CITATION: Thales DIS Canada Inc. v. Ontario, 2022 ONSC 3166

DIVISIONAL COURT FILE NO.: 943/21

DATE: 20220601

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Wilton-Siegel, D.L. Corbett and Nishikawa JJ.

BETWEEN:

Thales DIS Canada Inc.

Applicant

– and –

Ontario (Ministry of Transportation)

Respondent

Peter N. Mantas and Nabila Abdul Malik, for the Applicant

Will MacLarkey, Andi Jin and Alex Redinger, for the Respondent

HEARD: March 31, 2022

REASONS FOR DECISION

NISHIKAWA J.:

Overview

[1] The Applicant, Thales DIS Canada Inc. (“Thales”), applies for judicial review of two decisions. The first is the decision of the Respondent, Ministry of Transportation (“MTO”), to issue Request for Bids with # Tender 13673, Card Production and Photo Comparison Technology Service Provider (the “RFB”). The second is MTO’s decision dated February 8, 2022 to dismiss Thales’ complaint regarding various aspects of the RFB that was submitted through the government’s bid dispute mechanism (the “Decision”). The Decision accepted and attached a “Briefing Note – Analysis and Findings” dated February 7, 2022 (the “Briefing Note”) of the Director, Program and Policy Enablement (the “Director”), Supply Chain Ontario (“SCO”) of the Ministry of Government and Consumer Services, who found that the complaint was unsubstantiated.

[2] The principal basis for Thales’ application is that the domestic production requirement (as defined below) in the RFB violates the non-discrimination provisions of the Canada-European Union Comprehensive Economic Trade Agreement (“CETA”) and the Canadian Free Trade Agreement (“CFTA”). Thales further submits that the Decision was biased and that the process was procedurally unfair.

[3] MTO submits that the terms of the RFB are not reviewable by this Court. In respect of the Decision, MTO submits that the process was fair and that the Decision is reasonable. MTO takes the position that the domestic production requirement falls within the public safety exception to the non-discrimination provisions of CETA. MTO also submits that the application is moot because, after completion of the tender process, Thales ranked fourth of four bidders.

[4] The parties agreed that in view of the anticipated contract award date of April 4, 2022, the application should proceed on an expedited basis. At the hearing, the parties requested a “bottom line” decision from the Court at the earliest opportunity.

[5] On April 12, 2022, this Court advised as follows: “the application for judicial review is allowed and the decision below is quashed: the RFB terms do not comply with the CETA.” The Court further indicated that the reasons for the decision would follow in due course. These are the reasons for that decision.

Factual Background

The Request for Bids and Addenda

[6] Each year, the Ontario government issues over nine million drivers’ licences, health cards and other identity cards to Ontarians. The contract for tender at issue is for the design and production of these Ontario government identity cards.

[7] The Applicant, Thales, is a security technology company that is part of the French multinational company Thales Group. Thales, through Thales Poland, produces identification cards and passports at its facility in Gdansk, Poland for governments in the European Union, the United Kingdom, and certain American states and Canadian provinces.

[8] On September 16, 2021, Ontario issued the “Request for Bids with Tender # 13673” to identify a vendor for a contract to provide image capture services, photo comparison technology services, and identification card production services. The term of the contract is for a minimum of seven years, with an option to extend for an additional three years. The main product would be the end-to-end design, processing, manufacturing, and personalization of Ontario identification cards.

[9] The RFB is a multi-ministry procurement involving the Ministries of Transportation, Health, Finance, and Government and Consumer Services. MTO is the lead Ministry. The deadline for submissions was December 1, 2021, after an extension from the original deadline of November 10, 2021.

[10] The RFB was issued pursuant to the Ontario Public Service Procurement Directive, issued by the Management Board of Cabinet in December 2014 (the “Procurement Directive.”) The purpose of the Procurement Directive is to ensure that the government of Ontario acquires goods and services through a process that is fair, open, transparent, geographically-neutral and accessible to qualified vendors. The Procurement Directive is mandatory, as further detailed below.

[11] Part of the manufacturing process includes the production of “Card Stock”, which is the blank card without identifying information. The Card Stock does, however, contain a unique card stock number and visual and tactile security features. Section 1.5.6.2.3.1 of the RFB specifies the following “Production Materials and Card Stock requirements”:

1. Card stock shall be produced in a secured facility that must comply to PHIPA standards. Card Stock shall be produced in the single secured Card Production facility in Canada. The Ministry confirms that Card Stock with background designs must be produced in Canada as part of the manufacturing process.

2. Printing and personalization of the Cards shall occur in the single secured Card Production facility in Canada. All Card Holder’s personal information must stay in Canada.

3. Record the DD/REF [Document Discriminator] (MTO Cards) and ICN [Inventory Control Number] (MOH Cards) on the Card stock at the point of manufacture for inventory control, audit and reconciliation purposes….

[12] The underlined portion of subparagraph 1 was added on November 10, 2021 pursuant to Addendum #12 in response to questions from bidders.

[13] Section 1.5.6.2.3.3. of the RFB, titled “Card Production Centre,” states that the “Card Production Centre must be located and maintained in Canada.” Under the subheading “Card Production Center requirements” the provision further states that the “vendor must have a secure facility in Canada to ensure that all “Personal Information” as defined in the Freedom of Information and Protection of Privacy Act, and “Personal Health Information” as defined in the Personal Health Information Protection Act, 2004… must be physically stored and maintained within Canada…” The provision also requires that the Document Discriminator (for MTO cards) and Inventory Control Numbers (for Ministry of Health cards) be printed on the Card Stock before submitting for personalization.

[14] MTO submits that, read together, these sections clearly require that the entire production process be done domestically and in the same facility. MTO also maintains that the Card Production Centre is not a “mandatory requirement” that bidders would need to satisfy at the time of bid submission because, under section 1.5.6.2.3.3, the RFB required only that the Card Production Centre be operable by November 2023.

[15] Bidders were invited to submit questions, which were addressed through the issuance of Addenda, which then formed part of the RFB. Thales submitted six questions about the domestic card production requirement, including whether the cards with a blank background design could be produced in a facility that would comply with the Personal Health Information Protection Act, 2004, S.O. 2004, c. 3, Sched. A, in a North Atlantic Treaty Organization country. On November 10, 2021, MTO issued Addendum # 12, in which it responded that Card Stock with background and security designs must be produced in Canada as part of the manufacturing process, but raw materials prior to the manufacture of Card Stock did not have to be produced in Canada. The RFB text was updated accordingly. This requirement is herein referred to as the “domestic production requirement”.

[16] Thales delivered a bid on November 30, 2021 and indicated it would produce the Card Stock at its facility in Gdansk, Poland. The rest of the work would be completed in Canada. On January 28, 2022, Thales was invited to participate in the next stage of the procurement.

The Applicable Trade Agreements

[17] The RFB states that it is subject to both the CETA and the CFTA, among other trade agreements. The following is a brief summary of the relevant provisions of these instruments.

The Canada-European Union Comprehensive Economic and Trade Agreement

[18] Canada and the European Union (“EU”) entered into the CETA in September 2017 with the objective of eliminating trade barriers between them. The CETA is based on principles of reciprocity and fairness between the parties and covers virtually all sectors of trade between Canada and the EU.

[19] Chapter 19 of the CETA deals specifically with government procurement and includes central, sub-central, municipal government entities and government enterprises. The general principles are non-discrimination, transparency and impartiality. Article 19.4 – General Principles states as follows:

Article 19.4 – General Principles

Non-Discrimination

1. With respect to any measure regarding covered procurement, each Party, including its procuring entities, shall accord immediately and unconditionally to the goods and services of the other Party and to the suppliers of the other Party offering such goods or services, treatment no less favourable than the treatment the Party, including its procuring entities, accords to its own goods, services and suppliers….

2. With respect to any measure regarding covered procurement, a Party, including its procuring entities, shall not:

a. treat a locally established supplier less favourably than another locally established supplier on the basis of the degree of foreign affiliation or ownership; or

b. discriminate against a locally established supplier on the basis that the goods or services offered by that supplier for a particular procurement are goods or services of the other Party.

[Emphasis added.]

[20] Article 19.3 of the CETA creates an exception to Article 19.4 for the protection of essential security interests:

Article 19.3 – Security and general exceptions

1. Nothing in this Chapter shall be construed to prevent a Party from taking any action or from not disclosing any information that it considers necessary for the protection of its essential security interests relating to the procurement:

a. of arms, ammunition or war material;

b. or to procurement indispensable for national security; or

c. for national defence purposes.

2. Subject to the requirement that such measures are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination between Parties where the same conditions prevail or a disguised restriction on international trade, nothing in this Chapter shall be construed to prevent a Party from imposing or enforcing measures:

a. necessary to protect public morals, order or safety;

b. necessary to protect human, animal or plant life or health;

c. necessary to protect intellectual property; or

d. relating to goods or services of persons with disabilities, of philanthropic institutions or of prison labour.

[Emphasis added.]

[21] Article 19.9 of the CETA contains requirements pertaining to technical specifications and tender documentation, which are not to have the effect of creating unnecessary obstacles to international trade. Article 19.9(7) requires that a procuring party “make available to suppliers tender documentation that includes all information necessary” to permit suppliers to prepare and submit responsive tenders.

[22] Article 19.17(1), the dispute resolution provision, requires that each party provide “a timely, effective, transparent and non-discriminatory administrative or judicial review procedure” through which a supplier may challenge a breach of Chapter 19 or a failure to comply with a party’s measures implementing the Chapter. Articles 19.17(4) – (6) set out dispute resolution and procedural protection requirements.

The Canadian Free Trade Agreement

[23] The CFTA is an intergovernmental trade agreement among the Canadian provinces which came into force in July 2017. The objective of the CFTA is to reduce and eliminate barriers to the free movement of persons, goods, services, and investments within Canada. The CFTA safeguards open, transparent and non-discriminatory access to government procurement by each party’s procuring entities.

[24] Under Article 502, each party is required to accord to the goods and services of any other party, and the suppliers of goods and services of any other party, treatment no less favourable than the best treatment the party accords to its own goods and services.

[25] The CFTA also has provisions regarding technical specifications and documentation (Article 509) and administrative or judicial review procedures (Article 518).

The Bid Dispute Process and Thales’ Complaint

[26] Supply Chain Ontario (“SCO”) centrally manages the procurement process on behalf of all Ontario government ministries. Section 5.10 of the Procurement Directive describes the bid dispute process. Ministries are required to respond to vendor concerns and to seek to resolve bid disputes. If a complaint cannot be resolved at the Ministry level, bidders with concerns about an Ontario government procurement may file a complaint with the Director.

[27] On December 10, 2021, Thales submitted its complaint to the Director, alleging that the RFB violates the CETA and the CFTA and was conducted in a manner that was procedurally unfair. On the same day, Thales filed the Notice of Application for Judicial Review with this Court, raising the same issues.

[28] On January 10, 2022, the Director wrote to Thales advising that Thales had submitted an eligible dispute for review and setting out a timetable for the procedural steps to a decision, prior to the tender award. A decision on Thales’ complaint was to be made by February 4, 2022.

[29] Thales requested a copy of the complaint review process and the identity of the decision-maker. SCO then provided Thales with a document entitled “Detailed Description of the Government of Ontario’s Bid Dispute Process” (the “Detailed Description”) which included a Bid Dispute Resolution Map describing the further steps in the process, as follows:

• Complaints not resolved at the Ministry level are centrally reviewed by the Director.

• The complaint is reviewed internally in conjunction with the Ministry against which the complaint was filed. Analysis is presented to the Assistant Deputy Minister (“ADM”), SCO, for consideration.

• The ADM, SCO will make a recommendation to resolve the complaint, which may include remedies such as rapid interim measures or monetary compensation.

• The Deputy Head of the Ministry against which the complaint was filed will consider the operational impacts of the recommendation and make a final decision. The decision will be adopted as the Government of Ontario’s position.

• The ADM, SCO will communicate the Government of Ontario’s position to the vendor.

• Vendors who are not satisfied with the outcome of the central review may seek recourse in Ontario’s court system (for complaints regarding a competitive procurement) or through an arbitration process (for complaints regarding a non-competitive procurement where the terms of a trade agreement apply).

[30] The Detailed Description states that if a complaint is received before the contract is awarded, where appropriate, rapid interim measures may be applied to preserve the vendor’s opportunity to participate in the procurement. These interim measures include suspending the procurement process, re-evaluating the tenders received, or re-issuing the procurement.

[31] According to the Detailed Description, after a recommendation is made to the Ministry, the Ministry will have an opportunity to consider the operational impacts of the recommendation and its obligations under Ontario’s trade commitments and the bid dispute resolution process, and will make a final decision that will be adopted as the government’s position and communicated back to the vendor.

[32] In response to Thales’ question about the identity of the decision-maker, the Director confirmed that, consistent with the process identified in the process map, a decision on Thales’ complaint would be made by the procuring Ministry, following SCO’s recommendation.

[33] On January 21, 2022, the Director dismissed Thales’ request for interim relief, a stay of the contract award, on the basis that the complaint and judicial review application would be decided before any contract award.

[34] In its submissions, MTO raised the public safety exception to the non-discrimination provisions of the CETA (as defined below). Thales made lengthy reply submissions in response. Following the submission of Thales’ reply submissions, the Director allowed Ontario to submit a sur-reply. Thales objected to the sur-reply on the basis that no such step was contemplated under the process identified and that, as a result, it was improper and prejudicial to Thales. On this application, Thales submits that it was procedurally unfair to allow MTO to make a sur-reply.

The Decision

[35] Consistent with the above process, on February 7, 2022, the Director submitted the Briefing Note containing her analysis and recommendation to the ADM, SCO. The Director concluded that Thales’ complaint was not substantiated and recommended that it be dismissed. The Briefing Note was then submitted by the ADM, SCO to the Deputy Minister of Transportation. The Deputy Minister agreed with the Director’s recommendation.

[36] In a letter dated February 8, 2022, the ADM, SCO advised Thales that the Director’s recommendation that its complaint be dismissed was accepted by the Government of Ontario. A copy of the Director’s Briefing Note was attached. As noted above, the Decision under review is MTO’s dismissal of Thales’ complaint, which was based on the Director’s recommendation. The Briefing Note is thus treated as containing the reasons for MTO’s Decision.[^1]

[37] The Decision addressed four issues raised by Thales in its complaint:

1. Whether there were “fundamental and significant changes” introduced into the RFB at the “eleventh hour” pursuant to Addendum #12;

2. Whether there was any discrimination under the CETA;

3. Whether there was any discrimination under the CFTA; and

4. Whether the dispute resolution mechanism of the Government of Ontario breached the CETA or the CFTA in respect of the requirement for transparency and the requirement that the procedural rules for challenges be in writing and be made generally available.

[38] The Director rejected each of the four allegations in finding that Thales’ complaint was not substantiated and set out her reasons for doing so in the Decision.

The Principal Issue – Discrimination Under the CETA

[39] As mentioned, the second and principal issue addressed by the Decision was whether there was discrimination under the CETA, specifically a contravention of Article 19.4(2)(b) of the CETA. The following is a summary of the relevant portions of the Decision with respect to this issue.

[40] The specific issue addressed by the Director was Thales’ position that the domestic production requirement discriminated against a bidder that offered Card Stock production at a facility in the EU. The Director appears to have proceeded on the basis that the RFB contravened the CETA in this manner by limiting its consideration to the narrower issue of whether the domestic production requirement fell within the exception in Article 19.3(2) of the CETA (the “public safety exception”).

The Positions of the Parties

[41] The Decision first recites the relevant facts pertaining to the RFB and the Thales complaint. In this recitation, the Director specifically noted that Thales wished to produce Card Stock at a facility in Poland and to transport the Card Stock to Canada for personalization.

[42] The Director noted that Thales alleged that the domestic production requirement discriminates, in contravention of Article 19.4(2)(b) of the CETA, against bidders which offer Card Stock produced at a facility in the EU. The Director then noted that MTO maintained that there was no breach of the CETA because the domestic production requirement fell within the public safety exception under Article 19.3(2) of the CETA. The Director then proceeded to summarize the submissions of the parties on this issue.

(a) The Position of the MTO

[43] In summarizing MTO’s submission, the Director began by referring to the MTO’s position that “there is a vital security interest relating to public morals, order or safety in reducing the risk of loss, theft and fraud associated with identity documents.” The Director then noted that MTO relied on an information note dated January 18, 2022 (the “MTO Fraud Note”) from the MTO Fraud Prevention and Business Integrity Office (the “MTO Fraud Office”).

[44] As summarized by the Director, the MTO Fraud Note detailed: (1) the high value of Card Stock to fraudsters and criminals who use Card Stock and personal data to commit identity theft and various financial and other crimes; (2) the fact that Card Stock contains the cards’ security features and is therefore much more difficult to forge as compared to personalization; and (3) MTO’s reduced control over foreign manufacturing of Card Stock and the increased risk of loss or theft of Card Stock due to multiple exchanges and transfers inherent in transportation and importation from overseas.

[45] In respect of the risks associated with transportation, the MTO Fraud Note stated that while, in theory, these risks might be attenuated with the “highest” forms of security, such protection would be more costly and the intrinsic risks of increased exchanges and handover “simply remain”. It also noted that “when loss or theft do occur, audit and enforcement are significantly more challenging where investigation and prosecution depend on foreign investigations and foreign law”.

[46] The Director then set out the following MTO legal submission regarding the application of the test by the World Trade Organization (“WTO”) Appellate Body in Brazil – Measures Affecting Imports of Retreaded Tyres (Complaint by the European Communities) (2007), WTO Doc. WT/DS332/AB/R (Appellate Body Report) (the “Brazil Decision”) to the issue of whether the domestic production requirement qualified for the public safety exception:

In accordance with international trade law, the domestic production requirement is “materially connected” to protecting “public morals, order or safety” of Ontario residents, as the measure is intended to, and will, mitigate the risk of loss or theft of card stock inherent with off-shoring production. The measure is also “necessary” in that its contribution to the achievement of the objective is “material”. In determining whether any less trade restrictive alternative was reasonably available, such alternative must still “preserve for the responding Member its right to achieve its desired level of protection with respect to the objective pursued”.

[47] MTO argued further that less restrictive measures, in the form of permitting offshore production of Card Stock, would not preserve Ontario’s “right to achieve its desired level of protection” regarding its security and safety interest because “there are inherently more opportunities for loss and theft of card stock through the multiple exchanges and handovers required by foreign manufactures.”

(b) The Position of Thales

[48] In summarizing Thales’ position, the Director noted the following. Thales argued that the public safety exception would not apply on the facts because: (1) it was equipped with a world class security infrastructure, security safeguards and protocol, superior manufacturing controls and superior audit functions compared to the incumbent’s faculty in Ontario; (2) Thales supplies Canadian provinces as well as international jurisdictions with identity cards; (3) Thales performs 1,200 shipments of Card Stock annually to over 60 clients worldwide and has not experienced any loss of product during shipment; and (4) there has never been an incident of cards being stolen or pirated during transportation to the end-point client destination, including over 50 million drivers’ licence cards delivered to governments in North America from its facility in the EU during the last five years. The Director also noted Thales’ submission that MTO ascribed a high risk to transportation based on the MTO Fraud Note which, in its view, was only speculation without actual proof such as statistical data.

The Reasoning and Conclusion of the Director on the Principal Issue

[49] The following aspects of the Director’s analysis and conclusion are relevant for the Court’s determination below.

[50] As a preliminary matter, the Director noted in paragraph 24 that the parties “do not differ substantially in their substantive review of the international trade law applicable to the analysis of the safety exception under CETA.” This is understood to mean that both parties accepted that the approach in, among other cases, the Brazil Decision is applicable. While this case, and the other cases referred to herein which follow the same approach, are not technically binding on this Court, the approach in the Brazil Decision appropriately collects and addresses the issues that are relevant to a determination of whether a trade restriction is “necessary” for the purposes of the public safety exception. In addition, as discussed below, insofar as the approach in these cases is applied in respect of similar provisions in trade treaties generally, the principles articulated in these decisions should be regarded as conventions which constitute constraints on administrative decision-makers: see Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, 441 D.L.R. (4th) 1, at para. 114. Accordingly, I have applied this approach in the analysis of the reasonableness of the Decision.

[51] The Director’s determination is set out in paragraph 31 of the Decision to the effect that “the safety exception under Article 19.3(2) of the CETA applies to the Ministry’s domestic production requirement for card stock, and accordingly the domestic production requirement does not breach CETA.” The Director’s analysis in reaching this conclusion is found in paragraphs 27-29 of the Decision. (The further argument of Thales discussed in paragraph 30 is not relevant for the discussion below). In fact, the entirety of the Director’s analysis of the question is set out in paragraph 27.

[52] In that paragraph, the Director accepted Thales’ evidence regarding its “security protocols and track record from its Polish facility”. She concluded however that such evidence was “not evidence that there are no or low risks of loss and theft associated with foreign manufacture and transport of card stock generally”. The Director also concluded that Thales’ track record was not “evidence that other suppliers in other countries have equally successful manufacturing and transportation track records”. The Director’s reliance on these statements is addressed later in these Reasons.

[53] The Director’s reasoning is found in the statements that follow these findings. The Director reasoned that “Thales’ argument necessarily requires accepting that, based on its own track record, the domestic production requirement is not warranted for any bidders and therefore is not justified under the CETA’s safety exception.” The Director stated that she did not accept this argument as a factual matter and had not been pointed to any legal authority that would support it. The extent to which the Director can rely on this reasoning is also addressed later.

[54] The conclusions in the Decision can be summarized as follows. The MTO Fraud Note and the Thales evidence establish that, in the absence of a domestic production requirement, there is a risk of loss, theft and fraud in respect of Card Stock associated with the transportation from a foreign facility to Canada for personalization and potentially also a risk of loss, theft and fraud in respect of the production of Card Stock at a foreign facility. While Thales has been able to eliminate these risks as a practical matter by the imposition of stringent safety protocols and practices, there is no guarantee that all other bidders proposing to produce Card Stock in a foreign facility can, or will, do likewise. Therefore, the domestic production requirement is “necessary” for public safety and, accordingly, MTO is entitled to avail itself of the public safety exception under the CETA.

[55] In paragraphs 28 and 29, the Director first rejected Thales’ position that MTO had no evidence to support its reliance on the public safety exemption, referring to the MTO Fraud Note, on which the Director determined she was entitled to rely. The Director then set out the specific nature and extent of her reliance on the Note and her justification for so doing. The Director found that the MTO Fraud Office was well-positioned to provide evidence on the risks of foreign manufacture and transportation of card stock across jurisdictions. She noted that the MTO Fraud Note stated that incidents of theft and loss are deliberately under-reported for security reasons and therefore it was “unsurprising that there were no statistics presented in the Fraud Office’s assessment of the inherent risk of loss or theft of Card Stock throughout the chain of custody when there are multiple handovers and modes of transport, as would be required by foreign manufacture.” The Director also referred to the statement in the MTO Fraud Note that, when loss and theft occur, audit and enforcement are inherently, and significantly, more challenging where prosecutions depend upon foreign investigations and foreign law.

Conclusions of the Director on the Remaining Issues in the Thales Complaint

[56] The conclusions of the Director on the remaining issues in the Thales complaint and their disposition on this application are addressed later in these Reasons.

Issues

[57] This application for judicial review raises the following issues:

(a) Is the application for judicial review moot?

(b) In respect of the Decision:

(i) Is judicial review available?

(ii) If so, what is the applicable standard of review?

(iii) Is the Decision reasonable?

(iv) If not, what is the appropriate relief?

(c) In respect of the issuance of the RFB:

(i) Is judicial review available?

(ii) If so, what is the applicable standard of review?

(iii) Is the decision to issue the RFB reasonable?

(iv) If not, what is the appropriate relief?

Is the Application for Judicial Review Moot?

The Applicable Principles

[58] The doctrine of mootness reflects a general policy of the courts to decline to decide cases where their decisions would have no practical effect on the rights of the parties. A case is moot when there is no longer a concrete legal dispute between the parties: Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342, at p. 353. If the decision of the court will have no practical effect on the rights of the parties, a court will generally decline to decide the case. The discretion to hear moot cases exists for “exceptional” circumstances: Tamil Co-operative Homes Inc. v. Arulappah (2000), 49 O.R. (3d) 566 (C.A.), at para. 13.

[59] Once mootness has been established, however, the onus is on the party seeking to have matter heard to demonstrate why the court should depart from its usual practice of refusing to hear moot cases: Fontaine v. Canada (Attorney General), 2021 ONCA 931, at para. 14.

The Parties’ Positions

[60] MTO takes the position that Thales’ application for judicial review is moot because the evaluators have now completed the evaluation process, and Thales ranked fourth of four bidders. MTO submits that as a result, irrespective of whether this Court sets aside the Decision, Thales would not be in a position to negotiate for the contract.

[61] Thales takes the position that the domestic production requirement cannot be disentangled from the evaluation process at Stages 2 and 3. Thales submits that because the evaluators were aware of both the domestic production requirement and Thales’ intent to manufacture Card Stock in Poland, MTO cannot demonstrate that the requirement had no material impact on the evaluation of Thales’ bid.

[62] MTO disputes Thales’ allegation that the evaluators were tainted by the knowledge that Thales proposed to manufacture the Card Stock in Poland. MTO further submits that the evaluators were screened for conflicts, as well as from Thales’ complaint and judicial review application. A fairness monitor was also appointed and rendered an opinion that Stage 1 and Stage 2 of the RFB adhered to the OPS Procurement Directive.

Evaluation of the Bids under the RFB

[63] Under the RFB, at Stage 1 of the evaluation process, the bids were reviewed to ensure that all of the Mandatory Requirements listed in Section 1 of the RFB were met. Any bids that did not meet the requirements were disqualified. In Stage 2, the Technical Evaluation, bids were scored against the technical specifications in Section 2 of the RFB. At Stage 3, bidders demonstrated their card samples, and were scored against prescribed criteria. Six evaluators were chosen from the Ontario public service to evaluate the bids at Stages 2 and 3. At Stage 4, each bidder received a percentage of the total price points available, calculated by dividing the lowest bid price by the bidder’s bid price. The bidder who achieved the highest score after adding the totals from Stages 2 to 4 became the “Preferred Bidder.”

[64] For Stages 2 and 3, the evaluators awarded Thales a total of 929.5 out of 1167 points. Thales received a pricing score of 125.6 out of 500. Thales’ total score for Stages 2 to 4 was 1055.1, which put it in fourth place out of four bidders.

[65] MTO submits that at Stage 2, only two technical requirements (Sections 2.3.13 and 2.3.14, relating to the Card Production Centre) engaged the domestic production requirement. MTO submits that even if Thales received full scores on those two requirements, for a total of 45 points, it would not be the Preferred Bidder.

[66] MTO further submits that, even if Thales received the maximum scores for Stages 2 and 3, it would have ranked third out of four, based on its pricing score. MTO advised however that it has requested a price clarification from the Preferred Bidder, and that, in the event that contract discussions with the Preferred Bidder are unsuccessful, Thales would become the Preferred Bidder.

[67] I find that Thales’ application for judicial review is not moot for the following reasons.

[68] First, I accept that the application would be moot if mathematically it was impossible for Thales to become the Preferred Bidder by virtue of its pricing as applied in Stage 4. However, Ontario has acknowledged that, if Thales is given full scores at Stages 2 and 3, in the event that the contract negotiations with the current Preferred Bidder are unsuccessful, Thales would become the Preferred Bidder. As a result, I cannot conclude that the application is moot on this basis.

[69] Second, MTO’s alternative argument is that Thales would not be the Preferred Bidder even if it received full scores for a total of 45 points on the two technical requirements described above which could relate to the domestic production requirement. This argument fails to address the larger issue of whether, in their evaluation of Stages 2 and 3 more generally, the evaluators were influenced by knowledge of Thales’ intention to produce the Card Stock at its facility in Poland and MTO’s imposition of the domestic production requirement.

[70] MTO’s assertion that the domestic production requirement played no role in the evaluators’ assessment at Stages 2 and 3 of the process is unsupported by evidence. Aside from the technical requirements themselves, and Thales’ scores on those requirements, there is a lack of evidence as to what the evaluators considered in their assessment at Stages 2 and 3 of the process. However, the evaluators knew, based on Thales’ bid and the technical demonstration, that Thales intended to produce the Card Stock at its facility in Poland. As a result, while MTO asserts that the evaluators did not take the domestic production requirement into consideration, MTO is unable to demonstrate that they did not.

[71] Even if MTO had such evidence, it does not form part of the record on this application. Any such evidence would not be admissible before us without a motion and would probably require a trial of the issue to receive oral testimony, as well as review any documentary evidence, to establish the knowledge and intentions of the evaluators.

[72] In any event, even if the underlying dispute were moot, I find that this Court should nonetheless exercise its discretion to decide the application. This application raises a matter of public importance, namely, Ontario’s compliance with its international trade obligations, the resolution of which is in the public interest. The issue could be elusive of review if a contract were awarded before the dispute resolution process, including judicial review or appeal, could be concluded. I am also mindful of the dislocation caused to this procurement process by the time required for this Court to hear and decide this application: it is in the public interest that the issues raised in this application be decided in this case to avoid similar dislocation in a future procurement process.

[73] Accordingly, I decline to dismiss the application on mootness grounds.

Is the Decision Reviewable?

[74] Thales seeks judicial review of the Decision to dismiss Thales’ complaint pursuant to s. 2(1) of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1 [“JRPA”]. Section 2 of the JRPA states as follows:

Applications for judicial review

2 (1) On an application by way of originating notice, which may be styled “Notice of Application for Judicial Review”, the court may, despite any right of appeal, by order grant any relief that the applicant would be entitled to in any one or more of the following:

1. Proceedings by way of application for an order in the nature of mandamus, prohibition or certiorari.

2. Proceedings by way of an action for a declaration or for an injunction, or both, in relation to the exercise, refusal to exercise or proposed or purported exercise of a statutory power.

[75] While s. 2(1)2 requires the exercise of a statutory power where a declaration or injunction is sought, there is no such requirement under s. 2(1)1 for the public law remedies of certiorari, mandamus or prohibition.

[76] The Decision is an exercise of state decision-making authority of a sufficiently public character, and is thus subject to judicial review: Highwood Congregation of Jehovah’s Witnesses (Judicial Committee) v. Wall, 2018 SCC 26, [2018] 1 S.C.R. 750, at para. 13. However, given that the SCO process was not created by statute and is not governed by a statutory regime, an SCO decision does not constitute the exercise of a statutory power or a statutory power of decision as defined in the JRPA. Therefore, only the relief in s. 2(1)1, that is, relief in the nature of certiorari, mandamus or prohibition, is available.

[77] I have reviewed in draft the reasons of my colleague, D.L. Corbett J. In my view, even if the SCO process does not comply with the terms of the CETA because it does not provide for an appeal, as to which no determination is made herein, such non-compliance would not be a basis for declining to review the Decision.

What is the Applicable Standard of Review?

[78] Thales submits that the standard of correctness applies to the review of the Decision and the RFB because both engage a question of law of central importance to the legal system as a whole. Alternatively, Thales submits that the standard of review is reasonableness, informed by Canada’s international obligations.

[79] MTO argues that the standard of review of the Decision is reasonableness. MTO submits that the RFB is not reviewable but that if it is reviewed by this Court, the standard is reasonableness.

[80] I conclude that the standard of review applicable to the Decision is reasonableness for the following reasons.

[81] First, the issue of whether the domestic production requirement violates the non-discrimination provision of CETA, or whether it falls under the public safety exemption, is a question of mixed fact and law.

[82] Second, while Ontario’s obligations under international trade agreements are important, the interpretation and application of the domestic production requirement in this case cannot be considered a question of law of central importance to the legal system as a whole. The fact that international obligations are engaged is not, in and of itself, sufficient to warrant a correctness standard of review.

[83] In this regard, I note that, in Vavilov, at para. 114, the Supreme Court proceeded on the basis that the standard of review of an administrative decision involving obligations under a treaty would be reasonableness. In that passage, the Supreme Court stated that “Since Baker, it has also been clear that international treaties and conventions, even where they have not been implemented domestically by statute, can help to inform whether a decision was a reasonable exercise of administrative power.” (Emphasis added.)

Is the Decision Reasonable?

[84] As mentioned, the Decision addressed four specific complaints of Thales respecting the terms of the RFB and the MTO’s conduct of the RFB process. In this section, I propose to address the principal issue – whether the Canadian production requirement violates the non-discrimination provision of CETA. I will then address the disposition of the remaining issues in the Decision.

The Applicable Legal Principles

[85] Before considering the reasonableness of the Decision, it is necessary to address two matters – the test for reasonableness according to Vavilov and the test to be applied as contemplated by the Brazil Decision to determine whether the domestic production requirement constitutes a measure that is “necessary” to protect public safety.

The reasonableness of a decision

[86] The relevant principles of a review for reasonableness have been set out by the Supreme Court in Vavilov. In this regard, I note the following.

[87] First, the “hallmarks” of reasonableness are justification, transparency and intelligibility and whether the decision is justified in relation to the relevant factual and legal constraints that bear on the decision.

[88] Second, to be reasonable, a decision must be based on reasoning that is both rational and logical. Of note, at paragraphs 102-104, the Supreme Court stated:

[102] To be reasonable, a decision must be based on reasoning that is both rational and logical. It follows that a failure in this respect may lead a reviewing court to conclude that a decision must be set aside. Reasonableness review is not a “line-by-line treasure hunt for error”: Irving Pulp & Paper, at para. 54, citing Newfoundland Nurses, at para. 14. However, the reviewing court must be able to trace the decision maker’s reasoning without encountering any fatal flaws in its overarching logic, and it must be satisfied that “there is [a] line of analysis within the given reasons that could reasonably lead the tribunal from the evidence before it to the conclusion at which it arrived”: Ryan, at para. 55; Southam, at para. 56. Reasons that “simply repeat statutory language, summarize arguments made, and then state a peremptory conclusion” will rarely assist a reviewing court in understanding the rationale underlying a decision and “are no substitute for statements of fact, analysis, inference and judgment”: R. A. Macdonald and D. Lametti, “Reasons for Decision in Administrative Law” (1990), 3 C.J.A.L.P. 123, at p. 139; see also Gonzalez v. Canada (Minister of Citizenship and Immigration), 2014 FC 750, 27 Imm. L.R. (4th) 151, at paras. 57-59.

[103] While, as we indicated earlier…, formal reasons should be read in light of the record and with due sensitivity to the administrative regime in which they were given, a decision will be unreasonable if the reasons for it, read holistically, fail to reveal a rational chain of analysis or if they reveal that the decision was based on an irrational chain of analysis: see Wright v. Nova Scotia (Human Rights Commission), 2017 NSSC 11, 23 Admin. L.R. (6th) 110; Southam, at para. 56. …

[104] Similarly, the internal rationality of a decision may be called into question if the reasons exhibit clear logical fallacies, such as circular reasoning, false dilemmas, unfounded generalizations or an absurd premise. … a reviewing court must ultimately be satisfied that the decision maker’s reasoning “adds up”.

[89] Third, “elements of the legal and factual contexts of a decision operate as constraints on a decision-maker. Of particular relevance in the present context is the statement at paragraph 114 of Vavilov referred to above regarding the constraint imposed by international law:

We would also note that in some administrative decision making contexts, international law will operate as an important constraint on an administrative decision maker. It is well established that legislation is presumed to operate in conformity with Canada’s international obligations, and the legislature is “presumed to comply with . . . the values and principles of customary and conventional international law”: R. v. Hape, 2007 SCC 26, [2007] 2 S.C.R. 292, at para. 53; R. v. Appulonappa, 2015 SCC 59, [2015] 3 S.C.R. 754, at para. 40. Since Baker, it has also been clear that international treaties and conventions, even where they have not been implemented domestically by statute, can help to inform whether a decision was a reasonable exercise of administrative power: Baker, at paras. 69-71.

In short, conformity with Canada’s international obligations will inform the reasonableness of any decision which engages such obligations.

The test regarding the necessity of a proposed measure

[90] As mentioned, the parties are in agreement that consideration of the reasonableness of the Director’s determination requires an assessment of the application of the two-stage test described in paragraph 178 of the Brazil Decision. The first stage of that test requires a consideration of the relevant factors including, in particular, the importance of the interests at stake, the extent of the contribution to the achievement of the measure’s objective, and its trade restrictiveness. In this regard, it is also necessary to identify the public interest sought to be protected by the domestic production requirement and to determine whether the domestic production requirement is materially connected to the objective being pursued, being the reduction in the risk of loss, theft and fraud in respect of Card Stock. In the case where such analysis yields a preliminary conclusion that the measure is necessary, the second stage of the test requires confirmation of the result by a comparison of the measure with possible alternatives which may be less restrictive against the right of the other party to achieve its desired level of protection.

[91] In my view, the Decision that the domestic production requirement is “necessary” within the meaning of Article 19.3(2) of the CETA is unreasonable for the reasons set out below.

The Analysis Regarding the Test for “Necessity”

[92] As discussed above, the Director’s determination that MTO is entitled to avail itself of the public safety exception under the CETA is based on the following three propositions: (1) the MTO Fraud Note and the Thales evidence establish that, in the absence of a domestic production requirement, there is a risk of risk of loss, theft and fraud in respect of Card Stock associated with the transportation from a foreign facility to Canada for personalization and potentially also a risk of risk of loss, theft and fraud in respect of the production of Card Stock at a foreign facility; (2) while Thales has been able to eliminate these risks as a practical matter by the imposition of stringent safety protocols and practices, there is no guarantee that all other bidders proposing to produce Card Stock in a foreign facility can, or will, do likewise; and (3) therefore, the domestic production requirement is “necessary” for public safety and, accordingly, MTO is entitled to avail itself of the public safety exception under the CETA.

[93] The foregoing summary of the Director’s reasoning demonstrates three significant features of the Decision. First, although the parties both proceeded on the basis that the two-stage test for “necessity” in the Brazil Decision, among other cases, as described above, was applicable, the Director did not express her conclusions in conformity with that test. In order to accommodate the Director’s analysis to the operation of the two-stage test in the present circumstances, it is necessary to make certain significant assumptions regarding the findings required for the purposes of the test. Second, as a consequence, the Director failed to address the four principal issues discussed below which must be considered in the application of that test. Third, as a further consequence, it is not possible to identify a chain of analysis that is both rational and logical leading to the conclusion of the Director. In broad terms, the Director’s discussion of the issues encompassed by statements (1) and (2) above is inadequate and speculative, and the conclusion reached in (3) does not necessarily follow from the first two statements. The Decision is more properly characterized as a summary of the positions of the parties followed by a peremptory conclusion, with the Director’s analysis limited to the comments in paragraph 27 of the Decision. The foregoing features of the Decision are more than sufficient to find it to be unreasonable.

[94] The following analysis addresses the four principal issues to be addressed sequentially by a tribunal to apply the test in the Brazil Decision and the other cases referred to by the parties. It serves two purposes. It highlights the specific failings in respect of the foregoing defects in the Director’s conclusions. In addition, it also addresses important issues that were not addressed by the Director. When these issues are considered, they reinforce the conclusion that the Decision is unreasonable.

The public safety interest

[95] The first issue that the Director ought to have addressed was identification of the specific matter of public morals, order or safety that the domestic production requirement was intended to protect. From the general tenor of the Decision, it is likely that the Director accepted MTO’s position that there was a “vital security interest related to protecting public morals, order or safety” which MTO defined as “reducing the risk of loss, theft, and fraud associated with identity documents.”

[96] However, it is certainly arguable that this characterization of the alleged public interest is overly broad and that the significance to be attached to it is inflated. At a minimum, it is difficult to see how the interest in reducing the risk of loss, theft, and fraud associated with identity documents has anything to do with public morals or public order and there is a legitimate question as to whether public safety must engage public order. In any event, because she failed to address the specific public interest at issue, the Director failed to consider these issues.

[97] Nevertheless, given the other more significant issues addressed below, for the purposes of this analysis, it is assumed that there is a public safety interest in reducing the risk of loss, theft, and fraud associated with identity documents that could potentially be the subject of the public safety exception.

Material connection with the domestic production requirement

[98] The next issue that the Director should have addressed is whether the domestic production requirement is “materially connected” to protecting “public morals, order or safety” of Ontario residents, that is, in the present circumstances is “materially connected” to the reduction of the risk of loss, theft, and fraud associated with identity documents. Rather than addressing this question, it appears that the Director also accepted the MTO position without any analysis that there is a material connection because the “the measure is intended to, and will, mitigate the risk of loss or theft of card stock inherent with off-shoring production”.

[99] This defect in the Director’s reasoning is more serious for the reason that she thereby failed to address the nature of the alleged connection as well as whether the connection was material. The evidence in the MTO Fraud Note did not support a material connection between the domestic production requirement and the reduction of the risk of loss, theft and fraud associated with production of Card Stock in a facility located in the EU. At most, the evidence before the Director could justify a connection between the domestic production requirement and the reduction of the risk of loss, theft, and fraud associated with the transportation of Card Stock from a foreign plant to Canada for personalization in that, if the production and personalization are performed in the same facility in Canada, the requirement would remove the risk of loss, theft and fraud in respect of the transportation of the card stock to a printing facility in Canada. At the hearing, MTO effectively conceded this point by limiting its submissions on this issue to the connection between the domestic production requirement and the reduction of the risk associated with transportation.

[100] The question remains however whether such connection is a “material connection”. In the present circumstances, this issue appears to be closely related to the issue of whether the contribution of the domestic production requirement to the achievement of the MTO objective is “material”, which is addressed below.

The analysis of the contribution of the domestic production requirement

[101] As described by the WTO in United States – Measures Affecting the Cross Border Supply of Gambling and Betting Services (Complaint by Antigua) (2005), WTO Doc. WT/DS 285/ABR (Appellate Body Report), at paragraphs 306 and 307, and as affirmed at paragraph 178 of the Brazil Decision, the first stage of the test for “necessity” involves an inherent weighing and balancing process that begins with an assessment of the “relative importance” of the interest furthered by the challenged measure. The analysis must also involve an assessment of other relevant factors usually including “the contribution of the measure to the realization of the ends pursued by it” and “the restrictive impact of the measure on international commerce”.

[102] The Director failed to engage in this exercise of weighing and balancing the foregoing considerations. She failed to consider the relative importance of the public safety interest furthered by the domestic production requirement. The Director also failed to consider both the contribution of the domestic production requirement to the reduction of the risk of loss, theft, and fraud associated with Card Stock and the restrictive impact of the requirement on international commerce.

[103] There is therefore no finding that, on a preliminary basis, the domestic production requirement satisfies the first stage of the test for “necessity”. Instead, the Director appears to have adopted, without expressly so stating, the MTO position that the domestic production requirement is “necessary” in that its contribution to the achievement of the objective is ‘material’ without providing any reasoning that explains this conclusion. Accordingly, insofar as there is an implied conclusion on the first stage of the test for “necessity”, it is purely conclusory – that the appropriate standard is a “material contribution” to the reduction of the risk of loss, theft, and fraud associated with Card Stock and that the domestic production requirement satisfies this standard.

[104] In reducing the issue before the Director to the question of whether the domestic production requirement would make a “material” contribution to the achievement of the objective of reducing the risk of loss, theft, and fraud associated with Card Stock, MTO relied on a view expressed in the Brazil Decision at paragraph 150. In that passage, the Appellate Body opined that in the case of a measure that produces restrictive effects on international trade that are as severe as those resulting from an import ban, it would be difficult for a panel to find the measure to be “necessary” unless it was satisfied that the measure was apt to make a “material” contribution to the achievement of its objective.

[105] Thales and MTO proceeded on the basis that this standard applies in the present circumstances. In this case, the impact of the domestic production requirement is absolute in that it would ban any bidder proposing to produce Card Stock in a facility outside Canada. However, in order for the Director to find that the domestic production requirement will make a “material contribution” to the reduction of loss, theft and fraud associated with identity cards, the Director had to establish both that there was a material risk and that the domestic production requirement would materially reduce that risk. I will address each of these issues in turn.

Is There a Material Risk?

[106] The evidence that the Director relied upon to establish a material risk of loss, theft and fraud associated with Card Stock consisted of the evidence in the MTO Fraud Note and the evidence of Thales, both of which bear closer examination.

[107] While the MTO Fraud Note sets out a litany of reasons why the MTO Fraud Office believes the risk of loss, theft and fraud associated with Card Stock could increase with foreign manufacture and transportation to Canada for personalization, the Note concludes by stating only that “[f]oreign production of card stock poses increased security and chain of custody risks.” As mentioned, there is minimal, if any, support in the MTO Fraud Note for the suggestion of increased risk associated with the foreign manufacture of Card Stock; the MTO’s position focusses on the risk associated with transportation to Canada. More significantly, the MTO Fraud Note does not purport to quantify the increased risk, even in general terms, and it is silent on the issue of whether the MTO Fraud Office considers the actual risk to be material. Moreover, the MTO Fraud Note does not address the submission of Thales that it has managed the risk through various security protocols and practices. There is therefore no basis in the MTO Fraud Note for determining that the risk described therein is material.

[108] The only evidence which addresses the materiality of the risk of loss, theft and fraud associated with identity cards was that presented by Thales. The Thales evidence establishes that it is possible to manufacture Card Stock in a facility in an EU country and to transport it to North America, including to Canadian locations, for personalization without loss or theft of Card Stock. Accordingly, as mentioned, this suggests that the actual risk of such loss or theft can be effectively minimized by the application of stringent safety protocols and practices. Under such circumstances, any residual risk of loss, theft and fraud associated with Card Stock is, at best, modest and speculative and certainly not material.

[109] Instead of taking this evidence into consideration, however, the Director ignored the probative value of the Thales evidence and responded with two negative statements. The MTO Fraud Note states that Thales’ evidence was not evidence of the absence of any risk, or of only low risk, of loss or theft associated with foreign manufacture and transport of Card Stock. In addition, the Director suggested that Thales’ evidence was not evidence that other suppliers in other countries have equally successful manufacturing and transportation track records. Thales was not, however, arguing that its evidence demonstrated either circumstance. More significantly, while it is correct that the Thales evidence is not a basis for inferring either of these states of affairs, it is also not a basis for inferring that a material risk of loss, theft and fraud of Card Stock exists if stringent safety protocols and practices are adopted.

[110] Apart from the Thales evidence, there was no other evidence before the Director regarding risk of loss or theft of Card Stock associated with the Card Stock production industry in general, or with any other specific manufacturer or bidder. In particular, there was no evidence that supported the Director’s assumption that the actual risk associated with other potential foreign suppliers of Card Stock was materially greater than the risk associated with Thales’ operations. I also note that the Director’s assumption required the further assumption, which was also not expressly acknowledged, that potential foreign suppliers other than Thales do not, and would not even if so required, apply the stringent safety protocols and practices that have allowed Thales to operate without any loss of Card Stock.

[111] Accordingly, while the evidence before the Director could justify a finding of a potential risk of loss, theft and fraud associated with Card Stock production and transportation to Canada, it could not justify a finding that the practical risk was material.

Does the Domestic Production Requirement Materially Reduce the Alleged Risk?

[112] There remains the further issue of whether a domestic production requirement would materially contribute to the reduction of the risk of loss, theft and fraud associated with identity cards.

[113] In the Brazil Decision at paragraph 151, the Appellate Body stated that the demonstration of an alleged material contribution can be demonstrated by “quantitative projections in the future” or “qualitative reasoning based on a set of hypotheses that are tested and supported by sufficient evidence”. While a party is not required to provide a quantitative analysis of the anticipated reduction of risk, it cannot avoid consideration of this issue by limiting its evidence to qualitative statements that are not “tested and supported by sufficient evidence”. In this case, there were no quantitative projections before the Director. Accordingly, she had to rely on qualitative statements, principally the statements in the MTO Fraud Note. However, to the extent that it can be said that the MTO Fraud Note constituted “qualitative reasoning based on a set of hypotheses” which the Director adopted, such reasoning was deficient for the following reasons.

[114] First, and most importantly, as discussed below, the Director’s determination was based on hypotheses that were unrealistic, unsupported by evidence and speculative.

[115] It is not possible to address the question of material reduction in risk without first considering the extent of the actual risk of loss, theft and fraud associated with foreign production and transportation to Canada of Card Stock. As discussed above, this requires an assessment of the extent to which stringent safety protocols and practices would otherwise be applied by potential suppliers, or could be imposed as a condition of a request for bids, in the absence of a domestic production requirement. Such a consideration requires knowledge of the extent to which the Card Stock production industry generally applies the same safety protocols and practices as Thales. Further, if there is, in fact, a variation in the safety protocols and practices among the members of the industry, it is also necessary to consider the extent to which there is a similar variation among the potential bidders in any request for bids. As discussed above, the Director was not, however, in a position to address these matters because of the absence of any relevant evidence before her.

[116] Instead, the Director implicitly assumed a scenario of security protocols and practices on the part of all other potential foreign bidders that were less stringent than those of Thales. There was however no evidence for this assumption. In particular, there was no evidence of the security protocols and practices of other potential suppliers of Card Stock, either domestic or foreign. Because the Director’s conclusion was based on, and required, these unsupported assumptions, the Director’s conclusion of a material contribution to the reduction of risk was entirely speculative.

[117] Second, the most that the Director could have realistically inferred from the evidence before her was that a domestic production requirement could possibly contribute to a material reduction in the risk in respect of a potential supplier that was not willing or able to apply safety protocols and practices that were as stringent as those of Thales, even if such actions were a condition of a request for bids. It is not possible on the evidence before the SCO to assess whether, or to what extent, such potential bidders exist. The MTO Fraud Note did not provide any such evidence.

[118] More importantly, the broad conclusion of the Director requires evidence that the security protocols and practices applied by Thales could not have been required of all other foreign suppliers with similar results in terms of the elimination of the practical risk of loss, theft and fraud at a foreign production facility and in the course of transportation to a Canadian printing facility. There was no evidence to this effect before the Director. More significantly, in making this assumption, the Director disregarded the ability of the MTO to exclude any such bidders from the RFB process or to take the elevated risk associated with such bidders into consideration in the evaluation of the bids under the RFB.

[119] Third, the Director justified her approach based, at least in part, on her position that Thales’ argument required acceptance of the proposition that Thales’ track record established that the domestic production requirement was not warranted for any bidders. This statement of the Thales position oversimplifies the necessary inference from the Thales experience and is logically flawed.

[120] On this point, the Thales evidence implies no more than that it is feasible to minimize any practical risk of loss, theft and fraud associated with the manufacture and transportation to Canada of Card Stock by the application of stringent safety protocols and practices. In other words, if one party has been able to manufacture Card Stock in a foreign facility and transport it to Canada for personalization without risk of loss of the Card Stock, a domestic production requirement applicable to all foreign suppliers is not “necessary” to reduce the risk of such loss or theft provided stringent safety protocols and practices are already in place or would be put in place as a requirement of a request for bids. The Thales experience implies that a domestic production requirement is not required, as the Director suggests, because the MTO has the authority in any request for bids to require that successful bidders adhere to stringent safety protocols and practices. The Director ignored this aspect of the Thales’ position and assumed away this possibility without any evidence for so doing.

[121] Fourth, and most importantly, as the foregoing discussion demonstrates, the contribution of a domestic production requirement to the reduction of any risk associated with foreign production of Card Stock and transportation to Canada would depend upon the extent that a foreign supplier put in place, or was prepared to put in place, stringent safety protocols and practices that managed the risk of loss or theft of Card Stock. To the extent they were prepared to do so and any bidders who were unprepared to do so were excluded from, or negatively evaluated under, the RFB, the practical risk of loss or theft associated with foreign production of Card Stock and transportation to Canada could be reduced to a minimal level without the imposition of a domestic production requirement. In such a situation, it follows necessarily that any further contribution to the reduction of the risk of loss or theft of Card Stock by the imposition of a domestic production requirement would not be material.

[122] Lastly, insofar as there is any analysis underlying this aspect of the Decision, it appears that MTO has defined its desired level of protection regarding the risk of loss, theft and fraud as nil and believes that the only means of achieving that level of protection is an absolute prohibition of the circumstances under which such risk could arise – namely, foreign production of Card Stock.

[123] This argument ignores the requirement that the proposed measure, in this case the domestic production requirement, must make a material contribution to the reduction of the risk against which MTO seeks to be protected. If, as here, it is demonstrated that, at least under certain realistic circumstances, the risk can be reduced to a level at which the imposition of a domestic production requirement would make no more than a negligible, essentially speculative, contribution to the reduction of whatever risk remains, the Director cannot rely upon this principle to support such a requirement. Imposition of a domestic production requirement to address the reduction of risk in such circumstances becomes arbitrary.

[124] In summary, because the Director did not address the issue of a material contribution to the reduction of risk using realistic assumptions, the Director’s determination that imposition of a domestic production requirement would make a material contribution to the risk of loss and theft associated with the foreign production and transportation to Canada of Card Stock was neither logically sound nor supported by the evidence before her.

The Analysis of Possible Alternatives

[125] It necessarily follows from the foregoing analysis that the Decision is unreasonable for the reason that the Director failed to consider available, less trade-restrictive alternatives to the domestic production requirement. The reasons for this conclusion are set out below.

[126] As mentioned above, the approach adopted in the Brazil Decision, and the other cases referred to by the parties, provides that where an analysis of a discriminatory trade measure yields a preliminary conclusion that the measure is “necessary”, the second stage of the test requires confirmation of the result by a comparison of the measure with possible alternatives which may be less restrictive while providing an equivalent contribution to the achievement of the objective. For this purpose, as stated in the Brazil Decision at paragraph 156, in order to qualify as an alternative, a proposed measure must be not only less trade restrictive than the measure at issue but should also preserve the authority’s right to achieve its desired level of protection with respect to the objective being pursued.

[127] In the present case, insofar as the Director considered the availability of less restrictive alternatives, as mentioned, she appears to have adopted the position of the MTO that the only possible less restrictive alternative was the absence of a domestic production requirement. She also appears to have concluded that such alternative failed the test of preserving for Ontario its right to achieve its desired level of protection with respect to the objective pursued, being a total absence of any risk of loss, theft and fraud. There are two significant problems with this approach and determination which collectively demonstrate that the Director also misdirected herself in her consideration of available, less-restrictive alternatives to the domestic production requirement.

[128] First, as mentioned, there was evidence before the Director that at least one bidder which produced Card Stock in a facility in the EU was able to achieve the desired level of protection as a practical matter, being an absence of loss, theft or fraud of Card Stock, by the application of stringent safety protocols and practices. This suggests that the imposition of stringent safety protocols and practices is a potentially viable, less trade-restrictive alternative to the domestic production requirement. For this purpose, there is no meaningful difference between reducing the risk of such loss, theft and fraud by the implementation of stringent safety protocols and practices to a negligible, essentially speculative, risk and eliminating such risk by means of a domestic production requirement. As discussed above, the Director disregarded this evidence without a reasonable basis for so doing.

[129] Second, the Director based her decision on an unreasonable scenario, being the absence of a domestic production requirement without any ability on the part of the MTO to exclude bidders who were not prepared to implement safety protocols and practices comparable to those that have proven effective in minimizing the risk of loss or theft associated with Card Stock. For the reasons discussed above, it is not realistic to consider the alternative to a domestic production requirement in the abstract. Insofar as the Director may have implicitly assumed that, in the absence of such a requirement, all other foreign producers would have applied safety protocols and practices that were less stringent or otherwise inferior to those of Thales, there was no basis for such an assumption on the evidence before her, as discussed above. If it were assumed that only some but not all of the potential bidders would fall into this category, there was even less justification for adopting a blanket domestic production requirement that discriminated against all foreign suppliers including those who applied appropriately stringent protocols and practices, particularly given the ability of the MTO to exclude, or negatively evaluate, the former class of bidders under the terms of the RFB. In short, in the absence of realistic assumptions regarding the operation of such safety protocols and practices in the absence of a domestic production requirement, the Director’s consideration of the less trade-restrictive alternatives was purely speculative.

[130] Collectively, these two considerations compel the conclusion that the Director could not reasonably limit her consideration of alternative less trade-restrictive measure in the manner in which she did. The Director was required to consider whether a requirement that potential suppliers apply stringent safety protocols and practices substantially similar to those of Thales would achieve MTO’s desired level of reduction of the risk of loss, theft and fraud associated with the foreign production and transportation to Canada of Card Stock. The Decision was also unreasonable because the Director failed to conduct such an analysis.

[131] In reaching this finding, I am not intending to specify in any detail the manner in which such an alternative requirement should be incorporated into a request for bids. There are several possible options for such incorporation. The selection of the most appropriate manner of doing so involves operational details which are more appropriately left to the administration decision-maker having responsibility for establishing the terms, and criteria for evaluation, for any future request for bids.

Conclusion on the Reasonableness of the Decision

[132] For the foregoing reasons, I find that the Decision that the domestic production requirement is “necessary” within the meaning of Article 19.3(2) of the CETA is unreasonable.

Disposition of the Remaining Issues in the Decision

Whether Addendum #12 Introduced Fundamental and Significant Changes to the RFB

[133] In the Decision, the Director, found that Addendum #12 did not introduce a fundamental and significant change to the RFB. Based on our findings above on the substantive reasonableness of the Decision, we need not determine whether Addendum #12 added the domestic production requirement and whether it was procedurally unfair to amend the RFB terms at that stage.

Alleged Contravention of the CFTA

[134] The Director found that there was no discrimination contrary to the CFTA because under the RFB, all suppliers, irrespective of which province or territory they are a part of, are subject to the same domestic production requirement. Based on our findings in relation to the CETA, we need not consider whether the RFB violated the terms of the CFTA.

Did the SCO Process Lack Procedural Fairness?

[135] The Director dismissed Thales’ procedural fairness arguments and found that the bid dispute process was sufficiently set out on Ontario’s website and that Thales was also provided with the Detailed Description. Given my conclusion on the substantive issue, it is not necessary to address Thales’ arguments regarding the lack of procedural fairness.

[136] I note however that none of the procedural fairness issues raised by Thales precluded it from fully participating in the SCO process. In particular, while Thales objects to the Director having allowed the Ministry to file a sur-reply, it does not argue that it was deprived of the opportunity to respond to any particular substantive issue, nor is there any basis for such a finding in the record before the Court.

What is the Appropriate Relief?

[137] While Thales seeks declaratory relief, as set out above, a declaration is only available in relation to the exercise, refusal to exercise or purported exercise of, a statutory power of decision: Daneshvar v. Ontario, 2021 ONSC 3186 (Div. Ct.), at paras. 28-31. As noted above, the Decision does not result from the exercise of a statutory power of decision. As a result, declaratory relief is not available in the circumstances of this case. Similarly, mandatory relief is only available where there is a statutory duty to act and the government fails to do so: Apotex Inc. v. Canada, [1994] 1 F.C. 742 (C.A.), aff’d 1994 47 (SCC), [1994] 3 S.C.R. 1100.

[138] As a result, in respect of the Decision, the appropriate relief is in the nature of certiorari, under s. 2(1)2 of the JRPA. The Decision must be set aside. Based on my analysis of the reasonableness of the Decision, it is clear that the only reasonable conclusion that the Director could have reached on the record before her is that the domestic production requirement contravened the CETA. In the circumstances, it would serve no useful purpose to remit the matter back to the Director.

Is Judicial Review of the RFB Available?

[139] While it is not, in my view, strictly necessary to review the RFB, for the purposes of clarity and to resolve any outstanding questions as to the status of the RFB, I will also review the RFB.

[140] This raises the issue of whether this Court has jurisdiction to review the RFB. MTO has taken the position that it does not.

[141] Courts 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. Where there are no statutory provisions or regulations which prescribe how the government agency is to go about entering 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.).

[142] In Bot Construction v. Ontario (Minister of Transportation) (2009), 99 O.R. (3d) 104 (Div. Ct.) at para. 21, however, 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.[^2]

[143] In 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.

[144] There are three principal reasons for finding that this Court has jurisdiction to review the RFB in the specific circumstances of this case.

[145] First, the present circumstances are distinguishable from the other cases in which courts have refused to entertain a judicial review application in that this case involves alleged non- compliance with applicable treaty provisions as opposed to the outcome or fairness of a government tender process.

[146] Second, as a related matter, a number of factors weigh in favour of finding that the decision to issue the RFB is more public than private in nature:

(a) The RFB was issued by multiple government ministries pursuant to the Procurement Directive. While the Directive is not a regulation, it states that it is mandatory, and Ontario governmental ministries are required to adhere to its requirements when issuing procurement tenders;

(b) The contract at issue is for the design and production of foundational identity documents issued by the government to Ontario residents. The ability to issue identification documents, and thus the need to produce them, is a power and responsibility unique to government. The public nature of the work to be performed under the contract is heightened by the fact that the documents will eventually contain personal information that is protected under privacy legislation. The documents are also closely related to the benefits and privileges that Ontario residents may access, such as driving and receiving health care. Moreover, MTO’s reliance on the public safety exception under the CETA is based on its position that the contract engages a fundamental governmental interest in a matter of significant public importance;

(c) The RFB specifically states that the CETA and CFTA apply. There is a strong public interest in ensuring that Ontario’s public procurements are conducted in a manner consistent with Canada’s obligations under international and interprovincial trade agreements and the principles underlying those agreements, including fairness, transparency, integrity and reciprocity. Moreover, Ontario has an interest in ensuring that its procurements are in line with the CETA and CFTA to ensure equal access to extra-provincial and international procurements for Ontario suppliers;

(d) The RFB involves a significant sum of public funds: $80 million over seven years. There is a public interest in ensuring that contracts that involve the expenditure of substantial public funds are awarded pursuant to a fair and transparent process; and

(e) The issue of whether the domestic production requirement breaches the non-discrimination requirement under the CETA cannot be addressed as a matter of contract law. Moreover, the SCO process limits the availability of private law remedies and stipulates that any complaint initiated after a contract award will be restricted in remedy.

[147] The third reason for the Court’s jurisdiction is that, given the determination of the judicial review of the Decision and the consequential relief, it could be argued that the status of the RFB has not been addressed directly. To that extent, the judicial review is necessary to clarify the status of the RFB.

[148] Accordingly, I find that the relevant considerations dictate that judicial review is appropriate in the circumstances.

What is the Applicable Standard of Review?

[149] My analysis on the standard of review of the Decision also applies to the decision to issue the RFB. The standard of review is reasonableness. The decision to issue the RFB does not engage a question of law of central importance to the legal system as a whole. Moreover, in my view, the fact that obligations under international trade agreements are engaged does not warrant a correctness standard of review.

Is the RFB Reasonable?

[150] I find the decision to issue the RFB including the domestic production requirement in its terms and conditions to be unreasonable for three reasons.

[151] First, given my conclusion that the Decision is not reasonable, it follows that, to the extent that the domestic production requirement contravenes the non-discrimination provision of the CETA and is not justified under the public safety exception, the decision to issue the RFB with the domestic production requirement was also unreasonable.

[152] Second, there is no evidence before the Court that MTO ever considered the application of the CETA to the RFB either upon the issuance of the RFB or at the time of the issuance of Addendum No. 12. In the absence of a Record of Proceedings of the MTO in respect of the decision to issue the RFB, the Court must proceed on the basis that the MTO did not consider this issue. MTO’s decision to issue the RFB without any consideration of the requirements of the CETA, and whether the domestic production requirement would violate the non-discrimination provision, is a further basis for finding the RFB to be unreasonable.

[153] Finally, while there could be an issue as to the admissibility of the evidence tendered by the MTO on this application, it is not necessary to address this issue in the circumstances of this case. Thales did not object to the consideration of the documents (the MTO Fraud Office Note and the American Association of Motor Vehicle Administrators’ DL/ID Card Design Standard for North America) that MTO relies upon to support the domestic production requirement.[^3] Even if MTO is permitted to rely on those documents, it has nonetheless failed to demonstrate that the public safety exception applies, for the reasons detailed above. Therefore, taking MTO’s case at its highest, the decision to issue the RFB with the domestic production requirement is also unreasonable.

What is the Appropriate Relief?

[154] Based on my finding that the decision to issue the RFB with a domestic production requirement is unreasonable, the RFB must also be quashed.

Conclusion

[155] Accordingly, for the reasons set out above, the Decision and the RFB are hereby quashed.

[156] For clarity, however, nothing in these Reasons should be interpreted as a finding of this Court that there is no legitimate public safety concern or that a government cannot adopt a measure that would be discriminatory under the CETA for public safety reasons in any future request for bids. Based on the evidence in this case, however, the application of the public safety exception has not been made out.

[157] At the hearing, counsel advised that the parties had agreed that the successful party on the application would be entitled to $75,000 in costs. The Respondent shall therefore pay the Applicant’s costs of the application in the amount of $75,000.

“Nishikawa J.”

I agree: “Wilton-Siegel J.”

D.L. Corbett J. (Concurring):

[158] I have had the benefit of reading the reasons of Nishikawa J. I agree with her that both the Decision and the RFB should be quashed. I do not agree, however, that this court should undertake a substantive review of the Decision.

[159] My concern with the approach taken by my colleague is focused on principles of administrative law. In my view, if the decisionmaker below had jurisdiction to make the Decision, this court should not appropriate that jurisdiction by reviewing the RFB. It is because the decisionmaker below did not have jurisdiction that this court should review the RFB: there is no other body with jurisdiction to undertake this task, and the Rule of Law requires that it be done.

[160] Ontario has failed to implement a CETA-compliant dispute resolution process. Ontario’s choice to resort to an internal bid dispute process to decide a claim under CETA was a breach of CETA. Judicial review of the Decision by this court would be a further breach of CETA. In my view, this court should not invoke its equitable jurisdiction in furtherance of a breach of Ontario’s obligations under CETA and should decline to review the Decision substantively. Instead, this court should quash the Decision on jurisdictional grounds, and then review the RFB.

[161] I would find that the RFB is unreasonable in two respects:

(1) in failing to comply with the dispute resolution requirements of CETA; and

(2) in discriminating against the applicant in breach of CETA.

In reaching this second conclusion, I would find that Ontario has not established on admissible evidence before this court that its domestic production requirement in the RFB is “necessary” to secure “public safety”.

[162] Therefore, for the reasons that follow, I would quash the Decision as having been made without jurisdiction and I would quash the RFB as unreasonable.

[163] In the result, Ontario would be entitled to issue a new RFB that is CETA-compliant, and that RFB could include terms intended to protect Ontario’s legitimate public safety requirements. Any dispute about whether the terms of a new RFB comply with CETA should then be adjudicated in a process that complies with the dispute resolution provisions of CETA.

Mootness

[164] The mootness issue does not arise on my analysis. In quashing the RFB, the entire process followed as a result of the RFB falls – including all of the bids and their evaluations.

Jurisdiction and Standard of Review

[165] I agree with my colleague’s analysis of the standard of review of both the Decision and the RFB.

[166] I also agree with my colleague’s reasons respecting this court’s jurisdiction to review the Decision. I note that this court’s jurisdiction under s.2(2) of the JRPA is not engaged because the Decision was not an exercise of a statutory decision-making power. This distinguishes this case from other reviews of adjudicative decisions in this court: they are almost always grounded in a statutory grant of decision-making authority to the decisionmaker below.

[167] I address this court’s jurisdiction to review the RFB later in these reasons.

Jurisdiction to Make the Decision

[168] Article 19.17.4 of CETA provides:

Each Party shall establish or designate at least one impartial administrative or judicial authority that is independent of its procuring entities to receive and review a challenge by a supplier arising in the context of a covered procurement.

Ontario properly concedes that the Decision was not made by an “impartial administrative or judicial authority that is independent of its procuring entit[y].” In designating the decision-making process below, Ontario has not complied with Article 19.17.4.

[169] Article 19.17.5 provides:

If a body other than an authority referred to in paragraph 4 initially reviews a challenge, the Party shall ensure that the supplier may appeal the initial decision to an impartial administrative or judicial authority that is independent of the procuring entity whose procurement is the subject of the challenge.

Ontario properly concedes that it has not created an appeal from the Decision. Ontario also properly concedes that this court does not have jurisdiction to entertain an appeal of the Decision in the absence of an express grant of jurisdiction: this is a statutory court and only has the jurisdiction conferred upon it by statute: Brent v. Brent (2004), 69 O.R. (3d) 737 (C.A.), at para. 9; R. v. Church of Scientology (1986), 25 CCC (3d) 149 (Ont. C.A.) at pp. 150-51.

[170] Article 19.17.6 provides:

Each Party shall ensure that a review body that is not a court shall have its decision subject to judicial review….

Ontario argues that the decisionmaker below is “a review body that is not a court” but that its decision is “subject to judicial review.” Thus, it argues, the process designated by Ontario complies with Article 19.17.6 of CETA. I do not accept this argument. Article 19.17 distinguishes between an “appeal” and “judicial review”. Under Article 19.17.4, the initial review may be undertaken by a judicial or an administrative authority. Where this review, pursuant to Article 19.17.4, is undertaken by a body other than a court, Article 19.17.6 requires that the decision is subject to judicial review. Where the initial review is conducted by an administrative authority that is not impartial and independent (that is, which does not comply with Article 19.17.4), then there must be an appeal to an independent and impartial administrative or judicial authority. If this appeal is to an independent administrative authority that is not a court, then the appeal decision must be subject to review by a court.

[171] I note two principles from these provisions. First, if the initial review is done by a body that is not independent and impartial, there must be a right of appeal to a body that is independent and impartial. Second, whatever processes are established, they must include eventual recourse to a court (whether by way of appeal or judicial review).

[172] Ontario is in breach of these provisions in failing “to designate at least one impartial administrative or judicial authority that is independent of its procuring entities’ (Art. 19.17.4) and by failing “to ensure the supplier may appeal” a decision of the decisionmaker below (Art. 19.7.5).

[173] Oceans of ink and forests of paper have been spent on the distinction between “appeals” and “applications for judicial review” in our law, and the distinct roles played by the court in these different proceedings. The distinction matters a great deal in our law and is addressed expressly in CETA.

[174] It surely should not need to be said that CETA is an important international trade obligation of Canada and its sub-national governments, including Ontario. Enforcement of CETA has been allocated to domestic tribunals and courts under CETA, and it is the responsibility of those tribunals and courts, including this court, to see to CETA’s enforcement.

[175] No explanation has been provided for Ontario’s failure to provide a CETA-compliant dispute resolution mechanism for CETA claims. By executive action, Ontario directed that such disputes be decided by an internal dispute-resolution process. This internal process was not designed for enforcement of international trade obligations, but for all manner of disputes and claims that may arise in connection with tendering for government contracts. The process below may be well-suited for other procurement disputes, but the course of this case shows how unsuited it was for these CETA claims.

[176] My decision does not turn on this point[^4] but I note here that the “Briefing Note”, which bears the hallmarks of an adjudicative decision, is not, in fact, the “decision” respecting the dispute. It is, in substance, internal advice provided to the Government of Ontario. The actual “decision” is that of the Government of Ontario, and under basic administrative law principles, it is that decision that is the culmination of the process below and which is the subject-matter of the application for judicial review in this court. This observation reinforces my conclusion that the process below was not designed to adjudicate CETA claims: it was designed to address Ontario’s decision to contract for goods and services (a subject-matter generally immune from judicial oversight) in the context of public procurement policies designed to promote efficiency and reduce or eliminate corruption in the letting of public contracts. The extent to which there is, or should be, judicial oversight of these issues is an open question: see Bot Construction v. Ontario (Minister of Transportation), 2009 ONCA 879, 85 C.L.R. (3d) 25: generally, the government is accountable to the Legislature for public spending decisions, not to the courts.

[177] In my view, the decisionmaker below did not have jurisdiction over the underlying dispute because it was not a tribunal that fits within either Article 19.17.4 or 19.17.5 of CETA. Thus, I conclude that the Decision was rendered without jurisdiction should be quashed as a nullity.

[178] My colleague characterizes this non-compliance with CETA as a failure to “strictly comply” with CETA. I do not see it so favourably. In my view it is a flagrant and inexplicable failure to implement Ontario’s obligations under CETA. The result was an unsatisfactory process, based on a dubious record, which led to a failure to understand and apply applicable international law, followed an unsatisfactory reasoning process, and approached the dispute showing deference to Ontario’s policy choices on an issue for which Ontario bore the onus of proof. If this decision had been rendered by a tribunal legally entrusted to adjudicate CETA disputes, my criticism would be properly levelled at the tribunal itself. Here, I think that would be unfair. This criticism should be levelled, not at the decision-makers below, who surely did their best to address a problem they were not qualified to decide institutionally. This criticism is instead levied against the Government of Ontario, for its failure to implement CETA in accordance with its terms.

Judicial Review of the RFB

[179] Having concluded that the Decision should be quashed on jurisdictional grounds, I now explain why I would review the RFB. I start, however, by explaining why I would not undertake a reasonableness review of the Decision.

[180] First, there is no need to conduct a reasonableness review of the Decision. It is a nullity for lack of jurisdiction. It cannot stand, whether it is substantively reasonable or otherwise.

[181] Second, substantive review of the Decision raises remedial and evidentiary problems which, though they were not argued by the parties, are evident on my colleague’s substantive review of the Decision.

[182] To be clear, I accept Nishikawa J.’s conclusion that there are serious failures of reasoning in the Decision that run counter to the guiding international trade jurisprudence, including:

(a) Ontario’s stated goal of reducing risk related to transportation of card stock to nil is a tautology that offends the non-discrimination principles in CETA. The circularity of this argument is obvious when placed in the context of the points below.

(b) Materiality had to be and was not assessed in the Decision – materiality of the risk of loss of card stock during transportation, materiality of this risk -- taking account of proposed security measures to address it, and materiality of the risk posed to “public safety” by the risk of loss, as attenuated by the proposed security measures. While it may not be necessary for all aspects of these issues to be supported by quantitative evidence, the analysis cannot be supported by speculation and bald assertion.

(c) This analysis then had to be weighed against the important value of reciprocal non-discrimination obligations in CETA.

(d) Finally, the Decision errs in its logic by failing to give serious consideration to alternatives to the domestic production requirement (such as prescribed transportation security measures) – the apogee of this error being where the Decision found that Thales’ security measures and track record, rather than providing evidence of a reasonable alternative to the domestic production requirement, was evidence of material risk posed by transportation of card stock.

[183] The reasoning in the Decision is, on its face, unsatisfactory and justifies Nishikawa J.’s conclusion that it is unreasonable. In that circumstance, what should this court do?

[184] If the Decision had been made by a decisionmaker lawfully authorized to decide the dispute, I would expect that this court would quash the Decision and send the matter back for a fresh hearing in accordance with this court’s reasons. This “usual” approach is followed in almost all cases. Why depart from it now? The answer, it seems to me, is that this court cannot send the issue back because the decisionmaker below does not have jurisdiction over the dispute.

[185] If we were sending the Decision back for a fresh hearing, I would not be satisfied to limit our reasons to those provided by my colleague. They are sufficient to grant certiorari, but they would be insufficient to provide the decisionmaker below with appropriate guidance about the evidentiary and other process issues below. One aspect of this court’s role, as a reviewing court, is to raise the quality of administrative decision-making below. This court need not perform that role in this case, because the dispute is not being sent back. When Ontario complies with its obligations under CETA and establishes a proper dispute resolution process, it will be for Ontario to prescribe a CETA-compliant process, and for the tribunal assigned the adjudicative task to develop its procedures and formulate its evidentiary principles, after all of which it may be appropriate for this court to weigh in on those issues.

[186] Thales is entitled to have its CETA complaint adjudicated. The Decision has been set aside and there is no jurisdiction below to hear the dispute anew. Ontario has not provided a process for the dispute to be adjudicated before any court or tribunal in accordance with CETA. That leaves this court, as the court with jurisdiction under the JRPA, to conduct a judicial review of the RFB. There is no other body with jurisdiction, and in this circumstance this court should take jurisdiction under the JRPA.

[187] This case falls outside the scope of the jurisdictional issues left open in Bot Construction. The issue in this case concerns enforcement of CETA. This issue has a clear public dimension. Under CETA, the issue is to be determined (at least at one level of the process) by an independent and impartial tribunal with ultimate recourse to a court at least by way of judicial review. In these circumstances there is a sufficient public dimension to the issue that this court should take jurisdiction, and it is not necessary to engage with the policy issues raised and left open in Bot Construction. In this regard, I accept my colleague’s analysis of the jurisprudence on this issue. My conclusion that we should not provide a substantive review of the Decision is, however, for me, the lynchpin of my conclusion that we should review the RFB.

[188] I disagree with my colleague’s approach because of what it could signal for future cases. If Ontario establishes a CETA-compliant dispute resolution process – as it is obliged to do under CETA – then this court should, in future, respect the process established by Ontario. This would ordinarily foreclose this court from taking original jurisdiction to review an RFB, and instead, this court would leave it to the decisionmaker assigned this task by Ontario in a CETA-compliant process. Or, in other words, faced with an unreasonable decision from a lawful decisionmaker, we would send the issue back.

RFB Is Unreasonable

[189] I agree with my colleague that the RFB is unreasonable. The RFB:

(a) fails to comply with dispute resolution provisions of CETA;

(b) discriminates against Thales within the meaning of CETA; and

(c) does not fit within the “public safety” exception to the non-discrimination principle in CETA on the record before this court.

(a) Failure to Comply with Dispute Resolution Provisions of CETA

[190] The RFB does not include dispute resolution provisions that comply with CETA. Nothing in the record before this court explains or justifies this non-compliance. Flagrant beach of CETA in this respect renders the RFB unreasonable.

(b) The RFB Discriminates Against Thales Within the Meaning of CETA

[191] This point is properly conceded by Ontario. The issue in the case is whether this discrimination is justified, as discussed below. In the absence of a justification on the basis of the public safety exception in CETA, the discrimination contravenes CETA and thereby renders the RFB unreasonable.

(c) Ontario Has Not Established the Public Safety Exception

[192] The reasons given by Nishikawa J. describe errors in reasoning in the Decision. Ontario repeats and relies upon this reasoning to invoke the public safety exception in CETA to justify the domestic production requirement in the RFB. I would reject that argument on review of the RFB for the reasons given by Nishikawa J.

[193] I would go further, much further. A judicial review of the RFB is a de novo hearing in this court, and it is not focused on the record below, but rather the justification available for the terms of the RFB at the time those terms were issued. Where, as here, there is no “record of decision”, this court assesses reasonableness of the RFB on the record placed before this court by the parties. That record is subject to the usual principles of evidence that apply in civil proceedings.

[194] Ontario has not adduced a record of evidence admissible before this court to justify its position on review of the RFB. Internal risk management documents and secondary source reports are not admissible in this court for the truth of their contents where they are not adopted by a witness entitled to present those documents to the court for the truth of their contents, a witness who is then available to be cross examined meaningfully in respect to the contents of those documents. By the nature of the evidence, one would expect such a witness to be qualified as an expert on the risk management and public safety issues in dispute. This is a crucial process point in this case and explains why it is less than satisfactory for this court to weigh in on the substantive reasonableness of the Decision in the absence of a proper process below.

[195] Evidentiary principles need not be the same before an administrative tribunal as they are before a generalist court. However, this court will assess evidentiary principles applied by an administrative tribunal in light of the entire context of the dispute including some consideration of the expertise of the tribunal. Since there was no jurisdiction below, there should be no need for this court analyse these principles in detail, but they do bear mention to further establish the inappropriateness of the process followed below.

[196] The decisionmaker below has no specialized expertise in international trade law. It accepted, uncritically, hearsay evidence tendered by Ontario without assessment of the dangers and frailties of that evidence. Such an approach may be in keeping of the sort of disputes ordinarily addressed in the process below: Ontario policy on matters of public safety and risk management could be entitled to deference in many procurement disputes. No such deference is owed in the context of this CETA dispute. Quite to the contrary, Ontario bears the onus of proving that the public safety exception applies, and it cannot discharge this onus by filing some internal documents and stating its position as a matter of policy. The decisionmaker below did not wrestle with these evidentiary problems or provide any justification for the evidentiary principles it followed. This would be a concern if the entire process below was not a nullity – not just for Thales but also for Ontario, which needs to understand the nature of its evidentiary burden in order to defend its position on the merits.

Remedy

[197] I agree with my colleague that both the Decision and the RFB should be quashed with costs to Thales of $75,000. In addition, I would order that, if Ontario decides to run the process to solicit bids again, a fresh RFB should include a CETA-compliant dispute resolution process.

“D.L. Corbett J.”

Released: June 1, 2022

CITATION: Thales DIS Canada Inc. v. Ontario, 2022 ONSC 3166

DIVISIONAL COURT FILE NO.: 943/21

DATE: 20220601

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

Wilton-Siegel, D.L. Corbett and Nishikawa JJ.

BETWEEN:

Thales DIS Canada Inc.

Applicant

• and –

Ontario (Ministry of Transportation)

Respondent

REASONS FOR DECISION

Released: June 1, 2022

[^1]: Given that the Decision accepted and attached the Director’s recommendation as contained in the Briefing Note, references to “the Decision” include the Briefing Note, which will not be referred to separately.

[^2]: In overturning the Divisional Court’s decision in Bot Construction, the Court of Appeal expressly reserved on the issue of whether judicial review was available with respect to the tendering process for government procurement contracts: Bot Construction v. Ontario (Minister of Transportation), 2009 ONCA 879, 85 C.L.R. (3d) 25.

[^3]: Not only did Thales not object, Thales relied on the AAMVA Standard to argue that best practices do not require production and printing of the cards in a single location.

[^4]: I accept the approach to this point taken by Nishikawa J. – the “Briefing Note” are the “reasons” below, and this case does not turn on a precise identification of who the “decisionmaker” was. I use the term “decisionmaker” to include all actors in the process below including the one making final decision, and I adopt my colleague’s use of the term “Decision” to likewise include the Briefing Note as the reasons for the decision.