A-532-06
A-565-06
A-520-06
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
CANADIAN NORTH INC., CANADA POST CORPORATION
and BRADLEY AIR SERVICES LIMITED (c.o.b. as FIRST AIR)
A-532-06
BRADLEY AIR SERVICES LIMITED (c.o.b. as FIRST AIR)
Applicant
and
ATTORNEY GENERAL OF CANADA, CANADIAN NORTH INC.,
and CANADA POST CORPORATION
Respondents
A-565-06
AND BETWEEN:
CANADA POST CORPORATION
Applicant
and
ATTORNEY GENERAL OF CANADA, BRADLEY AIR SERVICES LIMITED
(c.o.b. as FIRST AIR), and CANADIAN NORTH INC.
Respondents
Heard at Toronto, Ontario, on February 26, 2007.
Judgment delivered at Toronto, Ontario, on March 6, 2007.
REASONS FOR JUDGMENT BY: SHARLOW J.A.
CONCURRED IN BY: RICHARD C.J.
MALONE J.A.
Dockets: A-520-06
A-532-06
A-565-06
Citation: 2007 FCA 93
CORAM: RICHARD C.J.
SHARLOW J.A.
MALONE J.A.
A-520-06
BETWEEN:
ATTORNEY GENERAL OF CANADA
Applicant
and
CANADIAN NORTH INC., CANADA POST CORPORATION
and BRADLEY AIR SERVICES LIMITED (c.o.b. as FIRST AIR)
Respondents
A-532-06
AND BETWEEN:
BRADLEY AIR SERVICES LIMITED (c.o.b. as FIRST AIR)
Applicant
and
ATTORNEY GENERAL OF CANADA, CANADIAN NORTH INC.,
and CANADA POST CORPORATION
Respondents
A-565-06
AND BETWEEN:
CANADA POST CORPORATION
Applicant
and
ATTORNEY GENERAL OF CANADA, BRADLEY AIR SERVICES LIMITED
(c.o.b. as FIRST AIR), and CANADIAN NORTH INC.
Respondents
REASONS FOR JUDGMENT
[1] This is an application for judicial review of an interlocutory decision of the Canadian International Trade Tribunal (CITT) dated November 9, 2006 (File No. PR-2006-026). In that decision, the CITT dismissed the motion of the Department of Indian Affairs and Northern Development (DIAND) for an order dismissing, for want of jurisdiction, a procurement complaint made by Canadian North Inc. The procurement complaint was made in relation to an agreement between Canada Post Corporation and Bradley Air Services Limited (also known as First Air) for the transportation of mail to certain northern communities (the First Air Agreement).
[2] The First Air Agreement was awarded in November 2005 pursuant to a request for proposal (RFP) issued by Canada Post in May 2005. Under the First Air Agreement, First Air is obliged to provide Canada Post with certain mail transportation services, including the transportation of ordinary mail and goods mailed under the Food Mail Program of DIAND. The First Air Agreement has a term of more than five years.
[3] The Food Mail Program has existed since the late 1960s. Its objective is to improve nutrition and health in isolated northern communities. DIAND achieves that objective by subsidizing the cost to Canada Post of mailing nutritious perishable food and other essential items to specified northern communities that lack year round ground transportation. The amount of the subsidy is determined on the basis of an agreement between DIAND and Canada Post (the Food Mail Agreement) which, among other things, specifies in detail which goods and which communities are covered by the Food Mail Program. It also stipulates the method of computing the total direct costs incurred by Canada Post in mailing the eligible items to the specified communities. The amount of the subsidy payable by DIAND to Canada Post under the Food Mail Agreement is the amount of the stipulated direct costs, less the postal rates paid by the shippers through special postal rates set out in the Food Mail Agreement.
[4] The Food Mail Agreement that predated the First Air Agreement was entered into in 1996 for an indefinite term. It is subject to cancellation at any time by agreement, or by either party on six months notice.
[5] Whether the CITT has jurisdiction to consider the complaint of Canadian North depends on whether the First Air Agreement is a “designated contract” as defined in section 30.1 of the Canadian International Trade Tribunal Act, R.S.C. 1985 (4th Supp.), c. 47, which reads as follows:
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"designated contract" means a contract for the supply of goods or services that has been or is proposed to be awarded by a government institution and that is designated or of a class of contracts designated by the regulations; |
«contrat spécifique » Contrat relatif à un marché de fournitures ou services qui a été accordé par une institution fédérale — ou pourrait l’être — , et qui soit est précisé par règlement, soit fait partie d’une catégorie réglementaire. |
[6] Section 3 of the Canadian International Trade Tribunal Procurement Inquiry Regulations, SOR/93-602 (the Regulations), provides further clarification, and reads in relevant part as follows:
[7] The First Air Agreement is a “designated contract” if two conditions are met. The first condition relates to the nature of the goods or services procured under the contract (subsection 3(1) of the Regulations). The second condition relates to the identity of the party procuring those goods or services (subsection 3(2) of the Regulations).
[8] The first condition is met if the agreement concerns a procurement of goods or services that are covered by the North American Free Trade Agreement (NAFTA), the Agreement on Government Procurement (AGP), or the Agreement on Internal Trade (AIT). The CITT concluded that the air transportation services that are the subject of the First Air Agreement are not covered by NAFTA or the AGP, but are covered by the AIT. That conclusion is not challenged.
[9] The second condition is met if the party procuring the services is a “government institution” within the statutory definition. It is common ground that DIAND meets that definition for the purposes of the AIT, but Canada Post does not. Therefore, the CITT has no jurisdiction to consider the complaint of Canadian North if Canada Post procured the services that are the subject of the First Air Agreement.
[10] There is and can be no doubt that Canada Post procured those services. However, the CITT concluded that it nevertheless had the requisite jurisdiction to consider the complaint of Canadian North because of the participation of DIAND in the procurement process. That decision is being challenged by, First Air, Canada Post, and the Attorney General of Canada.
[11] In reaching the conclusion that it has the jurisdiction to consider the complaint of Canadian North, the CITT asked itself this question (paragraph 27 of its reasons):
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27. It is common ground between the parties that, technically speaking, the relationship between DIAND and Canada Post is not one of principal and agent. However, the question is whether the Tribunal should consider that DIAND exercised sufficient control over the procurement that, nonetheless, it is DIAND, and not Canada Post, that should be considered to be the entity awarding the contract.
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[12] In other words, the CITT determined that DIAND exercised so much control over the procurement process that it is DIAND, and not Canada Post, that should be treated for purposes of the AIT as having procured the services. The CITT reached that conclusion despite finding that (1) Canada Post issued the RFP, conducted all phases of the solicitation, and received and evaluated the bids, awarded the contract to First Air, (2) Canada Post is one of only two parties to the contract (the other being First Air), and (3) Canada Post acted throughout the procurement and contracting process on its own behalf and not as an agent of DIAND.
[13] The facts upon which the CITT relied to assess what it characterized as DIAND’s control over the procurement process are set out in paragraphs 34 to 41 of its reasons. It is not necessary to recount that evidence in detail. It is enough to say that DIAND reviewed the RFP in advance, considered it in detail, and had substantial input into its development. The input of DIAND was driven by the specific terms of the Food Mail Agreement, which also may have been altered in certain respects so that the RFP and the Food Mail Agreement would be consistent with each other. That is, DIAND was involved in the development of the parameters of the RFP, but in a manner that is consistent with its responsibility for the Food Mail Program and its contractual obligation to subsidize the costs incurred by Canada Post pursuant to the Food Mail Agreement. DIAND was not involved in receiving, reviewing or assessing the bids, choosing the successful bidder, or awarding the contract.
[14] Much of the debate at the hearing of this application related to the appropriate standard of review. I do not propose to attempt to resolve that debate because, in my view, the challenged decision should not be allowed to stand even on the most deferential standard of review.
[15] The CITT said in its reasons that it has been given jurisdiction to adjudicate procurement disputes in order to give effect to the purposes of the procurement rules in the NAFTA, the AGP and the AIT. The CITT reasoned that, because those purposes are to promote trade liberalization by ensuring that tendering procedures are applied in a non-discriminatory and transparent manner, the types of procurement situations covered by those trade agreements should be interpreted broadly. I agree that the CITT should interpret its governing legislation in a purposive way. However, that cannot justify giving the relevant statutory provisions a meaning they cannot bear.
[16] The procurement by Canada Post of air transportation services is outside the scope of the AIT. Given that Canada Post did not procure the services of First Air as agent of DIAND, the only possible conclusion in fact and law is that the procurement of the services of First Air in this case was by Canada Post alone. There is no statutory provision or legal principle that justifies treating DIAND as the party that procured the services. That is so despite the substantial involvement of DIAND in the development of the RFP, despite the fact that a significant portion of the direct costs of the procured services, to the extent they relate to the Food Mail Program, are borne by DIAND, and despite the fact that DIAND may have chosen to operate the Food Mail Program by conducting its own procurement without using the services of Canada Post at all.
[17] The CITT said in its reasons that a government entity that is covered by the AIT should not be able to avoid the application of the AIT by using another government entity that is not covered by the AIT as the instrument to conduct its procurement. I agree. If DIAND had engaged Canada Post as its agent to conduct the procurement of air transportation services for DIAND, then in fact and law the procurement would have been by DIAND and not Canada Post, and the CITT would have had the jurisdiction to consider the complaint of Canadian North. However, that is manifestly not the case here. In that regard, this case is readily distinguishable from Canada (Attorney General) v. Symtron Systems Inc. (C.A.), [1999] 2 F.C. 514, in which a procurement was found to have been conducted by Defence Construction Canada as agent for the Department of National Defence.
[18] For these reasons, I would allow these applications for judicial review with costs, quash the November 9, 2006 decision of the CITT, and refer the motion of DIAND back to the CITT with a direction to grant the motion and dismiss the complaint of Canadian North for want of jurisdiction.
“K. Sharlow”
“I agree
J. Richard C.J.”
“I agree
B. Malone J.A.”
FEDERAL COURT OF APPEAL
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: A-520-06
STYLE OF CAUSE: ATTORNEY GENERAL OF CANADA ET AL v. CANADA NORTH INC. ET AL
DOCKET: A-532-06
STYLE OF CAUSE: BRADLEY AIR SERVICES LIMITED v. ATTORNEY GENERAL OF CANADA ET AL
DOCKET: A-565-06
STYLE OF CAUSE: CANADA POST CORPORATION v. ATTORNEY GENERAL OF CANADA ET AL
PLACE OF HEARING: Toronto, Ontario
DATE OF HEARING: February 26, 2007
REASONS FOR JUDGMENT BY: Sharlow J.A.
CONCURRED IN BY: Richard C.J. & Malone J.A.
APPEARANCES:
SOLICITORS OF RECORD:
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