Supreme Court Judgments

SUPREME COURT OF CANADA

Att. Gen. of Can. v. Inuit Tapirisat et al., [1980] 2 S.C.R. 735

Date: 1980-10-07

The Attorney General of Canada (Defendant) Appellant;

and

Inuit Tapirisat of Canada and the National Anti-poverty Organization (Plaintiffs) Respondents.

1980: February 12; 1980: October 7.

Present: Laskin C.J. and Martland, Dickson, Beetz, Estey, McIntyre and Chouinard JJ.

ON APPEAL FROM THE FEDERAL COURT OF APPEAL

Administrative law — Decision of CRTC — Review by Governor in Council — Rules of natural justice and duty of fairness — Whether Governor in Council subject to judicial review — National Transportation Act, R.S.C. 1970, c. N-17 as amended, s. 64 — Railway Act, R.S.C. 1970, c. R-2 as amended, ss. 320, 321(l) — Interpretation Act, R.S.C. 1970, c. 1-23, s. 28.

After the approval by the CRTC of a new rate structure for Bell Canada, the plaintiffs-respondents appealed the CRTC decision to the Governor General in Council pursuant to s. 64(1) of the National Transpor­tation Act. Their petitions having been denied, the respondents attacked the decisions of the Governor Gen­eral in Council alleging that they had not been given a hearing in accordance with the principles of natural justice. This appeal arises from an application made in the Trial Division of the Federal Court for an order striking out the plaintiffs' statement of claim on the ground that the statement disclosed "no reasonable cause of action". The application was granted but the Federal Court of Appeal set aside the order of the Trial Division judge. Hence the appeal to this Court.

Held: The appeal should be allowed.

The substance of the question before this Court in this appeal is whether there is a duty to observe natural justice in, or at least a duty of fairness incumbent on, the Governor in Council in dealing with parties such as the respondents upon their submission of a petition under s. 64(1) of the National Transportation Act.

Such petitions are to be contrasted with the mech­anism for appeal to the Federal Court of Appeal on questions of law or jurisdiction provided in subs. (2) and following of s. 64. The courts have held that the rules of natural justice and the duty to act fairly depend on the

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circumstances of the case, the nature of the inquiry or investigation, the subject matter that is being dealt with, the consequences on the persons affected and so forth. The mere fact that a decision is made pursuant to a statutory power vested in the Governor in Council does not mean that it is beyond review if the latter fails to observe a condition precedent to the exercise of that power, whether such power is classified as administra­tive or quasi-judicial. However in this case, there is no failure to observe a condition precedent but rather the attack is directed at procedures adopted by the Gover­nor in Council, once validly seized of the respondents' petitions. The very nature of the Governor in Council must be taken into account in assessing the technique of review which he adopted. The executive branch cannot be deprived of the right to resort to its staff, departmen­tal personnel and ministerial members concerned with the various policy issues raised by a petition.

Under s. 64(1), the Governor in Council is not limited to varying orders made inter partes but he may act "of his motion"; he may act "at any time"; he may vary or rescind any order, decision, rule or regulation "in his discretion". Parliament has in s. 64(1) not burdened the Governor in Council with any standards or guidelines in the exercise of its rate review function. Nor were proce­dural standards imposed or even implied. The discretion of the Governor in Council is complete provided he observes the jurisdictional boundaries of s. 64(1). Fur­thermore there is no need for the Governor in Council to give reasons for his decision, to hold any kind of hearing, or even to acknowledge the receipt of a petition. Where the executive branch has been assigned a function performable in the past by the Legislature itself and where the res or subject matter is not an individual concern, considerations different from Nicholson v. Haldimand-Norfolk Regional Board of Commissioners of Police, [1979] 1 S.C.R. 311, arise. In such a circumstance the Court must fall back upon the basic jurisdictional super­visory role and in so doing construe the statute to determine whether the Governor in Council has performed its functions within the boundary of the parlia­mentary grant and in accordance with the terms of the parliamentary mandate.

Further, there is nothing in s. 64(1) to justify a variable yardstick for the application to that section of the principle of fairness according to the source of the information placed before the Governor in Council. Once the proper construction of the section is determined, it applies consistently throughout the proceedings before the Governor in Council.

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Ross v. Scottish Union and National Insurance Co. (1920), 47 O.L.R. 308; Wiseman v. Borneman, [1971] A.C. 297; Pearlberg v. Varty, [1972] 1 W.L.R. 534; Russell v. Duke of Norfolk, [1949] 1 All E.R. 109; Selvarajan v. Race Relations Board, [1976] 1 All E.R. 12; Border Cities Press Club v. Attorney General for Ontario, [1955] 1 D.L.R. 404; Martineau v. Matsqui Institution (No. 2), [1980] I S.C.R. 602; Re Davisville Investment Co. Ltd. and City of Toronto et al. (1977), 15 O.R. (2d) 553; Alliance des Professeurs Catholiques de Montréal v. Commission des Relations Ouvrières de la Province de Québec, [1953] 2 S.C.R. 140; Bates v. Lord Hailsham, [1972] 1 W.L.R. 1373; Essex County Council v. Minister of Housing (1967), 66 L.G.R. 23, referred to; Nicholson v. Haldimand-Norfolk Regional Board of Commissioners of Police, [1979] 1 S.C.R. 311, considered.

APPEAL from a judgment of the Federal Court of Appeal[1], setting aside the order of the Trial Division. Appeal allowed and order of the Trial Division restored.

E. A. Bowie, and H. L. Molot, for the defendant, appellant.

B. A. Crane, Q.C., and Andrew J. Roman, for the plaintiffs, respondents.

The judgment of the Court was delivered by

ESTEY J.—This appeal relates to the proper disposition of an application made in the Trial Division of the Federal Court of Canada for an order pursuant to the rules of that Court striking out the statement of claim and dismissing this action on the grounds that the statement of claim discloses "no reasonable cause of action". Mr. Justice Marceau of the Trial Division of the Fed­eral Court allowed the application, struck out the statement of claim, and dismissed the action. The Federal Court of Appeal set aside the order of the Trial Division although in doing so found that there was no basis for the relief sought in the statement of claim except with regard to one issue to which I will make reference later. The effect, therefore, of the disposition below is that if left undisturbed, the matter would go to trial on the basis of the pleadings as they now stand.

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A brief outline of events leading up to these proceedings will be helpful. The Canadian Radio-television and Telecommunications Commission (herein for brevity referred to as the CRTC), in response to an application from Bell Canada, conducted lengthy hearings concerning a proposed increase in telephone rates to be charged to subscribers in the provinces of Ontario and Quebec and in the Northwest Territories. The plaintiffs/ respondents participated in these hearings as intervenants throughout. In conducting these pro­ceedings, the CRTC was proceeding under author­ity provided in the Railway Act, R.S.C. 1970, c. R-2 as amended, the National Transportation Act, R.S.C. 1970, c. N-17 as amended, and the Canadian Radio-television and Telecommunications Commission Act, S.C. 1974-75-76, c. 49. We are not here concerned with the actual proceedings before the CRTC. The balance of the narrative can best be set out by quoting from the statement of claim which, because this is an application for dismissal, must be taken as proved.

5. On June 1st, 1977 the CRTC issued its decision in the matter, which decision denied some of the relief sought by each of the plaintiffs.

6. On June 10th, 1977 ITC [a respondent herein] appealed the decision of the CRTC to the Governor-in-Council pursuant to section 64 of the National Transportation Act, requesting the Governor-in-Council to set aside the relevant portion of the decision of the CRTC and to substitute its own order therefor. On June 29th, 1977 Bell Canada issued a reply thereto. While ITC was preparing its final reply to the reply of Bell Canada, the Governor-in-Council decided the appeal adversely to ITC. On July 14th, 1977 Order-in-Council P.C. 1977-2027 was made. ITC's final reply was never submitted.

7. On June 9th, 1977 NAPO [a respondent herein] also appealed the decision of the CRTC to the Governor-in-Council pursuant to section 64 of the National Trans­portation Act, to which Bell Canada prepared a reply dated June 29th, 1977. The Governor-in-Council decid­ed this appeal adversely to NAPO without waiting to receive the final reply of NAPO. On July 14th, 1977 Order-in-Council P.C. 1977-2026 was made. NAPO's final reply was never submitted.

8. In arriving at its decision the Governor-in-Council, following customary practice, allowed no oral presenta­tion but conducted the hearing entirely in writing. However, following the usual practice, the actual written

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submissions of the parties were not presented to the members of the Governor-in-Council but rather, evidence and opinions were obtained from officials of the Department of Communications as to:

a) What that Department thought were the positions of the parties in the appeal;

b) The position of the Department, or certain officials thereof, in relation to the facts and issues in the appeal;

c) Whether either or both of the appeals should be allowed. None of this evidence or these opinions have ever been communicated to the appellants (plaintiffs herein).

9. The CRTC was requested by the Governor-in-Council to submit its views as to the disposition of the appeals. These views of the CRTC were neither made available to the appellants (plaintiffs herein) by the CRTC itself, nor by the Governor-in-Council.

10. The Minister of Communications, at the meeting of the Governor-in-Council at which the appeals were decided, both participated in the making of the decisions and submitted to the meeting her recommendation that the decision be that the appeals be disallowed, together with evidence and argument in support of this recommendation. The submissions of the Minister were a conduit for, were based upon, or at least included evidence, opinions and recommendations from the CRTC and from officials of her Department. Neither the con-tent of these opinions and recommendations nor of any evidence or argument submitted in support thereof has ever been communicated to the appellants (plaintiffs herein), and hence the plaintiffs have been denied an opportunity to make a reply thereto; yet the two decisions and the resultant Orders-in-Council were made on the basis of the submissions of the Minister.

11. The plaintiffs submit that the defendant Governor­-in-Council, when deciding a matter on a petition pursuant to section 64 of the National Transportation Act, is a Federal Board, Commission or other tribunal within the meaning of section 18 of the Federal Court Act.

12. The plaintiffs submit that the defendant Governor-­in-Council was required to decide these appeals himself and to reach these decisions by means of a procedure which is fair and in accordance with the principles of natural justice.

13. The plaintiffs submit that in the circumstances, the Governor-in-Council held no hearing in any meaningful sense of that word, and that, therefore, the decisions and Orders-in-Council made pursuant to them are nullities. Alternatively, it is submitted that if there was a hearing,

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the procedure employed did not result in a fair hearing, hence the decisions and orders resulting are nullities.

14. Accordingly, the plaintiffs pray for the following relief:

*i)

ii) In the alternative, a declaration that the procedure employed by the Governor-in-Council in these two appeals resulted in:

a) no hearing having been held, or in the alternative,

b) such hearing as was held was not a full and fair hearing, in accordance with the principles of natu­ral justice.

iii) Such other relief as the Court deems proper.

* This paragraph being a prayer for issuance of writ of certiorari was omitted as the respondents, after the judgment of the court of first instance was issued, no longer advanced this claim. We are now concerned only with para. 14(ii) of the prayer for relief in which a declaration is sought.

Paragraph 14(ii) does not, of course, when read literally, frame a proper request for declaration. There is no declaration sought with reference to any rights or obligations allegedly arising in the parties to the proceeding. The declaration is with reference to a failure to hold a hearing, or, in any case, "a full and fair hearing" without reference to any statutory or other right or duty relating to the parties. The declaration sought should have related to the inferentially alleged invalidity of the two Orders-in-Council issued by the Governor-in-Council in response to the petition of the respond­ents, and I proceed to dispose of this appeal on the basis that the prayer for relief was so framed.

As I have said, all the facts pleaded in the statement of claim must be deemed to have been proven. On a motion such as this a court should, of course, dismiss the action or strike out any claim made by the plaintiff only in plain and obvious cases and where the court is satisfied that "the case is beyond doubt"; Ross v. Scottish Union and National Insurance Co.[2] Here Bell Canada in its statement of defence has raised the issue of law as to the position of the Governor in Council when

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acting under s. 64 of the National Transportation Act, supra, and the power and jurisdiction of the court in relation thereto. The issue so raised requires for its disposition neither additional pleadings nor any evidence. I therefore agree with respect with the judge of first instance that it is a proper occasion for a court to respond in the opening stages of the action to such an issue as this application raises.

The defendants other than Bell Canada comprise the occupant of the office of the Governor General of Canada at the time of the commencement of these proceedings and the then members of the federal Cabinet, collectively described in the style of cause as the Governor in Council. I note that the term is defined in the Interpretation Act, R.S.C. 1970, c. I-23, s. 28 in the following way:

"Governor in Council", or "Governor General in Coun­cil" means the Governor General of Canada, or person administering the Government of Canada for the time being, acting by and with the advice of, or by and with the advice and consent of, or in conjunction with the Queen's Privy Council for Canada.

The more traditional procedure has been to join only the Attorney General of Canada as a party representing the Governor in Council. Exception was taken to the particular procedure in the motion for dismissal but the learned trial judge did not find it necessary to refer to the matter because he dismissed the action; and the Federal Court of Appeal did not deal with it. Because of the disposition I shall propose, the matter does not require an answer to the second request in the appellant's application wherein the applicant asks that the claim be struck out as against all named defend-ants other than the Attorney General of Canada.

The CRTC proceedings concerned the application by Bell Canada for approval under s. 320 of the Railway Act, supra, of those telephone tolls proposed to be charged by Bell Canada for its services in areas including the Northwest Territo­ries. Section 321(1) of the Railway Act, supra, requires that "all tolls shall be just and reasonable ...". Subsection (2) prohibits "unjust discrimina­tion" and subs. (3) authorizes the CRTC to determine "as a question of fact" whether or not there has been unjust discrimination or unreasonable

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preference. The National Transportation Act, supra, makes further provision for such hearings by the CRTC and for appeals therefrom; and we are here principally concerned with s. 64 of that statute, as amended by R.S.C. 1970 (2nd Supp.), c. 10, s. 65 (Schedule II, Item 32). It provides as follows:

64. (1) The Governor in Council may at any time, in his discretion, either upon petition of any party, person or company interested, or of his own motion, and with-out any petition or application, vary or rescind any order, decision, rule or regulation of the Commission, whether such order or decision is made inter partes or otherwise, and whether such regulation is general or limited in its scope and application; and any order that the Governor in Council may make with respect thereto is binding upon the Commission and upon all parties.

(2) An appeal lies from the Commission to the Federal Court of Appeal upon a question of law, or a question of jurisdiction, upon leave therefor being obtained from that Court upon application made within one month after the making of the order, decision, rule or regula­tion sought to be appealed from or within such further time as a judge of that Court under special circum­stances allows, and upon notice to the parties and the Commission, and upon hearing such of them as appear and desire to be heard; and the costs of such application are in the discretion of that Court.

The foregoing statutes were enacted at a time when the approval of telephone tariffs was a func­tion of the Canadian Transport Commission and its predecessors. By the Canadian Radio-televi­sion and Telecommunications Commission Act, supra, ss. 14, 17 and Schedule Items 2 and 5, the CRTC was assigned these responsibilities with ref­erence to telephones and telegraphs.

The two respondent organizations participated "actively throughout the hearing" (to quote from the statement of claim) in the Bell Canada application "to increase the rates charged to cus­tomers". Not being satisfied with the decision of the CRTC, the two respondents had the alterna­tive of appealing to the Federal Court of Appeal on a question of law or jurisdiction (s. 64(2), supra) or of filing a petition with the Governor in

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Council "to set aside the relevant portion of the decision of the CRTC and to substitute its own order therefor" (to quote from para. 6 of the statement of claim). The respondents elected to follow the latter course. The record does not reveal the contents of the respondents' petition and argu­ments, if any, in support of their application to the Governor in Council. Paragraph 10 of the claim asserts, and I treat it for the purposes of these proceedings as factually correct, that the Governor in Council received recommendations from the Minister of Communications, together with evi­dence and argument in support; evidence, opinions, and recommendations from the CRTC; reports from officials of the Department of Communica­tions; and the reply of Bell Canada to each of the respondents' petitions. The respondents did not receive from the Governor in Council the contents of the recommendations and the material described in para. 10 of the claim, supra, but apparently did receive a copy of the Bell Canada reply to the petition. The Governor in Council denied the petitions of the respondents before the respondents had filed their respective responses to Bell Canada. According to the allegations made in the statement of claim, the Governor in Council did not communicate to the respondents the substance of the material received from the Minister and other sources mentioned above and did not invite and consequently did not receive the respondents' comments on such material. No oral hearing occurred in the sense of a session at which the Governor in Council heard the petitioners and the various respondents, and indeed the respond­ents do not insist that such a procedure is prescribed by law and do not now press for an 'oral' hearing. Before this Court the respondents' posi­tion was principally founded on the failure of the Governor in Council (a) to receive the actual petitions of the respondents and (b) to afford the respondents the opportunity to respond to the case made against them by the Minister, the departmental officials and the CRTC. To a much lesser extent the respondents objected to the lack of opportunity to answer the response by Bell Canada to the petitions, presumably because the respond­ents had already encountered at length the argu­ments and submissions of Bell Canada during the

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CRTC hearings and had no doubt anticipated Bell Canada's position in their respective petitions to the Governor in Council.

In support of these objections to the course followed by the Governor in Council the respond­ents submit:

(a) that the Governor in Council acting under s. 64 is a quasi-judicial body or at least owes the respondents a duty of fairness;

(b) the duty includes disclosure to the respond­ent of submissions received from the CRTC;

(c) the respondents have the right to answer Bell Canada if it has introduced some new aspect or submission;

(d) the very minimum requirement is that the actual written submissions of the petitioners (respondents) must be placed before the Council and not a summary thereof prepared by officials;

(e) the Governor in Council is required by s. 64 to give notice to all "parties" even if it moves on its own initiative (as the subsection authorizes it to do) so as to give prior notice to all those who may be affected by the rules to be established by the Governor in Council.

I turn then to the wording of s. 64 itself. This provision finds its roots in the Railway Act, 1868, 31 Vict., c. 68, subss. 12(9) and 12(10), which gave to the Governor in Council the power to approve rates and tariffs for the haulage of freight by rail. In 1903 the task was given to the Board of Railway Commissioners. Section 64 assumed its present form in the Railway Act, 1903, 3 Edw. VII, c. 58, s. 44. All these statutes related to railway rates in the first instance and eventually were extended to cover telephone and telegraph rates. In the meantime provision had been made for telephone rates and charges in the private statutes of incorporation of the Bell Telephone Company of Canada, for example the 1892 Bell Telephone Company of Canada Act, 55-56 Vict., c. 67, s. 3:

The existing rates shall not be increased without the consent of the Governor in Council.

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In its present state, s. 64 creates a right of appeal on questions of "law or jurisdiction" to the Federal Court of Appeal and an unlimited or unconditional right to petition the Governor in Council to "vary or rescind" any "order, decision, rule or regula­tion" of the Commission. These avenues of review by their terms are quite different. The Governor in Council may vary any such order on his own initiative. The power is not limited to an order of the Commission but extends to its rules or regula­tions. The review by the Governor in Council is not limited to an order made by the Commission inter partes or to an order limited in scope. It is to be noted at once that following the grant of the right of appeal to the Court in subs. (2), there are five subsections dealing with the details of an appeal to the Court. There can be found in s. 64 nothing to qualify the freedom of action of the Governor in Council, or indeed any guidelines, procedural or substantive, for the exercise of its functions under subs. (I).

The substance of the question before this Court in this appeal is this: is there a duty to observe natural justice in, or at least a lesser duty of fairness incumbent on, the Governor in Council in dealing with parties such as the respondents upon their submission of a petition under s. 64(1)? It will be convenient first to consider briefly the nature of the duty to be fair in our law.

It has been said by Lord Reid in Wiseman v. Borneman[3], at p. 308:

Natural justice requires that the procedures before any tribunal which is acting judicially shall be fair in all the circumstances.

Such a broad statement depends for its validity upon the meaning to be ascribed to "any tribunal", and to the terms of its parent statute. This Court was concerned with such matters in Nicholson v. Haldimand- Norfolk Regional Board of Commis­sioners of Police and the Attorney General for Ontario[4]. A probationary constable was dismissed without being told why his services were being dispensed with and without being given an opportunity

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to respond or to defend his position. In the result the majority decision of this Court required in those circumstances that the probationary constable should have been treated fairly, not arbi­trarily, even though he was not entitled to all the procedural protection accorded to a full constable. The Chief Justice writing for the majority stated at p. 325:

What rightly lies behind this emergence is the realiza­tion that the classification of statutory functions as judicial, quasi-judicial or administrative is often very difficult, to say the least; and to endow some with procedural protection while denying others any at all would work injustice when the results of statutory decisions raise the same serious consequences for those adversely affected, regardless of the classification of the function in question.

The essence of the decision is found in the Chief Justice's remarks at p. 328:

In my opinion, the appellant should have been told why his services were no longer required and given an opportunity, whether orally or in writing as the Board might determine, to respond. The Board itself, I would think, would wish to be certain that it had not made a mistake in some fact or circumstance which it deemed relevant to its determination. Once it had the appellant's response, it would be for the Board to decide on what action to take, without its decision being reviewable elsewhere, always premising good faith. Such a course provides fairness to the appellant, and it is fair as well to the Board's right, as a public authority to decide, once it had the appellant's response, whether a person in his position should be allowed to continue in office to the point where his right to procedural protection was enlarged. Status in office deserves this minimal protec­tion, however brief the period for which the office is held.

The House of Lords in the earlier decision of Pearlberg v. Varty[5], had in effect found a pre­sumption that the rules of natural justice apply to a tribunal entrusted with judicial or quasi-judicial functions but that no such presumption arises where the body is charged with administrative or executive functions. In the latter case courts will

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act on the presumption that Parliament had not intended to act unfairly and will "in suitable cases" imply an obligation in the body or person to act with fairness. See Lord Pearson at p. 547. Lord Hailsham L.C., combining the idea of fairness and natural justice, put it this way at p. 540:

The doctrine of natural justice has come in for increas­ing consideration in recent years and the courts general­ly, and your Lordships' House in particular, have, I think rightly, advanced its frontiers considerably. But at the same time they have taken an increasingly sophis­ticated view of what it requires in individual cases.

Tucker L.J., thirty years earlier, came closer to our situation in this appeal when he said in Russell v. Duke of Norfolk[6], at p. 118:

The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used, but whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case.

The arena in which the broad rules of natural justice arose and the even broader rule of fairness now performs is described by Lord Denning M.R. in Selvarajan v. Race Relations Board[7] where His Lordship, after enumerating a number of authori­ties dealing with tribunals generally concerned with a lis inter partes in a variety of administrative fields, said at p. 19:

In all these cases it has been held that the investigating body is under a duty to act fairly; but that which fairness requires depends on the nature of the investiga­tion and the consequences which it may have on persons affected by it. The fundamental rule is that, if a person may be subjected to pains or penalties, or be exposed to prosecution or proceedings or deprived of remedies or redress, or in some such way adversely affected by the investigation and report, then he should be told the case

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made against him and be afforded a fair opportunity of answering it.

(Even in those instances the Court went on to add that such a body may adopt its own procedure, can employ staff for all preliminary work, but in the end must come to its own decision.)

Let it be said at the outset that the mere fact that a statutory power is vested in the Governor in Council does not mean that it is beyond review. If that body has failed to observe a condition prece­dent to the exercise of that power, the court can declare that such purported exercise is a nullity. In Wilson v. Esquimalt and Nanaimo Railway Company[8], for example, the Privy Council con­sidered the position of the Lieutenant-Governor of British Columbia under the Vancouver Island Settlers' Rights Act, 1904, Amendment Act, 1917, S.B.C. 1917, c. 71. The effectiveness of a Crown land grant issued by order of the Lieutenant-Gov­ernor in Council was contested on the grounds that the Lieutenant-Governor in Council had no "rea­sonable proof" before them that the grantees had improved the lands in question or occupied them with an intention to reside thereon. The Court of Appeal found that there was no such evidence and hence declared the Order in Council to be void. The Privy Council proceeded on the basis that before the Lieutenant-Governor in Council could make the grant in question, it must determine that the statutorily prescribed conditions had been met by the applicant for the grant. As here, the allega­tion was made that the owners did not have "an adequate opportunity" to show that there was no factual foundation for the grant made by the Lieutenant-Governor in Council. The Privy Coun­cil found against this submission stating at p. 213 through Duff J., sitting as a member of the Board:

The respondents were given the fullest opportunity to present before the Lieutenant-Governor in Council everything they might to urge against the view that the depositions produced in themselves constituted "reasonable proof," and they had the fullest opportunity also of supporting their contention that the depositions alone, in

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the absence of cross-examination, ought not to be con­sidered sufficient, and that further time should be allowed to enable them to prepare their case. The appointed authority for dealing with the matter, it must be remembered, was the Executive Government of the Province directly answerable to the Legislature, and their Lordships agree without hesitation with the majority of the Court of Appeal in holding as they explicitly decided upon the same facts in Dunlop's case, that the Lieutenant-Governor in Council was not bound to govern himself by the rules of procedure regulating proceedings in a Court of justice.

It cannot be suggested that he proceeded without any regard to the rights of the respondents and the proce­dure followed must be presumed, in the absence of some conclusive reason to the contrary, to have been adopted in exercise of his discretion under the statute as a proper mode of discharging the duty entrusted to him. His decisions taken in the exercise of that discretion are, in their Lordships' opinion, final and not reviewable in legal proceedings.

The Privy Council also determined in the case that factual issues, including the "reasonableness" or "sufficiency" of the evidence, were exclusively for the Lieutenant-Governor whose decision would not be reviewable by a court if there was "some evidence in support of the application" (per Duff J. at p. 213).

The Ontario Court of Appeal was concerned with similar issues in Border Cities Press Club v. Attorney General for Ontario[9]. The factual differ­ences are such that it affords no direct assistance here. The statute prescribed conditions precedent to the exercise of the powers granted by the Legis­lature to the Lieutenant-Governor in Council in that "sufficient cause must be shown" before the letters patent in question might be cancelled. The trial court found that an unreasonable request had been made to the applicant by the province, no hearing or opportunity was afforded the applicant, and indeed no notice of the impending cancellation of the charter was given by the Lieutenant-Gover­nor in Council. The Court of Appeal set aside the declaration that the Order in Council was void for procedural reasons applicable to the powers of the court of the first instance and for reasons not here

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relevant, but in doing so stated through Pickup C.J.O. at p. 412:

I agree with the learned Judge in Weekly Court, for the reasons stated by him, that the power conferred is conditional upon sufficient cause being shown, and that without giving the respondent an opportunity of being heard, or an opportunity to show cause why the letters patent should not be forfeited, the Lieutenant-Governor in Council would not have jurisdiction under the statute to make the order complained of. In exercising the power referred to, the Lieutenant-Governor in Council is not, in my opinion, exercising a prerogative of the Crown, but a power conferred by statute, and such a statutory power can be validly exercised only by comply­ing with statutory provisions which are, by law, condi­tions precedent to the exercise of such power.

It may be of interest to note that in approving the observations of the court below with respect to the statutory powers granted to the Lieutenant-Governor in Council, no express approval was given to the comment by the learned Judge in Weelky Court that in performing his function under the statute the Lieutenant-Governor in Council was required to act judicially.

However, no failure to observe a condition precedent is alleged here. Rather it is contended that, once validly seized of the respondents' peti­tion, the Governor in Council did not fulfill the duty to be fair implicitly imposed upon him, the argument goes, by s. 64(1) of the National Trans­portation Act. While, after Nicholson, supra, and Martineau v. Matsqui Institution (No. 2)[10], (deci­sion of this Court handed down December 13, 1979) the existence of such a duty no longer depends on classifying the power involved as "administrative" or "quasi-judicial", it is still necessary to examine closely the statutory provi­sion in question in order to discern whether it makes the decision-maker subject to any rules of procedural fairness.

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Instructive in this regard is the decision of the Ontario Court of Appeal in Re Davisville Investment Co. Ltd. and City of Toronto et al.[11], where judicial review of an Order in Council was sought. The applicant had unsuccessfully applied to the Ontario Municipal Board for review of an earlier Board decision. By petition the applicant sought to have the Lieutenant-Governor in Council rescind the earlier Board order and direct a public hearing by the Board "to correct the earlier denial thereof" by the Board. The statute under which the petition was filed provided that the Lieutenant-Governor in Council might confirm, vary or rescind the Board order or require the Board to hold a new hearing. Lacourcière J.A. speaking on behalf of the major­ity, after describing the alternative provision for appeal to the court on a question of law or jurisdic­tion, described the petition as "the political route to the Lieutenant-Governor in Council" and went on to state at pp. 555-56:

The petition does not constitute a judicial appeal or review. It merely provides a mechanism for a control by the executive branch of Government applying its percep­tion of the public interest to the facts established before the Board, plus the additional facts before the Council. The Lieutenant-Governor in Council. is not concerned with matters of law and jurisdiction which are within the ambit of judicial control. But it can do what Courts will not do, namely, it can substitute its opinion on a matter of public convenience and general policy in the public interest. This is what was done by the Order in Council: if it was done without any error of law, or without defects of a jurisdictional nature, the Divisional Court had no power to interfere and properly dismissed the application before it.

At p. 557 His Lordship returns to the same point:

Section 94 of The Ontario Municipal Board Act should not be construed restrictively as if it involved an inferior tribunal to which certain matters have been committed by the Legislature. I prefer to regard the power as one reserved by the legislative to the executive branch of Government acting on broad lines of policy.

[Page 752]

There is no reason to fetter and restrict the scope of the power by a narrow judicial interpretation.

In the Davisville proceeding the petition was treated as an appeal in writing and it may be noted that the respondent party filed a reply but no response thereto was made by the applicant. Blair J.A. dissented on the interpretation to be placed upon s. 94 as it related to the alternative courses open on such a petition to the Lieutenant-Gover­nor in Council, but agreed with the majority of the court that the action of the Executive is reviewable only if the Lieutenant-Governor in Council acts outside the terms of the enabling statute.

It is not helpful in my view to attempt to classify the action or function by the Governor in Council (or indeed the Lieutenant-Governor in Council acting in similar circumstances) into one of the traditional categories established in the development of administrative law. The Privy Council in the Wilson case, supra, described the function of the Lieutenant-Governor as "judicial" as did the judge of first instance in the Border Cities Press proceedings, supra. However, in my view the essence of the principle of law here operating is simply that in the exercise of a statutory power the Governor in Council, like any other person or group of persons, must keep within the law as laid down by Parliament or the Legislature. Failure to do so will call into action the supervising function of the superior court whose responsibility is to enforce the law, that is to ensure that such actions as may be authorized by statute shall be carried out in accordance with its terms, or that a public authority shall not fail to respond to a duty assigned to it by statute.

I turn now to a consideration of s. 64(1) in light of those principles. Clearly the Governor in Coun­cil is not limited to varying orders made inter partes where a lis existed and was determined by the Commission. The Commission is empowered by s. 321 of the Railway Act, supra, and the section of the CRTC Act already noted to approve all charges for the use of telephones of Bell

[Page 753]

Canada. In so doing the Commission determines whether the proposed tariff of tolls is just and reasonable and whether they are discriminatory. Thus the statute delegates to the CRTC the func­tion of approving telephone service tolls with a directive as to the standards to be applied. There is thereafter a secondary delegation of the rate-fixing function by Parliament to the Governor in Council but this function only comes into play after the Commission has approved a tariff of tolls; and on the fulfillment of that condition precedent, the power arises in the Governor in Council to estab­lish rates for telephone service by the variation of the order, decision, rule or regulation of the CRTC. While the CRTC must operate within a certain framework when rendering its decisions, Parliament has in s. 64(1) not burdened the execu­tive branch with any standards or guidelines in the exercise of its rate review function. Neither were procedural standards imposed or even implied. That is not to say that the courts will not respond today as in the Wilson case supra, if the conditions precedent to the exercise of power so granted to the executive branch have not been observed. Such a response might also occur if, on a petition being received by the Council, no examination of its contents by the Governor in Council were undertaken. That is quite a different matter (and one with which we are not here faced) from the asser­tion of some principle of law that requires the Governor in Council, before discharging its duty under the section, to read either individually or en masse the petition itself and all supporting ma­terial, the evidence taken before the CRTC and all the submissions and arguments advanced by the petitioner and responding parties. The very nature of the body must be taken into account in assessing the technique of review which has been adopted by the Governor in Council. The executive branch cannot be deprived of the right to resort to its staff, to departmental personnel concerned with the subject matter, and above all to the comments and advice of ministerial members of the Council who are by virtue of their office concerned with the policy issues arising by reason of the petition whether those policies be economic, political, com­mercial or of some other nature. Parliament might otherwise ordain, but in s. 64 no such limitation

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had been imposed on the Governor in Council in the adoption of the procedures for the hearing of petitions under subs. (1).

This conclusion is made all the more obvious by the added right in s. 64(1) that the Governor in Council may "of his motion" vary or rescind any rule or order of the Commission. This is legislative action in its purest form where the subject matter is the fixing of rates for a public utility such as a telephone system. The practicality of giving notice to "all parties", as the respondent has put it, must have some bearing on the interpretation to be placed upon s. 64(1) in these circumstances. In these proceedings the respondent challenged the rates established by the CRTC and confirmed in effect by the Governor in Council. There are many subscribers to the Bell Canada services all of whom are and will be no doubt affected to some degree by the tariff of tolls and charges authorized by the Commission and reviewed by the Governor in Council. All subscribers should arguably receive notice before the Governor in Council proceeds with its review. The concluding words of subs. (1) might be said to support this view where it is provided that:

... any order that the Governor in Council may make with respect thereto is binding upon the Commission and upon all parties.

I read these words as saying no more than this: if the nature of the matter before the Governor in Council under s. 64 concerns parties who have been involved in proceedings before the adminis­trative tribunal whose decision is before the Gover­nor in Council by virtue of a petition, all such persons, as well as the tribunal or agency itself, will be bound to give effect to the order in council issued by the Governor in Council upon a review of the petition. Different terminology to the same effect is found in predecessor statutes and I see no basis for reading into this statute any different parliamentary intent from that which I have ascribed to these words as they are found now in s. 64(1).

It was pointed out that in the past the Governor in Council has proceeded by way of an actual oral hearing in which the petitioner and the contending parties participated (P.C. 2166 dated 24/10/23;

[Page 755]

and P.C. 1170 dated 17/6/27). These proceedings do no more than illustrate the change in growth of our political machinery and indeed the size of the Canadian community. It was apparently possible for the national executive in those days to conduct its affairs under the Railway Act, supra, through meetings or hearings in which the parties appeared before some or all of the Cabinet. The population of the country was a fraction of that today. The magnitude of government operations bears no rela­tionship to that carried on at the federal level at present. No doubt the Governor in Council could still hold oral hearings if so disposed. Even if a court had the power and authority to so direct (which I conclude it has not) it would be a very unwise and impractical judicial principle which would convert past practice into rigid, invariable administrative procedures. Even in cases men­tioned above, while the order recites it to have been issued on the recommendation of the respon­sible Minister, there is nothing to indicate that the parties were informed of such a recommendation prior to the conduct of the hearing.

While it is true that a duty to observe proce­dural fairness, as expressed in the maxim audi alteram partem, need not be express (Alliance des Professeurs Catholiques de Montréal v. Commis­sion des Relations Ouvrières de la Province de Québec[12]), it will not be implied in every case. It is always a question of construing the statutory scheme as a whole in order to see to what degree, if any, the legislator intended the principle to apply. It is my view that the supervisory power of s. 64, like the power in Davisville, supra, is vested in members of the Cabinet in order to enable them to respond to the political, economic and social concerns of the moment. Under s. 64 the Cabinet, as the executive branch of government, was exerci­sing the power delegated by Parliament to determine the appropriate tariffs for the telephone services of Bell Canada. In so doing the Cabinet, unless otherwise directed in the enabling statute, must be free to consult all sources which Parliament

[Page 756]

itself might consult had it retained this func­tion. This is clearly so in those instances where the Council acts on its own initiative as it is authorized and required to do by the same subsection. There is no indication in subs. (1) that a different inter­pretation comes into play upon the exercise of the right of a party to petition the Governor in Council to exercise this same delegated function or power. The wording adopted by Parliament in my view makes this clear. The Governor in Council may act "at any time". He may vary or rescind any order, decision, rule or regulation "in his discretion". The guidelines mandated by Parliament in the case of the CRTC are not repeated expressly or by impli­cation in s. 64. The function applies to broad, quasi-legislative orders of the Commission as well as to inter-party decisions. In short, the discretion of the Governor in Council is complete provided he observes the jurisdictional boundaries of s. 64(1).

The procedure sanctioned by s. 64(1) has sometimes been criticized as an unjustifiable inter­ference with the regulatory process: see Independ­ent Administrative Agencies, Working Paper 25 of the Law Reform Commission of Canada (1980), at pp. 87-89. The Commission recommended that

provisions for the final disposition by the Cabinet or a minister of appeals of any agency decisions except those requesting the equivalent of the exercise of the preroga­tive of mercy or a decision based on humanitarian grounds, should be abolished. (at p. 88)

Indeed it may be thought by some to be unusual and even counter-productive in an organized socie­ty that a carefully considered decision by an administrative agency, arrived at after a full public hearing in which many points of view have been advanced, should be susceptible of reversal by the Governor in Council. On the other hand, it is apparently the judgment of Parliament that this is an area inordinately sensitive to changing public policies and hence it has been reserved for the final application of such a policy by the executive branch of government. Given the interpretation of

[Page 757]

s. 64(1) which I adopt, there is no need for the Governor in Council to give reasons for his dici­sion [sic], to hold any kind of a hearing, or even to acknowledge the receipt of a petition. It is not the function of this Court, however, to decide whether Cabinet appeals are desirable or not. I have only to decide whether the requirements of s. 64(1) have been satisfied.

In reaching this conclusion concerning the procedures to be followed with reference to s. 64(1), I am assisted by the reasoning of Megarry J. in Bates v. Lord Hailsham[13] (cited by the majority judgment of this Court in Nicholson, supra). There the court was dealing with a chal­lenge made to the legality of an order issued under the Solicitors Act abolishing a tariff of fees, on the grounds that the order should have been preceded by wider consideration by the rule enacting body. In refusing to intervene, Megarry J. stated at p. 1378:

Let me accept that in the sphere of the so-called quasi-judicial the rules of natural justice run, and that in the administrative or executive field there is a general duty of fairness. Nevertheless, these considerations do not seem to me to affect the process of legislation, whether primary or delegated. Many of those affected by dele­gated legislation, and affected very substantially, are never consulted in the process of enacting that legisla­tion; and yet they have no remedy ... I do not know of any implied right to be consulted or make objections, or any principle upon which the courts may enjoin the legislative process at the suit of those who contend that insufficient time for consultation and consideration has been given.

Both the Bates case, supra, and this one deal with delegated legislation, the difference being that the delegatee in this case is, in effect, the executive branch of government while in the Bates case it was a committee of judges and solicitors constitut­ed under s. 56 of the Solicitors Act. Under s. 56(2) the committee could

make general orders prescribing and regulating in such manner as they think fit the remuneration of solicitors in respect of noncontentious business.

[Page 758]

The Governor in Council under s. 64(1) is entitled to vary decisions on telephone tariffs already made by another body, but this difference does not strike me as material. Nor does the fact that a citizen may invoke the review procedure of s. 64(1) via petition, while no comparable right existed under the English act, constitute a valid ground of dis­tinction. There is only one review procedure under s. 64(1) though it may be triggered in two ways, i.e., by petition or by the Governor in Council's own motion. It is clear that the orders in question in Bates and the case at bar were legislative in nature and I adopt the reasoning of Megarry J. to the effect that no hearing is required in such cases. I realize, however, that the dividing line between legislative and administrative functions is not always easy to draw: see Essex County Council v. Minister of Housing[14].

The answer is not to be found in continuing the search for words that will clearly and invariably differentiate between judicial and administrative on the one hand, or administrative and legislative on the other. It may be said that the use of the fairness principle as in Nicholson, supra, will obvi­ate the need for the distinction in instances where the tribunal or agency is discharging a function with reference to something akin to a lis or where the agency may be described as an 'investigating body' as in the Selvarajan case, supra. Where, however, the executive branch has been assigned a function performable in the past by the Legislature itself and where the res or subject matter is not an individual concern or a right unique to the peti­tioner or appellant, different considerations may be thought to arise. The fact that the function has been assigned as here to a tier of agencies (the CRTC in the first instance and the Governor in Council in the second) does not, in my view, alter the political science pathology of the case. In such a circumstance the Court must fall back upon the basic jurisdictional supervisory role and in so doing construe the statute to determine whether the Gov­ernor in Council has performed its functions

[Page 759]

within the boundary of the parliamentary grant and in accordance with the terms of the parlia­mentary mandate.

The precise terminology employed by Parlia­ment in s. 64 does not reveal to me any basis for the introduction by implication of the procedural trappings associated with administrative agencies in other areas to which the principle in Nicholson, supra, was directed. The roots of that authority do not reach the area of law with which we are concerned in scanning s. 64(1).

As mentioned at the outset, the Federal Court of Appeal, speaking through Le Dain J., agreed with the trial division except with respect to the lack of opportunity for the respondents to respond to the reply forwarded to the Governor in Council by Bell Canada in the proceedings initiated by the petition of the respondents. Le Dain J. regarded this issue as being one of fact depending for its determina­tion on the nature of Bell Canada's answer and the issues raised thereby, and on the reasonableness of the delay of two weeks before the issuance of the decision of the Governor in Council. His Lordship concluded:

Since the question is essentially one of fact, one cannot say before the issue has been tried that the Statement of Claim does not disclose a reasonable cause of action.

For the reasons already given I am unable, with respect, to conclude that the issue of fairness arises in these proceedings on a proper construction of s. 64(1). If there were to be a distinction between rights arising with reference to submissions from government sources and rights arising with refer­ence to the response from the rate applicant Bell Canada, more compelling reasons exist for disclo­sure of the intragovernmental communications as the respondents were, by this stage in these lengthy proceedings, very familiar with the application made by Bell Canada and the position taken by that company before the Commission by reason of the respondents' active participation in the hearings before the CRTC. In any case, I can discern nothing in s. 64(1) to justify a variable yardstick for the application to that section of the principle of fairness according to the source of the informa­tion placed before the Governor in Council for the

[Page 760]

disposition of the respondents' petition. The basic issue is the interpretation of this statutory provi­sion in the context of the pattern of the statute in which it is found. In my view, once the proper construction of the section is determined, it applies consistently throughout the proceedings before the Governor in Council.

I would therefore allow the appeal and restore the order of the trial court. As to costs, the respondent has never asked for costs and the Attorney General of Canada at the hearing in this Court placed himself in the hands of the Court. In all the circumstances of these proceedings, I would not consider this to be a case for costs and I would award no costs to any party in this Court or in any of the courts below.

Appeal allowed.

Solicitor for the defendant, appellant: R. Tassé, Ottawa.

Solicitor for the plaintiffs, respondents: Andrew J. Roman, Toronto.