Governmental Contracting, Procedural Fairness and Fundamental Freedoms

As a general rule, governments cannot and should not be required to fund speech or activities with which they do not agree. An organization committed to perpetuating inequalities between men and women, or which decries homosexuality as sinful, can lawfully be shunned. But should such an organization, especially one which previously received government funding, be entitled to some procedural protections before a decision is made to refuse to contract with it on the basis of its speech or activities?

The question arose before the Federal Court of Canada in Canadian Arab Federation v. Canada (Citizenship and Immigration), 2013 FC 1283. The answer given by Zinn J. was a resounding 'No'.

Two programmes provided by the applicant organization had been funded by the federal government for several years. Continued federal funding for one of these programmes -- aimed at assisting immigrants to settle in Canada -- was refused in 2009, based on anti-semitic comments allegedly made by a leader of the organization. Here is the letter sent by the Minister:

As you are also aware, serious concerns have arisen with respect to certain public statements that have been made by yourself or other officials of the CAF.  These statements have included the promotion of hatred, anti-semitism [sic] and support for the banned terrorist organizations Hamas and Hezbollah.

The objectionable nature of these public statements – in that they appear to reflect the CAF’s evident support for terrorist organizations and positions on its part which are arguably anti-Semitic – raises serious questions about the integrity of your organization and has undermined the Government’s confidence in the CAF as an appropriate partner for the delivery of settlement services to newcomers.

The organization claimed, however, that it was not given an adequate opportunity to respond to the allegations. Zinn J. was unimpressed. Contracting decisions of this nature are subject to judicial review in the Federal Court* but they do not attract a duty of fairness:

[46]                       In this case, the parties were in a purely contractual relationship at the time the Minister made his decision.  CAF was a party to a LINC funding contract with CIC, ending March 31, 2009.  There was no provision in that contract for the automatic renewal or extension of that term.  However, as a consequence of that contractual relationship, CAF was invited to submit a proposal for an amendment to the contract to extend its term for one year....

[47]                       There was nothing in the documents sent to CAF that committed CIC to amend the existing contract.  The letter from CIC indicating that the contract term of CAF’s existing contribution agreement could be extended is akin to a request for the submission of a proposal and, as was held in Irving Shipbuilding, arguably creates a contract when the recipient responds.  In this case, that contract contains no express promise that parties responding will be treated in a procedurally fair manner. 

[48]                        CAF points out that there was nothing in the document package to indicate that organizations that were considered by the Minister to be anti-Semitic or supporters of terrorism would not be granted a contract extension.  Equally there was nothing in the package that indicated that approval by the Minister would be automatic even if his officials were otherwise satisfied with the proposal.

[49]                       Accordingly, to the extent that the parties’ relationship was a commercial and contractual relationship, there is nothing in the record that suggests that there was any obligation on the Minister to engage with CAF about his concerns prior to making his decision not to extend the existing contract’s term.  There is neither a statutory or contractual basis on which this Court can impose on a duty of procedural fairness on the Minister....

[57]                       If the added legitimacy resulting from the very act of contracting with the government is a sufficient interest to impose procedural fairness obligations, virtually every party that contracts with the government in any fashion will suddenly acquire procedural rights.  Furthermore, part of the reason that the Minister decided not to continue to fund CAF was because he did not think it was appropriate for the government to appear to support, endorse, or legitimize an organization that might be viewed as anti-Semitic or that might support terrorism.

In my view, however, the issue is not whether the relationship between the parties should be described as "contractual" or "commercial". This is a purely formal analysis which avoids the substance of the issue. The necessary substance is provided by attention to the purposes of the courts' judicial review jurisdiction.

In asking questions about the scope of the duty of fairness, one ought to begin by taking account of the nature of the state action complained of. The sanctioning of individuals or organizations for speech (be it anti-semitic, misogynist, or homophobic) which is contrary to the views of the government of the day is precisely the sort of official conduct which judicial review is designed to protect against.

That conclusion is strengthened by the fact that this organization had a pre-existing relationship with the government. The ability to discontinue funding on the basis of an organization's views is a power so great as to invite judicial oversight and procedural protections.

Against this, the organization's ability to seek review of the reasonableness of the decision (at para. 53) does not appear to be an adequate response, for it sidelines the organization's interest in being heard before a decision is reached.

This case is far removed from Irving Shipbuilding Inc. v. Canada (Attorney General), 2009 FCA 116, for two reasons. First, the applicant subcontractor in that case was seeking a purely commercial benefit; there was no question that it had suffered because of positions it or people affiliated with it had taken publicly. Second, the tendering process already imposes significant fairness obligations (albeit not of a public-law nature) on the government. In addition, Evans J.A. left the door open for some types of public-law challenge even in purely commercial cases (see paras. 61-62); a door that was pushed further ajar by Stratas J.A. in Air Canada v. Toronto Port Authority, 2011 FCA 347 to admit "a human rights violation" (see para. 60).

This discussion may seem academic, given that Zinn J. also concluded in the alternative that the government had met any procedural obligations it had (at paras. 60-69). Yet he also took the view (somewhat surprisingly) that the Minister had a closed mind. Thus, were it not for the "contractual" nature of the relationship, the decision would have been struck down for bias (at paras. 78-81).

On two other grounds, the organization failed: the decision did not breach its Charter rights (at paras. 82-94) and was reasonable:

[106]                  With respect to the six specific matters relied on by the Minister, it is submitted by CAF that it did not authorize them, the persons involved were not officially representing CAF at the time, or the actions and content were not endorsed or approved of by CAF.  In many cases, this defense ignores the maxim that “one is known by the company one keeps.”  Quite simply, CAF cannot completely disassociate itself from the content of web links it includes in its materials, or from comments, distribution of materials, or attendances at meetings and conferences by its executive.

[107]                  All of the statements and actions raised by the Minister can, in my view, reasonably lead one to the view that CAF appears to support organizations that Canada has declared to be terrorist organizations and which are arguably anti-Semitic.  Aside from the Minister himself reaching this view, the record is replete with news articles and statements of others to the same effect, all of which support that it was not unreasonable for the Minister to reach that conclusion. 

This conclusion seems to pose another question: whether it is reasonable for the Minister to cut off funding for organizations which appear to support other organizations that are arguably anti-semitic (though see another formulation at para. 103). Notably absent from the reasonableness calculus is any reference to Charter values. Even though the organization's rights were not violated, it seems pursuant to Doré that the values underpinning those rights are to be considered by decision-makers. Viewed in the light of Charter values, the reasonableness of a decision based on appearances and some logical leaps is much less obvious.

* In other jurisdictions, including the Canadian provinces, the question might be whether the decision in question was sufficiently 'public' as to be reviewable at all. See my recent post here. Zinn J.'s conclusion was that the decision was reviewable but that the duty of fairness was not triggered.

UPDATE: Via John O'Dowd, see a recent English decision, Trafford v. Blackpool Borough Council, [2014] EWHC 85 (Admin), described here. The Council refused to renew the lease of a firm of solicitors that had been active in helping plaintiffs to sue it. The following observations, made in the context of a discussion of the amenability of the Council's action to judicial review, are of particular interest:

The claimant is also entitled to say, in my judgment, that this is not a case of her seeking to challenge the defendant's decision to enter only into contracted out leases, so that she had no right of renewal under Part II of the 1954 Act. Instead, it is a case of her having been subjected to a decision that the defendant would not even consider a request by her for a new tenancy once her existing tenancy expired, even though this was always clearly an option, as recorded on the statutory declaration signed by her at the time she entered the 2010 lease. In short, the effect of the CAMG's decision was that the defendant had decided, by reference to her firm's professional activities as the defendant had decided them to be, and in advance of any request the claimant might make for a new tenancy, that it was not prepared to consider any such application on its merits, by reference to its published tenant selection criteria.

In that context, the claimant is contending that the decision is vitiated:

(1) Because it was taken for an improper or an unauthorised purpose, namely "that of penalising and victimising the claimant precisely and solely because some of her clients have sued the defendant" (see the detailed statement of grounds, at CBp9).
(2) Because it was irrational, in that if taken on financial grounds, it "does not achieve any reduction of such claims" (ditto, CBp9) and, as per the claimant's skeleton argument, it is capricious, vindictive and seeks to punish or detriment someone who has acted lawfully.
(3) Because it was procedurally unfair, in that where the defendant was considering deciding that any request for a new tenancy should be determined other than by reference to its published tenant selection criteria, and instead solely by reference to its assessment of the claimant's alleged activities, the claimant was entitled to be afforded the opportunity to make representations before that decision was made.
In my judgment all of these challenges are genuine and substantial. There is in my judgment a sufficient public law element or connection to render the decision amenable to judicial review on all such grounds. At the very least there is a sufficient public law element or connection to render the decision amenable to judicial review on the ground of abuse of power, whether categorised as improper or unauthorised power.