A-7-02
2002 FCA 184
The Attorney General of Canada (Applicant)
v.
McNally Construction Inc. and ABCO Industries Limited (Respondents)
and
Canadian International Trade Tribunal (Intervener)
Indexed as: Canada (Attorney General) v. McNally Construction Inc. (C.A.)
Court of Appeal, Stone, Sexton and Sharlow JJ.A.-- Ottawa, April 17 and May 9, 2002.
Administrative Law -- Judicial Review -- Standard of review -- Canadian International Trade Tribunal (CITT) holding North American Free Trade Agreement (NAFTA), Agreement on Government Procurement (AGP) applied to procurement of jet-propelled patrol boat -- "Pragmatic and functional" approach to determining standard of review -- Act not containing privative clause, suggesting less deference owed to CITT's decisions -- Essential question interpretation of "shipbuilding and repair" in NAFTA, AGP exclusions -- Since 1994 CITT acquiring considerable specialized expertise in interpretation of trade agreements, procurement matters -- Weighing these factors, more deferential standard of "patent unreasonableness" appropriate.
Internal Trade -- Judicial review of CITT decision North American Free Trade Agreement (NAFTA), Agreement on Government Procurement (AGP) applied to procurement of jet-propelled patrol boat by government -- Applying standard of review of patent unreasonableness, only clearly irrational decision, evidently not in accordance with reason, set aside -- CITT not erring in taking into account various definitions, purpose for tendering provisions of NAFTA, AGP -- CITT's construction of "shipbuilding and repair" exclusions in NAFTA, AGP not patently unreasonable.
This was an application for judicial review of a decision of the Canadian International Trade Tribunal (CITT) that the North American Free Trade Agreement (NAFTA) and the Agreement on Government Procurement (AGP) applied to the procurement by the Department of Public Works and Government Services (DPWGS) on behalf of the Department of Fisheries and Oceans of a jet-propelled patrol boat for use in the coastal waters of the Maritime provinces. The respondent, McNally Construction Inc., an unsuccessful bidder, filed a complaint with the CITT alleging that contrary to NAFTA and the AGT the DPWGS had failed to make an award in accordance with the criteria specified in the tender documents. The DPWGS contended that the solicitation was covered by the specific exclusions for "shipbuilding and repair" in NAFTA and the AGP, so that the procurement was covered only by the Agreement on Internal Trade (AIT). Having determined that the word "ship" has both a broad and narrower meaning, the CITT decided to resolve the construction problem by selecting the meaning that it found to be most harmonious with the general purpose of the tendering provisions of NAFTA and the AGP. Accordingly it adopted the narrower definition of "ship" as a "large sea-going vessel", in the sense that it is fit to cross the sea and make distant voyages as opposed to a coasting, harbour or river vessel. It concluded that the boat was not a ship and that the procurement was not in respect of "shipbuilding" within NAFTA and the AGP. Therefore it held that it had jurisdiction to consider the complaint not only under the AIT but also under NAFTA and the AGP. The CITT has been Canada's bid challenge authority for federal government procurements under Chapter 10 of NAFTA since January 1, 1994, for the AIT since July 1, 1995 and the AGP since January 1, 1996. Canadian International Trade Tribunal Procurement Inquiry Regulations, section 11 requires the CITT to "determine whether the procurement was conducted in accordance with the requirements" of NAFTA, the AIT or AGP.
The issues were: (1) what is the appropriate standard of review of the CITT's decision that the procurement was not exempted from the scope of NAFTA and the AGP; and (2) whether the CITT erred in construing "shipbuilding and repair" in the NAFTA and AGP exclusions.
Held, the application should be dismissed.
(1) Traditionally the analysis has begun by classifying the decision under review as either one of jurisdiction or as one made within jurisdiction. A question of jurisdiction is to be reviewed on the "correctness" standard while one made within jurisdiction is to be reviewed on the "patent unreasonableness" standard. The CITT was construing the language of trade agreements to determine whether the procurement fell within the "shipbuilding and repair" exclusions. This had jurisdictional consequences in that the CITT could not apply NAFTA and the AGP to the procurement without first deciding that the "shipbuilding and repair" exclusions did not apply. Determination of the standard of review is to be made by taking a "pragmatic and functional" approach, which requires the weighing of several factors. In general terms those factors are: the purpose and objective of the Act and the specific provision, the specific language of the provision, any privative clauses in the tribunal's constitutive statute, the nature of the tribunal's decision and the relative expertise of the tribunal. The Act does not contain a privative clause. Taken by itself, this factor suggests that less, rather than more, deference is owed to the CITT's decision. Nothing in the record disclosed the underlying reason for these exclusions. On their face, they appear to render inapplicable the NAFTA and the AGP to a government procurement for the construction or repair of any ship regardless of size and whether or not fit to cross the open sea. The essential question was thus concerned with the interpretation of the term "shipbuilding and repair" in the NAFTA and the AGP exclusions. The factor of a tribunal's expertise and the nature of the question are closely interrelated. The tribunal's relative expertise may be the most important factor to be considered in settling on a standard of review. Since 1994 the CITT has acquired considerable specialized expertise over the interpretation of the trade agreements in issue. Weighing the various factors, particularly the nature of the problem and the CITT's expertise in trade matters, the more deferential standard of "patent unreasonableness" was favoured. A decision is "patently unreasonable" if it is "clearly irrational, that is to say evidently not in accordance with reason".
(2) The CITT did not err in taking into account various definitions of "shipbuilding" and "ship" and the purpose for the tendering provisions of NAFTA and the AGP in construing the language of the exclusions. The language of the exclusions suggested that they were not intended to apply to any craft that might conceivably fall within a broad definition of that language but only to a large seagoing ship built or repaired on procurement of the federal government.
There was nothing in the record before the CITT to indicate that the "shipbuilding and repair" exclusions were intended by Canada to be applied to a "ship" in the broad sense in which that word has been defined. Nor was there any evidence of the negotiating history that would have illuminated the intended scope of the exclusions herein, or support a conclusion that there was any intention to obtain reciprocity with the United States, which has adopted measures to protect its shipbuilding and repair industries by excluding much of such activities from NAFTA. The CITT's construction of the "shipbuilding and repair" exclusions in NAFTA and the AGP was not patently unreasonable.
statutes and regulations judicially
considered
Agreement on Government Procurement, Annex 4 of the Agreement Establishing the World Trade Organization, signed at Marrakesh, 15 April 1994, Art. XIII(4)(c).
| Agreement on Internal Trade, Canada Gazette, Part I, Vol. 129, No. 17 (29 April 1995), Art. 506(6). |
| Agreement on Internal Trade Implementation Act, S.C. 1996, c. 17. |
| Canada Shipping Act, R.S.C., 1985, c. S-9, ss. 2 "ship", 673. |
| Canadian International Trade Tribunal Act, R.S.C., 1985 (4th Supp.), c. 47, ss. 30.1 (as enacted by S.C. 1993, c. 44, s. 44; 1994, c. 47, s. 39), 30.11 (as enacted by S.C. 1993, c. 44, s. 44; S.C. 1999, c. 12, s. 61), 30.13 (as enacted by S.C. 1993, c. 44, s. 44), 30.14(2) (as enacted idem), 30.15(2) (as enacted idem). |
| Canadian International Trade Tribunal Procurement Inquiry Regulations, SOR/93-602 (am. am. by SOR/95-300, s. 2), ss. 3(1) (as am. by SOR/96-30, s. 2), 7(1) (as am. by SOR/95-300, s. 7; 96-30, s. 5), 11 (as am. idem, s. 8). |
| Federal Court Act, R.S.C., 1985, c. F-7, s. 28(1)(e) (as am. by S.C. 1990, c. 8, s. 8). |
| Home-Trade, Inland and Minor Waters Voyages Regulations, C.R.C., c. 1430, s. 4(3). |
| Immigration Act, R.S.C., 1985, c. I-2, s. 70(1)(b) (as am. by S.C. 1995, c. 15, s. 13). |
| Jones Act, 46 U.S.C., § 688 (1994). |
| 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, Arts. 1015(4)(d), 1017, Annex 1001.1b-1, Art. 5(h), Annex 1001.1b-2, Art. J019, Annex 1001.2b. |
| North American Free Trade Agreement Implementation Act, S.C. 1993, c. 44. |
| World Trade Organization Agreement Implementation Act, S.C. 1994, c. 47. |
cases judicially considered
applied:
Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982; (1998), 160 D.L.R. (4th) 193; 11 Admin. L.R. (3d) 1; 43 Imm. L.R. (2d) 117; 226 N.R. 201; amended reasons [1998] 1 S.C.R. 1222; (1998), 11 Admin. L.R. (3d) 130; Canada (Attorney General) v. Public Service Alliance of Canada, [1993] 1 S.C.R. 941; (1993), 101 D.L.R. (4th) 673; 11 Admin. L.R. (2d) 59; 93 CLLC 14,022; 150 N.R. 161.
distinguished:
Canada (Deputy Minister of National Revenue -- M.N.R.) 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.
considered:
U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048; (1988), 35 Admin. L.R. 153; 89 CLLC 14,045; 95 N.R. 161; 24 Q.A.C. 244; Syndicat des employés de production du Québec et de l'Acadie v. Canada Labour Relations Board, [1984] 2 S.C.R. 412; (1984), 14 D.L.R. (4th) 457; 55 N.R. 321; 14 Admin. L.R. 72; 84 CLLC 14,069; Chieu v. Canada (Minister of Citizenship and Immigration) (2002), 208 D.L.R. (4th) 107; 18 Imm. L.R. (3d) 93; 280 N.R. 268 (S.C.C.); Cougar Aviation Ltd. v. Canada (Minister of Public Works and Government Services) (2000), 26 Admin. L.R. (3d) 30; 264 N.R. 49 (F.C.A.); Profac Facilities Management Services Inc. v. FM One Alliance Corp. (2001), 19 B.L.R. (3d) 1 (F.C.A.); Halifax Longshoremen's Assn., Local 269 v. Offshore Logistics Inc. (2000), 25 Admin. L.R. 224; 257 N.R. 338 (F.C.A.); International Longshoremen's and Warehousemen's Union, Ship and Dock Foremen, Local 514 v. Prince Rupert Grain Ltd., [1996] 2 S.C.R. 432; (1996), 135 D.L.R. (4th) 385; 40 Admin. L.R. (2d) 1; 96 CLLC 210-037; 198 N.R. 99; National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324; (1990), 74 D.L.R. (4th) 449; 45 Admin. L.R. 161; 114 N.R. 81; 3 T.C.T. 5303; 4 T.T.R. 267.
referred to:
Canada (Attorney General) v. McNally Construction Inc., 2002 FCA 111; [2002] F.C.J. No. 405 (QL); Canada (Attorney General) v. Symtron Systems Inc., [1999] 2 F.C. 514; (1999), 236 N.R. 143 (C.A.); Canada (Attorney General) v. Corel Corp. (1999), 241 N.R. 190 (F.C.A.); Novell Canada Ltd. v. Canada (Minister of Public Works and Government Services) (2000), 257 N.R. 179 (F.C.A.); E.H. Industries Ltd. v. Canada (Minister of Public Works and Government Services) (2001), 267 N.R. 173 (F.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; 274 N.R. 69 (C.A.); leave to appeal to S.C.C. refused [2001] S.C.C.A. No. 490 (QL); Nanaimo (City) v. Rascal Trucking Ltd., [2000] 1 S.C.R. 342; (2000), 143 D.L.R. (4th) 1; [2000] 6 W.W.R. 403; 76 B.C.L.R. (3d) 201; 132 B.C.A.C. 298; 9 M.P.L.R. (3d) 1; 251 N.R. 42; Trinity Western University v. British Columbia College of Teachers, [2001] 1 S.C.R. 772; (2001), 199 D.L.R. (4th) 1; 31 Admin. L.R. (3d) 163; 151 B.C.A.C. 161; 269 N.R. 1; Committee for Equal Treatment of Asbestos Minority Shareholders v. Ontario (Securities Commission), [2001] 2 S.C.R. 132; (2001), 199 D.L.R. (4th) 577; 29 Admin. L.R. (3d) 1; 14 B.L.R. (3d) 1; 269 N.R. 311; 146 O.A.C. 201.
authors cited
Gage Canadian Dictionary, Toronto: Gage Educational Publishing Co., 1997.
APPLICATION for judicial review of the Canadian International Trade Tribunal's decision that the provisions of the North American Free Trade Agreement and the Agreement on Government Procurement applied to the procurement of a jet-propelled patrol boat by the Department of Public Works and Government Services (McNally Construction Inc. (Re), [2001] C.I.T.T. No. 87 (QL)). Application dismissed.
appearances:
Anne M. Turley for applicant.
No one appearing for respondents.
John C. Dodsworth and Michele Hurteau for intervener.
solicitors of record:
Deputy Attorney General of Canada for applicant.
Canadian International Trade Tribunal, Legal Services, for intervener.
The following are the reasons for judgment rendered in English by
[1]Stone J.A.: This is an application to review and set aside a decision of the Canadian International Trade Tribunal (the Tribunal) dated December 6, 2001, [[2001] C.I.T.T. No. 87 (QL)] made pursuant to subsection 30.14(2) [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), with respect to the procurement by the Department of Public Works and Government Services (DPWGS) on behalf of the Department of Fisheries and Oceans pursuant to the Agreement on Internal Trade [Canada Gazette, Part I, Vol. 129, No. 17 (29 April 1995)] (AIT) for the construction of a jet-propelled patrol boat for use in the coastal waters of the Maritime provinces during all seasons of the year.
INTRODUCTION
[2]The respondent McNally Construction Inc. was an unsuccessful bidder on this procurement. On September 7, 2001, McNally filed a complaint with the Tribunal alleging that contrary to Articles 506(6) of the AIT, 1015(4)(d) of the North American Free Trade Agreement Between the Government of Canada, the Government of the United Mexican States and the Government of the Unites States of America [December 17, 1992, [1994] Can. T.S. No. 2] (NAFTA) and XIII(4)(c) of the Agreement on Government Procurement [Annex 4 of the Agreement Establishing the World Trade Organization, signed at Marrakesh, 15 April 1994] (AGP), the DPWGS had failed to make an award in accordance with the criteria specified in the tender documents. Chapter 10 of NAFTA applies to government procurement. The DPWGS contended before the Tribunal that the procurement in issue was subject only to the provisions of the AIT because the solicitation was covered by the specific exclusions for "shipbuilding and repair" in Annex 1001.2b, Schedule of Canada, of NAFTA and in the General Notes of the AGP. These exclusions read:
Annex 1001.2b, Schedule of Canada, of NAFTA:
1. This Chapter does not apply to the procurements in respect of:
(a) shipbuilding and repair;
General Notes to the AGP
Notwithstanding anything in these Annexes, the Agreement does not apply to procurements in respect of:
(a) shipbuilding and repair.
[3]As the respondents no longer have any interest in this application it became moot. However, another panel of this Court exercising its discretion despite this mootness, decided that the Court should nevertheless hear and determine the issue of whether the Tribunal properly construed the relevant exclusions in NAFTA and the AGP. On March 20, 2002 [2002 FCA 111; [2002] F.C.J. No. 405 (C.A.) (QL)], Décary J.A. granted the Tribunal's motion to intervene for the purpose stated in paragraph 4 of the order, that is "to assist the Court in determining the relevant standard of review and to provide the Court with a perspective on the `shipbuilding and repair' issue that is different from that advanced by the Attorney General". The applicant thus limits the relief it seeks in this Court to the setting aside of the Tribunal's decision to the extent that the Tribunal concluded that the provisions of NAFTA and the AGP applied to the procurement of the jet-propelled patrol boat in issue.
FACTUAL BACKGROUND
[4]The patrol boat in issue is to be between 43 and 46 feet in length and to have a breadth of approximately one-third of its length. It is to be powered by twin marine diesel engines of approximately 600 horsepower. The statement of requirements (SOR) prepared by the Department of Fisheries and Oceans describes the missions and other requirements of the boat in paragraph G 1.1 as follows:
G 1.1 Program Delivery Requirements
| 1.1.1 Fisheries & Oceans Canada (DFO), Canadian Coast Guard (CCG), Maritimes Region requires a fast inshore patrol boat for fisheries enforcement purposes. The patrol boat shall operate as a station-mode patrol boat in the coastal waters within the Region during all seasons of the year. |
| 1.1.2 The primary mission for the patrol boat shall be to allow fisheries officers to recover and haul (bring to port), untagged or illegal lobster traps and other fishing gear. For this purpose, the patrol boat must be able to transport a minimum of one hundred (100) lobster traps safely stacked and secured in place. |
| 1.1.3 The secondary mission for the patrol boat shall be other fisheries enforcement duties such as boarding and surveillance, and Search and Rescue (SAR) duties, which are within the reasonable capabilities of this type and size of patrol boat. There are times that the patrol boat will be required to provide ambulance service to evacuate persons from Grand Manan Island. |
| 1.1.4 The patrol boat must be fast to allow rapid deployment from home port to the work area and seaworthy to allow prudent, safe operation and sea-kindliness to minimise crew fatigue. |
| 1.1.5 The patrol boat must also be stable to allow safe hauling of gear and carrying seized gear, robust to be able to withstand normal in-service wear and tear and easily maintained. Also with good access to main and auxiliary machinery without the requirement to remove equipment, piping, etc. to carry out routine maintenance, replacement and inspection. |
[5]The SOR sets out in clause G1.4.1 a general requirement that the patrol boat "be designed, built and classed to Transport Canada Marine Safety Branch. . . for Home Trade Voyages Class III". Counsel for the applicant conceded that "Home Trade Voyages Class III" is there used in the sense appearing in the Home-Trade, Inland and Minor Waters Voyages Regulations, C.R.C., c. 1430, made pursuant to the Canada Shipping Act, R.S.C., 1985, c. S-9. Subsection 4(3) of these Regulations defines a "home-trade voyage, Class III" as one in the course of which, inter alia, the vessel does not go south of the port of New York nor more than 20 nautical miles off shore.
THE TRIBUNAL'S DECISION
[6]In construing the NAFTA and AGP exclusions referred to above after examining a definition of "shipbuilding", the Tribunal turned for assistance to various dictionary definitions of the word "ship". As the Tribunal observed, some of these definitions broadly include "any description of vessel or boat used or designed for use in navigation without regard to method or lack of propulsion". The Tribunal noted that a similarly broad definition of the word "ship" appears in Canadian federal legislation as, for example, in section 2 of the Canada Shipping Act: "any description of vessel used in navigation and not propelled by oars". The Tribunal found that other dictionary definitions signify a narrower meaning of the word "ship", as a "large sea-going vessel" in the sense that it is fit to cross the sea and make distant voyages as opposed to a coasting, harbour or river vessel. In selecting this narrower definition, the Tribunal took into account the purpose of procurement provisions of NAFTA and the AGP when it stated, at paragraphs 36-37 of its decision:
Given the fact that both broad and narrow definitions of the word "ship" are possible, the Tribunal needs to determine whether a broad or narrow definition should be adopted in this context.
Generally speaking, the purpose of the procurement provisions of NAFTA and the AGP is to promote trade liberalization by ensuring that tendering procedures are applied in a non-discriminatory and transparent manner. In order to address this purpose as broadly as possible, the Tribunal considers that the categories of procurements excluded from coverage by NAFTA and the AGP should normally be construed narrowly. Accordingly, the Tribunal adopts the narrower definition of "ship" and considers that , in this context, a ship is "any large seagoing vessel".
[7]The Tribunal next turned to the required functions of the patrol boat as described in the SOR, noting at paragraph 44, that the boat would "be based in a home port, out of which it will be deployed to various work areas in coastal waters", and that it [at paragraph 45] "is not required to cross the sea or to travel long distances over the sea". It concluded [at paragraph 47]:
Accordingly, the Tribunal considers that the jet-propelled patrol boat is not a ship and that the procurement of a jet-propelled patrol boat is not a procurement in respect of "shipbuilding" within the meaning of NAFTA and the AGP. Therefore, the Tribunal has jurisdiction to consider the complaint not only under the AIT but also under NAFTA and the AGP.
LEGISLATIVE FRAMEWORK
[8]The NAFTA, AGP and the AIT have been implemented in federal legislation: North American Free Trade Agreement Implementation Act, S.C. 1993, c. 44; World Trade Organization Agreement Implementation Act, S.C. 1994, c. 47; Agreement on Internal Trade Implementation Act, S.C. 1996, c. 17. Following the implementation of NAFTA on January 1, 1994, the Tribunal became Canada's bid challenge authority for federal government procurements under Chapter 10 of that Agreement. On July 1, 1995 and January 1, 1996, the Tribunal became the bid challenge authority for the AIT and for the AGP, respectively.
[9]The complaint in issue was filed with the Tribunal pursuant to section 30.11 [as enacted by S.C. 1993, c. 44, s. 44; 1999, c. 12, s. 61] of the Act, as a result of which the Tribunal decided to conduct an inquiry into the complaint pursuant to section 30.13 [as enacted by S.C. 1993, c. 44, s. 44]. The purpose of the inquiry was to determine the validity of the complaint. The Tribunal's power with respect to the disposition of the complaint is set forth in subsection 30.14(2) [as enacted idem] of the Act. That subsection reads:
30. 14 . . .
(2) At the conclusion of an inquiry, the Tribunal shall determine whether the complaint is valid on the basis of whether the procedures and other requirements prescribed in respect of the designated contract, or the class of contracts to which it belongs, have been or are being observed.
Where the Tribunal finds that a complaint is valid it may recommend one of the remedies enumerated in subsection 30.15(2) [as enacted idem] of the Act.
[10]Under section 30.13 of the Act, the Tribunal is required to determine whether to conduct an inquiry into the complaint. By subsection 7(1) [as am. by SOR/96-30, s. 5] of the Canadian International Trade Tribunal Procurement Inquiry Regulations, SOR/93-602 [as am. by SOR/95-300, s. 2] (the Regulations), the Tribunal must make a determination whether the conditions of inquiry have been satisfied. One of these conditions is that the complaint be in respect of a "designated contract". No issue arises that the procurement in question met the definitions of "designated contract" as found in section 30.1 [as enacted by S.C. 1993, c. 44, s. 44; 1994, c. 47, s. 39] of the Act and subsection 3(1) [as am. by SOR/96-30, s. 2] of the Regulations. Section 11 [as am. idem, s. 8] of the Regulations describes the purpose of an inquiry into a complaint. It reads:
11. Where the Tribunal conducts an inquiry into a complaint, it shall determine whether the procurement was conducted in accordance with the requirements set out in whichever one of NAFTA, the Agreement on Internal Trade, the Agreement on Government Procurement applies.
ISSUES
[11]The primary issue in this appeal is determining the standard by which this Court is to review the Tribunal's decision that the procurement at issue was not exempted from the scope of NAFTA and the AGP. The Court then must decide, on the appropriate standard, whether the Tribunal erred in construing the term "shipbuilding and repair" in the NAFTA and AGP exclusions.
ANALYSIS
Standard of Review
[12]Central to the present application is the standard by which this Court is to review the Tribunal's decision on the construction of the "shipbuilding" exclusions. The applicant contends that the review should be for "correctness" because the exclusions in question define the boundaries of the Tribunal's jurisdiction to deal with the procurement as one to which the AIT alone applies or as one to which the AIT as well as NAFTA and the AGP apply. The intervener argues, on the other hand, that the "patent unreasonableness" standard is more appropriate to this case. It submits that although the Tribunal's decision may have jurisdictional consequences the application of the exclusions is a matter which, through the scheme of the legislation, Parliament has delegated to the Tribunal.
[13]In Canada (Deputy Minister of National Revenue--M.N.R.) v. Mattel Canada Inc., [2001] 2 S.C.R. 100, at paragraph 24, the Supreme Court reiterated that the various standards of review recognized by that Court range from the more deferential "patent unreasonableness" standard, through "reasonableness simpliciter" to the more exacting "correctness" standard. The Court reaffirmed that the determination in any given case is to be made by taking a "pragmatic and functional" approach bearing in mind that the focus of the inquiry "is whether the question raised is one that was intended by the legislators to be left to the exclusive decision of the administrative tribunal". The Court listed the following factors to be weighed in that approach for determining the appropriate standard of review. These are, "the purpose and objective of the Act and provision at issue, the specific language of the provision at issue and any privative clauses in the tribunal's constitutive statute, the nature of the decision made by the tribunal and the relative expertise of the tribunal compared to that of the courts in deciding such matters". The Court reemphasized that none of these factors "is alone dispositive".
[14]Traditionally, in determining the appropriate standard for reviewing decisions of the Tribunal this Court has started its analysis by classifying the decision under review as either one of jurisdiction or as one made within jurisdiction. The Court has adopted the view that a question of jurisdiction is to be reviewed on the "correctness" standard while one made within jurisdiction is to be reviewed on the more deferential "patent unreasonableness" standard: Canada (Attorney General) v. Symtron Systems Inc., [1999] 2 F.C. 514 (C.A.); Canada (Attorney General) v. Corel Corp. (1999), 241 N.R. 190 (F.C.A.); Novell Canada Ltd. v. Canada (Minister of Public Works and Government Services) (2000), 257 N.R. 179 (F.C.A.); E.H. Industries Ltd. v. Canada (Minister of Public Works and Government Services) (2001), 267 N.R. 173 (F.C.A.); Siemens Westinghouse Inc. v. Canada (Minister of Public Works and Government Services), [2002] 1 F.C. 292 (C.A.); leave to appeal to S.C.C. refused, April 18, 2002, [2001] S.C.C.A. No. 490 (QL). In Siemens, supra, Malone J.A. was of the view that it would be "only rarely" that the Court would apply the "correctness" standard to a legal issue that was within the jurisdiction of the Tribunal but outside of its area of expertise.
[15]This distinction between a "jurisdictional question" and a question "within jurisdiction" was indeed noted in U.E.S., Local 298 v. Bibeault, [1988] 2 S.C.R. 1048, where the "pragmatic and functional" approach had its genesis. In that case Beetz J. stated, at page 1086, that "a tribunal cannot by a misinterpretation of an enactment assume a power not given to it by the legislator". Beetz J. had expressed views to the same effect in Syndicat des employés de production du Québec et de l'Acadie v. Canada Labour Relations Board, [1984] 2 S.C.R. 412, at page 441, where he stated that while "it is often difficult to determine what constitutes a question of jurisdiction" once the classification has been made "it does not matter whether an error as to such a question is doubtful, excusable or not unreasonable, or on the contrary is excessive, blatant or patently unreasonable" because "[w]hat makes this kind of error fatal, whether serious or slight, is its jurisdictional nature". More recently in Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982, Bastarache J. adhered to that general view when he stated at paragraph 28:
Although the language and approach of the "preliminary", "collateral" or "jurisdictional" question has been replaced by this pragmatic and functional approach, the focus of the inquiry is still on the particular, individual provision being invoked and interpreted by the tribunal. Some provisions within the same Act may require greater curial deference than others, depending on the factors which will be described in more detail below. To this extent, it is still appropriate and helpful to speak of "jurisdictional questions" which must be answered correctly by the tribunal in order to be acting intra vires. But it should be understood that a question which "goes to jurisdiction" is simply descriptive of a provision for which the proper standard of review is correctness, based upon the outcome of the pragmatic and functional analysis. In other words, "jurisdictional error" is simply an error on an issue with respect to which, according to the outcome of the pragmatic and functional analysis, the tribunal must make a correct interpretation and to which no deference will be shown.
[16]Unlike as in Mattel, supra, the Court is not here concerned with the interpretation by the Tribunal of a statutory term to which the Supreme Court there applied the "correctness" standard on the basis that the interpretation of the statutory provisions in issue involved "pure questions of law". In the instant case the Tribunal was not faced with the construction of a statutory provision but, rather, with construing certain language of NAFTA and the AGP for the purpose of determining whether the procurement in issue fell within the "shipbuilding and repair" exclusions. Nevertheless, as the Tribunal itself indicated at paragraph 26 of the decision, the construction of the exclusions carried with it jurisdictional consequences in the sense that the Tribunal could not embark on the application of NAFTA and the AGP to the procurement in issue before first deciding that the "shipbuilding and repair" exclusions did not apply.
[17]The Supreme Court has consistently stressed that the appropriate standard is to be determined by taking the "pragmatic and functional" approach. Illustrations of that approach to standard of review, in addition to Pushpanathan, supra, include Nanaimo (City) v. Rascal Trucking Ltd., [2000] 1 S.C.R. 342; Trinity Western University v. British Columbia College of Teachers, [2001] 1 S.C.R. 772; Mattel, supra; and Committee for the Equal Treatment of Asbestos Minority Shareholders v. Ontario (Securities Commission), [2001] 2 S.C.R. 132. A further recent example is Chieu v. Canada (Minister of Citizenship and Immigration) (2002), 208 D.L.R. (4th) 107 (S.C.C.), where in taking that approach the Court determined that a decision of the Immigration Appeal Board under paragraph 70(1)(b) [as am. by S.C. 1995, c. 15, s. 13] of the Immigration Act, R.S.C., 1985, c. I-2, whether "having regard to all the circumstances of the case" a person should not be removed from Canada, was to be reviewed for "correctness".
[18]I would note at the outset in taking the "pragmatic and functional" approach in the instant case, that the Act contains no privative clause. Tribunal decisions are subject to review by this Court pursuant to paragraph 28(1)(e) [as am. by S.C. 1990, c. 8, s. 8] of the Federal Court Act, R.S.C., 1985, c. F-7. Taken by itself, this factor suggests that less rather than more deference is owed to the decision of the Tribunal.
[19]The apparent purpose of the "shipbuilding and repair" exclusions is to exempt application of NAFTA and the AGP from a government procurement of that nature, and so leave such a procurement subject to the terms of the AIT alone. Nothing in the record discloses the underlying reason for these exclusions. Counsel for the applicant explained that despite much effort the applicant had been unable to turn up any evidence touching the intended scope of the exclusions. The discovery of evidence such as is ordinarily contained in travaux préparatoires might have shed some light on the intended scope of the exclusions. Unfortunately, none could be located by the applicant. On their face, the exclusions would appear to render inapplicable the NAFTA and the AGP to a government procurement for the construction or repair of any ship regardless of size and whether or not fit to cross the open sea. The essential question is thus concerned with the interpretation of the term "shipbuilding and repair" in the NAFTA and the AGP exclusions.
[20]In Mattel, supra, at paragraph 32, Major J. noted that the factor of a tribunal's expertise and the nature of the question are closely interrelated. The Court had earlier acknowledged, at paragraph 28, that the Tribunal's relative expertise was the most important factor of the factors to be considered "in settling on a standard of review". As Major J. pointed out at paragraph 29, the Act does not require tribunal members to be expert in any particular field or that experts advise on their appointments. He noted that in addition to a chair and two vice-chairs, not more than six other permanent members are to be appointed by the Governor in Council. Major J. went on to explain the significance of this form of appointment to the expertise of the Tribunal in trade matters, when he stated at paragraph 30:
Permanent members are appointed to hold office for a term not exceeding five years (s. 3(3)). Being permanent appointments, members of the CITT acquire experience in the questions they consider over the course of their appointments. Depending on the nature of the question at issue, members of the CITT acquire experience and expertise that courts do not. This is also consistent with Wilson J.'s characterization of the predecessor to the CITT as being "staffed by experts familiar with the intricacies of international trade relations who are in the business of dealing with a large volume of trade related cases" (National Corn Growers Assn., supra, at p. 1348).
[21]As noted above, section 11 of the Regulations requires the Tribunal to "determine whether the procurement was conducted in accordance with the requirements" of NAFTA, the AIT or AGP, as the case may be. There can be no doubt that since 1994 the Tribunal has acquired considerable specialized expertise from the frequent invocation and application of its jurisdiction over procurement complaints, an expertise that obviously extends to the interpretation of the trade agreements in issue -- the AIT, NAFTA and the AGP. The intervener asserts that over the past seven years the Tribunal has had to deal with more than 350 procurement complaints. I accept the intervener's submission that the exclusions for "shipbuilding and repair" in NAFTA and the AGP requires an understanding of the procurement provisions of those agreements, including the scheme of exceptions and exemptions contained therein and calls upon the Tribunal's specialized expertise in interpreting the agreements in the context of the Act and the Regulations.
[22]In two recent cases, this Court was required to determine the appropriate standard of review of a Tribunal decision. They provide an interesting contrast. In Cougar Aviation Ltd. v. Canada (Minister of Public Works and Government Services) (2000), 26 Admin. L.R. (3d) 30 (F.C.A.), this Court decided to apply the standard of "correctness" to an allegation of bias in the Tribunal in determining the validity of a complaint. In Profac Facilities Management Services Inc. v. FM One Alliance Corp. (2001), 19 B.L.R. (3d) 1 (F.C.A.), the Tribunal had to determine whether a renewal clause in 1994 agreements between Canada Post Corporation and the suppliers of services was sufficiently precise to enable Canada Post to rely upon it in order to justify exempting a subsequent agreement dated March 23, 2001 from NAFTA procurement requirements. It was there argued that the point at issue was not within the expertise of the Tribunal because it depended on the construction of contractual documents and of ascribing legal consequences to them and to the conduct of the parties that derived from the general law of contract, and that the standard of correctness should apply. This Court disagreed. Evans J.A., for the Court, was of the view, at paragraph 24, that it was "simply unrealistic to say that the Tribunal was dealing primarily with a question of the general law of contract and was thus operating outside its area of expertise", and concluded that "the Tribunal related its conclusion to the need for Canada Post to comply with NAFTA obligations" and, accordingly, the decision was to be reviewed for "patent unreasonableness".
[23]The applicant relies heavily on the fact that the Tribunal had first to construe the exclusions in issue before it could go on to apply NAFTA and the AGP to this particular procurement and, accordingly, that a decision in this respect must be seen as one of jurisdiction to which the standard of "correctness" applies. The applicant further notes that the Tribunal itself, at paragrpah 47, recognized that it had to decide a "jurisdictional" issue by acknowledging in its conclusion on the point that it had "jurisdiction to consider the complaint not only under AIT but also under NAFTA and the AGP". I accept that in one sense the problem might possibly be viewed as jurisdictional. On the other hand, as Rothstein J.A. stated in Halifax Longshoremen's Assn., Local 269 v. Offshore Logistics Inc. (2000), 25 Admin. L.R. 224 (F.C.A.), at paragraph 15, "every time a board makes a positive decision which involves the exercise of its jurisdiction, its decision might be branded as jurisdictional", and he added: "The functional and pragmatic approach . . . is intended, among other things, to guide the Courts in deciding whether decisions that may have a jurisdictional overtone or implication are, nonetheless, not to be subjected to review for correctness". Rothstein J.A. took note of earlier warnings of the Supreme Court against too easy resort to labels in the judicial review function. He found recent support for that caution in International Longshoremen's and Warehousemen's Union, Ship and Dock Foremen, Local 514 v. Prince Rupert Grain Ltd., [1996] 2 S.C.R. 432, at page 446, per Cory J.:
If these warnings are not heeded, the operation and indeed the whole concept of administrative tribunals may be jeopardized. These tribunals are often set up to operate in areas where specific expertise, experience, and sensitivity to the particular problems involved are essential to their resolution. Administrative tribunals are designed to function expeditiously, inexpensively, and with less formality than courts. There is little doubt either of the need for these tribunals or of the very important role they fulfil in Canadian society.
[24]The problem confronting the Tribunal in the present case was in deciding whether NAFTA and the AGP applied to the procurement in issue. The solution depended on the construction of "shipbuilding and repair" appearing in those two international trade agreements in respect of which the Tribunal is the bid challenge authority. I agree that the term "shipbuilding and repair" raises a legal issue in the sense that the Tribunal is required to give it meaning in the overall context of the trade agreements and in the light of the objects and purposes of NAFTA and the AGP. While, apparently, the Tribunal had not earlier been called upon to interpret the particular term it has nevertheless been actively involved in determining procurement disputes under these various trade agreements since their implementation by Parliament during the last decade. As a result of that experience the Tribunal has acquired much expertise in procurement matters in general. In National Corn Growers Assn. v. Canada (Import Tribunal), [1990] 2 S.C.R. 1324, at page 1336, Wilson J. pointed out that careful management of such sectors as international economic relations by administrative agencies "often requires the use of experts who have accumulated years of experience and a specialized understanding of the activities they supervise". In the present case, the Tribunal was required by section 11 of the Regulations to decide whether the procurement was conducted in accordance with the requirements of the AIT, NAFTA and the AGP. To my mind, this duty extended to the construction of those trade agreements including the exclusions here in issue, which fell within the Tribunal's mandate.
[25]Weighing the various factors to be considered under the "pragmatic and functional" approach, particularly the nature of the problem and the Tribunal's expertise in trade matters, I have concluded that they favour the more deferential standard of "patent unreasonableness" rather than the more exacting "correctness" standard.
Application of the standard
[26]The second issue is whether the Tribunal made a patently unreasonable decision in deciding that the "shipbuilding and repair" exclusions in Annex 1001.2b, Schedule of Canada, of NAFTA and in the General Notes to the AGP did not apply to the procurement in issue. As has been held, the "patent unreasonableness" standard is a very strict one which signifies a high degree of judicial deference to decisions of administrative tribunals. As was stated by Cory J. in Canada (Attorney General) v. Public Service Alliance of Canada, [1993] 1 S.C.R. 941, at pages 963-964, a decision is "patently unreasonable" if it is "clearly irrational, that is to say evidently not in accordance with reason".
[27]In the case at bar, as the Tribunal noted, neither NAFTA nor the AGP defines the term "shipbuilding and repair". Accordingly, the Tribunal turned for assistance to a definition of "shipbuilding" in the Gage Canadian Dictionary, 1997, as meaning "the designing or building of ships" and "the art of building ships". The Tribunal next considered two possible approaches to the meaning of the word "ship". The first was to adopt the [at paragraph 30] "extremely broad definition that essentially indicates that a ship is any kind of boat". It noted that the definition of the word "ship" in section 673 of the Canada Shipping Act is one of broad import. The second approach was to adopt a narrower definition of "ship" as referring to a specific kind of craft. General purpose dictionaries consulted by the Tribunal indicated to it that the distinguishing features of a "ship" are that "it is large and seagoing". Having determined that the word "ship" has both a broad and narrower meaning, the Tribunal decided to resolve the construction problem by selecting the meaning that it found to be most harmonious with the general purpose of the tendering provisions of NAFTA and the AGP, and which it described as [at paragrpah 37] "to promote trade liberalization by insuring that tendering procedures are applied in a non-discriminatory and transparent manner".
[28]I am not persuaded that the Tribunal erred in taking into account the various definitions relied upon and the purpose for the tendering provisions of NAFTA and the AGP in construing the language of the exclusions. The language in which the exclusions are cast suggested to the Tribunal that they were not intended to apply to any craft that might conceivably fall within a broad definition of that language but only to a large seagoing ship built or repaired on procurement of the federal government.
[29]It must be stressed again that nothing in the record before the Tribunal indicates that the "shipbuilding and repair" exclusions were intended by Canada to be applied to a "ship" in the broad sense in which that word has been defined. The Tribunal attempted to reconcile the divergent definitions by having regard to the purpose of NAFTA and the AGP. That would seem consistent with Canada's obligations under NAFTA and the AGP. By Article 1017 of NAFTA the bid challenge procedures are intended "to promote fair, open and impartial procurement procedures". Also, the first recital to the AGP recognizes the need for "an effective multilateral framework of rights and obligations with respect to laws, regulations, procedures and practices regarding government procurement with a view to achieving greater liberalization and expansion of world trade". I accept the intervener's submission that the interpretation and application of the "shipbuilding and repair" exclusions requires an understanding of the procurement provisions of NAFTA and of the AGP, including the scheme of the exceptions and exemptions contained in them, and calls upon the Tribunal's specialized expertise in interpreting these international treaties in the context of the Act and the rules and regulations made thereunder.
[30]I have not overlooked a final argument put forward by the applicant in favour of according the word "ship" and the exclusions a broad meaning. The gist of the submission is that as the United States, a party to NAFTA, has adopted measures to protect its shipbuilding and repair industries and has excluded much of such activities from NAFTA, the exclusions under review mirror Canada's objective of obtaining a degree of reciprocity in this regard with the United States. The applicant drew attention to the Jones Act, 46 U.S.C. § 688 of the United States, and points as well to Article 5(h) of Annex 1001.1b-1 of NAFTA under which the United States has excluded from that agreement purchases of the United States Department of Defense of certain goods on the basis of national security and that this exclusion extends equally to purchases for the United States Coast Guard. Likewise, by Article J019 in Annex 1001.1b-2 of NAFTA the United States excludes the "Maintenance, Repair, Modification, Rebuilding and Installation of Equipment related to Ships" from Chapter 10 procurement requirements. The NAFTA agreement contains no similarly specific exclusions of procurement for ship construction or repair by Canada. Moreover, as already noted, there is not in the record any evidence of the negotiating history as would throw light on the intended scope of the exclusions here in issue and certainly none that would support a confident conclusion that the exclusions contained in Annex 1001.2b, Schedule of Canada, of NAFTA and in the General Notes to the AGP were intended to bring about reciprocity with the United States.
[31]In my view, the Tribunal's construction of the "shipbuilding and repair" exclusions in NAFTA and the AGP was not patently unreasonable. I would therefore dismiss the application but, in the circumstances, without costs.
Sexton J.A.: I agree.
Sharlow J.A.: I agree.