A-505-02
2003 FCA 199
The Attorney General of Canada (Applicant)
v.
Georgian College of Applied Arts and Technology (Respondent)
Indexed as: Canada (Attorney General) v. Georgian College of Applied Arts and Technology (C.A.)
Court of Appeal, Stone, Noël and Sexton JJ.A.-- Toronto, April 7; Ottawa, May 2, 2003.
Foreign Trade -- Canadian International Trade Tribunal -- CITT refusing to award Crown, as represented by HRDC, costs though successful in resisting procurement complaint -- Case concerned method of selecting service providers for employment assistance programs -- CITT dismissing complaint in entirety for want of jurisdiction -- Costs refusal justified as complainant acted in good faith, HRDC counsel salaried -- Attorney General's research showing CITT always denying Crown costs where complaints dismissed, awarding complainants costs if successful -- Consideration of appropriate standard of review -- At issue: not particular exercise of discretion to deny costs but Tribunal's practice of denying Crown costs whenever successful -- Reasonableness appropriate standard as Tribunal's expertise possibly extending to awarding costs -- Awarding costs is within discretion of court, tribunal -- But must be exercised judicially -- No justification for costs denial herein -- Absence of statutory authority -- Irrelevant that HRDC counsel on salary -- Tribunal's argument as "bid challenge authority" having duty to ensure Canadian compliance with NAFTA obligations, encourage complainants to come forward, rejected -- One thing to provide dispute resolution forum, another to encourage litigation -- No statutory authority for CITT to undertake pro-active role in encouraging complaints.
Practice -- Costs -- Canadian International Trade Tribunal (CITT) denying Crown costs though successful in resisting NAFTA procurement complaint -- Denial justified as complainant acted in good faith, government lawyer salaried -- CITT invariably denying Crown costs when successful -- CITT having statutory authority to award costs to either side -- Decision reviewed on reasonableness standard as CITT's expertise perhaps extending to awarding costs -- Costs awarded as indemnity, not imposed as punishment -- Award of costs is in discretion of courts, tribunals -- But must be exercised judicially -- Exercised against successful party only for reason connected with case -- Wrong to hold Crown "unusual" litigant, able to pay own costs -- Time when "rule of dignity" dictated Crown neither demand, pay costs long gone -- Denial of costs herein not justified -- Irrelevant that government lawyer salaried -- While policy of denying Crown costs would encourage complainants to come forward, no statutory authority for CITT to adopt pro-active role of encouraging litigation.
Administrative Law -- Judicial Review -- Certiorari -- Canadian International Trade Tribunal (CITT) denying Crown costs though successfully resisting procurement complaint -- Determining appropriate standard of review -- In pragmatic, functional approach, four contextual factors considered: whether privative clause or statutory appeal; tribunal's expertise relative to court's; purpose of statutory provision; whether question of law, fact, mixed law, fact -- Here neither privative clause nor statutory appeal -- CITT having expertise adjudicating procurement complaints -- Having statutory authority to award costs -- Real question herein: not simple exercise of Tribunal's discretion but practice of invariably denying Crown costs despite success -- Question of law attracting lower deference level -- Court's decision herein going to jurisdiction, important as precedent -- Reasonableness appropriate standard as Tribunal's expertise perhaps extending to awarding costs -- Reasonableness standard requires court to stay close to tribunal's reasons to see whether support decision -- Should be unnecessary to look outside Tribunal's reasons -- Costs award by court, tribunal is discretionary but facts of litigation, outcome must be considered -- Discretion must be exercised judicially -- Upon application of standard, costs denial herein unjustified -- Tribunal fettered discretion by adhering to practice of denying Crown costs -- Decision set aside, case referred back for proper exercise of discretion.
This was an application for judicial review of a decision by the Canadian International Trade Tribunal (CITT) not to award costs in applicant's favour although successful in overcoming a procurement complaint made by the College. The Attorney General argued that, in refusing an award of costs, the CITT fettered its discretion by taking into account irrelevant considerations while ignoring considerations that were relevant.
Georgian College filed a complaint with CITT that the method employed by Human Resources Development Canada (HRDC) of selecting service providers for certain Employment Insurance Act employment assistance programs violated the North American Free Trade Agreement (NAFTA) as well as the Agreement on Internal Trade (AIT).
HRDC took the position that CITT lacked jurisdiction, the selection process at issue not being a procurement within the meaning of the agreements. The CITT dismissed the complaint for want of jurisdiction but failed to address the matter of costs even though HRDC had asked for them. HRDC then wrote to the Tribunal requesting that it consider the matter but the costs request was denied.
The Tribunal defended its refusal to award costs on the basis that the College had acted in good faith and that HRDC counsel are on salary. The Tribunal's policy is to award reasonable costs where complainant is successful but not to require an unsuccessful complainant to pay costs unless warranted by such conduct as: launching a frivolous or vexatious complaint, not being candid and forthright during the investigation or being guilty of conduct amounting to abuse of process. The Tribunal found no reason herein to depart from its usual policy in the matter of costs. Research conducted by the Attorney General revealed that the Tribunal always awarded costs to successful complainants but invariably denied the government institution its costs where complaints were dismissed in their entirety. Whenever success was divided, the CITT in every case awarded complainant its costs.
Held, the application should be allowed.
The appropriate standard of review was the pragmatic and functional approach very recently reiterated by McLachlin C.J. in Dr. Q. v. College of Physicians and Surgeons of British Columbia. While Tribunal decisions are not protected by a privative clause, neither is there a statutory right of appeal. The CITT is a specialized body the expertise of which extends to the adjudication of procurement complaints. The Tribunal has, under Canadian International Trade Tribunal Act, section 30.16, power to award costs and to direct by whom and to whom they are to be paid. From the above, it would appear that a high degree of deference would be owed to this Tribunal and that the "patent unreasonableness" standard would, upon judicial review, be applicable. But, what was here at issue was the Tribunal's practice of always denying the Crown its costs despite its success. Since whether such practice is authorized by the Act is a question of law, the Tribunal was entitled to a lower level of deference than if the case involved a simple exercise of discretion. Such reduced deference level was also appropriate in view of the jurisdictional nature of this decision and its precedential value. Even so, the decision should be reviewed on a standard of reasonableness, since the Tribunal's expertise in procurement matters may perhaps extend to the awarding of costs. The Supreme Court of Canada has stated that in an application of the reasonableness standard, a reviewing court must "stay close to the reasons given by the tribunal" to see whether any of them adequately support the decision. It should be necessary to look beyond the reasons given by the CITT to determine whether they disclose a reasonable justification of the Tribunal's practice which resulted in the denial of costs to the Crown herein.
Absent statutory or regulatory provision to the contrary, the awarding of costs--whether by courts or tribunals--is within the discretion of the adjudicator. The exercise of that discretion requires, however, a consideration of the facts giving rise to the litigation as well as the outcome of the dispute. As was said by Viscount Cave L.C. in the 1927 case Donald Campbell and Company Limited v. Pollack, a court's absolute, unfettered discretion in the matter of costs "like any other discretion, must of course be exercised judicially, and the judge ought not to exercise it against the successful party except for some reason connected with the case". The reasons in Pollack were applied by this Court in R. v. James Lorimer and Company Limited, in which the Crown met with success but was denied costs, the Trial Division Judge not wishing to "punish" defendant or further its burden and also because the Crown was seen as an "unusual plaintiff" capable of paying its own costs. As noted by Mahoney J.A. in overturning that decision, the time was long gone when the "rule of dignity" dictated that the Crown neither asked for nor paid costs. None of the reasons given for denying the Crown its costs had anything to do with the facts connected with or leading up to the case. The same could be said in the instant case. Certainly, section 30.16 does not authorize the CITT to adopt a practice of denying costs to the Crown regardless of its success. Indeed, the provision, on its face, contemplates an award of costs to either side.
Nor was it relevant that HRDC was represented by salaried lawyers. The Tribunal's reasons ignored the principle of indemnification and failed to recognize the fact that costs were incurred by the government department in resisting the complaint. Again, the reference in the Tribunal's reasons to its general experience in dealing with complaints, even to the extent that they can be read as addressing specifics of the present case, were not such as to justify a denial of costs to the Crown. That Georgian College had to navigate through complex legal issues and presented its case in a forthright manner, did not justify denial of costs to the successful party.
The Tribunal's final argument was that it had a duty to ensure Canadian compliance with NAFTA and authority to encourage complainants to come forward. Its costs policy was said to be consistent with that objective. While the Tribunal's costs policy would indeed encourage complainants to come forward, it was unable to point to any statutory authority for its taking on a pro-active role by encouraging complaints. Providing a forum for dispute resolution was one thing; encouraging disputes was quite another.
The Tribunal, in adhering to its practice in the case at bar, fettered its discretion and its decision had to be set aside and the matter referred back so that it could exercise its discretion on proper principle.
statutes and regulations judicially
considered
Agreement on Internal Trade, Canada Gazette, Part I, Vol. 129, No. 17 (29 April 1995).
| Canadian International Trade Tribunal Act, R.S.C., 1985 (4th Supp.), c. 47, s. 30.16 (as enacted by S.C. 1993, c. 44, s. 44). |
| Employment Insurance Act, S.C. 1996, c. 23. |
| National Transportation Act, R.S.C. 1970, c. N-17. |
| North American Free Trade Agreement Between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America, December 17, 1992, [1994] Can. T.S. No. 2. |
cases judicially considered
applied:
Dr. Q. v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226; (2003), 223 D.L.R. (4th) 599; [2003] 5 W.W.R. 1; 11 B.C.L.R. (4th) 1; 48 Admin. L.R. (3d) 1; 179 B.C.A.C. 170; 302 N.R. 34; Law Society of New Brunswick v. Ryan, [2003], S.C.R. 247 (2003), 223 D.L.R. (4th) 577; 48 Admin. L.R. (3d) 33; 31 C.P.C. (5th) 1; 302 N.R. 1; Bell Canada v. Consumers' Association of Canada, [1986] 1 S.C.R. 190; (1986), 26 D.L.R. (4th) 573; 17 Admin. L.R. 205; 9 C.P.R. (3d) 145; 65 N.R. 1; Ryan v. McGregor (1925), 58 O.L.R. 213 (C.A.); Donald Campbell and Company Limited v. Pollack, [1927] A.C. 732 (H.L.); R. v. James Lorimer and Company Limited, [1984] 1 F.C. 1065; (1984), 77 C.P.R. (2d) 262; 180 N.R. 351 (C.A.).
referred to:
Georgian College of Applied Arts and Technology (Re), [2002] C.I.T.T. No. 49 (QL); Flolite Industries (Re), [1998] C.I.T.T. No. 26 (QL); Stelco Inc. v. British Steel Canada Inc., [2000] 3 F.C. 282; (2000), 20 Admin. L.R. (3d) 159; 252 N.R. 364 (C.A.); Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services), [2002] 1 F.C. 292; (2001), 202 D.L.R. (4th) 610; 36 Admin. L.R. (3d) 171; 274 N.R. 69 (C.A.); Chieu v. Canada (Minister of Citizenship and Immigration), [2002] 1 S.C.R. 84; (2002), 208 D.L.R. (4th) 107; 37 Admin. L.R. (3d) 252; 18 Imm. L.R. (3d) 93; 280 N.R. 268; Canada (Deputy Minister of National Revenue) v. Mattel Canada Inc., [2001] 2 S.C.R. 100; (2001), 199 D.L.R. (4th) 598; 29 Admin. L.R. (3d) 56; 12 C.P.R. (4th) 417; 270 N.R. 153; Canada (Deputy Minister of National Revenue, Customs and Excise) v. Schrader Automotive Inc. (1999), 240 N.R. 381; 4 T.T.R. (2d) 179 (F.C.A.); Telecom. Decision CRTC 81-5 (Re), [1984] 1 F.C. 79; (1983), 147 D.L.R. (3d) 37; 34 C.P.C. 121; 72 C.P.R. (2d) 162; 48 N.R. 197 (C.A.); Henderson v. Laframboise (1930), 65 O.L.R. 610; [1930] 4 D.L.R. 273 (C.A.); CCH Canadian Ltd. v. Law Society of Upper Canada (2000), 184 D.L.R. (4th) 186; 4 C.P.R. (4th) 129 (F.C.T.D.); Canada (Attorney General) v. McNally Construction Inc., [2002] 4 F.C. 633; (2002), 214 D.L.R. (4th) 478; 42 Admin. L.R. (3d) 1; 291 N.R. 139 (C.A.).
APPLICATION for judicial review of a CITT decision denying an award of costs to the Crown although successful in a matter before it (Georgian College of Applied Arts and Technology (Re), [2002] C.I.T.T. No. 73 (QL)). Application granted.
appearances:
Susanne G. Pereira for applicant.
Kevin D. MacNeill for respondent.
solicitors of record:
Deputy Attorney General of Canada for applicant.
Graham, Wilson and Green, Barrie, Ontario for respondent.
The following are the reasons for judgment rendered in English by
[1]Noël J.A.: This is an application for judicial review of a decision by the Canadian International Trade Tribunal (the Tribunal) [[2002] C.I.T.T. No. 73 (QL)] not to award costs in favour of the applicant despite its success in overcoming the procurement complaint which had been brought by the respondent. The applicant maintains that in refusing to award costs in its favour, the Tribunal fettered its discretion by taking into account irrelevant considerations and by ignoring relevant considerations.
THE FACTS
[2]On February 27, 2002, the respondent Georgian College of Applied Arts and Technology filed a complaint with the Tribunal alleging that Human Resources Development Canada's (HRDC) method of selecting service providers for certain employment assistance programs pursuant to the Employment Insurance Act [S.C. 1996, c. 23] violated the North American Free Trade Agreement [North American Free Trade Agreement Between the Government of Canada, the Government of the United Mexican States and the Government of the United States of America, December 17, 1992, [1994] Can. T.S. No. 2] (NAFTA) and the Agreement on Internal Trade [Canada Gazette, Part I, Vol. 129, No. 17 (29 April 1995)] (AIT).
[3]On March 6, 2002, the Tribunal informed the parties that the complaint had been accepted for inquiry. At the same time, the Tribunal issued an order postponing the award of any contract in connection with the procurement pending its determination on the validity of the complaint.
[4]On April 2, 2002, HRDC filed a government institution report in response to the complaint in which HRDC submitted that the Tribunal was without jurisdiction to hear the complaint since the selection process was not a procurement within the meaning of NAFTA or AIT.
[5]By letters dated May 2, 2002 and May 13, 2002, the Tribunal requested that HRDC provide additional information. HRDC complied with these requests on May 7, 2002 and on May 15, 2002 respectively.
[6]On May 29, 2002, the Tribunal issued a determination in which it dismissed the complaint in its entirety. In its statement of reasons released on July 16, 2002 [[2002] C.I.T.T. No. 49 (QL)], the Tribunal indicated that it had rejected the complaint on the basis that it did not have jurisdiction. The Tribunal did not address the question of costs in either its initial determination or in its statement of reasons despite the fact that costs had been sought by HRDC.
[7]By letter dated July 17, 2002, HRDC again requested that the Tribunal address the issue of costs.
[8]On August 9, 2002 [[2002] C.I.T.T. No. 73 (QL)], the Tribunal denied HRDC's request for costs by way of an addendum which is the subject of this application.
THE DECISION UNDER REVIEW
[9]The Tribunal justified its refusal to award costs on the basis that Georgian College, although its claim had been dismissed, had acted in good faith in bringing the complaint and that counsel for HRDC receive salaries for their services. The Tribunal also expressed the view that little purpose would be served by awarding costs to HRDC while this would add to the burden faced by complainants when deciding whether to file a complaint. The precise reasoning of the Tribunal is as follows, at paragraphs 3-9:
Subsection 30.16(1) of the CITT Act provides that the Tribunal may award "costs of, and incidental to, any proceedings before it in relation to a complaint". When a complainant is successful, the Tribunal usually awards the complainant its reasonable costs, in a manner consistent with the Tribunal's Procurement Cost Guidelines.
At times, a complaint is so apparently without merit that the Tribunal does not even commence an investigation. At other times, a complaint demonstrates a reasonable indication of a breach at the initiation stage, but, upon further investigation, it becomes clear that the complaint lacks merit. Also, a complaint may be seemingly meritorious, but, for "technical" reasons, the Tribunal cannot conclude that there has been a breach of any of the relevant agreements, or there is simply insufficient evidenced to satisfy it that an agreement has been breached.
In the Tribunal's experience, most complaints have a degree of merit and are pursued by the complainants in a forthright and candid manner. Though complainants present their cases in the most favourable light possible, the Tribunal rarely sees them acting in a way that would indicate that the complaints are improper or abusive or that the complainants lack candour.
Complainants may range from very small to very large organizations. They devote time, money and resources in preparing a bid. When they feel aggrieved and decide to file a complaint, they devote more time, money and resources. It is not unusual for complainants to retain outside counsel to assist them navigate the world of procurement law and procedures. In addition to the costs and time that they have expended, they may have lost the opportunity to win a government contract.
On the one hand, HRDC was represented by salaried counsel from the Department of Justice whose responsibilities included representing HRDC's interests in this matter. On the other, the complainant often faces a difficult decision with regard to filing a complaint but must also incur additional costs in pursuing its complaint.
Generally speaking, little purpose would be served by awarding costs to HRDC and thereby adding to the burden that a complainant already bears, except in those cases where a complainant's conduct demands it. This may arise, for example, where it becomes clear that a complaint was frivolous or vexatious, where a complainant was not candid and forthright before or during the investigation or where a complainant acted in a way that amounts to an abuse of process. This is not an exhaustive list of the circumstances in which the Tribunal may award complaint costs to a government department, but it does indicate the type of conduct that would generally warrant the award of costs.
In the present case, Georgian College presented its case in a forthright and professional manner. While Georgian College was ultimately unsuccessful, in the Tribunal's opinion, it acted in good faith. The Tribunal sees no reasons why, in the circumstances of this case, costs should be awarded to HRDC. Consequently, HRDC's request for costs is denied.
[10]It was pointed out during the hearing that the above-quoted reasons are virtually identical to those given by the Tribunal in an earlier decision (Flolite Industries (Re), [1998] C.I.T.T. No. 26 (QL) file No. PR-97-045, May 8, 1998). As here, the government institution concerned had been successful in resisting a complaint and, upon noting that its request for costs had gone unaddressed in the Tribunal's reasons, had made a further request that costs be addressed. This resulted in the issuance of an addendum bearing the same language as the addendum issued in this case.
[11]In the same vein, a review of the decisions reached by the Tribunal conducted by the applicant for the period of April 1, 1999 to December 2, 2002 reveals that amongst the 50 cases where complaints were dismissed in their entirety during that period, the Tribunal refused to award costs in favour of the government institution concerned in every case. Conversely, among the 37 cases where complaints were upheld, the Tribunal awarded costs to the complainant in every case. In the 19 cases where success was divided, the Tribunal awarded costs in favour of the complainant.
[12]While the respondent did allege that the period underlying this review was arbitrarily chosen, it has placed no material before the Court which would suggest that a different pattern can be established by reference to another period. Nor has it challenged the accuracy of the reported figures with respect to the period surveyed.
[13]Against this background, it is apparent that the Tribunal has over the years adhered to a practice of awarding costs to successful complainants while denying costs to the Crown although successful in resisting complaints; and awarding the Crown its costs only where it can be shown that the complaint was frivolous, vexatious or where some reprehensible conduct can be attributed to the complainant. It is also clear from the reasons that the Tribunal adhered to this practice in denying costs in this instance.
ANALYSIS
Standard of Review
[14]The appropriate approach to determining the standard of review was reiterated by the Supreme Court in the recent decision of Dr. Q. v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226. At paragraph 26, McLachlin C.J. described the pragmatic and functional approach as follows:
In the pragmatic and functional approach, the standard of review is determined by considering four contextual factors--the presence or absence of a privative clause or statutory right of appeal; the expertise of the tribunal relative to that of the reviewing court on the issue in question; the purposes of the legislation and the provision in particular; and, the nature of the question--law, fact, or mixed law and fact. The factors may overlap. The overall aim is to discern legislative intent, keeping in mind the constitutional role of the courts in maintaining the rule of law.
[15]Applying this approach to the present case, I note that the procurement complaint determinations made by the Tribunal are not protected by a privative clause. However, neither is there a statutory right of appeal. The Tribunal is clearly a specialized body (e.g. see Stelco Inc. v. British Steel Canada Inc., [2000] 3 F.C. 282 (C.A.), at paragraph 18) and I am willing to accept that its expertise extends to the adjudication of procurement complaints (Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services), [2002] 1 F.C. 292 (C.A.)).
[16]Section 30.16 [as enacted by S.C. 1993, c. 44, s. 44] of the Canadian International Trade Tribunal Act [R.S.C., 1985 (4th Supp.), c. 47] (the Act) is the statutory authority under which the decision in issue was rendered. It provides:
30.16. (1) Subject to the regulations, the Tribunal may award costs of, and incidental to, any proceeding before it in relation to a complaint on a final or interim basis and the costs may be fixed at a sum certain or may be taxed.
(2) Subject to the regulations, the Tribunal may direct by whom and to whom any costs are to be paid and by whom they are to be taxed and allowed.
[17]The purpose of this provision is to grant the Tribunal the power to make determinations as to costs in procurement complaint proceedings. It gives the Tribunal the power to award costs, determine when, and by whom they should be payable. Because such costs awards are made in the context of proceedings which are within the Tribunal's specialized jurisdiction, its expertise arguably extends to the framing of these awards.
[18]The first three factors identified by McLachlin C.J. in Dr. Q. would therefore tend to indicate that a relatively high degree of deference would be owed to the Tribunal in reviewing its decision.
[19]The fourth factor--i.e. the nature of the question--is of particular significance in the present case. The Tribunal's determination, to the extent that it results from the simple exercise of the Tribunal's statutorily conferred discretion and considering the other factors noted above, would suggest the application of a standard of "patent unreasonableness". This was the standard proposed by the parties at the hearing.
[20]However, the decision in this case does not involve the simple exercice of the Tribunal's discretion to award costs. What is in issue here is the Tribunal's practice of denying costs to the Crown despite its success, while awarding costs to complainants in the same circumstances. It seems clear when regard is had to the record before us and to the generic wording of the reasons given by the Tribunal that this judicial review is directed not so much against the decision denying costs, as against the practice which the Tribunal adhered to in denying such costs.
[21]Keeping this in mind, the real question to be decided in this case is whether the practice adhered to by the Tribunal over the years, which resulted in the denial of costs in this instance, is authorized by the Act. This is a pure question of law, which indicates a lower level of deference than that which would apply to the simple exercise of discretion. Consideration must also be given to the jurisdictional nature of this decision (Chieu v. Canada (Minister of Citizenship and Immigration), [2002] 1 S.C.R. 84, at paragraph 24, per Iacobucci J.) as well as to its obvious precedential value (Dr. Q., supra, at paragraph 34, per McLachlin C.J.). Both of these factors emphasize the appropriateness of a less deferential standard.
[22]The nature of the question, properly understood, suggests that this Court may be in as good a position as the Tribunal to decide the issue in this case. However, I believe that the decision should nevertheless be reviewed on a standard of reasonableness, recognizing as I must that the Tribunal's expertise in procurement matters possibly extends to the awarding of costs (Canada (Deputy Minister of National Revenue) v. Mattel Canada Inc., [2001] 2 S.C.R. 100, at paragraphs 32-33; Canada (Deputy Minister of National Revenue, Customs and Excise) v. Schrader Automotive Inc. (1999), 240 N.R. 381 (F.C.A.), at paragraphs 4-5).
[23]The reasonableness standard requires a determination as to whether there are reasons capable of supporting the decision. The Supreme Court recently explained that this approach should focus on the reasons provided by the decision maker. In Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, Iacobucci J. stated (paragraph 49):
. . . the reasonableness standard requires a reviewing court to stay close to the reasons given by the tribunal and "look to see" whether any of those reasons adequately support the decision. Curial deference involves respectful attention, though not submission to, those reasons.
[24]Accordingly, it is incumbent upon this Court to focus on the above-quoted reasons of the Tribunal to determine whether they disclose a reasonable justification for the practice which resulted in the denial of costs in this instance. It should not be necessary to look beyond the Tribunal's reasons in this respect, particularly since it can be assumed that the Tribunal provided its full answer to the respondent's repeated requests for costs in this and in other cases dating back to 1998.
Application of the Standard
[25]In Bell Canada v. Consumers' Association of Canada, [1986] 1 S.C.R. 190, it was held (at page 207) that in the absence of words to the contrary, "costs" in section 73 of the National Transportation Act [R.S.C. 1970, c. N-17] carries the same general connotation as legal costs, that is being for the purpose of indemnification or compensation. In the course of his reasons, Le Dain J. writing for a unanimous Court quoted (at page 202) the following passage from Middleton J.A. in Ryan v. McGregor (1925), 58 O.L.R. 213 (C.A.) [as page 216]:
The fundamental principle is thus clearly stated by Baron Bramwell in the case of Harold v. Smith (1960), 5 H. & N. 381, 385: "Costs as between party and party are given by the law as an indemnity to the person entitled to them: they are not imposed as punishment on the party who pays them, nor given as a bonus to the party who receives them. Therefore, if the extent of the damnification can be found out, the extent to which costs ought to be allowed is also ascertained."
[26]An award of costs, whether made in a judicial proceeding or in a proceeding before a regulatory or other Tribunal and apart from some statute or regulation providing for the contrary, is in the discretion of the Court or the Tribunal (Telecom. Decision CRTC 81-5 (Re), [1984] 1 F.C. 79 (C.A.), at page 84, per Urie J.A.). Section 30.16 expressly provides the Tribunal with this discretion, and is to that extent confirmative of the case law.
[27]In the absence of some indication to the contrary, the exercise of this discretion requires consideration of the facts connected with or leading up to the litigation with respect to which the award is made, including the outcome of the dispute (Henderson v. Laframboise (1930), 65 O.L.R. 610 (C.A.)).
[28]In the normal course, and absent indications to the contrary, costs usually go to the successful party. Similarly, costs are not usually awarded where success is evenly divided in the absence of some factor dictating a different result (CCH Canadian Ltd. v. Law Society of Upper Canada (2000), 184 D.L.R. (4th) 186 (F.C.T.D.) at page 190). In Donald Campbell and Company Limited v. Pollack, [1927] A.C. 732 (H.L.), Viscount Cave L.C. gave the following account of the discretion to award costs [at pages 811-812]:
A successful defendant in a non-jury case has no doubt, in the absence of special circumstances, a reasonable expectation of obtaining an order for the payment of his costs by the plaintiff; but he has no right to costs unless and until the Court awards them to him, and the Court has an absolute and unfettered discretion to award or not to award them. This discretion, like any other discretion, must of course be exercised judicially, and the judge ought not to exercise it against the successful party except for some reason connected with the case. Thus, if--to put a hypothesis which in our Courts would never in fact be realized--a judge were to refuse to give a party his costs on the ground of some misconduct wholly unconnected with the cause of action or of some prejudice due to his race or religion or (to quote a familiar illustration) to the colour of his hair, then a Court of Appeal might well feel itself compelled to intervene. But when a judge, deliberately intending to exercise his discretionary powers, has acted on facts connected with or leading up to the litigation which have been proved before him or which he has himself observed during the progress of the case, then it seems to me that a Court of Appeal, although it may deem his reasons insufficient and may disagree with his conclusion, is prohibited by the statute from entertaining an appeal from it.
[29]This Court applied the above-quoted passage in R. v. James Lorimer and Company Limited, [1984] 1 F.C. 1065 (C.A.) where the relevance of similar considerations was at issue. In that case, the Trial Division Judge [T-2216-81, April 30, 1982, not reported] had exercised his discretion not to award costs to the Crown despite the Crown's success in the proceeding before him. Mahoney J.A., writing for this Court, noted that the Trial Judge had refused to award costs on the basis that he did not see fit to "punish" the defendant or "further [its] burden" and also because he viewed the Crown as an "unusual plaintiff" which could pay its own costs. In overturning the decision of the Trial Judge, Mahoney J.A. stated (pages 1076-1077):
It is trite law that costs are not awarded to punish an unsuccessful party. There was a time when the "rule of dignity" dictated that the Crown neither asked nor paid costs in the ordinary course of events. That time is long past and the position of the Crown, even if it be "unusual", is no more relevant than the colour of a litigant's hair. With respect, none of the reasons given for denying the appellant costs have anything to do with the case nor any facts connected with it or leading up to it.
[30]Considering that the broad discretion to award (or not to award) costs must nevertheless be exercised judicially and staying close to the reasons offered by the Tribunal in support of its decision (Ryan, supra), I am unable to detect any reasonable justification for denying costs in this instance. I first note that section 30.16, which is the only statutory authority to which the Tribunal referred in its reasons (paragraph 3), does not authorize the Tribunal to adhere to a practice of denying costs to the Crown despite its success. Quite to the contrary, this provision, on the face of it, envisages that costs can be awarded to either party.
[31]Looking at the remainder of the reasons, the fact that HRDC was represented by salaried employees (reasons, paragraph 7) is not a relevant consideration. Furthermore, the reasons give no consideration to the principle of indemnification and do not recognize the fact that costs were incurred by HRDC in resisting the complaint brought against it. I also note that paragraphs 4, 5 and 6 of the reasons relate to the Tribunal's general experience in dealing with complaints and, as such, bear no connection with the litigation with respect to which costs were sought.
[32]In this last connection, the respondent argued that although the observations made in these paragraphs are of a general nature, some of the facts in issue in this case come within the profile of cases to which the Tribunal was alluding in making these comments. As such, the respondent argued that these observations are relevant and justify the decision of the Tribunal denying costs to the applicant.
[33]Assuming that these paragraphs can be read as addressing the specifics of the present case, I do not believe that any of the observations which they embody can justify the denial of costs to the applicant. In particular, the fact that the respondent may have had to navigate through complex legal issues, devote time, money and resources to the pursuit of the complaint or that it presented its case in a forthright manner (reasons, paragraphs 5 and 6) does not justify a denial of costs to the successful party. After all, the end result establishes that HRDC was well advised to resist the complaint and costs were incurred in the process of doing so.
[34]Similarly, the fact that the complaint was "seemingly meritorious" at the initial stage (reasons, paragraph 4) is not a valid reason for ultimately denying costs to the successful party. A complaint which seems meritorious at the initial stage may turn out to be devoid of any merit at the final stage. Incidentally, this question cannot be answered in this case as there was no adjudication on the merits and hence no determination as to whether the complaint was meritorious.
[35]Finally, looking beyond what is expressly stated by the Tribunal in its reasons, the respondent argued that the Tribunal, as the "bid challenge authority" (Canada (Attorney General) v. McNally Construction Inc., [2002] 4 F.C. 633 (C.A.), at paragraph 8) had a duty to ensure Canada's compliance with international obligations arising under NAFTA and AIT relating to procurement matters. As such, it was submitted that the Tribunal has the authority to encourage complainants to come forward, or at least not to discourage them from doing so. The Tribunal's costs policy is said to be justified on this basis.
[36]Although it seems clear that the practice of denying costs to the Crown despite its success has the effect of encouraging complainants to come forward, the Tribunal has alluded to no provision which would authorize it to implement measures towards that end. Indeed, the only statutory reference contained in the reasons is to section 30.16 which, as we have seen, provides for no such authority. The respondent has been unable to point to any other provision which could be construed as authorizing the Tribunal to assume a pro-active role in encouraging complaints.
[37]I accept that Parliament has designated the Tribunal as the competent forum for adjudicating procurement complaints and that, in fulfilling this function, the Tribunal is called upon to give effect to the international obligations which bind Canada in relation to procurement matters. But there is a quantum leap between providing a forum for dispute resolution and encouraging disputes to take place. I can find nothing in the Act which would give the Tribunal authority to encourage or invite litigation in the area of procurement by adhering to a practice of denying costs to the Crown despite its success.
[38]I therefore conclude that the Tribunal fettered its discretion by adhering to this practice in this instance.
[39]I would allow the application for judicial review, set aside the decision of the Tribunal, and refer the matter back so that the Tribunal may exercise its discretion anew on proper principle, in the light of the foregoing reasons. The applicant should be entitled to the costs of this application.
Stone J.A.: I agree.
Sexton J.A.: I agree.