COURT FILE NO.: 842/12 (Perth)
DATE: 2012Dec03
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
2145850 ONTARIO LIMITED o/a Highland Bus Services, BARR BUS LINES LIMITED, CLARK BUS & MARINA LIMITED, HEALEY TRANSPORTATION LIMITED, PREMIER BUS LINES INC., VALLEY BUS LINES LIMITED, and WHITTEKER BUS LINES LIMITED
Plaintiffs
– and –
STUDENT TRANSPORTATION OF EASTERN ONTARIO
Defendant
J. Lisus and D. Schwartz, for the Plaintiffs
R. Keel, P. Harper and J. Kala, for the Defendant/Moving Party
HEARD: November 30, 2012 at Kingston
Tranmer J.
MOTION DECISION
NATURE OF THE MOTION
[1] The Defendant moves for an Order striking out the Amended Statement of Claim pursuant to Rule 21.01(1)(b) on the ground that it discloses no reasonable cause of action. The sole basis for the Defendant's position is its submission that sections 22 and 23 of the Broader Public Sector Accountability Act (“The Act”) bars the action as pleaded in the Amended Statement of Claim.
[2] No evidence was admitted on the motion.
[3] For the purposes of the motion, it is assumed that the facts as stated in the Amended Statement of Claim could be proven.
THE LAW on a RULE 21 MOTION
[4] The test to be applied by the court is whether it is plain and obvious that the Plaintiffs' claims disclose no reasonable cause of action. Statements of Claim should not be struck out in anything other than the clearest of cases. The power to strike out proceedings should be exercised with great care and reluctance. Hunt v. Carey Canada Inc. 1990 CanLII 90 (SCC), [1990] 2 S.C.R. 959. The Defendant also referred me to the decision of the Nova Scotia Supreme Court in Rowe v. Brown [2008] N.S.J. No. 28 where the court states that there is a very high burden resting on the Defendant who brings such a motion, and where the test was stated to be “the Defendant will only succeed if, on the facts pled, the action is “obviously unsustainable.” The burden is on the Defendant to convince the court that the claim is “certain to fail.”
AMENDED STATEMENT OF CLAIM
[5] The Plaintiffs are small and medium-sized independent school bus operators from rural Ontario who have been serving their school boards and communities for a number of years, and in some cases, for decades. In some cases, this employment and service has been passed down through generations. The businesses of the Plaintiffs have grown over the years from very small and modest beginnings to a present point where each business owns a number of vehicles, serves a number of school bus routes, and employs a number of people in the community that it serves, ranging from 9 buses, 7 routes and 14 employees to 54 routes and over 100 employees.
[6] The Defendant issued a request for proposal (“RFP”) on September 24, 2012, which closed on November 26, 2012. By agreement, that date has been extended to January 11, 2013 at 2 PM, pending the outcome of this motion. The RFP is for the procurement of student transportation services that, to this point in time, have been contracted for and provided by the Plaintiffs. The Defendant submits that the RFP process undertaken by it is pursuant to and in accordance with the Act and directives issued there under.
[7] The Amended Statement of Claim includes the following allegations:
a. the Plaintiffs have been entirely dependent upon the Defendant which has exercised complete control over their businesses; as a result the Plaintiffs are in a unique position of vulnerability and in addition to the contractual duties owed by the Defendant, a special relationship exists between the Defendant and the Plaintiffs giving rise to a duty of care;
b. the procurement of student transportation contracts is a unique exception to the general rule, whereby school boards in Ontario procure services and supplies and equipment; the Defendant requires the Plaintiffs to be completely available to them at all times; the Plaintiffs are of necessity based in the communities they serve; the Defendant controls the Plaintiffs’ investments, profit margins, receives and uses the confidential business information and exercises significant control over their employees;
c. the Plaintiffs have had a long-term relationship with the Defendant, some for decades; the relationship involves contracts renewed annually, although that is not strictly adhered to; in some cases, the Plaintiffs continue to work after a contract has expired;
d. the Plaintiffs provide the Defendant with significant amounts of their confidential business information as specified in the Amended Statement of Claim and the Defendant uses this information to their advantage as pleaded;
e. the relationship reflected a relationship of trust and cooperation between the Plaintiffs and the Defendant;
f. security of tenure for the Plaintiffs’ routes has played a very important role in establishing goodwill in their businesses, permitting an operator who wishes to retire to sell his or her business knowing that they will receive value for their equipment and for the goodwill associated with their routes and that their purchasers will carry on in their shoes;
g. it is pleaded that the Plaintiffs and the Defendant are in a relationship that gives rise to a common law duty of care;
h. it is pleaded that the Defendant made certain representations to the Plaintiffs, upon which they relied and which the Defendant has breached to the detriment of the Plaintiffs;
i. it is pleaded that the Defendant has used its knowledge of the Plaintiffs’ financial and operational information to their disadvantage in the terms of the RFP, which is fundamentally unfair to the Plaintiffs and puts them at a highly prejudicial disadvantage in respect of large operators who may submit proposals;
j. it is pleaded that the Defendant intends to eliminate most if not all of the Plaintiffs and deliver a monopoly on student transportation in favour of large, financially powerful companies;
k. it is pleaded that the Defendant has not followed the Act or directives in its RFP;
l. the Plaintiffs plead facts supporting their allegation that the Defendant breached common-law duties of care;
m. the Plaintiffs plead facts supporting their allegation that the Defendant has breached its duty of good faith to them;
n. the Plaintiffs plead facts that the Defendant has breached its duty of fairness to them;
o. -the Plaintiffs plead facts that the Defendant has breached its duty of confidence to them;
p. the Plaintiffs plead facts that support their allegation that the Defendant has engaged in unlawful acts that are not in accordance with mandatory requirements of the directives.
POSITION OF THE DEFENDANT/MOVING PARTY
[8] The Defendant submits that sections 22 and 23 of the Act bar the claims as pleaded. The sections together with s. 12 are set out below.
PART V
PROCUREMENT STANDARDS
Directives
- (1) The Management Board of Cabinet may issue directives governing the procurement of goods and services by designated broader public sector organizations. 2010, c. 25, s. 12 (1).
Same
(2) Without limiting the generality of subsection (1), the directives may incorporate by reference a Government of Ontario policy or directive, in whole or in part, as amended from time to time. 2010, c. 25, s. 12 (2).
Compliance
(3) Every designated broader public sector organization to which the directives apply shall comply with the directives. 2010, c. 25, s. 12 (3).
Limitations on remedies
- (1) No cause of action arises against the Crown, or any of the Crown’s ministers, agents, appointees and employees, or an organization subject to this Act, as a direct or indirect result of,
(a) the enactment or repeal of any provision of this Act;
(b) the making or revocation of any provision of the regulations, directives or guidelines made under this Act; or
(c) anything done or not done in accordance with this Act or the regulations or the directives or guidelines. 2010, c. 25, s. 22 (1).
Same
(2) Without limiting the generality of subsection (1), that subsection applies to an action or other proceeding claiming any remedy or relief, including specific performance, injunction, declaratory relief, any form of compensation or damages, including loss of revenue and loss of profit, or any other remedy or relief. 2010, c. 25, s. 22 (2).
Proceedings barred
(3) No proceeding, including but not limited to any proceeding in contract, restitution, tort, trust, fiduciary obligation or otherwise, that is directly or indirectly based on or related to anything referred to in clause (1) (a), (b) or (c) may be brought or maintained against the Crown or any of the Crown’s ministers, agents, appointees and employees or an organization subject to this Act. 2010, c. 25, s. 22 (3).
No judicial review
(4) Despite any other Act or law, no person may bring an application for judicial review of a directive issued under Part V or a procurement process undertaken under a directive. 2010, c. 25, s. 22 (4).
Rights preserved
(5) Subsections (1), (2), (3) and (4) do not prevent the Attorney General from bringing an application or commencing proceedings to require an organization subject to this Act to comply with this Act and its regulations and directives. 2010, c. 25, s. 22 (5).
Same
(6) Subsections (1), (2), (3) and (4) do not prevent the enforcement of an agreement or funding arrangement referred to in sections 17, 18 and 19. 2010, c. 25, s. 22 (6).
No compensation
- (1) Despite any other Act or law, no person is entitled to any compensation for any loss or damages, including loss of revenues or loss of profit, arising from the enactment or application of this Act or anything done in accordance with this Act, the regulations or directives, including,
(a) the termination of an agreement in accordance with subsection 4 (3);
(b) the termination of an agreement in accordance with section 19;
(c) a reduction in compensation in accordance with subsection 20 (2);
(d) the invalidity or unenforceability of an agreement by reason of section 21; or
(e) the inoperability of a compensation plan by reason of subsection 7.17 (1). 2010, c. 25, s. 23 (1); 2012, c. 8, Sched. 4, s. 2.
Saving
(2) Subject to subsection (3), subsection (1) does not bar any action against a designated broader public sector organization for failure to meet a common law duty owed during a procurement process undertaken by the designated broader public sector organization. 2010, c. 25, s. 23 (2).
Same
(3) A duty referred to in subsection (2) does not include an obligation of a designated broader public sector organization arising from a directive issued under this Act. 2010, c. 25, s. 23 (3).
[9] The Defendant submits that these sections give it complete immunity from the claims advanced for injunctive relief and declaratory relief. It submits that it is plain and obvious on a plain and ordinary reading of these sections that the Plaintiffs’ claims are certain to fail.
[10] The Defendant submits that the only exception to the bar against action is set out in section 23(2). Counsel submits that that section does not bar “any action… for failure to meet a common law duty owed during a procurement process”, but submits that such action must be framed in damages not for injunctive relief or declaratory relief as in the Plaintiffs’ claim.
[11] The Defendant submits that the wording of sections 22 and 23 in the Act are clear and not ambiguous. Therefore, it says, this court must not read additional words into the sections.
[12] The Defendant submits that paragraphs such as paragraph 34 of the Amended Statement of Claim can be pursued by the Plaintiffs under s. 23(2) of the Act, but only as a claim for damages.
[13] The Defendant submitted before me that if I am not persuaded that the entire Amended Statement of Claim should be struck out then in the alternative, I should strike out those portions that relate to acts “done or not done in accordance with the Act” and relief that is not damages. On this point, I note specifically that the sole item of relief sought in the Notice of Motion is for an Order striking out the Amended Statement of Claim. There is no alternative relief sought such as striking out only portions thereof. For this reason, I decline to consider granting such relief. If I am wrong in this regard, the balance of my Reasons explain why I am of the view the Amended Statement of Claim should not be struck out, in whole or in part.
[14] I note that no argument was advanced before me by the Defendant that the Amended Statement of Claim pleaded evidence or breached the rule that every pleading shall contain a concise statement of material facts on which the party relies for the claim.
[15] It is the position of the Defendant that, although the facts as pleaded are that while damages may be able to partially compensate the Plaintiffs’ investments made, damages cannot compensate the Plaintiffs for the loss of opportunity to compete for future contracts, the loss of employment in the community and irreparable damage to upstream suppliers, and further that the Defendant's actions intend and will eliminate most of the Plaintiffs from business, wrongfully putting them out of their established and long-term businesses, devastating them to a point where they are no longer viable, and causing them irreparable harm, the only relief available to the Plaintiffs are for breaches of a common law duty and their only remedy is damages, after the fact.
[16] It is the position of the Defendant that even if the action that it has taken is unlawful as set out in the Amended Statement of Claim and causes the losses to the Plaintiffs as claimed by them, their only remedy is to suffer such losses and sue for damages. For such a proposition, the Defendant relies upon R v. McIntosh 1995 CanLII 124 (SCC), [1995] 1 SCR 686, where the court states, at paragraph 34, “where, by the use of clear and unequivocal language, capable of only one meaning, anything is enacted by the legislature, it must be enforced however harsh or absurd or contrary to common sense the result may be.”
[17] It is the position of the Defendant that even though it is bound to comply with the Act and its directives, sections 22 and 23 shield it even though it takes action “not in accordance with this Act,” that is, as if the sections read even though it takes action, “contrary to the Act.”
POSITION OF THE PLAINTIFFS
[18] The Plaintiffs submit that the interpretation by the Defendant of sections 22 and 23 leads to the absurd result that would immunize the Defendant from unlawful acts. Counsel submits that misusing confidential information to shape a bid, or deliberately failing to comply with the directive, by way of examples pleaded, are not acts “done or not done in accordance with this Act.” He points out that section 12(3) requires “shall comply with the directives”. He submits that failure to comply surely cannot be protected under sections 22 and 23.
[19] The Plaintiffs submit that it is not plain and obvious and beyond doubt that section 23(2) which expressly does not bar “any” action for breach of common law duty should be interpreted to mean the “only” action available is one for damages.
[20] The Plaintiffs submit that it is not plain and obvious and beyond doubt that the Act would permit the Defendant to act unlawfully with the result that the Plaintiffs, despite the history and their relationship with the Defendant, would be put out of business completely, suffering irreparable harm, with their only relief to be in damages after the fact.
[21] The Plaintiffs rely on the decision of the Ontario Court of Appeal in PDC 3 Limited Partnership v. Bregman + Hamann Architects 2001 CanLII 38745 (ON CA), [2001] O.J. No. 422 for the principle that where issues raised are important, legally novel and complex, they should be decided based on a full factual record, which allows the judge to make findings, which form the basis for the legal analysis and conclusions. Counsel submits that core factual issues in the present case include whether the Defendant misused confidential information, considered local market conditions, considered alternate measures and so on as required by the directives.
[22] The Plaintiffs also rely on the decision of this court in Rizmi Holdings Ltd. v. Vaughan (City) [2009] O.J. No. 2088, where the interpretation of similarly worded legislation was in issue. O’Marra J. noted that a motion under rule 21 must meet a stringent test. He noted in that case that the impugned section did not apply to acts of negligence, malfeasance or bad faith conduct alleged to have been committed for reasons or purposes unrelated to the Act. He stated that if it can be established that the acts or conduct of the Defendant or its staff that gives rise to the Plaintiffs’ claim had nothing to do with the Act then the section would provide no protection. As in the present case, the provision in question in that case had never been judicially considered. He held that the Plaintiffs’ claim raised novel legal issues that required a complete evidentiary record. He relied on previous authority that had held that matters of law which have not been settled fully in our jurisprudence should not be disposed of at the motion stage of the proceedings. Factual underpinnings which can only come from a full trial are necessary for a valid construction of statutory words. He concluded that whether the legislation in that case barred the Plaintiffs’ claims could be determined only after a full evidentiary record had been provided at trial.
[23] The Plaintiffs further submit that this court has the right to review action such as that taken by the Defendant through its powers of judicial review, Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190. The court held that by virtue of the rule of law principle, all exercises of public authority must find their source in law. All decision-making powers have legal limits, derived from the enabling statute itself, the common or civil law or the Constitution. Judicial review is the means by which the courts supervise those who exercise statutory powers, to ensure that they do not overstep their legal authority. The function of judicial review is therefore to ensure the legality, the reasonable doubts in the fairness of the administrative process and its outcomes.
[24] In this regard, the Plaintiffs also rely upon the decision of this court in Couchiching First Nation et al v. The Attorney General of Canada et al., 2010 ONSC 4373.
[25] The Plaintiffs further submit that there is authority for injunctive relief in procurement cases.
[26] The Plaintiffs submit that the court cannot read into section 23 (2) words that would limit “any action” to “any action for damages”, as submitted by the Defendant. R v. McIntosh 1995 CanLII 124 (SCC), [1995] 1 SCR 686.
ANALYSIS
[27] The Plaintiffs plead facts in support of their allegations that the Defendant breached common-law duties of care owed by it to the Plaintiffs, including the duty of good faith, the duty of fairness and the duty of confidence. In view of the authorities cited to me, including McIntosh and Airport Limousine Drivers Association v. Greater Toronto Airports Authority (S.C.J.O. – August 2, 2005, M.G.J. Quigley, J.), I am not persuaded by the Defendant that it is plain and obvious that the Plaintiffs’ claims are certain to fail based on the Defendant’s submission that section 23(2) limits recovery to damages only. To do so would require reading into section 23(2) and ignoring legal precedent for injunctive relief.
[28] The Plaintiffs plead facts in support of their allegations that the Defendant has engaged in unlawful acts that are not in accordance with the mandatory requirements of the directive and therefore the Act. Section 22(1)(c) insulates the Defendant from any cause of action that arises as a result of anything “done or not done in accordance with this Act… or the directives”. In simple terms, if the directive required the Defendant to do something, and the Defendant did it then it would seem to be protected under this section. Similarly, if the directive required the Defendant to not do something, and the Defendant did not do it, then it would seem to be protected under this section. Arguably, this is the extent of the protection. The dispute between the parties in regard to this section arises in the situation where the directive requires the Defendant to do something, but it does not do it. The Defendant's position is that that conduct is protected under the phrase “not done in accordance with this Act… or the directives.” In my view, it is not plain and obvious that the Defendant is correct in this interpretation such that the Plaintiffs’ claims must fail. The Plaintiffs have pleaded that in this case the directive required the Defendant to do something, but it did not do it. The Plaintiffs submit that the sections cannot and should not be interpreted to protect the Defendant in that situation. In simple terms, the Plaintiffs submit that this section on a proper reading, reflecting the intention of the legislation, does not afford protection for conduct contrary to the Act or directives. I cannot find that the Plaintiffs’ claim in this regard is certain to fail.
[29] I find that it is not plain and obvious that sections 22 and 23 of the Act were intended to and result in a person suffering irreparable harm not compensable in damages with his or her only remedy being for breach of common law duties, and then only in damages, after the fact, despite conduct that is contrary to and in violation of the Act by an organization which is bound to comply with the Act.
[30] In addition, based on the principles set out in PDC 3 and in Rizmi, at this stage of the proceedings, I cannot find that it is plain and obvious that the Plaintiffs' claims are certain to fail. It is not plain and obvious that the Act bars the claims being made. These sections have not been considered judicially and the issues raised are important, novel and complex. In my view, a determination of the issues raised in the Amended Statement of Claim require a complete evidentiary record and should not be disposed of at this stage of the proceedings.
[31] For these reasons, I am of the view that the motion brought by the Defendant should be dismissed. Therefore, it is unnecessary for me to decide the additional submission made by the Plaintiffs in support of their case as set out in Dunsmuir.
COSTS
[32] If the parties are unable to resolve the question of costs of this motion, the Plaintiffs may make written submissions to me of no more than three pages plus a costs outline on or before December 14, 2012 at 4 PM. The Defendant may respond in writing, limited to three pages plus a costs outline within five days of receipt of the Plaintiffs’ submissions and no later than on or before December 21, 2012 at 4 PM.
FURTHER PROCEEDINGS
[33] If the parties wish to discuss with me scheduling of further proceedings, they may do so by arranging a telephone conference with me to take place on or before December 7, 2012 at 9:30 AM through the office of the trial coordinator at Kingston, Ms. Harnett, 613-548-6827. In the absence of such discussion, this matter is remitted to the next Assignment Court in Perth, which is January 8, 2013 at 11 AM.
Tranmer J.
Released: December 3, 2012
COURT FILE NO.: 842/12 (Perth)
DATE: 2012Dec03
ONTARIO
SUPERIOR COURT OF JUSTICE
BETWEEN:
2145850 ONTARIO LIMITED o/a Highland Bus Services, BARR BUS LINES LIMITED, CLARK BUS & MARINA LIMITED, HEALEY TRANSPORTATION LIMITED, PREMIER BUS LINES INC., VALLEY BUS LINES LIMITED, and WHITTEKER BUS LINES LIMITED
Plaintiffs
– and –
STUDENT TRANSPORTATION OF EASTERN ONTARIO
Defendant
MOTION decision
Tranmer J.
Released: December 3, 2012