses. An insufficiency of reasons does not
necessarily mean an absence of reasons. It should be noted that the decision at
issue in Newfoundland Nurses was 12 pages long, was the product of
a quasi-judicial proceeding supported by an ample evidentiary record and outlined
the facts, the arguments of the parties, the relevant provisions of the
collective agreement, a number of applicable interpretive principles as well
presenting an analysis (Newfoundland Nurses, above, at para 5). In
the present case, the Minister’s decision, which has real consequences for the
applicant, is only a few lines long. Recently, in Komolafe v Canada (Minister
of Citizenship and Immigration), 2013 FC 431 at paras 9 to 11, [2013] FCJ
No. 449, Justice Rennie wrote the following:
[9] The decision provides no insight into the
agent’s reasoning process. The agent merely stated her conclusion, without
explanation. It is entirely unclear why the decision was reached.
[10] Newfoundland and Labrador Nurses' Union v
Newfoundland and Labrador (Treasury Board), 2011 SCC 62, [2011] 3 S.C.R. 708
does not save the decision. Newfoundland Nurses ensures that the focus
of judicial review remains on the outcome or decision itself, and not the
process by which that outcome was reached. Where readily apparent, evidentiary
lacunae may be filled in when supported by the evidence, and logical
inferences, implicit to the result but not expressly drawn. A reviewing court
looks to the record with a view to upholding the decision.
[11] Newfoundland Nurses is not an open
invitation to the Court to provide reasons that were not given, nor is it
licence to guess what findings might have been made or to speculate as to what
the tribunal might have been thinking. This is particularly so where the
reasons are silent on a critical issue. It is ironic that Newfoundland
Nurses, a case which at its core is about deference and standard of review,
is urged as authority for the supervisory court to do the task that the
decision maker did not do, to supply the reasons that might have been given and
make findings of fact that were not made. This is to turn the jurisprudence on
its head. Newfoundland Nurses allows reviewing courts to
connect the dots on the page where the lines, and the direction they are
headed, may be readily drawn. Here, there were no dots on the page.
[Emphasis added.]
[59]
In
the present case, I must agree with the words of my colleague
Justice Rennie. The decision under judicial review does not give any
reasons or explanations which the Court could connect: the respondent merely
announces the Minister’s decision to maintain the policy on related persons and
then refuses to consider the 2013 application. The decision gives this reviewing
Court no clue whatsoever as to what lines to draw, or between which dots or in
which direction to draw them.
[60]
What
is more, in her affidavit, Ms. Funtek herself states that the wording of
the reply was “unfortunate”. She refers to the fact that, in its decision, the
Department says that it is [translation] “unable
to consider the application”, which would suggest that the application was
simply refused without even being looked at first. She states in her affidavit that
the 2013 application [translation]
“was indeed considered” and that it was refused because the following
conclusions were reached after considering it:
[translation]
1.
7687567 Canada
Inc. [the applicant] was related to another applicant for a share of the
chicken tariff rate quota, namely MTY – (Under section 10.1 of Notice
to Importers No. 815, except as per sections 4.10 and 8.6, where two or
more applicants are considered to be related, they shall normally be eligible
for only one allocation).
2.
MTY
was a food-service company – (Under section 9.2 of Notice to Importers
No. 815, 7687567 Canada Inc., as a processor of non-ICL products,
would not normally be eligible for a share of the portion of the chicken tariff
rate quota for processors of non-ICL products).
3.
As
in his 2011 application for a share of the portion of the chicken tariff rate
quota for processors and in his 2012 application for a share of the portion of
the chicken tariff rate quota for processors of non-ICL products, Mr. Corneli
failed to report the association between 7687567 Canada Inc. and MTY –
(Under section 10.1 of Notice to Importers No. 815, applicants for an
allocation are required to provide a list of related persons or companies so it
can be determined which companies are related).
Trying to supplement insufficient
reasons or give reasons after a decision has been made is not allowed by the
case law. However, a court may take this intention to add to the decision into
account when assessing the reasonableness of that decision (Stemijon Investments
Ltd. v Canada (Attorney General) et al, 2011 FCA 299 at para 40,
[2013] FCJ No. 553).
[61]
I
share the view of the respondent that the form of the response is indeed [translation] “unfortunate”. However, the
fact remains that this is how the respondent chose to formulate it and that
this is what the applicant received as an answer. Thus, in its affidavit, the
respondent admits that its response was badly worded and poorly documented and,
moreover, asks the Court to make up for the shortcomings by interpreting the
decision in accordance with Ms. Funtek’s statement in her affidavit. This
pushes the exercise contemplated by the Supreme Court of Canada in Newfoundland
Nurses too far. In that case, the Court stated the following at paragraph 17:
[17] The fact that there may be an alternative
interpretation of the agreement to that provided by the arbitrator does not
inevitably lead to the conclusion that the arbitrator’s decision should be set
aside if the decision itself is in the realm of reasonable outcomes. Reviewing
judges should pay “respectful attention” to the decision-maker’s reasons, and
be cautious about substituting their own view of the proper outcome by
designating certain omissions in the reasons to be fateful. [Emphasis added.]
[62]
This
Court cannot substitute its own opinion for that of the decision maker, who is
of course in a better position to analyze the applicant’s case. Consequently,
in light of the total lack of reasons for the impugned decision—that is, to
borrow Justice Rennie’s metaphor, the total lack of dots on the page
allowing the judge to draw the lines between the reasons—this Court, upon
review, would be merely “guessing” the reasons if it had to infer all the
reasons from the record, as the respondent asks the Court to do. The reviewing
Court would then find itself substituting its reasons for those of the decision
maker, an outcome which Newfoundland Nurses expressly tries to avoid. In
this regard, Justice Phelan acknowledged the following at paragraph 9
of Canada (Minister of Citizenship and Immigration) v Liu,
2012 FC 1403, [2012] FCJ No. 1504:
[9] With respect to the adequacy of reasons,
while Newfoundland and Labrador Nurses’ Union v Newfoundland and Labrador
(Treasury Board), 2011 SCC 62, [2011] 3 S.C.R. 708 [Newfoundland Nurses],
has held that adequacy of reasons is not a stand alone grounds for review,
inadequate reasons go to the root of “reasonableness” of a decision. The Court
is, according to Newfoundland Nurses, required to find support for a decision
in the record where it can. However, that does not mean the Court must guess
as to the reasons or substitute its reasons for those of the decision-maker.
[Emphasis added.]
[63]
Newfoundland
Nurses
thus allows gaps in the reasons to be filled or supplemented to an extent, in
light of the decision maker’s record. However, the Supreme Court of Canada
certainly did not intend to allow decision makers to render decisions that are
devoid of any justification and, moreover, “unfortunately” drafted, nor did the
Court intend to allow these same decision makers to defend the essence of their
decisions by requiring a reviewing court to rely on the decision maker’s record
and infer all the reasons from it, all the while accepting an affidavit that
adds, after the fact, reasons that did not appear in the decision dated
February 20, 2013.
[64]
The
Supreme Court of Canada’s intentions in Newfoundland Nurses raises
another issue. If, as the respondent claims, that judgment does indeed save the
respondent’s decision in the present case, how could a decision that is totally
devoid of justification inform the applicant of the decision made in its
regard, unless the recipient of the decision letter telephones the decision
maker, as the applicant was invited to do (“If you have any question [sic],
please contact me at . . .”)? What recourse would the applicant have
to obtain an explanation for the decision? Would the applicant be obliged to
apply for judicial review of the decision to obtain the decision maker’s
record, or would it have to make a request under the Access to Information
Act, RSC, 1985, c A-1? I doubt that the decision maker would disclose
the entire record to the applicant if the applicant called for an explanation.
I find it difficult to believe that such was the Supreme Court’s intention when
it wrote its judgment.
[65]
One
thing is certain: the general lack of justification in the respondent’s
decision allows me to conclude that the reasons do not meet the criteria in Dunsmuir,
above, that is, the justification, transparency and intelligibility of the
decision-making process, because the reasons, by virtue of their absence, do
not allow a reviewing court “to understand why the tribunal made its decision
and permit it to determine whether the conclusion is within the range of
acceptable outcomes” (Newfoundland Nurses, above, at para 16).
D. Did the
respondent breach its duty of procedural fairness by applying the policy set
out in section 9.2 of Notice to Importers No. 815 systematically, thereby
unduly fettering its discretion?
[66]
The
answer to the first question in this case is sufficient to quash the
respondent’s decision and refer the matter back for reconsideration. However,
in the interests of transparency and thoroughness, I will nevertheless deal
with the second question.
[67]
The
applicant is of the view that the respondent did not exercise its discretion
and that it is entitled to have its case considered on the merits, not on the
basis of a systematic application of a departmental policy. According to the
applicant, by slavishly applying the policy on related persons, the respondent
breached its duty of procedural fairness and made a jurisdictional error, since
it transformed its discretion into a rule. The respondent, meanwhile, argues
that it did indeed analyze the case on the merits and denies having applied the
related persons policy systematically. As I explained above, there is nothing
in the record that would allow me to conclude that the respondent exercised its
discretion.
[68]
I
note that as a result of the present situation, the respondent owes the
applicant certain obligations in terms of procedural fairness. In its
memorandum and at the hearing, the respondent argued that its obligations in
this regard are very limited and that the accommodations offered to the
applicant to date go far above and beyond those obligations. Both the applicant
and the respondent base their procedural fairness arguments on the Supreme
Court of Canada’s judgment in Baker, above, among others. For various
reasons given above and below, I find that the respondent’s decision regarding
the request for an exception had to give reasons in the present case so that a
person could understand the decision’s main points and know whether or not the
respondent exercised its discretion.
[69]
As
was explained above, the consequences of a refusal are considerable for a
company operating in what is undeniably a highly competitive environment.
Moreover, as the respondent so aptly noted, the respondent gave the applicant
the benefit of an ongoing and inclusive decision-making process. So why stop at
the decision stage? Since reasons were given for the 2012 application, I find
that the applicant could reasonably expect to receive an answer with at least
minimal reasons for its 2013 application, especially since the 2012 decision
was made under Notice to Importers No. 792, while the 2013 decision
involved Notice to Importers No. 815. The context in which the decision
was made had thus changed from one year to the next. In addition, the applicant
submitted to the respondent a body of evidence supporting its argument that it
was not a related person, but nothing in the decision indicates that these new
allegations were assessed. Finally, the fact that the decision could be subject
to judicial review demanded the addition of at least minimal reasons so that
the Court could understand the decision’s content.
[70]
To
better understand the situation, it would be appropriate to review the
provisions creating the discretion in issue here. Sections 6.2 and 8 of
the EIPA allow the Minister to determine the quantities of goods covered by a
particular import access regime, decide how the quotas in issue are allocated
to the public and choose whether or not to grant shares of the portion of the
chicken tariff rate quota to those who request it.
[71]
The
Import Allocation Regulations, SOR/95-36, made pursuant to the EIPA, set
out in section 6 the six considerations that the Minister should take into
account when exercising his discretion to issue allocations. In addition, the
Department publishes Notices to Importers explaining how it normally exercises
its discretion. Section 10.1 of Notice to Importers No. 815 provides
that where two or more applicants are considered to be related, they shall “normally”
be eligible for only one allocation. The definition of “related persons” is
found in Appendix 11 to this Notice to Importers. What is more, section 9.2
of Notice to Importers No. 815 (section 8.9 of Notice to Importers
No. 792) states the following:
9.2. Processors considered to be related to foodservice
companies are not normally eligible for an allocation under the non-ICL
portion of the chicken TRQ. [Emphasis added.]
[72]
This
is the provision at the heart of this dispute. First of all, I would note that
the legality of Notice to Importers No. 815 has not been challenged in
this case. The case law confirmed that it is perfectly legitimate for a public
administrative agency to use rules, or non-legally binding instruments, for
guidance in exercising its discretion. Such guidelines allow the agency in
question to deal with a specific problem proactively and help applicants
affected by that problem predict how the agency will likely deal with it (Thamotharem
v Canada (Minister of Citizenship and Immigration), 2007 FCA 198 at
paras 55 and 57, [2007] FCJ No. 734 [Thamotharem]).
[73]
However,
I must add that a public administrative agency that bases its discretion on
such guidelines must ensure that it does not apply them as if they were legal
rules, since they are not. In this regard, the Federal Court of Appeal states
as follows at paragraph 62 of Thamotharem, above:
[62] Nonetheless, while agencies may issue
guidelines or policy statements to structure the exercise of statutory
discretion in order to enhance consistency, administrative decision makers may
not apply them as if they were law. Thus, a decision made solely by reference
to the mandatory prescription of a guideline, despite a request to deviate from
it in the light of the particular facts, may be set aside, on the ground that
the decision maker’s exercise of discretion was unlawfully fettered: see, for
example, Maple Lodge Farms, at page 7. This level of compliance may
only be achieved through the exercise of a statutory power to make “hard” law,
through, for example, regulations or statutory rules made in accordance with
statutorily prescribed procedure.
[74]
Thus,
neither the content of the policy, particularly section 9.2 of Notice to
Importers No. 815, nor its effect on the respondent is being challenged in
this case. Rather, it is a question of reviewing how the policy was applied.
Although valid, for the purposes of this case, the policy nonetheless requires
an additional exercise on the respondent’s part: the wording chosen by the
Department in Notice to Importers No. 815, through the use of the
adverb “including” (and “normally” in section 10.1), is the underpinning
for a discretionary authority. In addition, on cross-examination, Ms. Funtek
acknowledged that exemptions from the policy may be granted in exceptional
circumstances. It would therefore be possible for a company deemed to be
related to nevertheless receive a share of the portion of the chicken tariff
rate quota for processors of non-ICL products. Moreover, in confirming that the
policy was being maintained, the Minister at the same time confirmed that it is
possible to make exceptions to it.
[75]
However,
in exercising its discretion to deviate from the guideline it legitimately set
in Notice to Importers No. 815, the respondent cannot limit its efforts to
determining whether a company is deemed to be related before refusing its
application. Obviously, the respondent must analyze the case as a whole and
determine whether there are exceptional circumstances that justify bending the
rule.
[76]
In
the present case, after establishing that the applicant was considered to be
related to MTY, the respondent should have then analyzed the case on its
merits. Such an exercise may have taken place, but nothing in the decision
indicates that it did. As the applicant aptly pointed out, the brief letter
serving as a decision merely refers to the Minister’s decision to maintain the
policy. There is no mention of an analysis of the case on its merits. As both
parties have argued, an administrative agency with discretionary authority is
required to exercise that discretion on a case-by-case basis after considering
the particular circumstances of a case (Canada (Minister of Employment and Immigration)
v Jiminez-Perez, [1984] 2 S.C.R. 565).
[77]
Given
the answer to the first question in this case, that is, that the decision had
no reasons whatsoever, it goes without saying that the decision likewise does
not present any grounds allowing this Court to assess any such exercise of
discretion by the respondent.
[78]
That
being said, some of the evidence appearing in the written documentation and
raised at the hearing suggests that the respondent did not exercise its
discretion on a case-by-case basis here and did indeed apply the policy
systematically. For example, at the hearing, the respondent stated through its
counsel that it would have been inappropriate to make an exception in the
applicant’s case because such a decision would open the door to multiple
requests for exceptions from other companies, which according to the respondent
could result in an excessive workload, placing it in an untenable situation.
However, after drawing such a conclusion, how can the respondent then state
that it decided the fate of the applicant’s application on the basis of a
thorough review of the case? In saying that the decision not to make an
exception was made to avoid a potential avalanche of requests for exceptions,
the respondent confirms the applicant’s fear, that is, that the policy was
applied automatically as if it were a rule, without discretion.
[79]
In
light of the preceding and the general lack of grounds in this regard, I see no
hint of anything that would allow me to conclude that the respondent exercised
its discretion in analyzing the 2013 application under the policy;
consequently, the respondent committed a jurisdictional error resulting in a
breach of procedural fairness.
[80]
Since
the standard of review applicable to the second question is correctness, the
respondent’s decision, which has already been invalidated because of a lack of
reasons, is not entitled to any deference from this Court.
[81]
The
applicant asks the Court to quash the decision dated February 20, 2013, declare
that the respondent shall exercise its discretion in accordance with the
principles of procedural fairness, and order the respondent to do so. The
applicant also asks the Court to order the respondent to not allocate to any
other person the shares initially intended for the applicant, pending a final
judgment. The respondent did not comment on the relief sought.
[82]
The
Court has no objection to granting the relief sought, in part. Therefore, for
the reasons set out above, the decision dated February 20, 2013, will be
quashed, and the application will be referred back to the decision maker for
reconsideration on the basis of these reasons. However, there is nothing to be
gained in ordering the decision maker to exercise its discretion in accordance
with the principles of procedural fairness because, as the decision maker is
already required to do so, such an order would be pointless for stating the
obvious. The applicant also asks the Court to prohibit the respondent from
allocating to any person the shares that had originally been granted to it,
pending a final judgment. However, this case clearly constitutes an application
for judicial review, not a motion for an injunction, which by its nature
involves an entirely different set of criteria that the parties did not address
or argue in the slightest in the course of this proceeding. Consequently, the
Court cannot grant the injunction as requested.
ORDER
1. First,
the Court orders that the motion to strike be granted and that paragraphs 10(c), 59, 60, 61(a) to (c) and (f) to
(k), 62 and 114 to 116 of the applicant’s memorandum of fact and law and
Exhibit FC-5 (“Memorandum of Agreement made and entered into in the City
and district of Montreal, on the 9 day of December 2010”) be struck.
2. Second,
the Court orders that this application for judicial review be allowed, that the
respondent’s decision dated February 20, 2013, be quashed, and that the
case be referred back to the respondent for reconsideration in accordance with
these reasons for judgment.
3. With costs.
“Simon Noël”
____________________________
Judge
Certified
true translation
Michael
Palles
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