A-1 Credit Recovery v. Ministry of Finance, 2023 ONSC 6667

CITATION: A-1 Credit Recovery v. Ministry of Finance, 2023 ONSC 6667

DIVISIONAL COURT FILE NO.: 406/23 DATE: 20231127

ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT

Matheson, Nishikawa and Leiper JJ.

BETWEEN:

A-1 CREDIT RECOVERY & COLLECTION SERVICES INC.

Applicant

– and –

MINISTRY OF FINANCE and MINISTRY OF PUBLIC AND BUSINESS

SERVICE DELIVERY

Respondents

Andrew Faith and Emily Young, for the Applicant

Mark Wiffen for the Respondents

HEARD at Toronto: November 1, 2023

BY THE COURT:

Introduction

1The Applicant, A-1 Credit Recovery and Collections Services Inc. (“A-1”), seeks judicial review of a decision by the Respondents, the Ministry of Finance and the Ministry of Public and Business Service Delivery (“the Ministries”) disqualifying it from a request for bid (“RFB”) process at the initial evaluation stage (the “Decision”).

2At the outset of the hearing, the court granted a motion to amend the application, on consent, to add a challenge to the decision dated Sept. 21, 2023, concluding that the applicant’s complaint about the bid was unsubstantiated (the “Complaint Decision”).

3The RFB was to procure contracts for the successful bidders to provide debt collection services for non-tax debts owed to the Ontario government. A-1 seeks to quash the Decision on the basis that the Ministries’ RFB process was procedurally unfair and the Decision was unreasonable.

4The Ministries respond that the matter is a commercial procurement dispute and is not subject to judicial review. In the alternative, the Ministries submit that the Decision was reasonable, and the process was procedurally fair.

Background Facts

The Request for Bids

5On January 9, 2023, Supply Chain Ontario, a part of the Ministry of Public and Business Service Delivery (“MPBSD”) issued the RFB on behalf of the Ministry of Finance (“MOF”), seeking bidders to provide debt collection services regarding non-tax accounts receivable for the Province of Ontario. The RFB process had four stages:

a. Evaluation of Qualification Response and Mandatory Requirements (the “Evaluation Stage”);

b. Technical Response (“Bidder Capabilities”);

c. Technical Response (“Collections”); and

d. Systems Integration Testing (“Testing”).

6At the Evaluation Stage, the Ministries required bidders to demonstrate that they were currently registered under the Ontario Collection and Debt Settlement Services Act, R.S.O. 1990, c. C.14 (the “Act”) to carry on business as a collection agency in Ontario. Subsection 4(1) of the Act provides that “No person shall carry on the business of a collection agency unless the person is registered by the Registrar under this Act.” The question on the tender form was as follows:

“Are you, or the collection agency you represent, currently registered under the Ontario Collection and Debt Settlement Services Act to carry on business as a collection agency in Ontario?”

7If bidders could not demonstrate compliance with this requirement, they would be disqualified and their bid would not proceed through the remaining steps in the RFB process.

8The expiry of a registration and renewal process is addressed under the s. 13(1) of the Regulation under the Act:

13(1) Every registration expires on the date shown on the certificate of registration unless an application for renewal of registration in a form approved by the Registrar, together with the fee established by the Minister, is filed with the Registrar prior to the date of expiry: General Regulation R.R.O. 1990, Reg. 74 under the Collection and Debt Settlement Services Act.

A-1 Credit Recovery’s Bid and the Disqualification Decision

9A-1 is a collections agency that recovers debts on behalf of its clients. On February 8, 2023, A-1 submitted a bid in response to the Ministries’ RFB. A-1 was later informed that it was disqualified at the Evaluation Stage for failing to demonstrate that it was registered under the Act.

10In its bid, A-1 had stated that it was validly registered under the Act and submitted two documents that together purported to show that it was “currently registered”. The first document was a Business Registration Certificate which expired on February 6, 2023, three days before the bid submission deadline.

11The second document was an email exchange in December of 2022 between A-1 and another branch of MPBSD. The exchange included an email from A-1 explaining how the timing of its year-end meant that A-1 could not fulfill the renewal requirements by the expiry date shown on its certificate. The registrar responded to the email, granting A-1 an extension of time to March 30, 2023 to submit its financial statements, as required to renew its registration (the “Email Extension”). In its bid submission, A-1 representatives had typed at the top of the Email Extension, “Please see below email whereby Ontario Collection License has been extended to March 31, 2023 (due to timing of year-end and financial statements).”

12The wording of the Email Extension from the registrar referred only to an extension for A-1 to file its financial statements, and an invitation for A-1 to arrange to pay its fee. The Email Extension was silent as to whether the fee had been paid and the status of A-1’s certificate pending delivery of its financial statements.

A-1 Attends a Debriefing Meeting

13On May 30, 2023, MPBSD advised A-1 in writing that its bid was unsuccessful and named the four successful bidders to whom contracts had been awarded. The letter did not give reasons but advised that A-1 could request a debriefing meeting to receive feedback on its submission.

14As provided in the letter, and s. 1.5.4 of the RFB, A-1 requested a debriefing meeting. MPBSD provided A-1 with a “Debriefing Document” which stated that at the Evaluation Stage, A-1 had failed the mandatory requirement to show that it was registered under the Act because, “[T]he evidence provided showed that the license had expired with the Registrar.”

15On June 6, 20203, staff from the Ministries held a debriefing meeting with representatives from A-1. A-1 representatives recorded the meeting, which was held by videoconference, without giving notice to the other participants.

The Motion to Strike out the Affidavit

16In its application record, the Applicant included the affidavit of Iain Coffey, co-Chief Executive Officer of the applicant, affirmed August 11, 2023. The respondents moved to strike it out, or, in the alternative put forward a responding affidavit.

17The affidavit largely consists of evidence that is not permitted in an application for judicial review, as summarized in 'Namgis First Nation v. Canada (Fisheries and Oceans), 2019 FCA 149, at para. 10. Further, the exhibits include documents that are already in the record of proceedings. Those exhibits need not be resubmitted.

18The applicant’s focus is on one exhibit – an unofficial transcript of the debriefing meeting of June 6, 2023 and the related affidavit evidence. The applicant submits that the transcript and related evidence are relevant to a breach of procedural fairness and that the transcript records the reasons for the Decision. This is disputed. We conclude that even if the entire affidavit was admitted, it would not change the outcome of this application for judicial review. Therefore, we need not rule on each paragraph and exhibit.

A-1 Disputes the Decision to Disqualify

19On June 23, 2023, A-1 submitted a complaint to the MPBSD’s bid dispute process. After the notice of application for judicial review was filed, MPBSD considered the complaint. On September 21, 2023, it dismissed the complaint and confirmed the decision to disqualify A-1 (the “Complaint Decision”).

The Issues

20The issues on this application are:

a. Should the Court grant leave to amend the notice of application to include the result of the bid dispute process?

b. Is the Decision by the Ministries reviewable?

c. If so, was the Ministries’ Decision reasonable?

d. Was the bid process and the dispute resolution process procedurally fair?

Is the Decision by the Ministries Reviewable?

21The Ministries take the position that the Decision is not subject to judicial review because it is a contractual decision and therefore private in nature, as opposed to the exercise by a public body of “a power central to the administrative mandate given to it by Parliament”: Highwood Congregation of Jehovah’s Witnesses (Judicial Committee) v. Wall, 2018 SCC 26, [2018] 1 S.C.R. 750, at para. 14; Khorsand v. Toronto Police Services Board, 2023 ONSC 1270 (Div. Ct.), at para. 37.

22Courts have traditionally considered the process of awarding government contracts for goods and services to be a commercial matter governed by private law: 2169205 Ontario Inc. o/a Lefroy Freshmart v. Liquor Control Board of Ontario, 2011 ONSC 1878, 278 O.A.C. 207 (Div. Ct.), at para. 24. See also: Grascan Construction Ltd. v. Metrolinx, 2017 ONSC 6424 (Div. Ct.), at paras. 91, 104; Wauzhushk Onigum Nation v. Ontario (Minister of Finance), 2019 ONSC 3491 (Div. Ct.) at para. 108. Where there are no statutory provisions or regulations which prescribe how the government agency is to go about entering into the contract in question, the decision to award a contract is not properly a subject for judicial review: St. Lawrence Cement Inc. v. Ontario (Minister of Transportation) (1991), 3 O.R. (3d) 30 (Div. Ct.).

23However, in Bot Construction v. Ontario (Minister of Transportation) (2009), 99 O.R. (3d) 104 (Div. Ct.) at para. 21, this Court found that “where government procurement decisions are authorized or constrained by statues, rules or regulations” a contract may sufficiently engage the public interest such that judicial review is appropriate. In that case, judicial review was found to be warranted because of the following factors: the contract award had public interest implications beyond the interests of the contracting parties, such as the construction of public roads and the fairness and integrity of the process; the implications on the Canadian steel industry and the road construction industry in Ontario; the expenditure of substantial public funds; and the limitation of the bidder’s private law remedies. On appeal, the Court of Appeal reversed this Court’s decision on other grounds but specifically left open the issue of the availability of judicial review as a remedy with respect to the tendering process for government procurement contracts.

24In Air Canada v. Toronto Port Authority, 2011 FCA 347, [2013] 3 F.C.R. 605, at para. 60, Stratas J.A. identified a number of factors as relevant to determining “whether a matter is coloured with a public element, flavour or character sufficient to bring it within the purview of public law” for the purposes of judicial review. Those factors include: the character of the matter for which review is sought; the nature of the decision-maker and its responsibilities; the extent to which the decision is founded in and shaped by law as opposed to private discretion; the body’s relationship to other statutory schemes or parts of government; the extent to which a decision-maker is an agent of government or directed/controlled by a public entity; the suitability of public law remedies; and the existence of compulsory power over the public at large or over a defined group.

25In Thales DIS Canada Inc. v. Ontario, 2022 ONSC 3166 (Div. Ct.), (leave to appeal granted), this Court applied the Air Canada factors and found that the request for bids in that case was reviewable. By contrast, in Astro Zodiac Enterprises Ltd v. Board of Governors of Exhibition Place, 2022 ONSC 1175 (Div. Ct.), at paras. 29-36, this Court found that an application of the Air Canada factors led to the conclusion that the matter was a private contract dispute.

26Applying the Air Canada factors to the circumstances of this case, we find that the matter is a private contract dispute to which public law remedies are not suitable:

(a) The character of the matter for which review is sought. The procurement was for the collection of non-tax related debts owed to Ministries within the Ontario government. The successful bidders are assigned collection accounts and receive a fixed commission when those accounts are collected. While the amounts to be collected could be significant, this is at MOF’s discretion. The successful bidders exercise no discretion as to what accounts are collected, and their actions are effectively invisible to the public, other than those individuals whose debts are assigned to collection.

(b) The nature of the decision-maker and its responsibilities. The MOF is a government Ministry but is not an administrative body like a court or tribunal exercising statutory decision-making powers.

(c) How much a decision is founded in and shaped by law rather than private discretion. While the RFB was issued pursuant to the Procurement Directive, which is mandatory, there are no specific statutes or regulations which direct how the MOF is to contract with collection agencies. Moreover, the Minister of Finance (and not the successful bidders) has the discretion to determine that all or part of a debt owed to it is uncollectible: Financial Administration Act, R.S.O. 1990, c. F.12, s. 5(1).

(d) The Board’s relationship to other statutory schemes, or as an agent of government or directed or significantly influenced by a public entity. The MOF is a public entity. However, the contracted service of debt collection arises in various business settings and is far from unique to the government.

(e) The suitability of public law remedies. A-1 seeks not only to quash the Decision but also the award of contracts to the four successful bidders. This demonstrates that the dispute would be better addressed by civil remedies, which A-1 would be able to pursue without impacting contracts already awarded to third parties.

(f) The existence of compulsory power. A-1 was not compelled to make a bid and did so voluntarily. Its disqualification from the RFB process does not impact its ability to otherwise carry on business.

(g) An “exceptional” category of cases in which the conduct has attained a serious public dimension. No such circumstances exist in this case.

27We therefore conclude that this dispute is not subject to judicial review. However, we have also considered the other issues, concluding that the applicant has not shown, in any event, that the Decision was unreasonable or the process procedurally unfair.

Was the Decision by the Ministries Reasonable?

28The parties agree that to the extent that judicial review is available in these circumstances, the presumptive standard of review, reasonableness, applies to the Decision to disqualify A-1: Transdev Canada Inc. v. The Regional Municipality of York, 2023 ONSC 135 (Div. Ct.) at paras 34-35; Canada (Minister of Citizenship and Immigration) v. Vavilov 2019 SCC 65, at para. 25.

29A-1 submits that it should not have been disqualified because the error made is “clear as day.” It submits that when the expired certificate and Email Extension are read together, they are capable of only one interpretation, that A-1 was registered in good standing at the time of its bid submission. Alternatively, A-1 submits that if its materials were ambiguous, the Ministries ought to have verified with the registration branch of MPBSD that A-1’s registration was in good standing, pursuant to the terms of the RFB which granted the right to verify or seek clarification and supplementary information relating to verification.

30We disagree. The decisionmaker who reviewed the documents submitted by A-1 could reasonably have concluded that its certificate of registration was expired and that at its highest, the Email Extension established that A-1 was taking steps, which were not yet finalized, to renew its registration. The Email Extension granted an extension to provide financial statements and included a method to submit the required fee. However, the Email Extension did not explicitly confirm that A-1’s certificate was going to be renewed, or that A-1’s registration would be in force as of the date of expiry shown on the certificate. The plain wording of the Email Extension specified that payment and delivery of the financial statements would be required to renew the registration. Although A-1 was eventually given a certificate on June 5, 2023 that showed an issued date of February 6, 2023, during the Evaluation Stage, the status of its registration was not clear.

31While there may have been more than one way to read the documents that A-1 submitted, including as urged by A-1, the conclusion drawn by the Ministries here cannot be said to be unreasonable. Tenders for multi-million-dollar contracts using public money require attention to detail and adherence to technical requirements. The Ministries’ finding that the documentation fell short of establishing valid registration as of the submission date was not unreasonable.

32Further, the RFB did not require the Ministries to rectify any ambiguity on A-1’s behalf at this step in the process. The Evaluation Stage was the first step in a detailed tendering process which required the Ministries to act fairly toward all bidders. Before submitting its bid, A-1 could have clarified the status of its registration or asked follow-up questions. However, it did not do so.

33Had we considered the transcript from the debriefing meeting, its content would not have altered our finding that the Decision was reasonable. The focus at the debriefing meeting was on the deficient proof of registration. At the meeting, the Ministries’ representatives also pointed out that the content of the emails only confirmed an extension of time for providing financial statements. This limited information, in combination with the expired certificate of registration, led to A-1’s disqualification and is in line with the brief reasons given in the Debriefing Document.

34The Complaint Decision similarly focused on the Evaluation Stage and the documents that A-1 had provided. The Assistant Deputy Minister who reviewed the complaint concluded that A-1 had failed to demonstrate it was currently registered either by submitting “documentation or proof by way of an unexpired certificate of registration, or documentation or proof that it had applied for renewal of its registration and had paid the required fee.”

35These were reasonable requirements, grounded in the Act and the Regulation as to what constitutes and demonstrates valid registration. The Dispute Resolution Decision was responsive to the complaint and concluded that the initial disqualification decision was reasonable in the circumstances. We agree. Accordingly, had we found that the decisions in this matter were reviewable, we would have found both decisions to be reasonable.

Was the Process Adopted by the Ministries Procedurally Unfair?

36A-1 also submits that the Ministries adopted a procedurally unfair process by arbitrarily revising the registration criteria and requiring that A-1 submit a valid certificate of registration. A-1 submits that this amounts to adopting a “non-existent” requirement about which A-1 did not have notice. In doing so, A-1 submits that the Ministries breached their duty of fairness in tendering for procurement contracts as recognized in Cougar Aviation Ltd. v. Canada (Minister of Public Works and Government Services), 2000 16572 (FCA) at para. 27.

37Given the commercial context, the duty of procedural fairness owed to participants in a government tendering process tends to fall toward the lower end of the spectrum: Airbus Helicopters Canada Limited v. Canada (Attorney General), 2015 FC 257 at para. 116.

38We do not agree that the Ministries changed the criteria for A-1 to establish its registration was valid. At both levels of decision, the evidence in the record establishes that all the documents submitted by A-1 were considered, and that they were found to be insufficient.

39In the reasons provided in the dispute resolution letter the Assistant Deputy Minister described two methods available to A-1 to prove current registration:

a. By submitting documentation or proof by way of an unexpired certificate of registration, OR

b. Documentation or proof that it had applied for renewal of its registration and had paid the required fee.

33We find no breach of A-1’s right to procedural fairness during the RFB process or in the dispute resolution process.

Conclusion

34The motion to amend the notice of application is granted.

40The application for judicial review is dismissed. Costs are awarded to the Respondent in the agreed-on amount of $15,000, all inclusive.

35We recognize all counsel for the quality of their written materials and oral advocacy.

___________________________ Matheson J.

Nishikawa J.

Leiper J.

Date: November 27, 2023

CITATION: A-1 Credit Recovery v. Ministry of Finance, 2023 ONSC 6667

DIVISIONAL COURT FILE NO.: 406/23 DATE: 20231127