Thales DIS Canada Inc. v. Ontario Ministry of Transportation

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

DIVISIONAL COURT FILE NO.: 943/21

DATE: 20220601

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

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

BETWEEN:

)

Thales DIS Canada Inc.

– and –

Peter N. Mantas and Nabila Abdul Malik,

for the Applicant

)

Applicant

Will MacLarkey, Andi Jin and Alex

Redinger, for the Respondent

Ontario (Ministry of Transportation)

Respondent

)

) HEARD: March 31, 2022

REASONS FOR DECISION

NISHIKAWA J.:

Overview

[1]

The Applicant, Thales DIS Canada Inc. (“Thales”), applies for judicial review of two

decisions. The first is the decision of the Respondent, Ministry of Transportation (“MTO”), to

issue Request for Bids with # Tender 13673, Card Production and Photo Comparison Technology

Service Provider (the “RFB”). The second is MTO’s decision dated February 8, 2022 to dismiss

Thales’ complaint regarding various aspects of the RFB that was submitted through the

government’s bid dispute mechanism (the “Decision”). The Decision accepted and attached a

“Briefing Note – Analysis and Findings” dated February 7, 2022 (the “Briefing Note”) of the

Director, Program and Policy Enablement (the “Director”), Supply Chain Ontario (“SCO”) of the

Ministry of Government and Consumer Services, who found that the complaint was

unsubstantiated.

Page: 2

[2]

The principal basis for Thales’ application is that the domestic production requirement (as

defined below) in the RFB violates the non-discrimination provisions of the Canada-European

Union Comprehensive Economic Trade Agreement (“CETA”) and the Canadian Free Trade

Agreement (“CFTA”). Thales further submits that the Decision was biased and that the process

was procedurally unfair.

[3]

MTO submits that the terms of the RFB are not reviewable by this Court. In respect of the

Decision, MTO submits that the process was fair and that the Decision is reasonable. MTO takes

the position that the domestic production requirement falls within the public safety exception to

the non-discrimination provisions of CETA. MTO also submits that the application is moot

because, after completion of the tender process, Thales ranked fourth of four bidders.

[4]

The parties agreed that in view of the anticipated contract award date of April 4, 2022, the

application should proceed on an expedited basis. At the hearing, the parties requested a “bottom

line” decision from the Court at the earliest opportunity.

[5]

On April 12, 2022, this Court advised as follows: “the application for judicial review is

allowed and the decision below is quashed: the RFB terms do not comply with the CETA.” The

Court further indicated that the reasons for the decision would follow in due course. These are the

reasons for that decision.

Factual Background

The Request for Bids and Addenda

[6]

Each year, the Ontario government issues over nine million drivers’ licences, health cards

and other identity cards to Ontarians. The contract for tender at issue is for the design and

production of these Ontario government identity cards.

[7]

The Applicant, Thales, is a security technology company that is part of the French

multinational company Thales Group. Thales, through Thales Poland, produces identification

cards and passports at its facility in Gdansk, Poland for governments in the European Union, the

United Kingdom, and certain American states and Canadian provinces.

[8]

On September 16, 2021, Ontario issued the “Request for Bids with Tender # 13673” to

identify a vendor for a contract to provide image capture services, photo comparison technology

services, and identification card production services. The term of the contract is for a minimum of

seven years, with an option to extend for an additional three years. The main product would be the

end-to-end design, processing, manufacturing, and personalization of Ontario identification cards.

[9]

The RFB is a multi-ministry procurement involving the Ministries of Transportation,

Health, Finance, and Government and Consumer Services. MTO is the lead Ministry. The deadline

for submissions was December 1, 2021, after an extension from the original deadline of November

10, 2021.

[10] The RFB was issued pursuant to the Ontario Public Service Procurement Directive, issued

by the Management Board of Cabinet in December 2014 (the “Procurement Directive.”) The

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purpose of the Procurement Directive is to ensure that the government of Ontario acquires goods

and services through a process that is fair, open, transparent, geographically-neutral and accessible

to qualified vendors. The Procurement Directive is mandatory, as further detailed below.

[11] Part of the manufacturing process includes the production of “Card Stock”, which is the

blank card without identifying information. The Card Stock does, however, contain a unique card

stock number and visual and tactile security features. Section 1.5.6.2.3.1 of the RFB specifies the

following “Production Materials and Card Stock requirements”:

1. Card stock shall be produced in a secured facility that must comply to PHIPA

standards. Card Stock shall be produced in the single secured Card Production

facility in Canada. The Ministry confirms that Card Stock with background

designs must be produced in Canada as part of the manufacturing process.

2. Printing and personalization of the Cards shall occur in the single secured

Card Production facility in Canada. All Card Holder’s personal information

must stay in Canada.

…

5. Record the DD/REF [Document Discriminator] (MTO Cards) and ICN

[Inventory Control Number] (MOH Cards) on the Card stock at the point of

manufacture for inventory control, audit and reconciliation purposes….

[12] The underlined portion of subparagraph 1 was added on November 10, 2021 pursuant to

Addendum #12 in response to questions from bidders.

[13] Section 1.5.6.2.3.3. of the RFB, titled “Card Production Centre,” states that the “Card

Production Centre must be located and maintained in Canada.” Under the subheading “Card

Production Center requirements” the provision further states that the “vendor must have a secure

facility in Canada to ensure that all “Personal Information” as defined in the Freedom of

Information and Protection of Privacy Act, and “Personal Health Information” as defined in the

Personal Health Information Protection Act, 2004… must be physically stored and maintained

within Canada…” The provision also requires that the Document Discriminator (for MTO cards)

and Inventory Control Numbers (for Ministry of Health cards) be printed on the Card Stock before

submitting for personalization.

[14] MTO submits that, read together, these sections clearly require that the entire production

process be done domestically and in the same facility. MTO also maintains that the Card

Production Centre is not a “mandatory requirement” that bidders would need to satisfy at the time

of bid submission because, under section 1.5.6.2.3.3, the RFB required only that the Card

Production Centre be operable by November 2023.

[15] Bidders were invited to submit questions, which were addressed through the issuance of

Addenda, which then formed part of the RFB. Thales submitted six questions about the domestic

card production requirement, including whether the cards with a blank background design could

be produced in a facility that would comply with the Personal Health Information Protection Act,

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2004, S.O. 2004, c. 3, Sched. A, in a North Atlantic Treaty Organization country. On November

10, 2021, MTO issued Addendum # 12, in which it responded that Card Stock with background

and security designs must be produced in Canada as part of the manufacturing process, but raw

materials prior to the manufacture of Card Stock did not have to be produced in Canada. The RFB

text was updated accordingly. This requirement is herein referred to as the “domestic production

requirement”.

[16] Thales delivered a bid on November 30, 2021 and indicated it would produce the Card

Stock at its facility in Gdansk, Poland. The rest of the work would be completed in Canada. On

January 28, 2022, Thales was invited to participate in the next stage of the procurement.

The Applicable Trade Agreements

[17] The RFB states that it is subject to both the CETA and the CFTA, among other trade

agreements. The following is a brief summary of the relevant provisions of these instruments.

The Canada-European Union Comprehensive Economic and Trade Agreement

[18] Canada and the European Union (“EU”) entered into the CETA in September 2017 with

the objective of eliminating trade barriers between them. The CETA is based on principles of

reciprocity and fairness between the parties and covers virtually all sectors of trade between

Canada and the EU.

[19] Chapter 19 of the CETA deals specifically with government procurement and includes

central, sub-central, municipal government entities and government enterprises. The general

principles are non-discrimination, transparency and impartiality. Article 19.4 – General Principles

states as follows:

Article 19.4 – General Principles

Non-Discrimination

1. With respect to any measure regarding covered procurement, each Party,

including its procuring entities, shall accord immediately and unconditionally

to the goods and services of the other Party and to the suppliers of the other

Party offering such goods or services, treatment no less favourable than the

treatment the Party, including its procuring entities, accords to its own goods,

services and suppliers….

2. With respect to any measure regarding covered procurement, a Party,

including its procuring entities, shall not:

a. treat a locally established supplier less favourably than another locally

established supplier on the basis of the degree of foreign affiliation or

ownership; or

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b. discriminate against a locally established supplier on the basis that the

goods or services offered by that supplier for a particular procurement are

goods or services of the other Party.

…

[Emphasis added.]

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

security interests:

Article 19.3 – Security and general exceptions

1. Nothing in this Chapter shall be construed to prevent a Party from taking any

action or from not disclosing any information that it considers necessary for

the protection of its essential security interests relating to the procurement:

a. of arms, ammunition or war material;

b. or to procurement indispensable for national security; or

c. for national defence purposes.

2. Subject to the requirement that such measures are not applied in a manner that

would constitute a means of arbitrary or unjustifiable discrimination between

Parties where the same conditions prevail or a disguised restriction on

international trade, nothing in this Chapter shall be construed to prevent a

Party from imposing or enforcing measures:

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

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

c. necessary to protect intellectual property; or

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

institutions or of prison labour.

[Emphasis added.]

[21] Article 19.9 of the CETA contains requirements pertaining to technical specifications and

tender documentation, which are not to have the effect of creating unnecessary obstacles to

international trade. Article 19.9(7) requires that a procuring party “make available to suppliers

tender documentation that includes all information necessary” to permit suppliers to prepare and

submit responsive tenders.

Page: 6

[22] Article 19.17(1), the dispute resolution provision, requires that each party provide “a

timely, effective, transparent and non-discriminatory administrative or judicial review procedure”

through which a supplier may challenge a breach of Chapter 19 or a failure to comply with a party’s

measures implementing the Chapter. Articles 19.17(4) – (6) set out dispute resolution and

procedural protection requirements.

The Canadian Free Trade Agreement

[23] The CFTA is an intergovernmental trade agreement among the Canadian provinces which

came into force in July 2017. The objective of the CFTA is to reduce and eliminate barriers to the

free movement of persons, goods, services, and investments within Canada. The CFTA safeguards

open, transparent and non-discriminatory access to government procurement by each party’s

procuring entities.

[24] Under Article 502, each party is required to accord to the goods and services of any other

party, and the suppliers of goods and services of any other party, treatment no less favourable than

the best treatment the party accords to its own goods and services.

[25] The CFTA also has provisions regarding technical specifications and documentation

(Article 509) and administrative or judicial review procedures (Article 518).

The Bid Dispute Process and Thales’ Complaint

[26] Supply Chain Ontario (“SCO”) centrally manages the procurement process on behalf of all

Ontario government ministries. Section 5.10 of the Procurement Directive describes the bid

dispute process. Ministries are required to respond to vendor concerns and to seek to resolve bid

disputes. If a complaint cannot be resolved at the Ministry level, bidders with concerns about an

Ontario government procurement may file a complaint with the Director.

[27] On December 10, 2021, Thales submitted its complaint to the Director, alleging that the

RFB violates the CETA and the CFTA and was conducted in a manner that was procedurally

unfair. On the same day, Thales filed the Notice of Application for Judicial Review with this Court,

raising the same issues.

[28] On January 10, 2022, the Director wrote to Thales advising that Thales had submitted an

eligible dispute for review and setting out a timetable for the procedural steps to a decision, prior

to the tender award. A decision on Thales’ complaint was to be made by February 4, 2022.

[29] Thales requested a copy of the complaint review process and the identity of the decision-

maker. SCO then provided Thales with a document entitled “Detailed Description of the

Government of Ontario’s Bid Dispute Process” (the “Detailed Description”) which included a Bid

Dispute Resolution Map describing the further steps in the process, as follows:



Complaints not resolved at the Ministry level are centrally reviewed by the

Director.

Page: 7



The complaint is reviewed internally in conjunction with the Ministry against which

the complaint was filed. Analysis is presented to the Assistant Deputy Minister

(“ADM”), SCO, for consideration.



The ADM, SCO will make a recommendation to resolve the complaint, which may

include remedies such as rapid interim measures or monetary compensation.

The Deputy Head of the Ministry against which the complaint was filed will

consider the operational impacts of the recommendation and make a final decision.

The decision will be adopted as the Government of Ontario’s position.



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

vendor.

Vendors who are not satisfied with the outcome of the central review may seek

recourse in Ontario’s court system (for complaints regarding a competitive

procurement) or through an arbitration process (for complaints regarding a non-

competitive procurement where the terms of a trade agreement apply).

[30] The Detailed Description states that if a complaint is received before the contract is

awarded, where appropriate, rapid interim measures may be applied to preserve the vendor’s

opportunity to participate in the procurement. These interim measures include suspending the

procurement process, re-evaluating the tenders received, or re-issuing the procurement.

[31] According to the Detailed Description, after a recommendation is made to the Ministry, the

Ministry will have an opportunity to consider the operational impacts of the recommendation and

its obligations under Ontario’s trade commitments and the bid dispute resolution process, and will

make a final decision that will be adopted as the government’s position and communicated back

to the vendor.

[32] In response to Thales’ question about the identity of the decision-maker, the Director

confirmed that, consistent with the process identified in the process map, a decision on Thales’

complaint would be made by the procuring Ministry, following SCO’s recommendation.

[33] On January 21, 2022, the Director dismissed Thales’ request for interim relief, a stay of the

contract award, on the basis that the complaint and judicial review application would be decided

before any contract award.

[34] In its submissions, MTO raised the public safety exception to the non-discrimination

provisions of the CETA (as defined below). Thales made lengthy reply submissions in response.

Following the submission of Thales’ reply submissions, the Director allowed Ontario to submit a

sur-reply. Thales objected to the sur-reply on the basis that no such step was contemplated under

the process identified and that, as a result, it was improper and prejudicial to Thales. On this

application, Thales submits that it was procedurally unfair to allow MTO to make a sur-reply.

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The Decision

[35] Consistent with the above process, on February 7, 2022, the Director submitted the Briefing

Note containing her analysis and recommendation to the ADM, SCO. The Director concluded that

Thales’ complaint was not substantiated and recommended that it be dismissed. The Briefing Note

was then submitted by the ADM, SCO to the Deputy Minister of Transportation. The Deputy

Minister agreed with the Director’s recommendation.

[36] In a letter dated February 8, 2022, the ADM, SCO advised Thales that the Director’s

recommendation that its complaint be dismissed was accepted by the Government of Ontario. A

copy of the Director’s Briefing Note was attached. As noted above, the Decision under review is

MTO’s dismissal of Thales’ complaint, which was based on the Director’s recommendation. The

Briefing Note is thus treated as containing the reasons for MTO’s Decision.¹

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

1. Whether there were “fundamental and significant changes”

introduced into the RFB at the “eleventh hour” pursuant to

Addendum #12;

2. Whether there was any discrimination under the CETA;

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

4. Whether the dispute resolution mechanism of the Government

of Ontario breached the CETA or the CFTA in respect of the

requirement for transparency and the requirement that the

procedural rules for challenges be in writing and be made

generally available.

[38] The Director rejected each of the four allegations in finding that Thales’ complaint was not

substantiated and set out her reasons for doing so in the Decision.

The Principal Issue – Discrimination Under the CETA

[39] As mentioned, the second and principal issue addressed by the Decision was whether there

was discrimination under the CETA, specifically a contravention of Article 19.4(2)(b) of the

CETA. The following is a summary of the relevant portions of the Decision with respect to this

issue.

[40] The specific issue addressed by the Director was Thales’ position that the domestic

production requirement discriminated against a bidder that offered Card Stock production at a

facility in the EU. The Director appears to have proceeded on the basis that the RFB contravened

¹Given that the Decision accepted and attached the Director’s recommendation as contained in the Briefing Note,

references to “the Decision” include the Briefing Note, which will not be referred to separately.

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the CETA in this manner by limiting its consideration to the narrower issue of whether the

domestic production requirement fell within the exception in Article 19.3(2) of the CETA (the

“public safety exception”).

The Positions of the Parties

[41] The Decision first recites the relevant facts pertaining to the RFB and the Thales complaint.

In this recitation, the Director specifically noted that Thales wished to produce Card Stock at a

facility in Poland and to transport the Card Stock to Canada for personalization.

[42] The Director noted that Thales alleged that the domestic production requirement

discriminates, in contravention of Article 19.4(2)(b) of the CETA, against bidders which offer

Card Stock produced at a facility in the EU. The Director then noted that MTO maintained that

there was no breach of the CETA because the domestic production requirement fell within the

public safety exception under Article 19.3(2) of the CETA. The Director then proceeded to

summarize the submissions of the parties on this issue.

(a)

The Position of the MTO

[43] In summarizing MTO’s submission, the Director began by referring to the MTO’s position

that “there is a vital security interest relating to public morals, order or safety in reducing the risk

of loss, theft and fraud associated with identity documents.” The Director then noted that MTO

relied on an information note dated January 18, 2022 (the “MTO Fraud Note”) from the MTO

Fraud Prevention and Business Integrity Office (the “MTO Fraud Office”).

[44] As summarized by the Director, the MTO Fraud Note detailed: (1) the high value of Card

Stock to fraudsters and criminals who use Card Stock and personal data to commit identity theft

and various financial and other crimes; (2) the fact that Card Stock contains the cards’ security

features and is therefore much more difficult to forge as compared to personalization; and (3)

MTO’s reduced control over foreign manufacturing of Card Stock and the increased risk of loss

or theft of Card Stock due to multiple exchanges and transfers inherent in transportation and

importation from overseas.

[45] In respect of the risks associated with transportation, the MTO Fraud Note stated that while,

in theory, these risks might be attenuated with the “highest” forms of security, such protection

would be more costly and the intrinsic risks of increased exchanges and handover “simply remain”.

It also noted that “when loss or theft do occur, audit and enforcement are significantly more

challenging where investigation and prosecution depend on foreign investigations and foreign

law”.

[46] The Director then set out the following MTO legal submission regarding the application of

the test by the World Trade Organization (“WTO”) Appellate Body in Brazil – Measures Affecting

Imports of Retreaded Tyres (Complaint by the European Communities) (2007), WTO Doc.

WT/DS332/AB/R (Appellate Body Report) (the “Brazil Decision”) to the issue of whether the

domestic production requirement qualified for the public safety exception:

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In accordance with international trade law, the domestic production requirement is

“materially connected” to protecting “public morals, order or safety” of Ontario

residents, as the measure is intended to, and will, mitigate the risk of loss or theft

of card stock inherent with off-shoring production. The measure is also “necessary”

in that its contribution to the achievement of the objective is “material”. In

determining whether any less trade restrictive alternative was reasonably available,

such alternative must still “preserve for the responding Member its right to achieve

its desired level of protection with respect to the objective pursued”.

[47] MTO argued further that less restrictive measures, in the form of permitting offshore

production of Card Stock, would not preserve Ontario’s “right to achieve its desired level of

protection” regarding its security and safety interest because “there are inherently more

opportunities for loss and theft of card stock through the multiple exchanges and handovers

required by foreign manufactures.”

(b)

The Position of Thales

[48] In summarizing Thales’ position, the Director noted the following. Thales argued that the

public safety exception would not apply on the facts because: (1) it was equipped with a world

class security infrastructure, security safeguards and protocol, superior manufacturing controls and

superior audit functions compared to the incumbent’s faculty in Ontario; (2) Thales supplies

Canadian provinces as well as international jurisdictions with identity cards; (3) Thales performs

1,200 shipments of Card Stock annually to over 60 clients worldwide and has not experienced any

loss of product during shipment; and (4) there has never been an incident of cards being stolen or

pirated during transportation to the end-point client destination, including over 50 million drivers’

licence cards delivered to governments in North America from its facility in the EU during the last

five years. The Director also noted Thales’ submission that MTO ascribed a high risk to

transportation based on the MTO Fraud Note which, in its view, was only speculation without

actual proof such as statistical data.

The Reasoning and Conclusion of the Director on the Principal Issue

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

determination below.

[50] As a preliminary matter, the Director noted in paragraph 24 that the parties “do not differ

substantially in their substantive review of the international trade law applicable to the analysis of

the safety exception under CETA.” This is understood to mean that both parties accepted that the

approach in, among other cases, the Brazil Decision is applicable. While this case, and the other

cases referred to herein which follow the same approach, are not technically binding on this Court,

the approach in the Brazil Decision appropriately collects and addresses the issues that are relevant

to a determination of whether a trade restriction is “necessary” for the purposes of the public safety

exception. In addition, as discussed below, insofar as the approach in these cases is applied in

respect of similar provisions in trade treaties generally, the principles articulated in these decisions

should be regarded as conventions which constitute constraints on administrative decision-makers:

see Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, 441 D.L.R. (4th)

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1, at para. 114. Accordingly, I have applied this approach in the analysis of the reasonableness of

the Decision.

[51] The Director’s determination is set out in paragraph 31 of the Decision to the effect that

“the safety exception under Article 19.3(2) of the CETA applies to the Ministry’s domestic

production requirement for card stock, and accordingly the domestic production requirement does

not breach CETA.” The Director’s analysis in reaching this conclusion is found in paragraphs 27-

29 of the Decision. (The further argument of Thales discussed in paragraph 30 is not relevant for

the discussion below). In fact, the entirety of the Director’s analysis of the question is set out in

paragraph 27.

[52] In that paragraph, the Director accepted Thales’ evidence regarding its “security protocols

and track record from its Polish facility”. She concluded however that such evidence was “not

evidence that there are no or low risks of loss and theft associated with foreign manufacture and

transport of card stock generally”. The Director also concluded that Thales’ track record was not

“evidence that other suppliers in other countries have equally successful manufacturing and

transportation track records”. The Director’s reliance on these statements is addressed later in these

Reasons.

[53] The Director’s reasoning is found in the statements that follow these findings. The Director

reasoned that “Thales’ argument necessarily requires accepting that, based on its own track record,

the domestic production requirement is not warranted for any bidders and therefore is not justified

under the CETA’s safety exception.” The Director stated that she did not accept this argument as

a factual matter and had not been pointed to any legal authority that would support it. The extent

to which the Director can rely on this reasoning is also addressed later.

[54] The conclusions in the Decision can be summarized as follows. The MTO Fraud Note and

the Thales evidence establish that, in the absence of a domestic production requirement, there is a

risk of loss, theft and fraud in respect of Card Stock associated with the transportation from a

foreign facility to Canada for personalization and potentially also a risk of loss, theft and fraud in

respect of the production of Card Stock at a foreign facility. While Thales has been able to

eliminate these risks as a practical matter by the imposition of stringent safety protocols and

practices, there is no guarantee that all other bidders proposing to produce Card Stock in a foreign

facility can, or will, do likewise. Therefore, the domestic production requirement is “necessary”

for public safety and, accordingly, MTO is entitled to avail itself of the public safety exception

under the CETA.

[55] In paragraphs 28 and 29, the Director first rejected Thales’ position that MTO had no

evidence to support its reliance on the public safety exemption, referring to the MTO Fraud Note,

on which the Director determined she was entitled to rely. The Director then set out the specific

nature and extent of her reliance on the Note and her justification for so doing. The Director found

that the MTO Fraud Office was well-positioned to provide evidence on the risks of foreign

manufacture and transportation of card stock across jurisdictions. She noted that the MTO Fraud

Note stated that incidents of theft and loss are deliberately under-reported for security reasons and

therefore it was “unsurprising that there were no statistics presented in the Fraud Office’s

assessment of the inherent risk of loss or theft of Card Stock throughout the chain of custody when

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there are multiple handovers and modes of transport, as would be required by foreign

manufacture.” The Director also referred to the statement in the MTO Fraud Note that, when loss

and theft occur, audit and enforcement are inherently, and significantly, more challenging where

prosecutions depend upon foreign investigations and foreign law.

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

[56] The conclusions of the Director on the remaining issues in the Thales complaint and their

disposition on this application are addressed later in these Reasons.

Issues

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

(a) Is the application for judicial review moot?

(b) In respect of the Decision:

(i)

Is judicial review available?

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

(iii) Is the Decision reasonable?

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

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

(i) Is judicial review available?

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

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

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

Is the Application for Judicial Review Moot?

The Applicable Principles

[58] The doctrine of mootness reflects a general policy of the courts to decline to decide cases

where their decisions would have no practical effect on the rights of the parties. A case is moot

when there is no longer a concrete legal dispute between the parties: Borowski v. Canada (Attorney

General), [1989] 1 S.C.R. 342, at p. 353. If the decision of the court will have no practical effect

on the rights of the parties, a court will generally decline to decide the case. The discretion to hear

moot cases exists for “exceptional” circumstances: Tamil Co-operative Homes Inc. v. Arulappah

(2000), 49 O.R. (3d) 566 (C.A.), at para. 13.

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[59] Once mootness has been established, however, the onus is on the party seeking to have

matter heard to demonstrate why the court should depart from its usual practice of refusing to hear

moot cases: Fontaine v. Canada (Attorney General), 2021 ONCA 931, at para. 14.

The Parties’ Positions

[60] MTO takes the position that Thales’ application for judicial review is moot because the

evaluators have now completed the evaluation process, and Thales ranked fourth of four bidders.

MTO submits that as a result, irrespective of whether this Court sets aside the Decision, Thales

would not be in a position to negotiate for the contract.

[61] Thales takes the position that the domestic production requirement cannot be disentangled

from the evaluation process at Stages 2 and 3. Thales submits that because the evaluators were

aware of both the domestic production requirement and Thales’ intent to manufacture Card Stock

in Poland, MTO cannot demonstrate that the requirement had no material impact on the evaluation

of Thales’ bid.

[62] MTO disputes Thales’ allegation that the evaluators were tainted by the knowledge that

Thales proposed to manufacture the Card Stock in Poland. MTO further submits that the evaluators

were screened for conflicts, as well as from Thales’ complaint and judicial review application. A

fairness monitor was also appointed and rendered an opinion that Stage 1 and Stage 2 of the RFB

adhered to the OPS Procurement Directive.

Evaluation of the Bids under the RFB

[63] Under the RFB, at Stage 1 of the evaluation process, the bids were reviewed to ensure that

all of the Mandatory Requirements listed in Section 1 of the RFB were met. Any bids that did not

meet the requirements were disqualified. In Stage 2, the Technical Evaluation, bids were scored

against the technical specifications in Section 2 of the RFB. At Stage 3, bidders demonstrated their

card samples, and were scored against prescribed criteria. Six evaluators were chosen from the

Ontario public service to evaluate the bids at Stages 2 and 3. At Stage 4, each bidder received a

percentage of the total price points available, calculated by dividing the lowest bid price by the

bidder’s bid price. The bidder who achieved the highest score after adding the totals from Stages

2 to 4 became the “Preferred Bidder.”

[64] For Stages 2 and 3, the evaluators awarded Thales a total of 929.5 out of 1167 points.

Thales received a pricing score of 125.6 out of 500. Thales’ total score for Stages 2 to 4 was

1055.1, which put it in fourth place out of four bidders.

[65] MTO submits that at Stage 2, only two technical requirements (Sections 2.3.13 and 2.3.14,

relating to the Card Production Centre) engaged the domestic production requirement. MTO

submits that even if Thales received full scores on those two requirements, for a total of 45 points,

it would not be the Preferred Bidder.

[66] MTO further submits that, even if Thales received the maximum scores for Stages 2 and

3, it would have ranked third out of four, based on its pricing score. MTO advised however that it

has requested a price clarification from the Preferred Bidder, and that, in the event that contract

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discussions with the Preferred Bidder are unsuccessful, Thales would become the Preferred

Bidder.

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

[68] First, I accept that the application would be moot if mathematically it was impossible for

Thales to become the Preferred Bidder by virtue of its pricing as applied in Stage 4. However,

Ontario has acknowledged that, if Thales is given full scores at Stages 2 and 3, in the event that

the contract negotiations with the current Preferred Bidder are unsuccessful, Thales would become

the Preferred Bidder. As a result, I cannot conclude that the application is moot on this basis.

[69] Second, MTO’s alternative argument is that Thales would not be the Preferred Bidder even

if it received full scores for a total of 45 points on the two technical requirements described above

which could relate to the domestic production requirement. This argument fails to address the

larger issue of whether, in their evaluation of Stages 2 and 3 more generally, the evaluators were

influenced by knowledge of Thales’ intention to produce the Card Stock at its facility in Poland

and MTO’s imposition of the domestic production requirement.

[70] MTO’s assertion that the domestic production requirement played no role in the evaluators’

assessment at Stages 2 and 3 of the process is unsupported by evidence. Aside from the technical

requirements themselves, and Thales’ scores on those requirements, there is a lack of evidence as

to what the evaluators considered in their assessment at Stages 2 and 3 of the process. However,

the evaluators knew, based on Thales’ bid and the technical demonstration, that Thales intended

to produce the Card Stock at its facility in Poland. As a result, while MTO asserts that the

evaluators did not take the domestic production requirement into consideration, MTO is unable to

demonstrate that they did not.

[71] Even if MTO had such evidence, it does not form part of the record on this application.

Any such evidence would not be admissible before us without a motion and would probably

require a trial of the issue to receive oral testimony, as well as review any documentary evidence,

to establish the knowledge and intentions of the evaluators.

[72] In any event, even if the underlying dispute were moot, I find that this Court should

nonetheless exercise its discretion to decide the application. This application raises a matter of

public importance, namely, Ontario’s compliance with its international trade obligations, the

resolution of which is in the public interest. The issue could be elusive of review if a contract were

awarded before the dispute resolution process, including judicial review or appeal, could be

concluded. I am also mindful of the dislocation caused to this procurement process by the time

required for this Court to hear and decide this application: it is in the public interest that the issues

raised in this application be decided in this case to avoid similar dislocation in a future procurement

process.

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

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Is the Decision Reviewable?

[74] Thales seeks judicial review of the Decision to dismiss Thales’ complaint pursuant to s.

2(1) of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1 [“JRPA”]. Section 2 of the JRPA

states as follows:

Applications for judicial review

2 (1) On an application by way of originating notice, which may be styled “Notice

of Application for Judicial Review”, the court may, despite any right of appeal, by

order grant any relief that the applicant would be entitled to in any one or more of

the following:

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

prohibition or certiorari.

2. Proceedings by way of an action for a declaration or for an injunction, or both,

in relation to the exercise, refusal to exercise or proposed or purported

exercise of a statutory power.

[75] While s. 2(1)2 requires the exercise of a statutory power where a declaration or injunction

is sought, there is no such requirement under s. 2(1)1 for the public law remedies of certiorari,

mandamus or prohibition.

[76] The Decision is an exercise of state decision-making authority of a sufficiently public

character, and is thus subject to judicial review: Highwood Congregation of Jehovah’s Witnesses

(Judicial Committee) v. Wall, 2018 SCC 26, [2018] 1 S.C.R. 750, at para. 13. However, given that

the SCO process was not created by statute and is not governed by a statutory regime, an SCO

decision does not constitute the exercise of a statutory power or a statutory power of decision as

defined in the JRPA. Therefore, only the relief in s. 2(1)1, that is, relief in the nature of certiorari,

mandamus or prohibition, is available.

[77] I have reviewed in draft the reasons of my colleague, D.L. Corbett J. In my view, even if

the SCO process does not comply with the terms of the CETA because it does not provide for an

appeal, as to which no determination is made herein, such non-compliance would not be a basis

for declining to review the Decision.

What is the Applicable Standard of Review?

[78] Thales submits that the standard of correctness applies to the review of the Decision and

the RFB because both engage a question of law of central importance to the legal system as a

whole. Alternatively, Thales submits that the standard of review is reasonableness, informed by

Canada’s international obligations.

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[79] MTO argues that the standard of review of the Decision is reasonableness. MTO submits

that the RFB is not reviewable but that if it is reviewed by this Court, the standard is

reasonableness.

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

following reasons.

[81] First, the issue of whether the domestic production requirement violates the non-

discrimination provision of CETA, or whether it falls under the public safety exemption, is a

question of mixed fact and law.

[82] Second, while Ontario’s obligations under international trade agreements are important,

the interpretation and application of the domestic production requirement in this case cannot be

considered a question of law of central importance to the legal system as a whole. The fact that

international obligations are engaged is not, in and of itself, sufficient to warrant a correctness

standard of review.

[83] In this regard, I note that, in Vavilov, at para. 114, the Supreme Court proceeded on the

basis that the standard of review of an administrative decision involving obligations under a treaty

would be reasonableness. In that passage, the Supreme Court stated that “Since Baker, it has also

been clear that international treaties and conventions, even where they have not been implemented

domestically by statute, can help to inform whether a decision was a reasonable exercise of

administrative power.” (Emphasis added.)

Is the Decision Reasonable?

[84] As mentioned, the Decision addressed four specific complaints of Thales respecting the

terms of the RFB and the MTO’s conduct of the RFB process. In this section, I propose to address

the principal issue – whether the Canadian production requirement violates the non-discrimination

provision of CETA. I will then address the disposition of the remaining issues in the Decision.

The Applicable Legal Principles

[85] Before considering the reasonableness of the Decision, it is necessary to address two

matters – the test for reasonableness according to Vavilov and the test to be applied as contemplated

by the Brazil Decision to determine whether the domestic production requirement constitutes a

measure that is “necessary” to protect public safety.

The reasonableness of a decision

[86] The relevant principles of a review for reasonableness have been set out by the Supreme

Court in Vavilov. In this regard, I note the following.

[87] First, the “hallmarks” of reasonableness are justification, transparency and intelligibility

and whether the decision is justified in relation to the relevant factual and legal constraints that

bear on the decision.

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[88] Second, to be reasonable, a decision must be based on reasoning that is both rational and

logical. Of note, at paragraphs 102-104, the Supreme Court stated:

[102] To be reasonable, a decision must be based on reasoning that is both rational

and logical. It follows that a failure in this respect may lead a reviewing court to

conclude that a decision must be set aside. Reasonableness review is not a “line-

by-line treasure hunt for error”: Irving Pulp & Paper, at para. 54, citing

Newfoundland Nurses, at para. 14. However, the reviewing court must be able to

trace the decision maker’s reasoning without encountering any fatal flaws in its

overarching logic, and it must be satisfied that “there is [a] line of analysis within

the given reasons that could reasonably lead the tribunal from the evidence before

it to the conclusion at which it arrived”: Ryan, at para. 55; Southam, at para. 56.

Reasons that “simply repeat statutory language, summarize arguments made, and

then state a peremptory conclusion” will rarely assist a reviewing court in

understanding the rationale underlying a decision and “are no substitute for

statements of fact, analysis, inference and judgment”: R. A. Macdonald and D.

Lametti, “Reasons for Decision in Administrative Law” (1990), 3 C.J.A.L.P. 123,

at p. 139; see also Gonzalez v. Canada (Minister of Citizenship and Immigration),

2014 FC 750, 27 Imm. L.R. (4th) 151, at paras. 57-59.

[103] While, as we indicated earlier…, formal reasons should be read in light of the

record and with due sensitivity to the administrative regime in which they were

given, a decision will be unreasonable if the reasons for it, read holistically, fail to

reveal a rational chain of analysis or if they reveal that the decision was based on

an irrational chain of analysis: see Wright v. Nova Scotia (Human Rights

Commission), 2017 NSSC 11, 23 Admin. L.R. (6th) 110; Southam, at para. 56. …

[104] Similarly, the internal rationality of a decision may be called into question

if the reasons exhibit clear logical fallacies, such as circular reasoning, false

dilemmas, unfounded generalizations or an absurd premise. … a reviewing court

must ultimately be satisfied that the decision maker’s reasoning “adds up”.

[89] Third, “elements of the legal and factual contexts of a decision operate as constraints on a

decision-maker. Of particular relevance in the present context is the statement at paragraph 114 of

Vavilov referred to above regarding the constraint imposed by international law:

We would also note that in some administrative decision making contexts,

international law will operate as an important constraint on an administrative

decision maker. It is well established that legislation is presumed to operate in

conformity with Canada’s international obligations, and the legislature is

“presumed to comply with . . . the values and principles of customary and

conventional international law”: R. v. Hape, 2007 SCC 26, [2007] 2 S.C.R. 292, at

para. 53; R. v. Appulonappa, 2015 SCC 59, [2015] 3 S.C.R. 754, at para. 40. Since

Baker, it has also been clear that international treaties and conventions, even where

they have not been implemented domestically by statute, can help to inform

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whether a decision was a reasonable exercise of administrative power: Baker, at

paras. 69-71.

In short, conformity with Canada’s international obligations will inform the reasonableness of any

decision which engages such obligations.

The test regarding the necessity of a proposed measure

[90] As mentioned, the parties are in agreement that consideration of the reasonableness of the

Director’s determination requires an assessment of the application of the two-stage test described

in paragraph 178 of the Brazil Decision. The first stage of that test requires a consideration of the

relevant factors including, in particular, the importance of the interests at stake, the extent of the

contribution to the achievement of the measure’s objective, and its trade restrictiveness. In this

regard, it is also necessary to identify the public interest sought to be protected by the domestic

production requirement and to determine whether the domestic production requirement is

materially connected to the objective being pursued, being the reduction in the risk of loss, theft

and fraud in respect of Card Stock. In the case where such analysis yields a preliminary conclusion

that the measure is necessary, the second stage of the test requires confirmation of the result by a

comparison of the measure with possible alternatives which may be less restrictive against the

right of the other party to achieve its desired level of protection.

[91] In my view, the Decision that the domestic production requirement is “necessary” within

the meaning of Article 19.3(2) of the CETA is unreasonable for the reasons set out below.

The Analysis Regarding the Test for “Necessity”

[92] As discussed above, the Director’s determination that MTO is entitled to avail itself of the

public safety exception under the CETA is based on the following three propositions: (1) the MTO

Fraud Note and the Thales evidence establish that, in the absence of a domestic production

requirement, there is a risk of risk of loss, theft and fraud in respect of Card Stock associated with

the transportation from a foreign facility to Canada for personalization and potentially also a risk

of risk of loss, theft and fraud in respect of the production of Card Stock at a foreign facility; (2)

while Thales has been able to eliminate these risks as a practical matter by the imposition of

stringent safety protocols and practices, there is no guarantee that all other bidders proposing to

produce Card Stock in a foreign facility can, or will, do likewise; and (3) therefore, the domestic

production requirement is “necessary” for public safety and, accordingly, MTO is entitled to avail

itself of the public safety exception under the CETA.

[93] The foregoing summary of the Director’s reasoning demonstrates three significant features

of the Decision. First, although the parties both proceeded on the basis that the two-stage test for

“necessity” in the Brazil Decision, among other cases, as described above, was applicable, the

Director did not express her conclusions in conformity with that test. In order to accommodate the

Director’s analysis to the operation of the two-stage test in the present circumstances, it is

necessary to make certain significant assumptions regarding the findings required for the purposes

of the test. Second, as a consequence, the Director failed to address the four principal issues

discussed below which must be considered in the application of that test. Third, as a further

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consequence, it is not possible to identify a chain of analysis that is both rational and logical leading

to the conclusion of the Director. In broad terms, the Director’s discussion of the issues

encompassed by statements (1) and (2) above is inadequate and speculative, and the conclusion

reached in (3) does not necessarily follow from the first two statements. The Decision is more

properly characterized as a summary of the positions of the parties followed by a peremptory

conclusion, with the Director’s analysis limited to the comments in paragraph 27 of the Decision.

The foregoing features of the Decision are more than sufficient to find it to be unreasonable.

[94] The following analysis addresses the four principal issues to be addressed sequentially by

a tribunal to apply the test in the Brazil Decision and the other cases referred to by the parties. It

serves two purposes. It highlights the specific failings in respect of the foregoing defects in the

Director’s conclusions. In addition, it also addresses important issues that were not addressed by

the Director. When these issues are considered, they reinforce the conclusion that the Decision is

unreasonable.

The public safety interest

[95] The first issue that the Director ought to have addressed was identification of the specific

matter of public morals, order or safety that the domestic production requirement was intended to

protect. From the general tenor of the Decision, it is likely that the Director accepted MTO’s

position that there was a “vital security interest related to protecting public morals, order or safety”

which MTO defined as “reducing the risk of loss, theft, and fraud associated with identity

documents.”

[96] However, it is certainly arguable that this characterization of the alleged public interest is

overly broad and that the significance to be attached to it is inflated. At a minimum, it is difficult

to see how the interest in reducing the risk of loss, theft, and fraud associated with identity

documents has anything to do with public morals or public order and there is a legitimate question

as to whether public safety must engage public order. In any event, because she failed to address

the specific public interest at issue, the Director failed to consider these issues.

[97] Nevertheless, given the other more significant issues addressed below, for the purposes of

this analysis, it is assumed that there is a public safety interest in reducing the risk of loss, theft,

and fraud associated with identity documents that could potentially be the subject of the public

safety exception.

Material connection with the domestic production requirement

[98] The next issue that the Director should have addressed is whether the domestic production

requirement is “materially connected” to protecting “public morals, order or safety” of Ontario

residents, that is, in the present circumstances is “materially connected” to the reduction of the risk

of loss, theft, and fraud associated with identity documents. Rather than addressing this question,

it appears that the Director also accepted the MTO position without any analysis that there is a

material connection because the “the measure is intended to, and will, mitigate the risk of loss or

theft of card stock inherent with off-shoring production”.

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[99] This defect in the Director’s reasoning is more serious for the reason that she thereby failed

to address the nature of the alleged connection as well as whether the connection was material.

The evidence in the MTO Fraud Note did not support a material connection between the domestic

production requirement and the reduction of the risk of loss, theft and fraud associated with

production of Card Stock in a facility located in the EU. At most, the evidence before the Director

could justify a connection between the domestic production requirement and the reduction of the

risk of loss, theft, and fraud associated with the transportation of Card Stock from a foreign plant

to Canada for personalization in that, if the production and personalization are performed in the

same facility in Canada, the requirement would remove the risk of loss, theft and fraud in respect

of the transportation of the card stock to a printing facility in Canada. At the hearing, MTO

effectively conceded this point by limiting its submissions on this issue to the connection between

the domestic production requirement and the reduction of the risk associated with transportation.

[100] The question remains however whether such connection is a “material connection”. In the

present circumstances, this issue appears to be closely related to the issue of whether the

contribution of the domestic production requirement to the achievement of the MTO objective is

“material”, which is addressed below.

The analysis of the contribution of the domestic production requirement

[101] As described by the WTO in United States – Measures Affecting the Cross Border Supply

of Gambling and Betting Services (Complaint by Antigua) (2005), WTO Doc. WT/DS 285/ABR

(Appellate Body Report), at paragraphs 306 and 307, and as affirmed at paragraph 178 of the Brazil

Decision, the first stage of the test for “necessity” involves an inherent weighing and balancing

process that begins with an assessment of the “relative importance” of the interest furthered by the

challenged measure. The analysis must also involve an assessment of other relevant factors usually

including “the contribution of the measure to the realization of the ends pursued by it” and “the

restrictive impact of the measure on international commerce”.

[102] The Director failed to engage in this exercise of weighing and balancing the foregoing

considerations. She failed to consider the relative importance of the public safety interest furthered

by the domestic production requirement. The Director also failed to consider both the contribution

of the domestic production requirement to the reduction of the risk of loss, theft, and fraud

associated with Card Stock and the restrictive impact of the requirement on international

commerce.

[103] There is therefore no finding that, on a preliminary basis, the domestic production

requirement satisfies the first stage of the test for “necessity”. Instead, the Director appears to have

adopted, without expressly so stating, the MTO position that the domestic production requirement

is “necessary” in that its contribution to the achievement of the objective is ‘material’ without

providing any reasoning that explains this conclusion. Accordingly, insofar as there is an implied

conclusion on the first stage of the test for “necessity”, it is purely conclusory – that the appropriate

standard is a “material contribution” to the reduction of the risk of loss, theft, and fraud associated

with Card Stock and that the domestic production requirement satisfies this standard.

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[104] In reducing the issue before the Director to the question of whether the domestic production

requirement would make a “material” contribution to the achievement of the objective of reducing

the risk of loss, theft, and fraud associated with Card Stock, MTO relied on a view expressed in

the Brazil Decision at paragraph 150. In that passage, the Appellate Body opined that in the case

of a measure that produces restrictive effects on international trade that are as severe as those

resulting from an import ban, it would be difficult for a panel to find the measure to be “necessary”

unless it was satisfied that the measure was apt to make a “material” contribution to the

achievement of its objective.

[105] Thales and MTO proceeded on the basis that this standard applies in the present

circumstances. In this case, the impact of the domestic production requirement is absolute in that

it would ban any bidder proposing to produce Card Stock in a facility outside Canada. However,

in order for the Director to find that the domestic production requirement will make a “material

contribution” to the reduction of loss, theft and fraud associated with identity cards, the Director

had to establish both that there was a material risk and that the domestic production requirement

would materially reduce that risk. I will address each of these issues in turn.

Is There a Material Risk?

[106] The evidence that the Director relied upon to establish a material risk of loss, theft and

fraud associated with Card Stock consisted of the evidence in the MTO Fraud Note and the

evidence of Thales, both of which bear closer examination.

[107] While the MTO Fraud Note sets out a litany of reasons why the MTO Fraud Office believes

the risk of loss, theft and fraud associated with Card Stock could increase with foreign manufacture

and transportation to Canada for personalization, the Note concludes by stating only that “[f]oreign

production of card stock poses increased security and chain of custody risks.” As mentioned, there

is minimal, if any, support in the MTO Fraud Note for the suggestion of increased risk associated

with the foreign manufacture of Card Stock; the MTO’s position focusses on the risk associated

with transportation to Canada. More significantly, the MTO Fraud Note does not purport to

quantify the increased risk, even in general terms, and it is silent on the issue of whether the MTO

Fraud Office considers the actual risk to be material. Moreover, the MTO Fraud Note does not

address the submission of Thales that it has managed the risk through various security protocols

and practices. There is therefore no basis in the MTO Fraud Note for determining that the risk

described therein is material.

[108] The only evidence which addresses the materiality of the risk of loss, theft and fraud

associated with identity cards was that presented by Thales. The Thales evidence establishes that

it is possible to manufacture Card Stock in a facility in an EU country and to transport it to North

America, including to Canadian locations, for personalization without loss or theft of Card Stock.

Accordingly, as mentioned, this suggests that the actual risk of such loss or theft can be effectively

minimized by the application of stringent safety protocols and practices. Under such

circumstances, any residual risk of loss, theft and fraud associated with Card Stock is, at best,

modest and speculative and certainly not material.

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[109] Instead of taking this evidence into consideration, however, the Director ignored the

probative value of the Thales evidence and responded with two negative statements. The MTO

Fraud Note states that Thales’ evidence was not evidence of the absence of any risk, or of only

low risk, of loss or theft associated with foreign manufacture and transport of Card Stock. In

addition, the Director suggested that Thales’ evidence was not evidence that other suppliers in

other countries have equally successful manufacturing and transportation track records. Thales

was not, however, arguing that its evidence demonstrated either circumstance. More significantly,

while it is correct that the Thales evidence is not a basis for inferring either of these states of affairs,

it is also not a basis for inferring that a material risk of loss, theft and fraud of Card Stock exists if

stringent safety protocols and practices are adopted.

[110] Apart from the Thales evidence, there was no other evidence before the Director regarding

risk of loss or theft of Card Stock associated with the Card Stock production industry in general,

or with any other specific manufacturer or bidder. In particular, there was no evidence that

supported the Director’s assumption that the actual risk associated with other potential foreign

suppliers of Card Stock was materially greater than the risk associated with Thales’ operations. I

also note that the Director’s assumption required the further assumption, which was also not

expressly acknowledged, that potential foreign suppliers other than Thales do not, and would not

even if so required, apply the stringent safety protocols and practices that have allowed Thales to

operate without any loss of Card Stock.

[111] Accordingly, while the evidence before the Director could justify a finding of a potential

risk of loss, theft and fraud associated with Card Stock production and transportation to Canada,

it could not justify a finding that the practical risk was material.

Does the Domestic Production Requirement Materially Reduce the Alleged Risk?

[112] There remains the further issue of whether a domestic production requirement would

materially contribute to the reduction of the risk of loss, theft and fraud associated with identity

cards.

[113] In the Brazil Decision at paragraph 151, the Appellate Body stated that the demonstration

of an alleged material contribution can be demonstrated by “quantitative projections in the future”

or “qualitative reasoning based on a set of hypotheses that are tested and supported by sufficient

evidence”. While a party is not required to provide a quantitative analysis of the anticipated

reduction of risk, it cannot avoid consideration of this issue by limiting its evidence to qualitative

statements that are not “tested and supported by sufficient evidence”. In this case, there were no

quantitative projections before the Director. Accordingly, she had to rely on qualitative statements,

principally the statements in the MTO Fraud Note. However, to the extent that it can be said that

the MTO Fraud Note constituted “qualitative reasoning based on a set of hypotheses” which the

Director adopted, such reasoning was deficient for the following reasons.

[114] First, and most importantly, as discussed below, the Director’s determination was based on

hypotheses that were unrealistic, unsupported by evidence and speculative.

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[115] It is not possible to address the question of material reduction in risk without first

considering the extent of the actual risk of loss, theft and fraud associated with foreign production

and transportation to Canada of Card Stock. As discussed above, this requires an assessment of

the extent to which stringent safety protocols and practices would otherwise be applied by potential

suppliers, or could be imposed as a condition of a request for bids, in the absence of a domestic

production requirement. Such a consideration requires knowledge of the extent to which the Card

Stock production industry generally applies the same safety protocols and practices as Thales.

Further, if there is, in fact, a variation in the safety protocols and practices among the members of

the industry, it is also necessary to consider the extent to which there is a similar variation among

the potential bidders in any request for bids. As discussed above, the Director was not, however,

in a position to address these matters because of the absence of any relevant evidence before her.

[116] Instead, the Director implicitly assumed a scenario of security protocols and practices on

the part of all other potential foreign bidders that were less stringent than those of Thales. There

was however no evidence for this assumption. In particular, there was no evidence of the security

protocols and practices of other potential suppliers of Card Stock, either domestic or foreign.

Because the Director’s conclusion was based on, and required, these unsupported assumptions, the

Director’s conclusion of a material contribution to the reduction of risk was entirely speculative.

[117] Second, the most that the Director could have realistically inferred from the evidence

before her was that a domestic production requirement could possibly contribute to a material

reduction in the risk in respect of a potential supplier that was not willing or able to apply safety

protocols and practices that were as stringent as those of Thales, even if such actions were a

condition of a request for bids. It is not possible on the evidence before the SCO to assess whether,

or to what extent, such potential bidders exist. The MTO Fraud Note did not provide any such

evidence.

[118] More importantly, the broad conclusion of the Director requires evidence that the security

protocols and practices applied by Thales could not have been required of all other foreign

suppliers with similar results in terms of the elimination of the practical risk of loss, theft and fraud

at a foreign production facility and in the course of transportation to a Canadian printing facility.

There was no evidence to this effect before the Director. More significantly, in making this

assumption, the Director disregarded the ability of the MTO to exclude any such bidders from the

RFB process or to take the elevated risk associated with such bidders into consideration in the

evaluation of the bids under the RFB.

[119] Third, the Director justified her approach based, at least in part, on her position that Thales’

argument required acceptance of the proposition that Thales’ track record established that the

domestic production requirement was not warranted for any bidders. This statement of the Thales

position oversimplifies the necessary inference from the Thales experience and is logically flawed.

[120] On this point, the Thales evidence implies no more than that it is feasible to minimize any

practical risk of loss, theft and fraud associated with the manufacture and transportation to Canada

of Card Stock by the application of stringent safety protocols and practices. In other words, if one

party has been able to manufacture Card Stock in a foreign facility and transport it to Canada for

personalization without risk of loss of the Card Stock, a domestic production requirement

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applicable to all foreign suppliers is not “necessary” to reduce the risk of such loss or theft provided

stringent safety protocols and practices are already in place or would be put in place as a

requirement of a request for bids. The Thales experience implies that a domestic production

requirement is not required, as the Director suggests, because the MTO has the authority in any

request for bids to require that successful bidders adhere to stringent safety protocols and practices.

The Director ignored this aspect of the Thales’ position and assumed away this possibility without

any evidence for so doing.

[121] Fourth, and most importantly, as the foregoing discussion demonstrates, the contribution

of a domestic production requirement to the reduction of any risk associated with foreign

production of Card Stock and transportation to Canada would depend upon the extent that a foreign

supplier put in place, or was prepared to put in place, stringent safety protocols and practices that

managed the risk of loss or theft of Card Stock. To the extent they were prepared to do so and any

bidders who were unprepared to do so were excluded from, or negatively evaluated under, the

RFB, the practical risk of loss or theft associated with foreign production of Card Stock and

transportation to Canada could be reduced to a minimal level without the imposition of a domestic

production requirement. In such a situation, it follows necessarily that any further contribution to

the reduction of the risk of loss or theft of Card Stock by the imposition of a domestic production

requirement would not be material.

[122] Lastly, insofar as there is any analysis underlying this aspect of the Decision, it appears

that MTO has defined its desired level of protection regarding the risk of loss, theft and fraud as

nil and believes that the only means of achieving that level of protection is an absolute prohibition

of the circumstances under which such risk could arise – namely, foreign production of Card Stock.

[123] This argument ignores the requirement that the proposed measure, in this case the domestic

production requirement, must make a material contribution to the reduction of the risk against

which MTO seeks to be protected. If, as here, it is demonstrated that, at least under certain realistic

circumstances, the risk can be reduced to a level at which the imposition of a domestic production

requirement would make no more than a negligible, essentially speculative, contribution to the

reduction of whatever risk remains, the Director cannot rely upon this principle to support such a

requirement. Imposition of a domestic production requirement to address the reduction of risk in

such circumstances becomes arbitrary.

[124] In summary, because the Director did not address the issue of a material contribution to the

reduction of risk using realistic assumptions, the Director’s determination that imposition of a

domestic production requirement would make a material contribution to the risk of loss and theft

associated with the foreign production and transportation to Canada of Card Stock was neither

logically sound nor supported by the evidence before her.

The Analysis of Possible Alternatives

[125] It necessarily follows from the foregoing analysis that the Decision is unreasonable for the

reason that the Director failed to consider available, less trade-restrictive alternatives to the

domestic production requirement. The reasons for this conclusion are set out below.

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[126] As mentioned above, the approach adopted in the Brazil Decision, and the other cases

referred to by the parties, provides that where an analysis of a discriminatory trade measure yields

a preliminary conclusion that the measure is “necessary”, the second stage of the test requires

confirmation of the result by a comparison of the measure with possible alternatives which may

be less restrictive while providing an equivalent contribution to the achievement of the objective.

For this purpose, as stated in the Brazil Decision at paragraph 156, in order to qualify as an

alternative, a proposed measure must be not only less trade restrictive than the measure at issue

but should also preserve the authority’s right to achieve its desired level of protection with respect

to the objective being pursued.

[127] In the present case, insofar as the Director considered the availability of less restrictive

alternatives, as mentioned, she appears to have adopted the position of the MTO that the only

possible less restrictive alternative was the absence of a domestic production requirement. She also

appears to have concluded that such alternative failed the test of preserving for Ontario its right to

achieve its desired level of protection with respect to the objective pursued, being a total absence

of any risk of loss, theft and fraud. There are two significant problems with this approach and

determination which collectively demonstrate that the Director also misdirected herself in her

consideration of available, less-restrictive alternatives to the domestic production requirement.

[128] First, as mentioned, there was evidence before the Director that at least one bidder which

produced Card Stock in a facility in the EU was able to achieve the desired level of protection as

a practical matter, being an absence of loss, theft or fraud of Card Stock, by the application of

stringent safety protocols and practices. This suggests that the imposition of stringent safety

protocols and practices is a potentially viable, less trade-restrictive alternative to the domestic

production requirement. For this purpose, there is no meaningful difference between reducing the

risk of such loss, theft and fraud by the implementation of stringent safety protocols and practices

to a negligible, essentially speculative, risk and eliminating such risk by means of a domestic

production requirement. As discussed above, the Director disregarded this evidence without a

reasonable basis for so doing.

[129] Second, the Director based her decision on an unreasonable scenario, being the absence of

a domestic production requirement without any ability on the part of the MTO to exclude bidders

who were not prepared to implement safety protocols and practices comparable to those that have

proven effective in minimizing the risk of loss or theft associated with Card Stock. For the reasons

discussed above, it is not realistic to consider the alternative to a domestic production requirement

in the abstract. Insofar as the Director may have implicitly assumed that, in the absence of such a

requirement, all other foreign producers would have applied safety protocols and practices that

were less stringent or otherwise inferior to those of Thales, there was no basis for such an

assumption on the evidence before her, as discussed above. If it were assumed that only some but

not all of the potential bidders would fall into this category, there was even less justification for

adopting a blanket domestic production requirement that discriminated against all foreign suppliers

including those who applied appropriately stringent protocols and practices, particularly given the

ability of the MTO to exclude, or negatively evaluate, the former class of bidders under the terms

of the RFB. In short, in the absence of realistic assumptions regarding the operation of such safety

protocols and practices in the absence of a domestic production requirement, the Director’s

consideration of the less trade-restrictive alternatives was purely speculative.

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[130] Collectively, these two considerations compel the conclusion that the Director could not

reasonably limit her consideration of alternative less trade-restrictive measure in the manner in

which she did. The Director was required to consider whether a requirement that potential suppliers

apply stringent safety protocols and practices substantially similar to those of Thales would

achieve MTO’s desired level of reduction of the risk of loss, theft and fraud associated with the

foreign production and transportation to Canada of Card Stock. The Decision was also

unreasonable because the Director failed to conduct such an analysis.

[131] In reaching this finding, I am not intending to specify in any detail the manner in which

such an alternative requirement should be incorporated into a request for bids. There are several

possible options for such incorporation. The selection of the most appropriate manner of doing so

involves operational details which are more appropriately left to the administration decision-maker

having responsibility for establishing the terms, and criteria for evaluation, for any future request

for bids.

Conclusion on the Reasonableness of the Decision

[132] For the foregoing reasons, I find that the Decision that the domestic production requirement

is “necessary” within the meaning of Article 19.3(2) of the CETA is unreasonable.

Disposition of the Remaining Issues in the Decision

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

[133] In the Decision, the Director, found that Addendum #12 did not introduce a fundamental

and significant change to the RFB. Based on our findings above on the substantive reasonableness

of the Decision, we need not determine whether Addendum #12 added the domestic production

requirement and whether it was procedurally unfair to amend the RFB terms at that stage.

Alleged Contravention of the CFTA

[134] The Director found that there was no discrimination contrary to the CFTA because under

the RFB, all suppliers, irrespective of which province or territory they are a part of, are subject to

the same domestic production requirement. Based on our findings in relation to the CETA, we

need not consider whether the RFB violated the terms of the CFTA.

Did the SCO Process Lack Procedural Fairness?

[135] The Director dismissed Thales’ procedural fairness arguments and found that the bid

dispute process was sufficiently set out on Ontario’s website and that Thales was also provided

with the Detailed Description. Given my conclusion on the substantive issue, it is not necessary to

address Thales’ arguments regarding the lack of procedural fairness.

[136] I note however that none of the procedural fairness issues raised by Thales precluded it

from fully participating in the SCO process. In particular, while Thales objects to the Director

having allowed the Ministry to file a sur-reply, it does not argue that it was deprived of the

Page: 27

opportunity to respond to any particular substantive issue, nor is there any basis for such a finding

in the record before the Court.

What is the Appropriate Relief?

[137] While Thales seeks declaratory relief, as set out above, a declaration is only available in

relation to the exercise, refusal to exercise or purported exercise of, a statutory power of decision:

Daneshvar v. Ontario, 2021 ONSC 3186 (Div. Ct.), at paras. 28-31. As noted above, the Decision

does not result from the exercise of a statutory power of decision. As a result, declaratory relief is

not available in the circumstances of this case. Similarly, mandatory relief is only available where

there is a statutory duty to act and the government fails to do so: Apotex Inc. v. Canada, [1994] 1

F.C. 742 (C.A.), aff’d [1994] 3 S.C.R. 1100.

[138] As a result, in respect of the Decision, the appropriate relief is in the nature of certiorari,

under s. 2(1)2 of the JRPA. The Decision must be set aside. Based on my analysis of the

reasonableness of the Decision, it is clear that the only reasonable conclusion that the Director

could have reached on the record before her is that the domestic production requirement

contravened the CETA. In the circumstances, it would serve no useful purpose to remit the matter

back to the Director.

Is Judicial Review of the RFB Available?

[139] While it is not, in my view, strictly necessary to review the RFB, for the purposes of clarity

and to resolve any outstanding questions as to the status of the RFB, I will also review the RFB.

[140] This raises the issue of whether this Court has jurisdiction to review the RFB. MTO has

taken the position that it does not.

[141] Courts have traditionally considered the process of awarding government contracts for

goods and services to be a commercial matter governed by private law: 2169205 Ontario Inc. o/a

Lefroy Freshmart v. Liquor Control Board of Ontario, 2011 ONSC 1878, 278 O.A.C. 207 (Div.

Ct.), at para. 24. Where there are no statutory provisions or regulations which prescribe how the

government agency is to go about entering the contract in question, the decision to award a contract

is not properly a subject for judicial review: St. Lawrence Cement Inc. v. Ontario (Minister of

Transportation) (1991), 3 O.R. (3d) 30 (Div. Ct.).

[142] In Bot Construction v. Ontario (Minister of Transportation) (2009), 99 O.R. (3d) 104 (Div.

Ct.) at para. 21, however, this Court found that “where government procurement decisions are

authorized or constrained by statues, rules or regulations” a contract may sufficiently engage the

public interest such that judicial review is appropriate. In that case, judicial review was found to

be warranted because of the following factors: the contract award had public interest implications

beyond the interests of the contracting parties, such as the construction of public roads and the

fairness and integrity of the process; the implications on the Canadian steel industry and the road

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construction industry in Ontario; the expenditure of substantial public funds; and the limitation of

the bidder’s private law remedies.²

[143] In Air Canada v. Toronto Port Authority, 2011 FCA 347, [2013] 3 F.C.R. 605, at para. 60,

Stratas J.A. identified a number of factors as relevant to determining “whether a matter is coloured

with a public element, flavour or character sufficient to bring it within the purview of public law”

for the purposes of judicial review. Those factors include: the character of the matter for which

review is sought; the nature of the decision-maker and its responsibilities; the extent to which the

decision is founded in and shaped by law as opposed to private discretion; the body’s relationship

to other statutory schemes or parts of government; the extent to which a decision-maker is an agent

of government or directed/controlled by a public entity; the suitability of public law remedies; and

the existence of compulsory power over the public at large or over a defined group.

[144] There are three principal reasons for finding that this Court has jurisdiction to review the

RFB in the specific circumstances of this case.

[145] First, the present circumstances are distinguishable from the other cases in which courts

have refused to entertain a judicial review application in that this case involves alleged non-

compliance with applicable treaty provisions as opposed to the outcome or fairness of a

government tender process.

[146] Second, as a related matter, a number of factors weigh in favour of finding that the decision

to issue the RFB is more public than private in nature:

(a) The RFB was issued by multiple government ministries pursuant to the

Procurement Directive. While the Directive is not a regulation, it states that it is

mandatory, and Ontario governmental ministries are required to adhere to its

requirements when issuing procurement tenders;

(b) The contract at issue is for the design and production of foundational identity

documents issued by the government to Ontario residents. The ability to issue

identification documents, and thus the need to produce them, is a power and

responsibility unique to government. The public nature of the work to be performed

under the contract is heightened by the fact that the documents will eventually

contain personal information that is protected under privacy legislation. The

documents are also closely related to the benefits and privileges that Ontario

residents may access, such as driving and receiving health care. Moreover, MTO’s

reliance on the public safety exception under the CETA is based on its position that

the contract engages a fundamental governmental interest in a matter of significant

public importance;

²In overturning the Divisional Court’s decision in Bot Construction, the Court of Appeal expressly reserved on the

issue of whether judicial review was available with respect to the tendering process for government procurement

contracts: Bot Construction v. Ontario (Minister of Transportation), 2009 ONCA 879, 85 C.L.R. (3d) 25.

Page: 29

(c) The RFB specifically states that the CETA and CFTA apply. There is a strong

public interest in ensuring that Ontario’s public procurements are conducted in a

manner consistent with Canada’s obligations under international and

interprovincial trade agreements and the principles underlying those agreements,

including fairness, transparency, integrity and reciprocity. Moreover, Ontario has

an interest in ensuring that its procurements are in line with the CETA and CFTA

to ensure equal access to extra-provincial and international procurements for

Ontario suppliers;

(d) The RFB involves a significant sum of public funds: $80 million over seven years.

There is a public interest in ensuring that contracts that involve the expenditure of

substantial public funds are awarded pursuant to a fair and transparent process; and

(e) The issue of whether the domestic production requirement breaches the non-

discrimination requirement under the CETA cannot be addressed as a matter of

contract law. Moreover, the SCO process limits the availability of private law

remedies and stipulates that any complaint initiated after a contract award will be

restricted in remedy.

[147] The third reason for the Court’s jurisdiction is that, given the determination of the judicial

review of the Decision and the consequential relief, it could be argued that the status of the RFB

has not been addressed directly. To that extent, the judicial review is necessary to clarify the status

of the RFB.

[148] Accordingly, I find that the relevant considerations dictate that judicial review is

appropriate in the circumstances.

What is the Applicable Standard of Review?

[149] My analysis on the standard of review of the Decision also applies to the decision to issue

the RFB. The standard of review is reasonableness. The decision to issue the RFB does not engage

a question of law of central importance to the legal system as a whole. Moreover, in my view, the

fact that obligations under international trade agreements are engaged does not warrant a

correctness standard of review.

Is the RFB Reasonable?

[150] I find the decision to issue the RFB including the domestic production requirement in its

terms and conditions to be unreasonable for three reasons.

[151] First, given my conclusion that the Decision is not reasonable, it follows that, to the extent

that the domestic production requirement contravenes the non-discrimination provision of the

CETA and is not justified under the public safety exception, the decision to issue the RFB with the

domestic production requirement was also unreasonable.

[152] Second, there is no evidence before the Court that MTO ever considered the application of

the CETA to the RFB either upon the issuance of the RFB or at the time of the issuance of

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Addendum No. 12. In the absence of a Record of Proceedings of the MTO in respect of the decision

to issue the RFB, the Court must proceed on the basis that the MTO did not consider this issue.

MTO’s decision to issue the RFB without any consideration of the requirements of the CETA, and

whether the domestic production requirement would violate the non-discrimination provision, is a

further basis for finding the RFB to be unreasonable.

[153] Finally, while there could be an issue as to the admissibility of the evidence tendered by

the MTO on this application, it is not necessary to address this issue in the circumstances of this

case. Thales did not object to the consideration of the documents (the MTO Fraud Office Note and

the American Association of Motor Vehicle Administrators’ DL/ID Card Design Standard for

North America) that MTO relies upon to support the domestic production requirement.³Even if

MTO is permitted to rely on those documents, it has nonetheless failed to demonstrate that the

public safety exception applies, for the reasons detailed above. Therefore, taking MTO’s case at

its highest, the decision to issue the RFB with the domestic production requirement is also

unreasonable.

What is the Appropriate Relief?

[154] Based on my finding that the decision to issue the RFB with a domestic production

requirement is unreasonable, the RFB must also be quashed.

Conclusion

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

[156] For clarity, however, nothing in these Reasons should be interpreted as a finding of this

Court that there is no legitimate public safety concern or that a government cannot adopt a measure

that would be discriminatory under the CETA for public safety reasons in any future request for

bids. Based on the evidence in this case, however, the application of the public safety exception

has not been made out.

[157] At the hearing, counsel advised that the parties had agreed that the successful party on the

application would be entitled to $75,000 in costs. The Respondent shall therefore pay the

Applicant’s costs of the application in the amount of $75,000.

“Nishikawa J.”

I agree: “Wilton-Siegel J.”

³Not only did Thales not object, Thales relied on the AAMVA Standard to argue that best practices do not require

production and printing of the cards in a single location.

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D.L. CORBETT J. (CONCURRING):

[158] I have had the benefit of reading the reasons of Nishikawa J. I agree with her that both the

Decision and the RFB should be quashed. I do not agree, however, that this court should undertake

a substantive review of the Decision.

[159] My concern with the approach taken by my colleague is focused on principles of

administrative law. In my view, if the decisionmaker below had jurisdiction to make the Decision,

this court should not appropriate that jurisdiction by reviewing the RFB. It is because the

decisionmaker below did not have jurisdiction that this court should review the RFB: there is no

other body with jurisdiction to undertake this task, and the Rule of Law requires that it be done.

[160] Ontario has failed to implement a CETA-compliant dispute resolution process. Ontario’s

choice to resort to an internal bid dispute process to decide a claim under CETA was a breach of

CETA. Judicial review of the Decision by this court would be a further breach of CETA. In my

view, this court should not invoke its equitable jurisdiction in furtherance of a breach of Ontario’s

obligations under CETA and should decline to review the Decision substantively. Instead, this

court should quash the Decision on jurisdictional grounds, and then review the RFB.

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

(1)

(2)

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

in discriminating against the applicant in breach of CETA.

In reaching this second conclusion, I would find that Ontario has not established on admissible

evidence before this court that its domestic production requirement in the RFB is “necessary” to

secure “public safety”.

[162] Therefore, for the reasons that follow, I would quash the Decision as having been made

without jurisdiction and I would quash the RFB as unreasonable.

[163] In the result, Ontario would be entitled to issue a new RFB that is CETA-compliant, and

that RFB could include terms intended to protect Ontario’s legitimate public safety requirements.

Any dispute about whether the terms of a new RFB comply with CETA should then be adjudicated

in a process that complies with the dispute resolution provisions of CETA.

Mootness

[164] The mootness issue does not arise on my analysis. In quashing the RFB, the entire process

followed as a result of the RFB falls – including all of the bids and their evaluations.

Jurisdiction and Standard of Review

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

RFB.

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[166] I also agree with my colleague’s reasons respecting this court’s jurisdiction to review the

Decision. I note that this court’s jurisdiction under s.2(2) of the JRPA is not engaged because the

Decision was not an exercise of a statutory decision-making power. This distinguishes this case

from other reviews of adjudicative decisions in this court: they are almost always grounded in a

statutory grant of decision-making authority to the decisionmaker below.

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

Jurisdiction to Make the Decision

[168] Article 19.17.4 of CETA provides:

Each Party shall establish or designate at least one impartial administrative or judicial

authority that is independent of its procuring entities to receive and review a challenge

by a supplier arising in the context of a covered procurement.

Ontario properly concedes that the Decision was not made by an “impartial administrative or

judicial authority that is independent of its procuring entit[y].” In designating the decision-making

process below, Ontario has not complied with Article 19.17.4.

[169] Article 19.17.5 provides:

If a body other than an authority referred to in paragraph 4 initially reviews a challenge,

the Party shall ensure that the supplier may appeal the initial decision to an impartial

administrative or judicial authority that is independent of the procuring entity whose

procurement is the subject of the challenge.

Ontario properly concedes that it has not created an appeal from the Decision. Ontario also

properly concedes that this court does not have jurisdiction to entertain an appeal of the Decision

in the absence of an express grant of jurisdiction: this is a statutory court and only has the

jurisdiction conferred upon it by statute: Brent v. Brent (2004), 69 O.R. (3d) 737 (C.A.), at para.

9; R. v. Church of Scientology (1986), 25 CCC (3d) 149 (Ont. C.A.) at pp. 150-51.

[170] Article 19.17.6 provides:

Each Party shall ensure that a review body that is not a court shall have its decision

subject to judicial review….

Ontario argues that the decisionmaker below is “a review body that is not a court” but that its

decision is “subject to judicial review.” Thus, it argues, the process designated by Ontario

complies with Article 19.17.6 of CETA. I do not accept this argument. Article 19.17 distinguishes

between an “appeal” and “judicial review”. Under Article 19.17.4, the initial review may be

undertaken by a judicial or an administrative authority. Where this review, pursuant to Article

19.17.4, is undertaken by a body other than a court, Article 19.17.6 requires that the decision is

subject to judicial review. Where the initial review is conducted by an administrative authority

that is not impartial and independent (that is, which does not comply with Article 19.17.4), then

there must be an appeal to an independent and impartial administrative or judicial authority. If

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this appeal is to an independent administrative authority that is not a court, then the appeal decision

must be subject to review by a court.

[171] I note two principles from these provisions. First, if the initial review is done by a body

that is not independent and impartial, there must be a right of appeal to a body that is independent

and impartial. Second, whatever processes are established, they must include eventual recourse to

a court (whether by way of appeal or judicial review).

[172] Ontario is in breach of these provisions in failing “to designate at least one impartial

administrative or judicial authority that is independent of its procuring entities’ (Art. 19.17.4) and

by failing “to ensure the supplier may appeal” a decision of the decisionmaker below (Art. 19.7.5).

[173] Oceans of ink and forests of paper have been spent on the distinction between “appeals”

and “applications for judicial review” in our law, and the distinct roles played by the court in these

different proceedings. The distinction matters a great deal in our law and is addressed expressly

in CETA.

[174] It surely should not need to be said that CETA is an important international trade obligation

of Canada and its sub-national governments, including Ontario. Enforcement of CETA has been

allocated to domestic tribunals and courts under CETA, and it is the responsibility of those

tribunals and courts, including this court, to see to CETA’s enforcement.

[175] No explanation has been provided for Ontario’s failure to provide a CETA-compliant

dispute resolution mechanism for CETA claims. By executive action, Ontario directed that such

disputes be decided by an internal dispute-resolution process. This internal process was not

designed for enforcement of international trade obligations, but for all manner of disputes and

claims that may arise in connection with tendering for government contracts. The process below

may be well-suited for other procurement disputes, but the course of this case shows how unsuited

it was for these CETA claims.

[176] My decision does not turn on this point⁴but I note here that the “Briefing Note”, which

bears the hallmarks of an adjudicative decision, is not, in fact, the “decision” respecting the dispute.

It is, in substance, internal advice provided to the Government of Ontario. The actual “decision”

is that of the Government of Ontario, and under basic administrative law principles, it is that

decision that is the culmination of the process below and which is the subject-matter of the

application for judicial review in this court. This observation reinforces my conclusion that the

process below was not designed to adjudicate CETA claims: it was designed to address Ontario’s

decision to contract for goods and services (a subject-matter generally immune from judicial

oversight) in the context of public procurement policies designed to promote efficiency and reduce

or eliminate corruption in the letting of public contracts. The extent to which there is, or should

be, judicial oversight of these issues is an open question: see Bot Construction v. Ontario (Minister

⁴I accept the approach to this point taken by Nishikawa J. – the “Briefing Note” are the “reasons” below, and this

case does not turn on a precise identification of who the “decisionmaker” was. I use the term “decisionmaker” to

include all actors in the process below including the one making final decision, and I adopt my colleague’s use of

the term “Decision” to likewise include the Briefing Note as the reasons for the decision.

Page: 34

of Transportation), 2009 ONCA 879, 85 C.L.R. (3d) 25: generally, the government is accountable

to the Legislature for public spending decisions, not to the courts.

[177] In my view, the decisionmaker below did not have jurisdiction over the underlying dispute

because it was not a tribunal that fits within either Article 19.17.4 or 19.17.5 of CETA. Thus, I

conclude that the Decision was rendered without jurisdiction should be quashed as a nullity.

[178] My colleague characterizes this non-compliance with CETA as a failure to “strictly

comply” with CETA. I do not see it so favourably. In my view it is a flagrant and inexplicable

failure to implement Ontario’s obligations under CETA. The result was an unsatisfactory process,

based on a dubious record, which led to a failure to understand and apply applicable international

law, followed an unsatisfactory reasoning process, and approached the dispute showing deference

to Ontario’s policy choices on an issue for which Ontario bore the onus of proof. If this decision

had been rendered by a tribunal legally entrusted to adjudicate CETA disputes, my criticism would

be properly levelled at the tribunal itself. Here, I think that would be unfair. This criticism should

be levelled, not at the decision-makers below, who surely did their best to address a problem they

were not qualified to decide institutionally. This criticism is instead levied against the Government

of Ontario, for its failure to implement CETA in accordance with its terms.

Judicial Review of the RFB

[179] Having concluded that the Decision should be quashed on jurisdictional grounds, I now

explain why I would review the RFB. I start, however, by explaining why I would not undertake

a reasonableness review of the Decision.

[180] First, there is no need to conduct a reasonableness review of the Decision. It is a nullity

for lack of jurisdiction. It cannot stand, whether it is substantively reasonable or otherwise.

[181] Second, substantive review of the Decision raises remedial and evidentiary problems

which, though they were not argued by the parties, are evident on my colleague’s substantive

review of the Decision.

[182] To be clear, I accept Nishikawa J.’s conclusion that there are serious failures of reasoning

in the Decision that run counter to the guiding international trade jurisprudence, including:

(a)

Ontario’s stated goal of reducing risk related to transportation of card stock to nil

is a tautology that offends the non-discrimination principles in CETA. The circularity of

this argument is obvious when placed in the context of the points below.

(b)

Materiality had to be and was not assessed in the Decision – materiality of the risk

of loss of card stock during transportation, materiality of this risk -- taking account of

proposed security measures to address it, and materiality of the risk posed to “public safety”

by the risk of loss, as attenuated by the proposed security measures. While it may not be

necessary for all aspects of these issues to be supported by quantitative evidence, the analysis

cannot be supported by speculation and bald assertion.

Page: 35

(c)

This analysis then had to be weighed against the important value of reciprocal non-

discrimination obligations in CETA.

(d) Finally, the Decision errs in its logic by failing to give serious consideration to

alternatives to the domestic production requirement (such as prescribed transportation

security measures) – the apogee of this error being where the Decision found that Thales’

security measures and track record, rather than providing evidence of a reasonable

alternative to the domestic production requirement, was evidence of material risk posed by

transportation of card stock.

[183] The reasoning in the Decision is, on its face, unsatisfactory and justifies Nishikawa J.’s

conclusion that it is unreasonable. In that circumstance, what should this court do?

[184] If the Decision had been made by a decisionmaker lawfully authorized to decide the

dispute, I would expect that this court would quash the Decision and send the matter back for a

fresh hearing in accordance with this court’s reasons. This “usual” approach is followed in almost

all cases. Why depart from it now? The answer, it seems to me, is that this court cannot send the

issue back because the decisionmaker below does not have jurisdiction over the dispute.

[185] If we were sending the Decision back for a fresh hearing, I would not be satisfied to limit

our reasons to those provided by my colleague. They are sufficient to grant certiorari, but they

would be insufficient to provide the decisionmaker below with appropriate guidance about the

evidentiary and other process issues below. One aspect of this court’s role, as a reviewing court,

is to raise the quality of administrative decision-making below. This court need not perform that

role in this case, because the dispute is not being sent back. When Ontario complies with its

obligations under CETA and establishes a proper dispute resolution process, it will be for Ontario

to prescribe a CETA-compliant process, and for the tribunal assigned the adjudicative task to

develop its procedures and formulate its evidentiary principles, after all of which it may be

appropriate for this court to weigh in on those issues.

[186] Thales is entitled to have its CETA complaint adjudicated. The Decision has been set aside

and there is no jurisdiction below to hear the dispute anew. Ontario has not provided a process for

the dispute to be adjudicated before any court or tribunal in accordance with CETA. That leaves

this court, as the court with jurisdiction under the JRPA, to conduct a judicial review of the RFB.

There is no other body with jurisdiction, and in this circumstance this court should take jurisdiction

under the JRPA.

[187] This case falls outside the scope of the jurisdictional issues left open in Bot Construction.

The issue in this case concerns enforcement of CETA. This issue has a clear public dimension.

Under CETA, the issue is to be determined (at least at one level of the process) by an independent

and impartial tribunal with ultimate recourse to a court at least by way of judicial review. In these

circumstances there is a sufficient public dimension to the issue that this court should take

jurisdiction, and it is not necessary to engage with the policy issues raised and left open in Bot

Construction. In this regard, I accept my colleague’s analysis of the jurisprudence on this issue.

My conclusion that we should not provide a substantive review of the Decision is, however, for

me, the lynchpin of my conclusion that we should review the RFB.

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[188] I disagree with my colleague’s approach because of what it could signal for future cases.

If Ontario establishes a CETA-compliant dispute resolution process – as it is obliged to do under

CETA – then this court should, in future, respect the process established by Ontario. This would

ordinarily foreclose this court from taking original jurisdiction to review an RFB, and instead, this

court would leave it to the decisionmaker assigned this task by Ontario in a CETA-compliant

process. Or, in other words, faced with an unreasonable decision from a lawful decisionmaker, we

would send the issue back.

RFB Is Unreasonable

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

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

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

(c) does not fit within the “public safety” exception to the non-discrimination principle

in CETA on the record before this court.

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

[190] The RFB does not include dispute resolution provisions that comply with CETA. Nothing

in the record before this court explains or justifies this non-compliance. Flagrant beach of CETA

in this respect renders the RFB unreasonable.

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

[191] This point is properly conceded by Ontario. The issue in the case is whether this

discrimination is justified, as discussed below. In the absence of a justification on the basis of the

public safety exception in CETA, the discrimination contravenes CETA and thereby renders the

RFB unreasonable.

(c)Ontario Has Not Established the Public Safety Exception

[192] The reasons given by Nishikawa J. describe errors in reasoning in the Decision. Ontario

repeats and relies upon this reasoning to invoke the public safety exception in CETA to justify the

domestic production requirement in the RFB. I would reject that argument on review of the RFB

for the reasons given by Nishikawa J.

[193] I would go further, much further. A judicial review of the RFB is a de novo hearing in this

court, and it is not focused on the record below, but rather the justification available for the terms

of the RFB at the time those terms were issued. Where, as here, there is no “record of decision”,

this court assesses reasonableness of the RFB on the record placed before this court by the parties.

That record is subject to the usual principles of evidence that apply in civil proceedings.

[194] Ontario has not adduced a record of evidence admissible before this court to justify its

position on review of the RFB. Internal risk management documents and secondary source reports

Page: 37

are not admissible in this court for the truth of their contents where they are not adopted by a

witness entitled to present those documents to the court for the truth of their contents, a witness

who is then available to be cross examined meaningfully in respect to the contents of those

documents. By the nature of the evidence, one would expect such a witness to be qualified as an

expert on the risk management and public safety issues in dispute. This is a crucial process point

in this case and explains why it is less than satisfactory for this court to weigh in on the substantive

reasonableness of the Decision in the absence of a proper process below.

[195] Evidentiary principles need not be the same before an administrative tribunal as they are

before a generalist court. However, this court will assess evidentiary principles applied by an

administrative tribunal in light of the entire context of the dispute including some consideration of

the expertise of the tribunal. Since there was no jurisdiction below, there should be no need for

this court analyse these principles in detail, but they do bear mention to further establish the

inappropriateness of the process followed below.

[196] The decisionmaker below has no specialized expertise in international trade law. It

accepted, uncritically, hearsay evidence tendered by Ontario without assessment of the dangers

and frailties of that evidence. Such an approach may be in keeping of the sort of disputes ordinarily

addressed in the process below: Ontario policy on matters of public safety and risk management

could be entitled to deference in many procurement disputes. No such deference is owed in the

context of this CETA dispute. Quite to the contrary, Ontario bears the onus of proving that the

public safety exception applies, and it cannot discharge this onus by filing some internal documents

and stating its position as a matter of policy. The decisionmaker below did not wrestle with these

evidentiary problems or provide any justification for the evidentiary principles it followed. This

would be a concern if the entire process below was not a nullity – not just for Thales but also for

Ontario, which needs to understand the nature of its evidentiary burden in order to defend its

position on the merits.

Remedy

[197] I agree with my colleague that both the Decision and the RFB should be quashed with costs

to Thales of $75,000. In addition, I would order that, if Ontario decides to run the process to solicit

bids again, a fresh RFB should include a CETA-compliant dispute resolution process.

“D.L. Corbett J.”

Released: June 1, 2022