COURT FILE NO.: 842/12 (Perth)

DATE: 2014 Jul 11

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 (STEO)

Defendant

– and –

HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO

Intervenor

J. Lisus, D. Schwartz and M. Law, for the Plaintiffs/Moving Party

R. Keel, P. Harper and N. Simmons, for the Defendant

R. Carr, C. Thompson and N. Laeeque, for the Intervenor

HEARD: June 24 and 25, 2014 at Kingston

Belch, J.

MOTION DECISION

[1] The Plaintiffs are seven private transportation service providers described as small rural bus operators in Eastern Ontario. The Defendant, Student Transportation of Eastern Ontario (STEO), is a non-profit corporation without share capital, incorporated under the Corporations Act, R.S.O. 1990, c. C.38 and is wholly controlled and funded by the Upper Canada District School Board, (UCSDB), and the Catholic District School Board of Eastern Ontario, (CDSBEO). It procures transportation for 77% of the students at these two Boards. In the past, the Plaintiffs had entered into negotiated commercial interests with STEO to transport some of the above students.

[2] Her Majesty the Queen in Right of Ontario, as represented by the Ministry of Education, (Ministry or Crown), Intervenor, on consent of the Plaintiffs and proposed Intervenor, the Defendant not opposing, was added as an Intervenor by Order dated February 8, 2013.

[3] A motion was commenced by the Plaintiffs on February 25, 2014 and subsequently amended March 11, 2014 for relief as follows:

a. an Order granting leave to amend the Amended Statement of Claim, in the form of a Fresh as Amended, Statement of Claim;

b. an Order that,

i. the Ministry must serve and file a defence within 30 days of the date leave is granted;

ii. the Plaintiffs may serve and file a Reply;

iii. the parties including the Ministry produce all documents relevant to the issues disclosed by the amended claim and not already produced; and

iv. additional examinations for discovery.

c. an Order requiring the Ministry pay the Plaintiffs costs to date plus costs going forward,

or,

d. an Order,

i. declaring the Ministry’s decision to fund STEO’s costs, ultra vires;

ii. prohibiting the Ministry from continuing payments to STEO; and

iii. requiring STEO repay the Crown costs it received.

e. in addition, an Order amending the February 8, 2013 Order requiring the Ministry to respond in its pleadings to allegations RFP’s are not an appropriate method to procure student transportation; and

f. costs.

[4] The Defendant, STEO:

a. takes no position with the Plaintiffs’ plea to amend, but submits the funding issues should be addressed at the motion and not the trial stage;

b. has no issues with the filing of a defence of the Ministry and reply by the Plaintiffs; but

c. STEO should also be allowed to file an amended statement of defence;

d. takes no position on the Plaintiffs’ request to be indemnified for costs, past and future, or to amend the February 8^th Order; and

e. objects to the declaration funding was ultra vires and takes issue with the prohibition of future payments from and the need to repay the Ministry and objects to the Plaintiffs’ plea for costs of the motion.

[5] The Ministry objects to the amendments and the Plaintiffs’ request to add the Ministry as a party Defendant as this will cause further delay, additional costs, and will keep competitive procurement at a standstill.

[6] For the reasons that follow, it is my decision the Plaintiffs’ request for amendments that are not financial, namely, (a) and (b)(i)(ii)(iii)(iv) and (e) of the Motion, and to add the Ministry as a party Defendant is granted. The Plaintiffs request the Ministry pay their costs to date plus going forward is denied and their request declaring STEO funding is ultra vires, prohibiting continuing payments to STEO and requiring STEO to repay the costs it received from the Crown is adjourned to the trial judge. The Plaintiffs are also permitted to amend their claim to include judicial review of STEO funding and of course, STEO and the Ministry can file responding materials.

BACKGROUND

[7] School boards provide bus transportation to many of their students. In those regions characterized by large geographical territories where schools and their students are “spread out,” transportation is often supplied by smaller bus operators. The consortia charged with procuring bus transportation appear to have been pleased with the service provided by the smaller operators who they believe provided taxpayers with good value for their money.

[8] Bus transportation along with other services is paid for through tax dollars. Obviously, the government has looked for ways to cut costs and on December 8, 2010, Royal Assent was received in regard to Bill 122, an Act to increase the financial accountability of organizations in the broader public sector. Bill 122 is now known as the Broader Public Service Accountability Act, 2010 (BPSAA). This Act includes every school board and provides an open procurement process must be conducted where the estimated value of the goods or services is $100,000 or more. The Act also applies to consortia procuring school transportation. In addition, the Ministry of Finance published a Broader Public Sector Procurement Directive (Directive) and a Supply Chain Guideline (Guideline).

[9] The Act and the directives that accompanied it set out to level the playing field by providing procurement procedures said to be open, transparent, and fair. These procedures would replace the previous system of negotiation for transportation which had existed in some cases for decades.

[10] In 2008, the Ministry decided to adopt competitive procurement for student transportation. To assist the Boards and consortia, the Minister of Education hired consultants to design a Request for Proposal (RFP) template for use in this new way of doing business.

[11] It seems some observers familiar with school bus transportation recognized RFPs were possibly not “a good fit” for the school bus industry. While cost savings were important so were safety and industry stability.

[12] In 1991, Ontario’s Auditor General noted creation of monopolies as a risk, warning large bus operators could undercut smaller operators thereby eliminating competition. In 2006 and 2008, the use of RFPs was excluded from student transportation. The Ministry of Education engaged Deloitte and Touche LLP, to produce a “Cost Benchmark Study” to determine minimum rates which would produce a safe and reliable product for student transportation.

[13] Evidently, in 2009, pilot projects using RFPs saw large multinational bus operators secure almost all the routes previously serviced by small bus operators. This, in turn, led to expressions of concern from operators, Boards and communities etc. In response, a Task Force was created in June 2011 under Cabinet direction to review competitive procurement processes, paying specific attention to their openness, fairness, accountability and value for money. The Task Force was to report to the Minister of Education in December 2011. School boards were not required to pursue competitive processes in procurement of student transportation services while awaiting the Task Force Report.

[14] The Task Force was comprised of up to 13 members including representatives of Ontario school boards, representatives of transportation consortia, a procurement expert, a representative from the Ministry of Education and up to four owner/operators from the school bus industry. It was chaired by the Hon. Coulter Osborne, QC.

[15] The Task Force delivered its report on January 25, 2012 with concluding comments from Mr. Osborne.

[16] Within the current proceedings, disclosure received from the Ministry of Education under the Freedom of Information Act suggests Ministry officials downplayed the significance of the conclusions reached by the Task Force, particularly the Task Force’s analysis that there were problems with the use of RFPs as “one size did not fit all” and suggesting the Task Force was nothing but a political exercise.

[17] The results of the pilot projects triggered a number of lawsuits across Ontario. This particular action is one of five actions and described as “further advanced” along the legal process and the other actions are standing by to observe the results. There have been a number of decisions of persuasive authority delivered in several of the actions and it appears that at least, in the rural areas, competitive procurement is on hold and school bus operators including these Plaintiffs have continued to negotiate contracts in the same way the contracts had been finalized over past decades. It is also of interest that some of the Plaintiffs in this action have been delivering transportation services to the school boards for such a significant time that many of the original operators have passed ownership of their businesses to their children.

[18] Some of the other consortia named in actions involving student transportation are identified as follows: Service DE Transport DE Wellington-Dufferin Student Transportation Services (STWDSTS); Southwestern Ontario Student Transportation Services, (STS); Tri-Board Student Transportation Services Inc. (Tri-Board); other actions are Epoch’s Garage Ltd. and UGDSB; and FL Ravin Ltd. and STS.

[19] STEO points out while Plaintiffs’ counsel in this action represent Plaintiffs in some but not all other actions, the parties in those actions have not been served with the material in this action nor have they filed materials in this action nor have these actions been consolidated, they are not companion actions, this is not a class action, nor a representative action, but is described to be of precedent setting value.

[20] The Plaintiffs, STEO, and the Intervenor presented their positions on adding the Crown as a party and amending the pleadings, including amending on the issue of funding. As previously mentioned, STEO only took a position on amendments dealing with the Plaintiffs’ funding and retaining its own funding.

PLAINTIFFS’ POSITION

[21] The Plaintiffs submit the Crown must be added as a party Defendant because the Ministry had been directing consortia to issue RFPs based on the Ministry’s template RFP. In addition, the Ministry while submitting it required intervenor status in order to take a limited and focused role had, in fact, in other actions, argued every aspect of the injunction motion, including irreparable harm, and balance of convenience stressing the public interest was at issue. Presumably, this was to further its stated objective that RFP issues should work their way through the courts. Further, the Ministry is funding the litigation costs of the consortia, however, it would not answer questions about this on the basis it is not a party to this action.

[22] The Plaintiffs submit, not only has the Ministry directed consortia to implement its template RFP, the Ministry discounted or ignored evidence the process was flawed and rather than investigate and ensure the process was fair, the Ministry, for example, was more concerned to ensure no Ministry funding had been used in the preparation of the RFP issued by the Consortium de L’Est.

[23] The Plaintiffs therefore seek to amend their claim to reflect evidence of the Ministry’s direct involvement, and seek purely declaratory relief against the Ministry. The Ministry should be a party Defendant to determine whether, as it claims, it was immune from liability because it was exercising “core or true” policy decisions. Also, it should be a party in order to determine whether its funding of the consortia legal expenses is ultra vires and whether this funding calls into question its claim it is a neutral third party.

[24] The Ministry should also be added as a party, given it is an active participant in four out of five of the existing actions and pleadings in these actions, engage a series of issues of fact and law which the Ministry concedes are common and evoke the public interest. The use of RFPs in student transportation is an issue with province-wide ramifications that should be determined on a complete trial record.

[25] It is submitted the amendments sought by the Plaintiffs are designed to harmonize the evidence from all of the outstanding cases and to achieve a ruling that finally determines the issues for the boards and the Ministry. This objective serves the interest of justice and proportionality and provides access to justice to all stakeholders across the province. The amendments bring the pleadings into conformity with the evidence and allow a complete record to be put before the court to assist in a fair adjudication.

[26] Rule 26.01 provides, on motion at any stage of an action, the court shall grant leave to amend the pleading on such terms as are just, unless prejudice would result that could not be compensated for by costs or an adjournment. Rule 5.03(1) provides every person whose presence is necessary to enable the court to adjudicate effectively and completely on the issues in a proceeding shall be joined as a party to the proceeding. Rule 5.03(5) states, a person who is required to be joined as a party under sub rule (1), (2) or (3) and who does not consent to be joined as a plaintiff or applicant shall be made defendant or respondent.

[27] These rules are mandatory. The court shall grant leave to amend a pleading unless prejudice would result that could not be compensated for by costs or an adjournment. The Ministry has not advanced any evidence of prejudice. Further, the court shall join, as a party, every person whose presence is necessary to adjudicate effectively and completely on the issues in the proceeding. Because the Ministry is not consenting to the proposed amendments, it must be made a party Defendant.

[28] The amended pleading must be legally tenable. It is not necessary to tender evidence to support the claims nor is it necessary for the court to consider whether the amending party is able to prove its amended claim. Where there is no prejudice, an amendment should not be rejected unless it contains a radical defect.

[29] Each of the five actions raise common issues concerning the design and implementation of the Ministry’s template RFP. The Plaintiffs in these actions do not possess the financial means to take each of their individual cases to trial. Accordingly, it is submitted the determination of common issues of fact and law by declaratory relief which is specifically provided for by statute in section 97 of the Courts of Justice Act, and which is part of the court’s inherent jurisdiction is a creative way of avoiding a multiplicity of proceedings and ensuring the most efficient and just result.

[30] Finally, the Plaintiffs submit the proposed amendments are tenable, well supported by the evidence and will ensure all relevant issues are heard on their merits and it is in the interest of justice that leave be granted to make them. The intervention Order also needs to be amended to reflect the Ministry’s expanded involvement as a result of the amendments.

MINISTRY’S POSITION

[31] The Ministry submits the amendments will unduly delay and complicate the proceeding, interfere with court ordered schedules, increase costs, and the addition of the Ministry as a party Defendant as opposed to Intervenor is unnecessary in any event. The proposed amendments will not only result in the continued standstill of competitive procurement across most of the Province, but the Plaintiffs will continue to enjoy their arrangements for the provision of student transportation services without having to compete against other bidders. The Plaintiffs’ current arrangements are contrary to law and they seek to continue such arrangements.

[32] The causes of action pled against the Crown failed to disclose a reasonable cause of action. Specifically, there is no duty of care owed to a prospective bidder in the design or drafting of a tender. There is also a lack of proximity or special relationship between the Ministry and the plaintiff corporations to establish a prima facie duty of care, and even if there were, it would be negated by policy considerations. Furthermore, any commercial reliance on the general representations regarding procurement processes was neither foreseeable nor reasonable.

[33] Damages are also an essential element of negligence and negligent misrepresentation and they are not claimed by the Plaintiffs.

[34] Finally the remedies sought by the Plaintiffs are untenable. Specifically, the remedies: are contrary to the law of tort; are not grounded in an underlying right vis-a-vis the Ministry to give jurisdiction to the court to grant them; are asserted in respect of policy decisions of the Ministry; are contrary to the Broader Public Service Procurement Directive and The Broader Public Sector Procurement Directive Guidebook issued under that Act and are limited by the immunity clause in that Act, are contrary to the Proceedings Against The Crown Act; are not properly declaratory of the rights of the parties, and they lack utility.

[35] Specifically, it is submitted, the Fresh as Amended Statement of Claim does not give rise to a reasonable cause of action against the Ministry or, in the alternative, the court should exercise its discretion to deny the motion for leave.

[36] Rule 5.03(4) grants the Court the discretionary power to make the joinder Order. It provides the Court “may order” that a party shall be added as a party. Rule 5. 03 is generally for Defendants or the Court to add parties where the plaintiff does not do so and is an exception to the general rule of the plaintiff’s choice as to the parties.

[37] The Ministry is already a party intervenor and is participating in the proceeding. The issue is whether the court should exercise its discretion to allow direct claims to be made against the Ministry at this stage of the proceeding to ensure procedural fairness. Consideration has to be given to such matters as the state of the action, whether the trial is imminent, whether examinations for discovery of all parties have already been held, whether it would be a proper joinder of a new cause of action, whether the purpose in adding a party Defendant was improper, and whether the proposed added party was a necessary or proper party. In this case, trial is set for September 2014 and discoveries have been held.

[38] Liability and negligence is premised on the existence of a duty owned by the Defendant to take reasonable care to protect the Plaintiffs’ interests. If foreseeability and proximity are established, a prima facie duty of care will arise, unless there are overriding public policy considerations to negate the duty. The Ministry disputes it owes the duties to the Plaintiffs, or is required to protect and/or further their economic interest. It is a settled matter of tender law that no such duties of care are owed. The Court concluded in Martel Building Limited v. Canada [2002] 2 SCR 860 where the design, drafting and preparation of a tender was considered that there is no duty of care because of overriding policy considerations. In the case at bar, the Ministry is further removed from the Plaintiffs as it was not in negotiations with the Plaintiffs to renew their existing contracts and in fact, was not even the party putting the tenders out for bids. Those parties are the school boards and consortia.

[39] There is no duty of care to any particular subset of potential bidders. If there is no duty of care to a subset of potential bidders in the design and drafting of an RFP, there can certainly be no duty of care to the same subset of potential bidders as to the choice of whether to procure by way of an RFP.

[40] There is no freestanding duty of fairness in the bidding process. The duty of fairness is confined to an obligation to treat all bidders fairly and consistently in the process of assessing the bids. It does not extend to other aspects of the tendering process.

[41] In effect, the Plaintiffs are asking the Court to substitute its view of the appropriate method of procurement and its view of the terms and conditions of the provincial template RFP for that of the tender calling party. It is not the Court’s role to do so. These are discretionary decisions and the Court should be loath to express its views on such matters.

[42] Any direction to transportation consortia to use RFPs, or the design and drafting of the provincial template RFP, which is the core of the claim against the Ministry, is a course or principle of action based on the policy to competitively procure in order to obtain value for taxpayers.

[43] In negligence, a proximate relationship is required to give rise to a prima facie duty of care. Here, it is alleged the basis for the Plaintiffs’ proximate relationship with the Ministry is solely the representations, none of which were made directly to the Plaintiffs but rather were made to the student transportation industry as a whole.

[44] In negligent misrepresentation, there must be a “special relationship” between the representing party and the representee. The representation must be untrue, inaccurate, or misleading. It must be made negligently. It must have been relied upon and the representee must have suffered damages as a result of the reliance. Here, none of the alleged representations were made directly to the Plaintiffs. It is not reasonable to have made significant investments based upon representations made to the industry as a whole. Finally, the Plaintiff corporations did not claim damages against the Ministry.

[45] With respect to declaratory relief, the Plaintiffs must demonstrate they have a right which has been infringed. Here the Plaintiffs do not have an underlying right. They have no right to direct the model of competitive procurement, or the terms or conditions of an RFP, and they have no property rights in the transportation routes in question.

[46] Section 22(1)(c) of The Broader Public Sector Accountability Act “provides that no cause of action arises against the Crown as a direct or indirect result of … anything done or not done in accordance with this Act or the regulations or the directives or guidelines including specific performance, injunction, declaratory relief, or any form of compensation or damages.”

[47] The Court, as provided for in the Courts of Justice Act may make binding declarations of right confirming or denying a legal or equitable right of the applicant. Declarations are not statements or findings of fact or opinions of the court. Rather, declarations are statements declaratory of the rights of the parties and shall not be granted on questions of moral, social or political character or about standards of conduct. Here, the declarations of what is sought by the Plaintiffs are not statements declaratory of the rights of parties.

[48] In summary, the tenability of the declarations does not require a trial as they are unavailable at law. They are contrary to the law of tort remedies, are not grounded in an underlying right, are in respect of policy decision, contrary to the Broader Public Sector Policy Directive and guidelines and/or limited by the Broader Public Sector Accountability Act, are not declarations of rights, and they lack utility. Even if the court finds the amendments are tenable at law, the court should exercise its discretion to deny the amendments. The Ministry is also not a necessary party Defendant. If STEO is found not liable and the relief sought against it is not granted, relief could not be available against the Ministry. If the relief sought against STEO is granted, then there is no need for any relief against the Ministry. There is no possibility of greater recovery by joining the Ministry. The Ministry is already a party Intervenor will be participating in the trial, and can offer the court assistance. Adding the Crown as a party Defendant is not necessary.

PLAINTIFFS’ REPLY

[49] It is difficult to determine the Crown’s role in the five cases. They are party Defendants in some, Intervenors in others and they now appear to want to get out of an expanded action while at the same time telling the Court the issues have profound significance for the Crown and for the parties and for procurement in Ontario.

[50] The Plaintiffs submit the role of the Court on this motion is to decide whether or not the Crown has discharged its burden under Rule 21 of identifying a defect so radical that the Plaintiffs’ claims cannot succeed. Put another way, has the Crown demonstrated it is plain and obvious and beyond doubt these pleadings disclose a radical defect.

[51] The Plaintiffs are not asking for special treatment, for guarantee of business, for the Crown to assume their business risk, to request an annuity, or to be exempt from the law. Rather, will a trial judge say, is there fairness under The Broader Public Sector Accountability Act? Although there have been judicial pronouncements in the other actions concerning procurement, this is the only case in which the procurement provisions of the Broader Public Sector Accountability Act have been considered. What are the rules of tender and what is fair?

[52] No damages are claimed because in this area of the East Region, procurement by way of an RFP has been put on hold to prevent damages from being sustained. This is a complete answer to the claim or assertion negligent misrepresentation is untenable because no damages were claimed.

[53] The Crown alleges there are no representations. The statements made by Minister Wynne and Deputy Minister Naylor that they are considering other procurement methods and they will make sure there is a system imposed that’s fair for all operators of all sizes are not representations submits Crown counsel today yet he said they were representations when arguing before Justice O’Marra. Crown counsel submits the representations were not made to these Plaintiffs. However, a letter was received by one of the Plaintiffs named in this action

[54] In his decision, Justice O’Marra touched on every point the Crown raises today and dealing specifically with whether a private law duty of care can arise based on representations the judge held, “it’s not plain and obvious to me that it cannot.” No appeal was taken from that decision.

[55] The Plaintiffs submit “the government had a long-standing process which it funded wherein it contracted with these parties through a consortium. It decided it was going to change that. These Plaintiffs accepted. It passed legislation saying “it’s going to be open, fair, and transparent.” It told them it would be open, fair and transparent. The legislation said you can use RFPs, RFQs, RFTs, or any other alternative approach and the government said we’ll look and will do a test, and we’ll try. And the Auditor General said, be careful about RFPs and the Ministry said, yes, we’ll be careful about RFPs… And it did pilots and it designed the template and it destroyed people and so it said it would stop and take a look and it did it again, and it stopped, and it appointed a Task Force, and the Task Force says one size fits all is dangerous, it could lead to monopolies, it’s creating casualties, have an independent review and it should be comprehensive. That’s the claim.”

[56] The Plaintiffs further submit, “the Crown said it would look at all forms of procurement knowing that RFPs were harmful and would harm, and it wrongfully refused to look at alternative forms. This case… is about a breach of the Crown’s duties under the BPSAA by directing consortia to issue RFPs which it knows and was told by the Auditor General and the Task Force were going to cause harm… There is no case under the BPSAA in which an allegation is made that the government has refused to allow authorities governed by the BPSAA to use alternate forms of procurement and instead has directed them to use RFPs only... The Crown has breached the BPSAA directive by doing this… the directive [is] … to ensure politically funded goods and services are procured by BPS organizations through a process that is open, fair and transparent… It also says procurement shall be non-discriminatory … and it is pleaded these RFPs which the Crown designed and is now directing, discriminate in favour of large companies and eliminate small ones and it’s therefore, discriminatory… .”

[57] Further, the Plaintiffs submit “the legislation gives these consortia their freedom and authority to use other alternate strategies and the Ministry has refused to let them do so knowing what it’s requiring them to do will destroy small operators and is unfair in the language of the BPSAA and is discriminatory in the language of the BPSAA, that’s the claim. You don’t have to decide it…”

NON-FINANCIAL AMENDMENTS - ANALYSIS AND CONCLUSION

[58] Rule 26 clearly states the Court shall grant leave to amend the pleading on such terms as are just unless prejudice would result that could not be compensated for by costs or an adjournment. The Crown argues any amendment will unduly delay and complicate the proceedings.

[59] The Crown has not convinced me amending pleadings would be so prejudicial that costs or an adjournment would not compensate. I am satisfied the suggested amendments are not scandalous, frivolous, vexatious or an abuse of the court process. As for complicating the proceedings, this action is not taking place in a vacuum. There are four additional proceedings on standby awaiting the results of this case. All actions have similar if not the same issue, namely, RFPs and procurement of student transportation under the BPSAA; is the process open, fair, and transparent? The pleadings should be framed broadly to ensure all issues are addressed in this action if it is to achieve the “precedent-setting value” counsel advises it is to have. The reliance of counsel in this proceeding on judicial pronouncements from the other actions demonstrates all actions are closely interwoven.

[60] The Crown also argues the pleadings should not be amended because they are not legally tenable leaving the impression a radical defect exists. The Crown refers the court to the decisions, Martel Building Ltd. v Canada, 2000 SCC 60, [2000] 2 SCR 860, and Design Services Ltd. v Canada, 2008 SCC 22, [2008] 1 SCR 737 submitting these cases address the issue of fairness in the tendering process.

[61] The Plaintiffs submit those cases are not applicable here. Procurement in student transportation in this case involves operators who have provided decades of service to their school boards and consortia. They acknowledge these Plaintiffs are not exempt from the new competitive processes described in the BPSAA, but they are operators hoping to provide service pursuant to the BPSAA, its directive and guidelines which stipulate the process will be open, transparent and fair and these operators and the student bus operators in general have been told by two Ministers of Education and a Deputy Minister of Education that the process will be open, transparent, and fair. STEO submits the applicability of Martel, supra, to this case is a matter of trial on a full record with which submission I agree.

[62] The Crown argues these operators are not owed a duty, there is no proximity, nor special relationship, and no representations have been made. The Crown also argues the Plaintiffs have not claimed damages which are a pre-requisite for relief. I am satisfied with the Plaintiffs’ explanation as to why damages have not been claimed, as it appears STEO has held down implementing its RFPs and continues to negotiate with the bus operators as it did prior to the passing of the BPSAA.

[63] Further, the Crown relies upon the immunity provided by section 22 of the BPSAA. The Plaintiffs reply such immunity is only available where anything has been done or not done in accordance with the BPSAA. The Ministry’s actions in directing consortia to use only RFPs whereas other alternative methods are authorized by the legislation and its directives thereby breach the legislation. This is an issue best left to trial.

[64] The Crown argues no basis for declaratory relief exists as there must be some right the Plaintiffs are protecting to allow an amendment for declaratory relief. The Plaintiffs argue declaratory relief is a creative way of harmonizing relief across the five actions involving different parties and counsel.

[65] The Crown also argues the remedies sought by the Plaintiffs are untenable because they are major policy decisions.

[66] The Crown’s arguments go to whether the amendments are tenable or whether a radical defect exists. I am not satisfied the Crown has established on this motion a radical defect exists or the amendments are untenable. Although it was not necessary for the Plaintiffs to tender evidence to support their claims, evidence was submitted and on a motion to amend, it is not necessary for the court to consider whether the amending party will be able to prove its extended claim. See Schembri v Way, 2012 ONCA 620.

SHOULD THE CROWN BE ADDED AS A PARTY DEFENDANT? IS RULE 5 MANDATORY OR DISCRETIONARY?

[67] I am satisfied if Rule 5 is not mandatory, but discretionary, to exercise my discretion to add the Crown as a party.

[68] The Crown argues it is not necessary to add the Ministry as a party Defendant. If STEO is found not liable and the relief sought against it is not granted, relief could not be available against the Ministry. If the relief sought against STEO is granted, then there is no need for any relief against the Ministry. The Plaintiffs will have obtained a permanent injunction enjoining RFP 12- 01 and various declarations of breaches and duties allegedly owed to it by STEO.

[69] The Ministry is already a party Defendant in two actions; and Intervenor in two others. If this case is to be a precedent value, the Ministry should be a party Defendant to avoid later argument that its position is different because it was only an Intervenor in this action. In addition, the Court was told on this motion the Ministry had already refused to provide an answer, falling back on its Intervenor status.

[70] Further, it is not STEO of whom it is suggested breached the BPSAA by directing consortia. It is not STEO which made statements or representations to these operators about fairness. It is not STEO who engaged consultants to design a RFP template which is the starting point for consortia RFPs which are alleged to be discriminatory. Materials filed on this motion suggest it was the Ministry who did the directing and who engaged the consultants. Whether the resultant RFP is discriminatory is not for me to decide and is best left for trial.

THE FUNDING ISSUE

[71] In their request for funding relief, the Plaintiffs submit the Ministry acknowledges this litigation engages the public interest and the Ministry’s provision of unlimited funding for both STS’s and STEO’s legal costs has skewed the litigation allowing both consortia to litigate with impunity against small operators. “In contrast, plaintiff operators who lack the unlimited resources of government have had to rely on their own extremely modest resources and the voluntary donations of other operators to assist them to finance the litigation.”

[72] The Plaintiffs argue Ministry funding was made without statutory authority suggesting the funding was ultra vires and judicial review is available to determine whether the funding was made in accordance and within the purpose of a discretionary granting statute. Additionally, the balance of convenience strongly favours an interim declaration or funding Order to create a level playing field. Further, the Court has jurisdiction under section 131(1) of the Courts of Justice Act dealing with proceedings or of a step in proceedings to order costs.

[73] In considering whether to exercise its equitable discretion to make an interim funding Order, the Court is requested to have regard to access to justice considerations discussed in Hryniak v. Mauldin, 2014 SCC 7. Without adequate funding, the legality of the RFP process may never be determined. Lebel, J in case of British Columbia (Ministry of Forests) v. Okanagan Indian Band, 2003 SCC 71 found that “[c]oncerns about access to justice and the desirability of mitigating severe inequality between litigants feature prominently” in cases where interim costs are awarded. The Plaintiffs submit these concerns are even more relevant since Hryniak, supra.

THE POSITION OF STEO

[74] STEO takes no position with respect to the Order sought that the Ministry of Education indemnify the Plaintiffs for the costs of the action, including costs to date plus costs going forward submitting, however, these are only granted in limited circumstances. STEO objects to an Order declaring payment of its expenses ultra vires including on an interim basis, prohibiting continuing payments, requiring it repay the Crown all monies it has received, and the Plaintiffs’ plea for costs of this motion on a substantial indemnity basis.

[75] STEO notes it is wholly controlled and funded by UCDSB and CDSBEO School Boards which are creatures of statute which receive their funding in its entirety from the Ministry of Education. Neither the boards nor STEO can run a deficit.

[76] STEO also notes the Plaintiffs have not sought judicial review and their prayer for relief in the further Amended Notice of Motion has not cited the Judicial Review Procedure Act as a ground for the relief sought, did not specify judicial review as the relief sought in Part IV of their factum, and have not proceeded by an Application, but rather have filed a motion. Further, the Plaintiffs have not sought leave of the Court pursuant to section 6(2) to have an Application for judicial review heard by a single judge of the Superior Court of Justice rather than the Divisional Court on the ground of urgency with respect to this motion, however, STEO pled it would not be making submissions with respect to the appropriateness of the Court to judicially review the Ministry’s decision with respect to funding.

[77] In addition, STEO submits the declaration the Plaintiffs seek is not a declaration with respect to their rights or legal interest; rather it is a declaration with respect to the actions of the Ministry in regard to STEO. Also, it submits the Plaintiffs have not set out a clear explanation as to how the funding of STEO is prejudicial to their present or future legal rights noting a person, whether the government or a private individual, cannot be held liable under the law for an action unless that action causes the deprivation, or the threat of deprivation of legal rights. There must be a probable prospect of harm to a legal interest before a declaration can issue.

THE POSITION OF THE MINISTRY

[78] The Ministry submits the decision of the Deputy Minister to provide financial support to STEO is intra vires his discretion and within the authority of the Financial Administration Act, the Supply Act, and the 2013/2014 Estimates as approved by a vote of the Legislature of the Province of Ontario and neither bad faith nor improper motive were involved.

[79] It further submits an interlocutory motion to this Court is not the appropriate procedure to challenge an exercise of discretion on the part of a Minister of the Crown in respect of the exercise of a statutory power of decision as defined in Section 1 of the Judicial Review Procedure Act. The proper procedure is by way of Application for judicial review before a full panel of the Divisional Court. In the alternative, such determination should only be made at trial and on a full and complete record. It should not be based upon allegations in proposed amendments to a Statement of Claim.

[80] It argues costs may be granted prior to the final disposition of the case only in rare and exceptional circumstances including where the party cannot afford to pay for the litigation and no other realistic option exists, the claim to be adjudicated is prima facie meritorious, and the issues raised transcend the individual interest of the particular litigant, are of public importance, and have not been resolved in previous cases.

[81] Further, the applicant must explore all other possible funding options including fundraising campaigns, loan applications, contingency fee agreements and any other available options. Here, none of the Plaintiff corporations claim to be impecunious nor are their principal shareholders, none have sworn an affidavit in support of their motion for a funding order, the Plaintiff corporations and shareholders have significant assets, none of the Plaintiff corporations nor other shareholders attest they would not be able to proceed with the litigation if a funding order is not granted or attest they are unable to borrow to fund the continuing cost of the litigation or in fact that they have attempted to borrow to fund the litigation.

[82] In addition, the Ministry submits the primary criteria of a public funding order have not been satisfied and indeed the evidence supports the opposite conclusion. All but one plaintiff remain willing to contribute further to their lawsuit and money has been raised for legal fees by the Independent Student Bus Owners Association (ISBOA) and the Plaintiffs have assets against which they can borrow.

[83] Also, this action is not public interest litigation. The issues raised here are said to be of significance to the Plaintiffs and other small, rural operators. These seven Plaintiffs do not even comprise the majority of small school bus operators in the area served by STEO. Further, the case of Hryniak, supra, deals with Rule 20 summary judgment motions and is not a case about public funding.

[84] Dealing with intra vires, the discretion of the Ministry to fund is found in the Financial Administration Act, the Supply Act, and the 2013- 2014 Estimates for the Ministry of Education. The latter constitute part of the Government’s annual formal request to the Legislature for approval of the expenditures involved. The Ministry submits the funding of the legal defence costs of STEO is intra vires the legislative authority of the Ministry as the funding is for a bona fide educational purpose in order to foster and sustain high quality education system for students in the region served by STEO. Also, there is a broad ambit of discretion within the decision-making powers of the government in regard to the management of public funds. “The responsibility for the management of public funds rests with the government and not the court, as does the correctness of the government’s decisions and policies, especially in the context of a specialized legislative scheme such as this one.” See Apotex Inc. v Ontario (Minister of Health), (2004), 73 OR (3d) (CA).

[85] In addition, the Minister submits a request for a declaration this funding was improper is not one for a Motion Court. Such exercise of discretion is the exercise of the statutory power of decision as the term is defined in section 1 of the Judicial Review Procedure Act. The appropriate forum is the Divisional Court by way of Application for Judicial Review. No claim of urgency has been asserted pursuant to which an Application for Judicial Review may be brought before a single judge of the Superior Court.

[86] It is also submitted declaratory relief is not the proper subject of an interlocutory motion and should accordingly be dismissed or in the alternative adjourned to be determined by the Divisional Court or by the trial judge after completion of testimony and on the basis of a complete record.

THE REPLY OF THE PLAINTIFFS

[87] Counsel for the Plaintiffs submits the issue is whether or not this court can order funding and there is guidance from the Supreme Court of Canada in the two cases, Little Sisters and British Columbia v Okanagan Indian Band. The court is urged to do so because here we have “something quite unique, … Small operators coming forward and raising an issue of public importance against the consortium and the Crown stepping in and saying we’re going to fund you consortium to litigate against them, and that’s a very different situation and it quite fully engages the equitable principles which are in all these cases… proportionality and access to justice.”

[88] Plaintiffs’ counsel takes issue with the position the Crown had to fund STEO because if it did not, STEO would have repurposed funds. “There is no evidence of that. STEO never made a request to the Boards.”

ANALYSIS AND CONCLUSION

[89] Funding is a two prong issue: one, the Ministry’s funding, past and future of STEO; two, should the Ministry also fund the Plaintiffs’ legal costs?

[90] Does this dispute engage the public interest or only the Plaintiffs’ private economic interest? STEO submits the latter whereas both the Plaintiffs and Minister agreed in their submissions on non-funding amendments the public interest was engaged. It is my observation any tax dollars to safely transport children to school is in the public domain, however, funding this litigation is more in tune with a private economic interest. I am satisfied making a finding either way does not affect my following conclusion.

STEO FUNDING

[91] A Court has jurisdiction to review this funding issue, but not this Court on this motion. Neither the statutory framework nor urgency have been pleaded or proven which might have provided a single judge of the Superior Court of Justice with jurisdiction. Ministry funding of the legal costs of consortia is not a complete surprise given consortia and their constitute Boards are creatures of statute, not allowed to run a deficit, and funded by the Ministry, however, whether in the Legislature, the correct procedure was used in approving the funding is for judicial review.

[92] STEO and the Intervenor suggest adjourning this issue to a full panel of the Divisional Court or reserving the issue to the trial judge. No counsel has provided this court with their preference and accordingly, I adjourn the issue to the trial judge noting counsel can state their preference to Justice Tramner, the case management judge, if proceeding before a full panel of the Divisional Court is preferred. The Plaintiffs are permitted to amend their claim to add judicial review and the Ministry and STEO can file responding material to those amendments.

FUNDING FOR THE PLAINTIFFS

[93] As of the date of this motion, the Plaintiffs have honoured their obligations to pay the legal costs billed by their counsel. While I have sympathy for their funding request, I am not convinced they are without means and the necessary evidentiary base addressing the availability of loans, contingency fees etc. has not been provided and accordingly, their claim for funding is dismissed.

COSTS

[94] The Court is not aware of offers to settle which may have been exchanged. The costs of this motion are left to counsel for the parties to sort out, failing that, the Court will fix costs, provided written submissions, limited to five pages each, are received by the Court prior to August 15, 2014.

[95] The Court leaves the parties with these observations which may assist their agreement on costs. The Plaintiffs have been successful on amendments, not financial in nature, and also having the Ministry added as a party Defendant. STEO did not contest either of these issues. The Plaintiffs have not been successful on their request for funding from the Ministry. Again, STEO took no position on this issue. The issue of STEO funding has been reserved to the trial judge.

Honourable Mr. Justice Douglas M. Belch

Released: July 11, 2014