By: Paul Emanuelli
This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its July 2019 decision in Independent Contractors and Businesses Association v. British Columbia (Transportation and Infrastructure), the Supreme Court of British Columbia rejected a summary dismissal application after ruling that the provincial government’s decision to limit work on a government construction contract to unionized labour remained subject to legal challenge by way of judicial review. The dispute dealt with a Request for Qualifications (RFQ) issued by the Minister of Transportation and Infrastructure for British Columbia for the Pattullo Bridge Replacement Project. The RFQ required that contractors source their labour exclusively from B.C. Infrastructure Benefits Inc. (BCIB), a Crown Corporation that, in turn, directed that work to the unions affiliated with the Allied Infrastructure and Related Construction Council of B.C. (AIRCC) through a collective bargaining agreement referred to as a “Community Benefits Agreement” (CBA).
The applicants legally challenged this process, seeking a declaration that the RFQ requirement was an unreasonable exercise of the Minister’s statutory power and infringed the Canadian Charter of Rights and Freedoms. The government brought a motion to dismiss the case. However, while the Court found that the decision in question was shielded from challenge under the provincial Judicial Review Procedure Act, it remained subject to challenge under the general judicial review powers of the courts, whereby the courts can review the contracting decision of government where the exercise of statutory power over the public interest is involved:
In Irving Shipbuilding Inc. v. Canada (Attorney General) (F.C.A.), [2010] 2 F.C.R. 488, 2009 FCA 116 [Irving], the Federal Court of Appeal also noted that decisions of a minister to enter into contracts might, in some circumstances, raise public law issues and be subject to judicial review. Irving concerned a challenge to the process involved in the awarding of government procurement contracts relating to submarines:
The fact that the power of the Minister, a public official, to award the contract is statutory, and that this large contract for the maintenance and servicing of the Canadian Navy’s submarines is a matter of public interest, indicate that it can be the subject of an application for judicial review under section 18.1 [as enacted by S.C. 1990, c. 8, s. 5; 2002, c. 8, s. 27], a public law proceeding to challenge the exercise of public power.
However, the fact that the Minister’s broad statutory power is a delegation of the contractual capacity of the Crown as a corporation sole, and that its exercise by the Minister involves considerable discretion and is governed in large part by the private law of contract, may limit the circumstances in which the Court should grant relief on an application for judicial review challenging the legality of the award of a contract.
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This view of the Court’s jurisdiction is consistent with that generally adopted by other courts in Canada: see Paul Emanuelli, Government Procurement, 2nd ed. (Markham, Ont.: LexisNexis, 2008), at pages 697–706, who concludes (at page 698):
As a general rule, the closer the connection between a procurement process and the exercise of a statutory power, the greater the likelihood that the activity can be subject to judicial review. Conversely, to the extent that the procurement falls outside the scope of a statutory power and within the exercise of government’s residual executive power, the less likely that the procurement will be subject to judicial review.
The decision of the Federal Court of Appeal in Air Canada v. Toronto Port Authority et al, [2013] 3 F.C.R. 605, 2011 FCA 347, is also relevant. That decision addressed the public-private distinction and the factors to be taken into account in determining whether judicial review is available.
The above authorities establish that the exercise of a power to contract by a Minister of the Crown can be either a private law matter, immune from judicial review, or a public law matter that is subject to judicial review. More specifically, for a contractual decision to be a public law matter subject to judicial review there must be an “additional public element” or it must be “of a sufficiently public character”. This requires a full consideration of the contract and the circumstances of the exercise of the power. For the purposes of the applications before me, I need only determine whether it is arguable the petition discloses a sufficient “additional public element” to make this a matter of public law subject to judicial review. In my view, this part of the petition is arguable. The factors that lead me to this conclusion, following the outline from Air Canada, are:
a) The impugned decision is of broad import to the general public. This is so because of the size of the projects affected, the fact that they are public projects, and because of the allegation that the Building Trades Only Requirement is being imposed for an improper purpose, including, to benefit the supporters of the current government;
b) The decision maker is the Minister who is charged with public responsibilities relating to public transportation projects and the impugned decision is closely aligned with those public responsibilities;
c) The authority of the Minister to make the impugned decision is largely authorized by s. 3 of the Transportation Act, a public statute;
d) The Minister is more than just an agent of the government, he is a Minister of the Crown;
e) The matters raised by the petition are arguably suitable for public law remedies such as certiorari or prohibition;
f) The impugned decision is in the nature of the exercise of a compulsory power in the sense that the parties affected by it have no real choice but to comply with it;
g) The impugned decision affects the rights and interests of workers and contractors, most of whom have no affiliation or relationship with the Building Trades Unions; and
h) The impugned decision also affects the general public, given the allegations that the Building Trades Only Requirement was imposed for an improper purpose.
The case was therefore allowed to proceed to determine the reviewability and defensibility of the government’s decision to impose labour restrictions on the public infrastructure project and to determine whether the court should strike down those restrictions as invalid. In its August 2020 ruling, the British Columbia Court of Appeal agreed that the government’s decision was subject to common law judicial review under the constitutional powers of the courts. The Court of Appeal also overruled the trial court and ruled that the government’s decision was also subject to review under the Judicial Review Procedure Act. Further, the Court of Appeal determined that the courts, and not the Labour Relations Board, had the jurisdiction to rule on the issue.
As this case illustrates, attempts by public purchasing institutions to impose limits on competition remain subject to legal challenge in various forms, which can include judicial review challenges based on the statutory or common law review powers of the courts. Purchasing institutions should therefore tread carefully before imposing requirements that unnecessarily restrict competition.
