Judgments

[1994] 3 .F.C. 128

T-2794-93

Dr. Fred G. Peet (Applicant) (Motion Respondent)

v.

Attorney General of Canada (Respondent) (Motion Applicant)

and

Deputy Minister of the Department of Natural Resources Canada (previously Forestry Canada) (Intervenor)

Indexed as: Peet v. Canada (Attorney General) (T.D.)

Trial Division, Reed J.—Calgary, April 20, 1994.

Judicial review — Prerogative writs — Certiorari — Motion to strike application to quash Deputy Minister’s decision applicant in breach of Conflict of Interest Code — Code requiring public servants to divest assets determined to constitute conflict of interest or face possible disciplinary action, including discharge — Code issued by Treasury Board pursuant to authority under Financial Administration Act, not promulgated by order in council — Respondent arguing Court lacking jurisdiction as Code mere administrative directive, not law — Motion dismissed — Internal administrative directives may form basis of public duty at law — Not all duties imposed expressly — Implied duty enforceable — Impugned decision having serious consequences — Such decisions traditionally subject to judicial review.

Public Service — Conflict of Interest Code — Issued by Treasury Board under Financial Administration Act, not promulgated by order in council — Decisions thereunder subject to judicial review as (1) enforceable implied duty, (2) having serious consequences (possible loss of employment or loss of business where conflict of interest determined).

This was a motion to strike out an application to quash the decision of the Deputy Minister of Forestry Canada that the applicant’s operation of two companies was in breach of the Conflict of Interest and Post-Employment Code for the Public Service. The respondent submitted that the Court had no jurisdiction over that decision because the Code is not law. It was issued by Treasury Board pursuant to its authority under the Financial Administration Act, unlike earlier Guidelines which had been promulgated by order in council and clearly had the force of law. The respondent argued that the Code was merely an administrative directive and that decisions made thereunder were not subject to judicial review. The Code requires employees to divest assets where it has been determined that they constitute a conflict of interest. Failure to comply can result in disciplinary action including discharge.

Held, the motion should be dismissed.

The Court had jurisdiction herein.

In Nguyen v. Canada (Minister of Employment and Immigration) the majority of the Federal Court of Appeal held that internal administrative directives could form the basis of a public duty at law. Not all duties imposed by law are express. An implied duty is nonetheless enforceable. The Code in this case is even closer to being “implied” or “quasi-legislation” than was the case in Nguyen, which dealt with the Immigration Manual.

The decision which was sought to be reviewed carried very serious consequences for the applicant: the loss of his job or the divestiture or closing down of his business. Decisions having these kind of consequences have traditionally been subject to judicial review.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Environmental Assessment and Review Process Guidelines Order, SOR/84-467.

Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 18.

Federal Court Act, R.S.C., 1985, c. F-7, ss. 2 (as am. by S.C. 1990, c. 8, s. 1), 18 (as am. idem, s. 4).

Financial Administration Act, R.S.C. 1970, c. F-10, s. 7.

Financial Administration Act, R.S.C., 1985, c. F-11, ss. 5(2), 7(1), 11(2).

Penitentiary Act, R.S.C. 1970, c. P-6, s. 29(3).

Public Servants Conflict of Interest Guidelines, SI/74-2.

CASES JUDICIALLY CONSIDERED

APPLIED:

Nguyen v. Canada (Minister of Employment and Immigration), [1994] 1 F.C. 232 (C.A.); leave to appeal to S.C.C. denied 17/2/94, [1994] S.C. Bulletin 237; Inuit Tapirisat of Canada v. The Right Honourable Jules Léger, [1979] 1 F.C. 710 (C.A.).

DISTINGUISHED:

Threader v. Canada (Treasury Board), [1987] 1 F.C. 41; (1986), 68 N.R. 143 (C.A.).

CONSIDERED:

Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3; (1992), 88 D.L.R. (4th) 1; [1992] 2 W.W.R. 193; 84 Alta. L.R. (2d) 129; 3 Admin. L.R. (2d) 1; 7 C.E.L.R. (N.S.) 1; 132 N.R. 321; Martineau et al. v. Matsqui Institution Inmate Disciplinary Board, [1978] 1 S.C.R. 118; (1977), 74 D.L.R. (3d) 1; 33 C.C.C. (2d) 366; 14 N.R. 285; Martineau v. Matsqui Institution Disciplinary Board, [1980] 1 S.C.R. 602; (1979), 106 D.L.R. (3d) 385; 50 C.C.C. (2d) 353; 13 C.R. (3d) 1; 15 C.R. (3d) 315; 30 N.R. 119; Peet and Treasury Board (Forestry Canada), [1993] C.P.S.S.R.B. No. 133 (QL).

REFERRED TO:

Maple Lodge Farms Ltd. v. Government of Canada, [1982] 2 S.C.R. 2; (1982), 137 D.L.R. (3d) 558; 44 N.R. 354; Canadian Assn. of Regulated Importers v. Canada (Attorney General), [1994] 2 F.C. 247; (1994), 164 N.R. 342 (C.A.); Nicholson v. Haldimand-Norfolk Regional Board of Commissioners of Police, [1979] 1 S.C.R. 311; (1978), 88 D.L.R. (3d) 671; 78 CLLC 14,181; 23 N.R. 410; McCarthy v. Attorney General of Canada, [1981] 1 F.C. 309; (1980), 114 D.L.R. (3d) 77; 80 CLLC 14,061 (C.A.); Saskatchewan Teachers’ Federation v. Munro (1993), 15 Admin. L.R. (2d) 307 (Sask. C.A.); Attorney General of Canada v. Inuit Tapirisat of Canada et al., [1980] 2 S.C.R. 735; (1980), 115 D.L.R. (3d) 1; 33 N.R. 304.

AUTHORS CITED

Dussault, René and Louis Borgeat. Administrative Law: A Treatise, 2nd ed., vol. 1. Translated by Murray Rankin. Toronto: Carswell, 1985.

Treasury Board of Canada. Conflict of Interest and Post-Employment Code for the Public Service. Ottawa: Supply and Services Canada, 1985.

MOTION to strike out an application for judicial review of a Deputy Minister’s decision that the applicant was in breach of the Conflict of Interest and Post-Employment Code for the Public Service on the ground that the decision was not subject to judicial review because the Code was not law. Motion dismissed.

COUNSEL:

Peter J. Barnacle for applicant (motion respondent).

Yvonne E. Milosevic for respondent (motion applicant).

SOLICITORS:

Nelligan/Power, Ottawa, for applicant (motion respondent).

Deputy Attorney General of Canada for respondent (motion applicant).

The following are the reasons for order rendered in English by

Reed J.: The respondent brings a motion to have this application struck out on the ground that this Court has no jurisdiction over the decision in question. The decision was made by the Deputy Minister of Forestry Canada on February 5, 1993. He found the applicant to be in breach of the Conflict of Interest and Post-Employment Code for the Public Service (Code). The action of the applicant, which it is alleged conflicts with the Code, is his operation of two companies: Eidetic Digital Imaging and Eidetic Imaging Ltd. The applicant alleges bad faith on the part of the decision maker, that an unfair procedure was followed and that the Code was improperly applied.

The respondent argues that this Court has no jurisdiction over the applicant’s motion to have the Deputy Minister’s decision quashed because the Code is not law. It is argued that the Code is merely an administrative managerial directive and that decisions made thereunder are not subject to judicial review.

The Code was issued by Treasury Board pursuant to its authority under the Financial Administration Act, R.S.C., 1985, c. F-11:

5. …

(2) The Treasury Board shall, in addition to the President of the Treasury Board, consist of the Minister and four other members of the Queen’s Privy Council for Canada to be nominated from time to time by the Governor in Council.

…

7. (1) The Treasury Board may act for the Queen’s Privy Council for Canada on all matters relating to

(a) general administrative policy in the public service of Canada;

…

(e) personnel management in the public service of Canada, including the determination of the terms and conditions of employment of persons employed therein; and

(f) such other matters as may be referred to it by the Governor in Council.

…

11. …

(2) Subject to the provisions of any enactment respecting the powers and functions of a separate employer but notwithstanding any other provision contained in any enactment, the Treasury Board may, in the exercise of its responsibilities in relation to personnel management including its responsibilities in relation to employer and employee relations in the public service, and without limiting the generality of sections 7 to 10,

…

(f) establish standards of discipline in the public service and prescribe the financial and other penalties, including suspension and discharge, that may be applied for breaches of discipline or misconduct, and the circumstances and manner in which and the authority by which or whom those penalties may be applied or may be varied or rescinded in whole or in part;

…

(i) provide for such other matters, including terms and conditions of employment not otherwise specifically provided for in this subsection, as the Treasury Board considers necessary for effective personnel management in the public service.

The first section of the Code states:

1.   This Code for the Public Service is designed to bring to the attention of all public servants for whom Treasury Board represents the government as the employer the provisions of the recently announced Conflict of Interest and Post-Employment Code for Public Office Holders, which was tabled by the Prime Minister in the House of Commons on September 9, 1985.

The particular provisions of the Code referred to by the Deputy Minister in making his decision are:

6.  Every employee shall conform to the following principles:

(a) employees shall perform their official duties and arrange their private affairs in such a manner that public confidence and trust in the integrity, objectivity and impartiality of government are conserved and enhanced;

…

(d) on appointment to office, and thereafter, employees shall arrange their private affairs in a manner that will prevent real, potential or apparent conflicts of interest from arising, but if such a conflict does arise between the private interests of an employee and the official duties and responsibilities of that employee, the conflict shall be resolved in favour of the public interest;

Prior to the adoption of the Code, conflict of interest in the public service was governed by the Public Servants Conflict of Interest Guidelines (“Guidelines”). These were promulgated by order in council (SI/74-2, January 9, 1974) and thus there was no doubt they had the force of law. Counsel for the respondent argues that with the revocation of the Guidelines, and with the adoption in their place of the Code, conflict of interest ceased to be governed by provisions having the force of law. Counsel notes, ironically, that what carried the title of “Guidelines” had the force of law because they were promulgated as such, while what carries the title “Code” is not law because it has not been so established. A somewhat backwards use of language?

It is argued that the Code falls within the ambit of the following description, found in Dussault and Borgeat, Administrative Law: A Treatise, 2nd ed., 1985, vol. 1, at pages 338-339:

When a government considers it necessary to regulate a situation through norms of behaviour, it may have a law passed or make a regulation itself, or act administratively by means of directives. In the first case, it is bound by the formalities surrounding the legislative or regulatory process; conversely, it knows that once these formalities have been observed, the new norms will come within a framework of “law” and that by virtue of the Rule of Law they will be applied by the courts. In the second case, that is, when it chooses to proceed by way of directives, whether or not they are authorized by legislation, it opts instead for a less formalized means based upon hierarchical authority, to which the courts do not have to ensure obedience. To confer upon a directive the force of a regulation is to exceed legislative intent. It is said that the Legislature does not speak without a purpose; its implicit wish to leave a situation outside the strict framework of “law” must be respected. [Underlining added.]

The above quotation from Dussault and Borgeat was cited in Friends of the Oldman River Society v. Canada (Minister of Transport), [1992] 1 S.C.R. 3, at page 36. It was quoted as being a description of ministerial directives different from the Environmental Assessment and Review Process Guidelines Order [SOR/84-467] (“EARP Guidelines”) which were under discussion in that case. These were held to have the force of law, despite being called guidelines, because they were framed in mandatory language and had been promulgated by order in council.

It is argued that the provisions of the present Code are administrative directives, similar to those under discussion in the Dussault and Borgeat text and in Maple Lodge Farms Ltd. v. Government of Canada, [1982] 2 S.C.R. 2. It is argued that they are not like the EARP Guidelines discussed in the Friends of the Oldman River Society case. I should note as well that directives similar to those which were under discussion in Maple Lodge Farms have more recently, again, been the subject of a decision in Canadian Assn. of Regulated Importers v. Canada (Attorney General), [1994] 2 F.C. 247 (C.A.).

The respondent relies as well on the decision in Martineau et al. v. Matsqui Institution Inmate Disciplinary Board, [1978] 1 S.C.R. 118. In that case the Court was discussing decisions taken pursuant to directives which had been issued by the Commissioner of Penitentiaries. The Commissioner’s authority to issue these directives derived from subsection 29(3) of the Penitentiary Act [R.S.C. 1970, c. P-6]. The majority of the Court, at page 129, held that a review of the decision in question was not within the jurisdiction of the Federal Court of Appeal because the directives were administrative and did not have the force of law:[1]

I have not been persuaded by the respondent’s arguments, in so far as they rely on the Dussault and Borgeat text or on the Martineau decision. The passage quoted from the Dussault and Borgeat text must be placed in context. The text, at pages 339-340, continues:

Courts have contributed much to date to the understanding of this concept. Certain principles, however, appear to be still somewhat fragile and should eventually be clarified. Courts must be careful when examining the characteristics of directives, firstly because they are so varied, but also because to categorize them too quickly or too simply might paralyze [sic] the Administration’s activity or infringe the rights of citizens.

This is a new phenomenon which still eludes rigorous analysis; it must not be sandwiched too quickly into rigid categories within existing law. The definition of directives raises obvious conceptual difficulties. Nevertheless, these difficulties should not prevent the evolution of a very useful concept, which exists on the borderline between the normative and decision-making, between the legislative and the administrative spheres. Therefore, we must avoid going astray, as D. Mockle considers English authors to have done in their approach to directives: “Rather than struggling to assign directives to an original category, they seek to treat them as regulations, perceiving them to be just another form of delegated legislation” [Tr.]

This has been a very brief summary of the major aspects of regulation-making power in Canada and in Quebec. Although subordinate legislation comes in different names, this variety in terminology has no legal consequences, since all these measures have the same legal effect, as C.K. Allen remarks: “In any case, the distinction is one of name rather than of substance, since there is no difference in actual legal validity between these variously named sublaws …” Therefore, in order to avoid a multiplicity of terms which would be completely pointless, we will now speak of “regulation”, in the broad sense, to refer to the entire category of true delegated legislation. [Footnotes omitted; underlining added.]

In so far as the Martineau case is concerned, while the Supreme Court held that the decision in question was not reviewable by the Federal Court of Appeal, because it had not been made pursuant to directives which had the force of law, the subsequent decision Martineau v. Matsqui Institution Disciplinary Board, [1980] 1 S.C.R. 602, held that the decision in question was reviewable by the Trial Division, pursuant to section 18 of the Federal Court Act [R.S.C. 1970 (2nd Supp.), c. 10], as an administrative decision which must be made fairly.

I agree that the Code does not have the same status as the EARP Guidelines. The Code was not promulgated by order in council. But, I do not think that ends the matter. In Nguyen v. Canada (Minister of Employment and Immigration), [1994] 1 F.C. 232, the Federal Court of Appeal held that internal administrative directives could form the basis of a public duty at law. One of the members of the Court, dissenting [at page 243], held an opposite view. He was of the opinion that the administrative manual in question did not have the force of law. Mr. justice Hugessen however, writing for the majority, discussed the status of the directives [at page 245]: “[N]ot all duties imposed by law are express. An implied duty is nonetheless enforceable.” He found, on behalf of the majority of the Court, that the Immigration Manual which was being used by officials of the Department of Employment and Immigration supported the imposition of a duty on the officials in question and thus an order of mandamus with respect thereto issued. An application for leave to appeal that decision has recently been dismissed by the Supreme Court (S.C. No. 23834, February 17, 1994) [[1994] S.C. Bulletin 237]. I am of the view that the Code in this case is even closer to being “implied” or “quasi-legislation”, than was the case in Nguyen.

Counsel for the applicant referred to Threader v. Canada (Treasury Board), [1987] 1 F.C. 41 (C.A.). In that case, as page 48, the Federal Court of Appeal referred to the then conflict directives which had been issued pursuant to section 7 of the Financial Administration Act, R.S.C. 1970, c. F-10. The Court of Appeal characterized them as “Personnel Bulletins having the force of law”. I am not sure that this assists the applicant to any great extent. While those directives had the same legal status as the present Code, in that they were issued pursuant to section 7 of the Financial Administration Act, their content mirrored the provisions of the then existing conflict of interest Guidelines which, having been promulgated by order in council, did have the force of law.

The respondent’s main concern, as I understand it, is that if decisions under the Code are reviewable, all managerial decisions within the civil service will also be reviewable. It is stated that all such decisions, in some form or other, flow from Treasury Board’s authority under the Financial Administration Act. This is particularly troublesome because of the broad definition, found in section 2 of the Federal Court Act [R.S.C., 1985, c. F-7], as am. by S.C. 1990, c. 8, s. 1. A federal board, commission or other tribunal is defined therein to include: “any person … exercising or purporting to exercise … powers conferred by … an Act of Parliament.”

Prior to commencing this application for judicial review, the applicant attempted to challenge the Deputy Minister’s decision in proceedings commenced before the Public Service Staff Relations Board. The respondent challenged the jurisdiction of the Board to hear that grievance because, no disciplinary action had been taken against the applicant at the time the Deputy Minister’s decision was taken. The Public Service Staff Relations Board agreed that it was without jurisdiction to hear the applicant’s complaint, and in a decision dated July 6, 1993 [[1993] C.P.S.S.R.B. No. 133 (QL)], it stated:

The letter addressed to the grievor dated October 27, 1992 from the deputy minister does not impose any discipline. In fact, it does nothing to stop Dr. Peet from continuing his ownership of Eidetic Digital Imaging Ltd. The deputy minister exercised an authority vested in him; he apparently followed the normal rules and took the advice of the Departmental Conflict of Interest Committee in requesting that Dr. Peet limit his activities. The grievor has failed to satisfy me that the deputy minister had a disciplinary motive for taking the action which he did.

In the circumstances, I can find no discipline and although it is possible he suffered financial losses, these are clearly outside my jurisdiction to deal with. Accordingly, this grievance is dismissed for want of jurisdiction.

The relevant enforcement provisions of the Code provide:

23. Employees must divest assets where it is determined by the designated official that such assets constitute a real or potential conflict of interest in relation to the duties and responsibilities of the employee…. Divestment of assets is usually achieved by selling them in an arm’s length transaction or by making them subject to a trust arrangement. The Schedule attached to this Code contains information on the more common trust arrangements.

…

33. An employee who does not comply with the measures described in Parts I and II is subject to appropriate disciplinary action up to and including discharge. [Underlining added.]

If the applicant defied the Deputy Minister’s decision and was dismissed, he could test the Deputy Minister’s decision by suing for wrongful dismissal. He does not however want to put himself in that position. The applicant seeks judicial review because there seems to be no other reasonable avenue of having the decision and the procedure used in making it challenged.

I do not think I have to determine the dividing line, in an abstract sense, between the types of decisions concerning civil servants which are reviewable pursuant to section 18 [as am. idem, s. 4] of the Federal Court Act and those which are not. It is sufficient to say that the decision which is sought to be reviewed in this case carries very serious consequences for the applicant: the loss of his job or the divestiture or closing down of his business. Decisions having these kinds of consequences have traditionally been subject to judicial review; see, for example, Nicholson v. Haldimand-Norfolk Regional Board of Commissioners of Police, [1979] 1 S.C.R. 311; McCarthy v. Attorney General of Canada, [1981] 1 F.C. 309 (C.A.) (an action for declaratory relief and damages); Saskatchewan Teachers’ Federation v. Munro (1993), 15 Admin. L.R. (2d) 307 (Sask. C.A.). In the McCarthy case, the Court referred [at page 315] to the statement of Mr. Justice Le Dain in Inuit Tapirisat of Canada v. The Right Honourable Jules Léger, [1979] 1 F.C. 710 (C.A.), at page 717:[2]

What is really in issue is what it is appropriate to require of a particular authority in the way of procedure, given the nature of the authority, the nature of the power exercised by it, and the consequences of the power for the individuals affected. The requirements of fairness must be balanced by the needs of the administrative process in question.

In my view, this Court has jurisdiction to examine those considerations by reference to the facts in issue.

For the reasons given the respondent’s motion to have the application struck out will be dismissed.

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