Polar Supplies v Cape Dorset (Hamlet), 2011 NUCJ 30

nunavuumi iqkaqtuijikkut NUNAVUT COURT OF JUSTICE La Cour de justice du Nunavut Citation: Polar Supplies v Cape Dorset (Hamlet), 2011 NUCJ 30 Date: 20111117 Docket: 03-11-437-CV Registry: Iqaluit Applicant: Polar Supplies Ltd -and- Respondants: Minister Of Community And Government Services And The Municipal Corporation Of The Hamlet Of Cape Dorset ________________________________________________________________________ Before: The Honourable Madame Justice Cooper Counsel (Applicant): Steven Cooper Counsel (Respondants): Adrian Silk (Minister), Michael Osland (Hamlet) Location Heard: Iqaluit, Nunavut Date Heard: July 12, 2011 Matters: Hamlets Act, S.N.W.T. 1988, c.

H-1, as enacted for Nunavut, pursuant to the Nunavut Act , S.C. 1993, c. 28. REASONS FOR JUDGMENT (NOTE: This document may have been edited for publication)

I. INTRODUCTION [ 1 ] Polar Supplies Ltd. (PSL) is a Cape Dorset based company that provides various types of services, including the excavation, hauling, spreading and compacting of gravel. Polar Supplies Ltd. has a difficult relationship with Huit Huit Tours Limited (HHTL), another Cape Dorset based company. The companies are in direct competition with each other as they both own and operate hotels in the community. There is a history of litigation between them.

There is also a history of litigation between PSL and the Hamlet of Cape Dorset. [ 2 ] Huit Huit Tours Limited is building an extension to its hotel business and requires gravel at various stages of the construction process. Rather than contract with PSL, HHTL was able to make arrangements for the Hamlet of Cape Dorset to supply, spread and compact the gravel. This arrangement was approved by the Minister of Community and Government Services, as required by the Hamlets Act. [ 3 ] This is an application by PSL for judicial review of the Minister's decision. II.

REMEDY SOUGHT [ 4 ] PSL seeks an order in the nature of certiorari, quashing the Minister's decision, and an order in the nature of mandamus, directing the Minister to reconsider the request to have the Municipality carry out the work. III. ISSUES [ 5 ] The issues are: 1) Is the application moot? If the application is not moot, or if the Court decides to exercise its discretion and decide the matter even though it is moot, the following issues must be considered: A. What is the standard of review? B.

Was PSL entitled to notice of the request for Ministerial approval for the Hamlet to carry out the work and, if so, was it entitled to make representations? C. Were there procedural irregularities in the manner in which the request was made to the Minister? D. Did the Minister provide sufficient reasons for his decision? A. Applicable legislation

[ 6 ] The Hamlets Act, S.N.W.T. 1988, c. H-1, as enacted for Nunavut pursuant to the Nunavut Act, S.C. 1993, c. 28 , provides: s.01. The purposes of municipal governments are (

a) to provide good government; (

b) to provide services, facilities or other things that, in the opinion of a council, are necessary or desirable for all or part of a municipality; and (

c) to develop safe and viable municipalities. s. 53.9.

(1) In this

section and in

section 53.97, “local economic development” means the establishment, expansion or continuation of a business or industry. 1. Subject to limitations on its powers in this or any other enactment or by a by-law, a council may encourage local economic development in any manner it considers appropriate and, for that purpose, may enter into an agreement with a person, with an Inuit organization, with an agency of the Government of Nunavut or the Government of Canada, or with another municipality or settlement corporation or government, including a local government outside of Nunavut. 2.

Where the plans of a council under subsection (2) to encourage local economic development would result in competition with similar services provided by the private sector, the approval of the Minister is required. s. 53.94.

(1) A municipal corporation may, for municipal purposes, do the following: … (

c) use municipal equipment, materials and labour to carry out private works on private property. …

(3) Where the exercise of the powers of the municipal corporation under subsection (1) would result in competition with similar services provided by the private sector, the approval of the Minister is required. s. 53.97.

(1) In deciding whether to grant his or her approval of a proposal by a council or municipal corporation under sections 53.9, 53.91, and 53.93 to 53.96, the Minister shall consider all relevant factors.

(2) Without restricting the general application of subsection (1), the Minister shall consider the possible effect of the carrying out of the proposal on (

a) local economic development; and (

b) existing and anticipated private sector business activity in the municipality. IV. FACTS [ 7 ] Huit Huit Tours Ltd. started construction on a new hotel during the 2011 construction season. [ 8 ] On May 5, 2011, Kristiina Alariaq, an officer of HHTL, contacted PSL to get a quote for the hauling and spreading of 2000 to 3000 cubic metres of gravel for the work site. PSL has a standard rate for excavating, hauling and spreading gravel of $80 per cubic metre and a rate for preferred customers of $60 per cubic metre. The standard and preferred rates are published by PSL on notices posted

throughout the community. Ms. Alariaq was quoted the standard rate and her request for the preferred rate was denied, as PSL did not do sufficient volume of work with HHTL. There is no suggestion that HHTL was being quoted a higher price than that charged to other customers. [ 9 ] On May 31, 2011, the Hamlet of Cape Dorset wrote to the Regional Director, Baffin Region, of the Department of Community and Government Services, requesting Ministerial approval to perform the work for HHTL. The letter stated as follows: The circumstances and reason(

s) for seeking Ministerial approval for Cape Dorset to carry out this particular work are as follows: Huit Huit Tours and its principals, Timmun and Kristiina Alariaq are, together with Cape Dorset, Defendants in an action commenced by Polar Supplies Ltd. in Nunavut Court of Justice File No. 03-10-432-CVC. See attached email from Kristiina Alariaq dated May 25, 2011. (Record, Tab 1) [ 10 ] The email referred to in the letter has not been provided to the Court. Requests for Ministerial Orders are put before the Minister in the form of a document titled “Request for Minister's Order”.

The document succinctly sets out the nature of the order being sought, the background leading to the request, possible objections to the granting of the order and a recommendation as to the decision that should be made. The Request for Minister's Order is signed by the Deputy Minister.

It is not clear from the evidence if the Minister had any documentation before him other than the Request for Minister's Order, but there is evidence that the Minister was, at all times, aware of the ongoing disputes between the various parties (Hollis affidavit, para. 13). [ 11 ] The Record discloses two different Request[s] For Minister's Order. [ 12 ] One, which was not signed by either the Deputy Minister or the Minister, had the following recommended decision: Approval not be granted by Order of Minister for Hamlet of Cape Dorset. The request to do gravel work for Huit Huit Tours should not be approved.

The reason given that Huit Huit is being sued by Polar Supplies is not a reason to exempt the Hamlet to compete with Polar Supplies. (Record, Tab 2) [ 13 ] The other, which was signed by the Deputy Minister and by the Minister and which refused the Order, contained the following recommended decision: Approval not be granted by Order of Minister for Hamlet of Cape Dorset. The request to do gravel work for Huit Huit Tours should not be approved. The reason given that Huit Huit is being sued by Polar Supplies is not a reason to exempt the Hamlet to compete with Polar Supplies.

However, if Polar Supplies Ltd. refuses to provide gravel fill to Huit Huit Tours Ltd. or will only do so at an unconscionable price or on unreasonable conditions, the Hamlet of Cape Dorset may make this request again. (Record, Tab 3) [ 14 ] The refusal of the Request for a Ministerial Order was issued on June 6, 2011 and faxed to the Hamlet on June 7, 2011. [ 15 ] Subsequent to the refusal of the Order, the Hamlet did not make any further requests to the Minister for approval to undertake the project.

However, on June 24, HHTL, by way of email correspondence directly to the Deputy Minister, asked for a reconsideration of the refusal. [ 16 ] The email correspondence set out the following reasons for a reconsideration: 1. Unconscionable price:

The correspondence states that PSL charges $80 per square metre for excavating and hauling gravel and $350 per hour for spreading ascompared to $45 per square metre for excavating, hauling and spreading by the Hamlet and $26.50 for Kudlik Construction to excavateand haul gravel in Iqaluit (spreading is done on an hourly rate). 2.

Unreasonable conditions: HHTL expresses a lack of confidence that PSL would deliver the gravel as required because: • They have had past experience with PSL where gravel was not delivered despite requests. • The ongoing litigation between the parties makes it unreasonable to think that PSL would serve them properly, particularly as thegravel is for a new hotel which will be in direct competition with a business run by PSL. • PSL does not have a quarry permit for that specific site and since quarrying permits are site specific, there is no guarantee that PSLwould be able to get a permit in a timely manner so that the work could be done according to the construction schedule. (Record, Tab 4) [17] Following receipt of the request for reconsideration from HHTL a second Request for Minister's Order was put before the Minister.

This Request recommended that the Order be issued on the basis that: • PSL is charging an unconscionable price when compared to Kudlik Construction and the Hamlet of Cape Dorset • PSL may not be able to deliver on time as it does not have a quarrying permit for the project and quarrying permits for the privatesector are site specific [18] The Request for Minister's Order also stated: “The recommended decision [to approve the Order] is based on the unconscionable price that Polar Supplies would $171,200 comparedto the Municipality of Cape Dorset $90,000 for 2000 cubic metres [sic].” (Record, Tab 12) [19] The Minister granted the Order on June 27, 2011, and the Hamlet was notified of the decision on the same date. [20] Polar Supplies Ltd. was not aware that a request had been made and approval granted to have the Municipality carry out the workuntil an officer of the company observed municipal vehicles and workers working on the project.

V. ANALYSIS A. Is the application for judicial review moot and, if so, should the Court exercise its discretion and decide the matter in any event? [21] It was clear that at the time of the hearing the work that the Hamlet was contracted to do was very near completion and,undoubtedly, would be completed by the time a decision on the judicial review application was issued. [22] The Supreme Court of Canada, in Borowski v Canada (Attorney General), (SCC), [1989] 1 SCR 342, 57 DLR

(4th) 231, directed that in determining a mootness issue, the Court must first determine whether the dispute between the parties has been resolved, rendering the issue academic and, if so, it must go on to determine whether it should exercise its discretion to decide the matter in any event. [ 23 ] In determining whether to proceed to hear a matter that is moot, the Court should consider, keeping in mind its role in the law making process, whether the nature of the proceedings lends itself to a full and vigorous argument of the issues and whether hearing the matter would be an efficient use of scarce judicial resources. [ 24 ] In this particular matter, in determining whether the dispute between the parties is moot, it is necessary to consider not only the particular contract that is under review, but also the history of the proceedings between the parties. [ 25 ] In March of 2011, the same three parties were before the Court arguing issues arising from work done by the Municipality allegedly in competition with PSL.

The nature of the work carried out by the Municipality in the 2009 and 2010 building season included work on public facilities, such as the sewage lagoon and the airport communications tower, as well as hauling gravel to a private residence and delivering sealift crates to individual households. [ 26 ] The Court was required to consider the same provisions of the Hamlets Act as it is being asked to consider in the present matter.

There was concern at that time that the same issues would arise during the 2011 construction season, leading the Court to express hope that the Government of Nunavut, absent amendments to the legislation, would establish a process for Ministerial approval that achieved the objectives of the legislation. [ 27 ] While it is clear that the specific work project which brought the parties to court on this occasion has been completed, the issues that give rise to the litigation remain unresolved.

Further, there is clearly an adversarial relationship between the various parties and there is no doubt that the issues were vigorously argued. Given the recurring nature of the issue, the parties would benefit from some direction from the Court. [ 28 ] I am satisfied that the Court should decide the matter despite the completion of the specific contract which brought the parties to court on this occasion. B.

Standard of review [ 29 ] The Supreme Court of Canada reconsidered and clarified the standard of review to be applied in the administrative law context in the case of Dunsmuir v New Brunswick, 2008 SCC 9 , [2008] 1 SCR 19 [Dunsmuir]. The Court established two standards of review: correctness and reasonableness. [ 30 ] A standard of review of correctness requires the Court to undertake its own analysis of the issues, without deference to the decision maker.

If the Court does not agree with the determination of the decision maker, it will substitute its own determination on the issues. [ 31 ] A standard of reasonableness requires the Court to show deference to the decision maker. The Court will concern itself with whether the decision falls within a range of possible, acceptable outcomes. [ 32 ] The Court must first determine if the jurisprudence has established the standard of review for the question to be determined and, if that determination has been made, that standard of review must be applied.

If the standard of review has not yet been determined, the Court must consider the following factors in determining the applicable standard: a. The existence of a privative clause;

b. whether the question is one of fact, policy, or discretion; c. whether the decision maker is interpreting its own statutes or related statutes, or whether the question is one of general law, beyondthe scope of the decision makers’ expertise and of central importance to the legal system; and d. whether the decision maker has expertise in the area. [33] The Hamlets Act does not contain a privative clause with respect to Ministerial decisions.

However, such decisions are generally,by their very nature, policy decisions, in which competing interests must be balanced and a decision reached which advances the publicinterest and the mandate of the government of the day.

There is a great deal of Ministerial discretion to be exercised in such decisions andthe Court should show deference to the decision maker. [34] Furthermore, the relevant legislation is at the core of the Minister's departmental responsibilities and the Minister and his staffregularly make decisions pursuant to the legislation. [35] The parties are in agreement that the standard of review is one of reasonableness and the Court agrees with that assessment. C.

Was PSL entitled to notice of the request for Ministerial approval for the Hamlet to carry out the work and, if so, was it entitled tomake representations? [36] The duty of procedural fairness owed by a decision maker to affected parties is flexible and will vary with the nature of the decisionbeing made.

In considering what is required to meet the duty of procedural fairness in any particular instance, one must keep in mindthat underlying the duty of fairness “...is the notion that the participatory rights contained within the duty of procedural fairness is to ensure that administrative decisions aremade using a fair and open procedure, appropriate to the decision being made and its statutory, institutional, and social context, with anopportunity for those affected by the decision to put forward their views and evidence fully and have them considered by the decisionmaker.” (Baker v Canada (Minister of Citizenship and Immigration), (SCC), [1999] 2 SCR 817, 174 DLR (4th) 193 at para 22.) [37] In this particular matter, there were two individual entities whose economic interests were impacted by the decision of the Minister.

Neither was affected as part of a larger class of entities or as a result of the application of a broad, general policy. [38] One of the parties, HHTL, not only knew of the request for the Ministerial Order but also gained access to the Minister via theDeputy Minister. The other affected party, PSL, was not provided with so much as notice of the Request. [39] Whether or not parties will be granted a hearing and (if granted) the form of the hearing will vary according to the nature of thedecision being made.

However, at the very least, parties whose interests are similarly affected must have equal access to the decisionmaker and equal opportunity to be heard. This did not occur in this instance. [40] In my view, this is sufficient to quash the approval. However, there are other concerns with the process and the decision whichshould be addressed. D. Were there procedural irregularities in the manner in which the request was made to the Minister? [41] The Hamlets Act, in

section 53.97, refers to the Minister considering “a proposal by a council or municipal corporation”. The

legislation does not contemplate any entity other than a municipality making a request for Ministerial approval to carry out private workson private property. There is good reason for this. A municipality is well situated to assess the needs of the community. The mandate ofa municipal council and its administration is to work for the best interests of the community as a whole and it is expected that all of itsdecisions will further that mandate.

The legislation calls upon the municipality to make a preliminary assessment that work it proposes toundertake pursuant to s. 53.94 is for a municipal purpose, as it is defined in the Act; that all relevant factors, including the impact onlocal economic development, are properly considered; and that the municipality has the means and the desire to carry out the work.Depending upon the nature of the work, the municipality may consider calling upon parties to make representations.

The municipalityshould maintain some record of its decision making process, which it can then provide to the Minister if a decision is made to seekMinisterial approval to carry out the work. [42] The process followed in the immediate matter was flawed in several respects. It is not clear whether council or administration, atthe municipal level, made the decision to seek Ministerial approval. When the original request was denied, the request forreconsideration came not from the Municipality, but from HHTL.

While it is true that the Municipality made the original request whichwas denied, it cannot be assumed that it would have supported the request for reconsideration, as it may not have agreed with the reasonsthat supported the request for reconsideration. E. Did the Minister provide sufficient reasons for his decision? [43] In certain circumstances the duty of procedural fairness will require that written reasons for a decision be provided.

Written reasonsare desirable as they generally lead to more carefully considered decisions and enhance the transparency of the decision making process,thereby increasing confidence in the process. Furthermore, if a decision is to be reviewed, either on appeal or judicial review, reasons arenecessary if the Court is to determine the reasonableness of the decision. As stated by the Court in Dunsmuir: A court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the processof articulating the reasons and to outcomes.

In judicial review, reasonableness is concerned mostly with the existence of justification,transparency and intelligibility within the decision-making process. But it is also concerned with whether the decision falls within arange of possible, acceptable outcomes which are defensible in respect of the facts and law. (Dunsmuir, supra at para 47) [44] In the within matter, the approval to carry out the requested work was approved because PSL was found to be charging anunconscionable price. The difficulty is that there is nothing in the record that shows how this determination was reached.

A directcomparison between the prices charged by PSL and by the Municipality could not reasonably lead to such a determination without moreinformation such as the profit margin of PSL and whether the Municipality factors overhead and labour costs into its pricing. There isno indication what criteria, if any, were used to classify PSL’s price as “unconscionable” as opposed to simply “high”. [45] The decision also queries whether PSL would be able to obtain a quarrying permit to complete the job, as there was some concernabout it not having cleaned up an old quarrying site.

Despite this concern, PSL was granted a quarrying permit in April of 2011 forstockpiling purposes. It seems unclear if a stockpiling permit would allow the material to be used on a specific job site, which causes theCourt to question what the purpose of a stockpiling permit is for. In any event, there are significant costs associated with obtaining aquarrying permit so no contractor is going to apply for one until he has successfully obtained a contract for work. Also, quarryingpermits are issued by the Municipality, which is unlikely to issue multiple permits for the same job.

At the time the Ministerial orderwas issued, any concerns regarding a quarrying permit were simply speculative. [46] Although I have discussed concerns with the manner in which the Minister reached his conclusions regarding the pricing and thequarrying permits, even if those conclusions could be upheld, the work must still be undertaken for a municipal purpose, as defined inthe Act. [47] In the earlier decision of this court on related matters (Polar Supplies v Cape Dorset (Hamlet), 2011 NLCA 5 , 2011 NUCJ05, [2011] NuJ No 6), private works undertaken by the municipality pursuant to s. 53.94 were discussed.

Generally, those that involvedremoving a public hazard or completing public infrastructure, when the private sector had been given the opportunity to do so and didnot, were viewed as permissible works for the municipality to undertake. Those that were strictly for the benefit of private entities, suchas the delivery of gravel to a residence, were not viewed as permissible.

As stated by the Court at that time, the dominant purpose of thework must be to advance the public interest. [48] In the present matter, the record and the decision of the Minister do not articulate the municipal purpose which is to be achieved byhaving the Municipality undertake the work. Further, even if the work will fulfill a municipal purpose, this must be weighed against thepotential negative impacts on existing and anticipated economic development in the community. The record does not disclose such an

analysis having been undertaken. VI. CONCLUSION [ 49 ] The application for judicial review is granted and the Minister's decision of June 24, 2011, is quashed. Given that the work is completed, it is unnecessary to remit the matter back to the Municipality or the Minister for reconsideration. [ 50 ] If the parties wish to speak to costs, they may set a date with the trial coordinator Dated at the City of Iqaluit this 17th day of November, 2011 ___________________ Justice S. Cooper Nunavut Court of Justice