2010 NBCA 82, 2010 NBCA 82

. COURT OF APPEAL OF NEW BRUNSWICK 18-10-CA ATTORNEY GENERAL OF NEW BRUNSWICK APPELLANT PROCUREUR GÉNÉRAL DU NOUVEAU-BRUNSWICK APPELANT - and - - et - THE DOMINION OF CANADA GENERAL INSURANCE COMPANY RESPONDENT DOMINION OF CANADA, COMPAGNIE D’ASSURANCE GÉNÉRALE INTIMÉE Attorney General of New Brunswick v. The Dominion of Canada General Insurance Company, 2010 NBCA 82 Procureur général du Nouveau-Brunswick c.

Dominion of Canada, Compagnie d’Assurance Générale, 2010 NBCA 82 CORAM: The Honourable Chief Justice Drapeau The Honourable Justice Robertson The Honourable Justice Green CORAM : L’honorable juge en chef Drapeau L’honorable juge Robertson L’honorable juge Green Appeal from a decision of the New Brunswick Insurance Board: January 11 th , 2010 Appel d’une décision de la Commission des assurances du Nouveau-Brunswick : Le 11 janvier 2010 History of Case: Historique de la cause : Decision under appeal: Unreported Décision frappée d’appel : Inédite Preliminary or incidental proceedings: [2010] N.B.J.

No. 173 Procédures préliminaires ou accessoires : [2010] A.N.-B. n o 173 Appeal heard: September 14, 2010 Appel entendu : Le 14 septembre 2010 Judgment rendered: November 25, 2010 Jugement rendu : Le 25 novembre 2010

Reasons for judgment by: The Honourable Justice Robertson Motifs de jugement : L’honorable juge Robertson Concurred in by: The Honourable Chief Justice Drapeau The Honourable Justice Green Souscrivent aux motifs : L’honorable juge en chef Drapeau L’honorable juge Green Counsel at hearing: For the appellant: William A. Anderson, QC For the respondent: Richard J. Scott, QC Avocats à l’audience : Pour l’appelant : William A. Anderson, c.r. Pour l’intimée : Richard J. Scott, c.r.

THE COURT The appeal is allowed, the Board’s decision to approve the rate application of the respondent is set aside and the matter is remitted to a differently constituted panel of the Board for a determination in a manner consistent with these reasons for judgment. No costs are awarded. LA COUR L’appel est accueilli, la décision de la Commission d’approuver la demande de hausse tarifaire de l’intimée est annulée et l’affaire est renvoyée devant une formation différemment constituée de la Commission pour qu’elle rende une décision conforme aux présents motifs de jugement.

Aucune ordonnance n’est rendue quant aux dépens. The judgment of the Court was delivered by ROBERTSON, J.A. I. Introduction [ 1 ] Ultimately, this administrative law appeal is about fairness and transparency in the adjudicative process surrounding the decision of the New Brunswick Insurance Board to approve an insurer’s rate application with respect to car insurance (private passenger vehicles). Under the Insurance Act , R.S.N.B. 1973, c. I-12 , the Board may only approve rates which are just and reasonable.

In cases where the Board decides to hold a hearing, the onus is on insurers to satisfy the Board this threshold has been met. However, the Attorney General of the Province has the right to intervene and make representations in the public interest.

In such cases, it is the role of the Board to adjudicate on competing views as to whether a proposed rate is just and reasonable, and to do so in a manner that respects the established tenets of the fairness doctrine applicable to administrative decision-makers. [ 2 ] The Dominion of Canada General Insurance Company (“Dominion”) was one of 20 companies seeking Board approval with respect to their annual application for rate approval. The Attorney General singled out the application of Dominion and one other company as warranting intervention.

With respect to Dominion’s application, the Attorney General raised two principal grounds of objection. First, Dominion’s anticipated 18.1% rate of return on equity exceeded the 12% benchmark established in a 2005 Board decision. Second, the actuarial assumptions upon which Dominion based its calculations were “unsound”. According to the Attorney General, once the proper actuarial assumptions are applied, the expected rate of return on equity would climb well above

18.1%. The general thrust of the Attorney General’s argument is that present rates are already excessive. The Board approved Dominion’s rate application, but without explaining why the Attorney General’s objections and supporting rationales were rejected. In response to the one-page decision, the Attorney General exercised his unqualified and unfettered right of appeal to this Court.

Although no less than seven grounds of appeal were advanced, they can be regrouped under three umbrellas: (1) the Board approved a rate of return on equity which far exceeded its established benchmark; (2) the Board based its decision on unsound actuarial principles; and (3) the Board breached the duty of fairness by limiting the types of questions the Attorney General could submit to Dominion and by failing to provide adequate reasons for its final decision. [ 3 ] Factually, I conclude the Board’s 2005 decision did not establish a 12% benchmark for the rate of return on equity.

I also affirm that we are in no position to rule on the relative validity of competing actuarial assumptions. However, I find the Board did breach the fairness duty.

Accordingly, I would allow the appeal and remit the matter to a differently constituted panel of the Board for a determination in a manner consistent with these reasons. [ 4 ] Not only did the Board unduly limit the scope of the “interrogatories”, it failed in its duty to provide reasons that adequately addressed issues properly raised by the Attorney General: reasons that would meet the general threshold test of “justification, transparency and intelligibility” articulated in Dunsmuir v. New Brunswick , 2008 SCC 9 , [2008] 1 S.C.R. 190, at para. 47 .

Without motivated reasons, there is no way of maintaining public confidence in an administrative scheme designed to ensure New Brunswick drivers are not paying excessive rates for car insurance. Moreover, the general duty of every adjudicative tribunal, presented with intelligent and competing arguments surrounding the merits of a dispute of immense precedential significance, is to explain why one argument prevailed over the other.

This is one more reason why this Court is in no position to rule on the validity of competing actuarial assumptions or principles. [ 5 ] The fact that a transcript of the Board’s post-hearing deliberations made its way onto our Bench is of no moment and no substitute for the crafting of a reasoned decision. While both Dominion and the Attorney General rely on that transcript to bolster their respective positions, it cannot form part of the appeal record.

Introduction of the transcript for purposes of “bootstrapping” materially deficient reasons for decision is an imprudent abdication of a tribunal’s right to deliberative secrecy in the administrative decision-making process. To be blunt, it is pure folly to believe that a transcript of disjointed questions, observations, musings and even expressions of opinion by individual decision-makers and their experts is an acceptable substitute for a set of reasons that should be as cogent as they are persuasive, while representing the collective views of only those who have the statutory right to decide. II.

The Statutory Framework [ 6 ] While the general powers and functions of the Board are set out in s. 19.3 of the Insurance Act , the framework for regulating rates for automobile insurance is set out from s. 267.1 to s. 267.8. Pursuant to s. 267.11, the Board is responsible for the general supervision of rates an insurer may charge or proposes to charge for automobile insurance. Pursuant to s. 267.1(1), the word “rates” is defined to mean “rates, surcharges, premiums or any other amount payable by an insured for automobile insurance”.

Section 267.2(1) requires each insurer to file with the Board the rates which it proposes to charge for automobile insurance at least once every 12 months from the date of the insurer’s last filing.

Section 267.2(1.1) goes on to require the insurer to provide the Board with such information when requested. The Board’s power to “investigate” proposed rates is contained in s. 267.5(1). That

section states that if the Board considers that the proposed rate may not be “just and reasonable” the Board may investigate. In considering whether to conduct an investigation, the Board must first advise the Superintendent of Insurance and consider any information which the Superintendent provides.

Section 267.5(3.1) goes on to provide that should the Board decide to investigate a proposed rate, the burden is on the insurer to prove that the rate is just and reasonable. Pursuant to s. 267.5(5) the Board is obligated to consider those factors which are prescribed by regulation when determining whether a proposed rate is just and reasonable. To date, no such regulation has been adopted. [ 7 ] As stated earlier, the general powers of the Board are set out in s. 19.3 of the Insurance Act .

For example, the Board is empowered to investigate or inquire into rates of insurance for other classes of insurance, as may be prescribed by regulation. However, with respect to the other classes of insurance, the Board may only make recommendations to the Minister responsible for the Act .

Section 19.1 outlines three ways of conducting an investigation/inquiry: (1) an electronic hearing; (2) an oral hearing; or (3) a written hearing. The first embraces telephone conferencing and the use of other electronic technology (video conferencing). The second embraces an oral hearing at which the parties or their counsel attend before the Board in person. Finally, a written hearing is defined as a hearing held by the exchange of documents whether in written or electronic form.

Section 19.41(

a) empowers the board to determine its own procedure and to give directions about the process and procedure that it considers appropriate in the circumstances, including a direction for one of the three types of hearing identified above.

Section 19.41(

b) authorizes the Board to request anyone to provide it with relevant information.

Section 19.41(

c) states the Board need not hold an oral hearing unless the Board considers it necessary to “act in a procedurally fair manner”.

Section 19.41(

d) outlines the Board’s obligation to ensure procedural fairness to all affected persons. While s. 19.41(

e) provides that the Board is not bound by any common law rule of evidence, the

section also states that any evidence the Board accepts must be relevant, material and trustworthy. At the same time, insurers are obligated under s. 19.7(1) to comply with any Board request for documents and information. By implication, the information requested must be relevant, material and trustworthy.

[ 8 ] Unless the Board orders otherwise, s. 19.71(1) of the Insurance Act dictates that the Board must provide the public with notice of any hearing by publishing an advertisement in one or more newspapers published in the Province.

Section 19.71(2) goes on to provide that the Attorney General of the Province and the Consumer Advocate for Insurance must be notified. Under s. 19.71(3) the Board must provide the Attorney General with copies of all documents relevant to the hearing if the Attorney General so requests. It is s. 19.71(4) that authorizes the Attorney General to intervene at the hearing and make representations that he or she considers in the public interest. [ 9 ] In

summary, the Board has the jurisdiction to decide whether to conduct an investigation or inquiry into a proposed rate. If after consulting with the Superintendent of Insurance the Board concludes that a hearing is warranted, it must then decide on the type of hearing. Specifically, an oral hearing is not required unless the Board considers it necessary to act in a procedurally fair manner. As would be expected, the Board possesses the general right to determine its procedures. The Board also has the power to direct the insurer to provide the Board with information which is relevant, material and trustworthy.

Of course, the exercise of any discretion is fettered to the extent that it must be exercised in good faith and in a principled fashion. The Attorney General is empowered to intervene as of right and to make representations he or she considers in the public interest. III. Factual Background [ 10 ] The standard application form for rate approval requires all insurers to identify the change in the insurance rate that would achieve an after tax return on equity of 12%.

The filing guidelines also require each insurer to disclose its after tax return on equity based on the insurance rate for which approval is being sought. Also required are the insurer’s calculated past frequency, severity, loss costs claims for all coverage including bodily injury, collision and accident benefits, together with what it has selected for the past loss costs, and to identify its assumptions as to the future trends rates for all types of coverage.

Finally, the applicant must identify the assumptions upon which it bases its calculations of the return on investments on its premium income and on surplus retained by the company, the ratio of premium income to surplus, and all other income of the applicant. In order to determine a provision for profit in the rate it is also necessary to consider the income tax rate and the after tax return on equity target. [ 11 ] In September 2009, Dominion filed a rate application which targeted a 12.5% return on equity rate [ROE].

Having regard to this ROE, Dominion would have had to reduce its present premium rates by 2.79%. Instead, Dominion asked that there be no change to its present premium rates. Subsequently, the Board asked Dominion to resubmit its application to show a 12% ROE. Dominion complied with the request. The recalculation showed that a premium reduction of 3.25% would generate a ROE of 12%. Once again, however, Dominion sought only to maintain its existing premium rates.

Dominion would then resubmit its application one more time, and ask for a .49% increase in premium rates because of recently obtained information released by the insurance industry. The appeal record shows that increase would produce an ROE of 18.1%. [ 12 ] On November 13, 2009, the Board advised the Attorney General that it would be conducting a hearing to consider Dominion’s rate application. The Attorney General asked for the relevant portions of the application and the Board obliged.

In an email dated November 19, 2009, the Board informed the Attorney General that he would be entitled to submit written information requests to Dominion and that the latter would have to respond in writing within the time specified as per an attached filing schedule. By further email of November 25, 2009, the Board indicated to the Attorney General that a paper hearing (written materials only) would be conducted. All “interrogatories” had to be completed six calendar days before the hearing.

Written submissions were to be received four calendar days in advance. [ 13 ] On November 27, 2009, the Attorney General’s actuary emailed a series of 11 questions to Dominion based on its application. Some of the questions asked Dominion to explain the rationale used for selecting certain figures (ex., future trends for bodily injury and accident benefits). Other questions involved Dominion providing alternative rate level indications by using other figures or amounts based on alternative actuarial assumptions. Those questions required Dominion to “generate new information”.

On November 30, 2009, the Board emailed the Attorney General’s actuary, advising her that many of the questions went beyond the scope of what was contemplated by the legislation and, therefore, that Dominion would not be required to respond to all questions posed. The actuary replied immediately, asking for an explanation as to what is contemplated by the legislation. On December 1, 2009, Board staff replied that the legislation does not contemplate interveners making any requests for information.

In the circumstances, the Board would not require Dominion to answer any questions that would require the generation of new information. On December 3, 2009, counsel for the Attorney General forwarded a letter to the Board prepared by the Attorney General’s actuary setting forth the rationale for the questions posed. Further email exchanges ensued in the following days.

On December 7, 2009 Dominion answered some of the questions but declined to answer those that would require the generation of new information. [ 14 ] Finally, on December 8, 2009, the Attorney General’s actuary provided the Board with a written submission addressing issues of concern, and, in particular, the loss trend assumptions of Dominion. The submission concludes with the following sentence: “As presented and calculated by Dominion in its rates filing, its proposed rate change (0%) is higher than its indicated change

of -3.25% and results in an after tax return on equity of +17.7%”. On the same date, Dominion amended its application in order to adopt the “2009 CLEAR rate group table” which had just been released by “VICC”. The amendment resulted in a request for a .49% premium rate increase which translates into a +18.1% after tax ROE once the actuarial assumptions of Dominion are accepted. [ 15 ] The Board rendered its decision to approve Dominion’s rate application on January 11, 2010.

Following the Board’s approval of the .49% rate increase, Dominion tendered a document which showed another ROE rate, but one which is less than the already approved 18.1%. Dominion states that the resubmission was done in response to and in accordance with the Board’s one- page decision. For purposes of deciding this appeal, I need not decide whether the Board’s final decision authorized the revision of actuarial assumptions which we are told had the effect of reducing the anticipated ROE rate. IV.

Issues and Standard of Review [ 16 ] The Attorney General raises five primary grounds of appeal and two alternative grounds. The primary grounds can be reduced to two. First, the Attorney General argued the Board approved a rate increase which would produce an ROE rate far exceeding the Board’s 12% benchmark. Second, the Board permitted Dominion to use unsound actuarial assumptions.

With respect to these grounds of appeal, the Attorney General asked this Court to vary the Board’s decision by approving a premium rate which reflected the actuarial assumptions advanced by the Attorney General and which produce a 12% ROE rate. In support of this relief, the Attorney General relied on s. 19.8(4) of the Insurance Act , which states that this Court may “confirm, modify, vary or reverse” a decision or order of the Board. During the appeal hearing, we advised the Attorney General that this Court was in no position to rule on the relative soundness of competing actuarial assumptions.

The record before us is materially deficient and we do not have the benefit of the Board’s reasoned opinion for which the review standard of reasonableness would most likely apply. At the same time, this Court is faced with another task: to decide whether the power to “reverse” includes the power to set aside a decision and to remit the matter back to the Board for a rehearing. Eventually, I answer that question in the positive. [ 17 ] The Attorney General also advances two alternative grounds of appeal.

First, in failing to give adequate reasons, the Board frustrated the Attorney General’s statutory right of appeal. Second, the Board’s ruling that Dominion did not have to answer those questions that generated new information, posed by the Attorney General’s actuary, frustrated the Attorney General’s attempt to question Dominion’s actuarial assumptions. These two grounds do not require this Court to begin on the premise that deference on the review standard of reasonableness is applicable.

Inevitably, tribunal decisions involving allegations of a breach of the fairness duty are reviewed on the standard of correctness (see New Brunswick Human Rights Commission v. Province of New Brunswick (Department of Social Development) , 2010 NBCA 40 , [2010] N.B.J. No. 186 (QL) , and specifically Fundy Linen Service Inc. v.

Workplace Health, Safety and Compensation Commission , 2009 NBCA 13 , 341 N.B.R. (2d) 286, where the Court states that “ when it comes to the fairness duty, correctness is the proper review standard” (para. 13)). [ 18 ] The following analysis addresses three issues which I believe reflect the legal realities of this case. The first issue is whether, in fact, the Board did establish a 12% benchmark rate of return on equity. Second, we must decide whether the Attorney General was denied procedural fairness when the Board ruled that Dominion need not answer questions which required the generation of new information.

This issue brings into question the decision of the Board to conduct a written hearing and to grant the Attorney General the right to pose interrogatories of Dominion. The third debate is whether the Board was under a duty to provide more substantial reasons for its decision to approve Dominion’s premium rate increase. On the first issue, I find in favour of Dominion. As a matter of fact, the Board did not establish a 12% benchmark in its 2005 decision. With respect to the remaining two issues, I find in favour of the Attorney General.

However, I do not accept his concession that, on the facts of the present case, the appeal record may be augmented with a copy of the transcript of the Board’s post-hearing deliberations. V. The 2005 Board Decision and the Alleged 12% Benchmark [ 19 ] In 2005 the Board issued a decision in which it considered several matters pertaining to applications for rate approval: (1) the appropriate ROE rate for automobile insurance companies; (2) the appropriate premium to surplus ratio; and (3) the investments and related returns that should be credited to policyholders.

The Board also asked whether the rates managed by the Facility Association should include a recovery of “Cost of Capital” and, if so, what should be considered a proper rate of return to recover this cost. To address those questions the Board held a public hearing. [ 20 ] The Board’s 2005 decision touches the issue of the appropriate premium to surplus ratio in a

summary fashion. Based on federal regulations governing the matter, the Board accepted the proper premium to surplus ratio should range from 1.5 to 2.2. As to the proper ROE rate, the Board noted that most companies’ ROE requests ranged from a low of 12% to a high of 17%. Some companies requested the Board not set a rate while others suggested a range from 8.5% to 10%. The Insurance Bureau of Canada introduced a graph showing the Property and Casualty Industry return from 1975 to 2004. The latest yield was 8.73%. From 1975 to 1983, the highest return was 11.2%. The Board was presented with competing approaches to determine an appropriate rate of return on

equity. Both the Board’s expert and that of the Attorney General agreed that the CAPM model provided the proper method for calculating the ROE. The Board agreed and accepted its expert’s opinion that the Board need not specify a specific rate for all insurers. The Board’s expert also stated that the Board should send a signal to insurers that it had a range in mind (e.g., 9% to 13%) and that it would be requiring “outliers” to justify a rate which falls outside the range.

Here is what the expert said in response to the question of whether it would be better to look at the ROE on a case by case basis: Yes, that’s what I would say. And that you send a signal that you have some range in mind that might be, you know, 9 to 12, 13 something in that zone as what people – what are they targeting for. And require for people who are the outliers to justify. I think it would be a waste of resources to have everyone coming forward to justify well, we are doing 11 percent and here is why, and we are doing 11.5, and here is why and so on.

But I think what the Board should be concerned with is the outliers. And, you know, that’s a good use of your time and also a better use for the times of the people, submitting for rate claims. [ 21 ] The Board interpreted the above passage in the following manner. While the Board’s expert thought the setting of a range of rates would facilitate the approval process by requiring those insurers outside the range to justify their rate of return, the Board decided not to establish a prima facie range of acceptable rates. The Board held: The Board agrees with the recommendations of [the Board’s expert].

The Board will not abdicate its responsibilities by creating a fixed rate or range of return on equity. The Board will review the requested rate of return on each application and decide what the rate should be based on the criteria of setting “just and reasonable rates” for the policy holders of New Brunswick. [ 22 ] In

summary, it is clear that the Board’s 2005 decision did not fix a 12% benchmark for the rate of return on equity and, therefore, the Attorney General remains in error on this point. At the same time, the Board’s 2005 statement that it was accepting the recommendations of its expert is confusing if not mistaken. The Board’s expert believed that the Board should fix a range for the ROE rate. Insurers whose ROE rates fell outside the range would have their applications subjected to greater scrutiny. The Board’s decision, however, does not expressly adopt this approach.

Curiously, regardless of what the Board stated in its 2005 decision, it appears that all insurers are being required to file a rate application which shows the impact on premium rates assuming a ROE rate of 12%. Given the fact that Dominion was seeking a ROE rate in excess of 18%, the decision of the Board to investigate further and hold a hearing into the rate application is perfectly consistent with the Board’s 2005 decision and, in particular, the opinion of its expert, even though the Board has never fixed a range of percentage rates which will attract less scrutiny.

In short, Dominion filed an application which rendered it an “outlier” and the Board duly responded. So far so good. VI. The Decisions to Hold a Written Hearing and to Limit Interrogatories [ 23 ] Once the Board consulted with the Superintendent of Insurance and decided to investigate Dominion’s rate application, the Board had to settle on which of the three hearing formats should be adopted. As noted earlier, the Board is not obligated to hold an oral hearing unless the Board considers it necessary to “act in a procedurally fair manner”.

Since the Board ordered a written hearing we must assume that the Board consciously decided that a written hearing with interrogatories, as between Dominion and the Attorney General, would be compliant with the common law understanding of procedural fairness. In any event, the Attorney General took no objection to the decision to hold a written hearing as opposed to an oral hearing.

But the question that lingers in my mind is whether an oral hearing would have better suited the Board’s adjudicative task by giving panel members the opportunity to question directly the actuarial opinions being tendered by the respective parties. This is a matter for the Board to reflect on in future cases after seeking the views of those who will be participating in the hearing.

At that point, the Board is entitled to make its ruling. [ 24 ] I am left to ask whether the Board denied the Attorney General procedural fairness when the Board limited his right to pose questions by eliminating those that required Dominion to generate new information. The Board’s formal response to the Attorney General’s objection to limiting the interrogatories was that the questions “go far beyond what is contemplated by the legislation”. This leads one to ask what is contemplated by the legislation. As noted earlier, s. 19.41(

a) authorizes the Board to determine its own procedure and to give directions about the process and procedure that it considers appropriate in the circumstances. Moreover, s. 19.41(

b) authorizes the Board to request a party to provide it with relevant information; that is to say, information which is relevant, material and trustworthy. However, there is nothing in the legislation to support the Board’s justification for limiting the Attorney General’s right to pose interrogatories to Dominion. The question facing the Board was whether the new information which the Attorney General sought from Dominion was relevant to the Board’s task of adjudicating on the proposed rate hike. The Board never addressed that question. As a result, the Board fell into error. Let me explain further.

[ 25 ] The Attorney General was asking Dominion to recalculate the ROE rate by using alternative actuarial assumptions; that is to say, ones that were different than those which Dominion had adopted. More importantly, one would have thought that the Board would have been interested to learn how different actuarial assumptions would impact on the percentage rate of return on equity and the insurance rate to be approved.

Yet, the Board’s curiosity was not piqued, nor could it offer this Court a reason why the so- called new information being sought was not relevant, material and trustworthy. [ 26 ] The above analysis leads me to conclude that the Attorney General was denied procedural fairness when the Board ruled that Dominion did not have to produce (generate) evidence which was otherwise prima facie relevant to the primary task at hand. Certainly, the legislation does not hinder the Board from requiring an insurer to make recalculations based on different actuarial assumptions.

The Attorney General’s questions were appropriate and in the “public interest” and the Board should have exercised its discretion to demand evidence that on its face appears relevant to a material issue. VII. The Duty to Give Reasons for Final Decision [ 27 ] The Board’s one-page decision begins with a recitation of the facts leading up to the hearing of the application, and an acknowledgement that the Board considered all of the relevant submissions, together with the actuarial advice of the Board’s firm of consulting actuaries.

The Board’s formal reasoning for accepting Dominion’s rate application is found in the following passage: The Board finds that the Company’s proposed rates are supported by sound actuarial principles and were within a range of reasonableness. It is the decision of the Board to approve the Company’s rate revision application as amended. The impact of the rate revision application is estimated to represent an overall change from the rate level currently in effect of +0.49%. [ 28 ] Obviously, the above passage does not qualify as reasons for decision. It is simply a conclusionary declaration of entitlement.

This leads one to consider whether the Board was under a duty to provide reasons. The Insurance Act does not contain an express obligation to do so and, hence we are left to decide whether such an obligation arises under common law principles. [ 29 ] Traditionally, there was no common law obligation on statutory decision-makers to provide written reasons for their decisions and, therefore, the failure to do so was not regarded as a breach of the duty of procedural fairness.

It was not until 1999 that the Supreme Court of Canada recognized that an administrative decision-maker could be obligated to provide reasons even though the enabling legislation did not mandate such a requirement. In the absence of an express statutory direction, the obligation to provide reasons for a decision depended on the application of the analytical framework which the Supreme Court first set out in Baker v. Canada (Minister of Citizenship and Immigration), 1999 CanLII 699 (SCC) , [1999] 2 S.C.R. 817, [1999] S.C.J.

No. 39 (QL), and more recently applied in Congrégation des témoins de Jéhovah de St-Jérôme-Lafontaine v. Lafontaine (Village) , 2004 SCC 48 , [2004] 2 S.C.R. 650.

That framework begins with the acceptance of the general principle that the content of the duty of fairness, including the duty of procedural fairness, which is imposed on all administrative decision-makers, varies according to five factors: (1) the nature of the decision and the decision-making process employed by the decision-maker; (2) the nature of the statutory scheme and the precise statutory provisions pursuant to which the public body operates; (3) the importance of the decision to the individuals affected; (4) the legitimate expectations of the party challenging the decision; and (5) the nature of the deference accorded to the decision-maker (see generally Jones and DeVillars, Principles of Administrative Law (Toronto: Thomson Reuters Canada Ltd., 2009) [Jones & DeVillars], at p. 368 et seq .). [ 30 ] The essential facts of Baker are straightforward.

Ms. Baker, a woman with four Canadian-born dependent children, was subject to a deportation order that issued in 1992. She had arrived on a visitor’s visa in 1981. To avoid deportation, Ms. Baker applied for an exemption, based on humanitarian and compassionate grounds, from the requirement that an application for permanent resident status be made from outside Canada. Ms. Baker’s application was denied in a letter written by a senior immigration officer. That letter did not provide reasons. However, Ms. Baker’s counsel requested and received the written notes of the investigating immigration officer.

The one issue relevant to this appeal is whether the senior immigration officer was under an obligation to provide reasons for the rejection of Ms. Baker’s application. Understandably, the issue was of immense precedential significance because it involved the obligation of all civil servants vested with a statutory power or discretion to provide reasons for their decision. The Supreme Court ruled that, on the facts of the case, the immigration officer was required to provide reasons. However, the Court went on to hold that the investigating officer’s “notes” could be used inferentially to meet that requirement.

It was on the basis of those notes that the Supreme Court held the immigration officer to be biased. As to the legal rationale for holding that the immigration officer was under a duty to provide reasons for his decision, the Supreme Court did not go through each of the five factors outlined above.

The Court’s reasoning is as follows: “The strong arguments demonstrating the advantages of written reasons suggest that, in cases such as this where the decision has important significance for the individual, when there is a statutory right of appeal, or in other circumstances, some form of reasons should be required” (para. 43).

[ 31 ] The most recent decision of the Supreme Court addressing the issue of the obligation of an administrative decision-maker to provide reasons for decision is Congrégation des témoins de Jéhovah de St-Jérôme-Lafontaine v. Lafontaine (Village) ; see also Prud’homme v. Prud’homme , 2002 SCC 85 , [2002] 4 S.C.R. 663. The essential facts involved the persistent refusal of a municipality to rezone land that would allow the Congrégation to erect a place of worship.

Under the zoning by-law places of worship could only be built in a regional community use zone, but the Congrégation felt that no land was available in this zone and thus bought a parcel of land in a residential zone only to have their application for a rezoning denied after the municipality accepted the negative recommendation of a consultative body. The Congrégation purchased another lot in a commercial zone and their two applications for rezoning were denied without the municipality providing reasons and without being in receipt of a recommendation from the consultative body.

The essence of the Congrégation’s lawsuit was that the municipality had infringed their s. 2(

a) Charter right to freedom of religion. [ 32 ] The majority of the Supreme Court in Lafontaine (Village) held that the municipality had breached the fairness duty by failing to give reasons based on the application of the five factors articulated earlier in these reasons. In brief, reasons for decision were needed for judicial oversight to ensure against arbitrary municipal decision making, as there was no right to appeal the rezoning refusal. The Congrégation’s right to practice their religion militated in favour of heightened protection.

The Congrégation had a right to expect that their application would be thoroughly vetted as had been done on the application to rezone land in a residential area. Finally, although the municipality’s zoning decisions would require deference because of the municipality’s relative expertise, the failure to provide reasons meant that there was no record to indicate that the municipality had actually engaged its expertise in evaluating the applications. [ 33 ] Just as Baker was of immense precedential significance, so too was Lafontaine (Village) .

The notion that a municipal council in New Brunswick could be required to produce reasons for its decision to reject a rezoning application might come as a surprise to many. However, the finding that the New Brunswick Insurance Board may be under a duty to provide reasons for one of its decisions should not. My formal reasoning is as follows. [ 34 ] In regard to private passenger vehicles, the primary function of the Board is to ensure that insurance premiums are just and reasonable.

This objective came about as a result of the 2003 reforms to the Insurance Act which saw, for example, a cap being placed on the damages that could be awarded for certain types of personal injury. That amendment alone had a significant impact on the existing right of all New Brunswickers to obtain compensation for personal injury based on common law principles.

Eventually, the legislature wanted to ensure that the interests of all New Brunswickers would be further protected by permitting the Attorney General to intervene in cases where the Board decided to subject a rate application to further scrutiny by ordering a hearing. Hence, the Board’s failure to provide reasons undermines public confidence that the Board will attempt to balance the interests of insurers and policy- holders alike. [ 35 ] How is the public to be assured that the Board is not engaged in arbitrary decision-making?

How does the Attorney General obtain a meaningful right of appeal to this Court if the Board has failed to demonstrate that it grasped the issues at hand? The answer to those questions is obvious. The Board must provide reasons for its decision. Otherwise, this Court would be effectively granting deference to the Board when there is no evidence of the Board actually engaging its expertise by deciding discrete issues of precedential significance. Without reasons for decision, the public cannot be assured that Dominion’s proposed rate was just and reasonable.

The Attorney General’s allegation that Dominion’s application did not meet this threshold test went unanswered and that is all that is required to undermine public confidence in the administrative scheme implemented for the purpose of ensuring that the rate approval process remains both fair and transparent to all concerned. [ 36 ] There is one other reason why the Board’s failure to provide reasons should not be sanctioned. Recall that s. 267.5(5) of the Insurance Act obligates the Board to consider those factors which are prescribed by regulation when determining whether a proposed rate is just and reasonable.

Recall also that, to date, no such regulation has been adopted. In the circumstances, surely the obligation rests on the Board to fill that gap by ruling on what factors it considers relevant to the rate-decision-making process. Without reasons for decision the gap will never be filled. Whether the Legislature is partially responsible for this lacuna is a question I need not address. [ 37 ] I do not wish these reasons for judgment to be misinterpreted. They do not stand for the bald proposition that the Board is required to provide reasons with respect to all of its decisions.

Each year the Board is required to rule on hundreds of applications. Many, if not most, do not involve the kinds of questions being raised in this appeal. What I am saying is that, in cases where the Board rules that the rate application is one which requires further investigation in the form of a hearing, thereby triggering the Attorney General’s right to intervene, and where in fact he or she so elects, the Board is obligated to provide reasons with respect to issues properly raised before the Board and intelligently pursued by the parties.

If the case is one in which the issues raised are of precedential significance, the need for reasons is inevitable and it makes no difference whether the Board elects to proceed by electronic, paper or oral hearing. What matters is that two adversaries have posed factual and legal questions which require adjudication by an adjudicative tribunal. Within this narrow framework, it is not difficult to justify the imposition of an obligation to provide reasons.

[ 38 ] This leads me to consider whether the transcript of the Board’s post-hearing deliberations should be accepted as part of the appeal record and, if so, whether the transcript satisfies the requirement for reasons for decision. The transcript appears to have been tendered on the assumption that, just as the investigating officer’s notes in Baker were deemed admissible for the purpose of satisfying the requirement for reasons, so too should the transcript of the Board’s deliberations be deemed to satisfy the reasons requirement.

In my view, any analogy between the present case and Baker is misguided. [ 39 ] My first task is to explain how the transcript of the post-hearing deliberations made it up and onto our Bench. Apparently, a disc of the transcript was provided on the hearing of the motion held in this Court dealing with the Board’s application for intervener status. The motion for intervener status, as a Friend of the Court, was granted.

Following the filing of the appeal record and submissions, a transcript of the deliberations was prepared by Dominion and sent to the Registrar and, subsequently, distributed to the panel hearing the present appeal. At no time has the Attorney General or the Board objected to the introduction of the transcript. Indeed, the Attorney General relies on the document to identify other errors of the Board. [ 40 ] I offer two reasons why this Court should not accept the transcript of the Board’s deliberations as part of the appeal record.

First, as a matter of policy, no Court should be privy to the deliberations of an adjudicative tribunal except in the circumstances prescribed by law. Second, as one might expect, the disjointed interjections of Board members interlaced with extensive commentary by the Board’s lead actuary does not meet the general threshold test of “justification, transparency and intelligibility” articulated in Dunsmuir v. New Brunswick . I shall elaborate on these points further. [ 41 ] The duty of fairness does not cease at the end of the tribunal’s hearing. Issues may arise post-hearing that require consideration.

Since the topic is dealt with comprehensively in Jones & DeVillars at p. 340 et seq. , I need only focus on the circumstances in which the courts are permitted to delve into the post-hearing process. The two lead decisions of the Supreme Court are IWA v. Consolidated-Bathurst Packaging Ltd., 1990 CanLII 132 (SCC) , [1990] 1 S.C.R. 282, [1990] S.C.J. No. 20 (QL), and Tremblay v. Quebec (Commission des affaires sociales), 1992 CanLII 1135 (SCC) , [1992] 1 S.C.R. 952 , [1992] S.C.J. No. 20 (QL) .

Those cases focus on the extent to which non-panel members were involved in the decision-making process (illegal sub-delegation), thereby impinging, but only so slightly, on the tribunal’s right to insist on deliberative secrecy with respect to the decision-making process. Jones & DeVillars state: “The process of adjudication is generally not required to be an open process: parties are not allowed to inquire about the actual thinking process or consideration about the issues in the decision by the decision-maker. Deliberative secrecy is not absolute, but it is nonetheless heavily protected” (p. 346).

In support of that statement, the authors cite Gonthier J. in Tremblay at para. 25 where he distinguishes between review by the court of the “formal process” for consultation and “matters of substance or the decision makers’ thinking on such matters”. [ 42 ] Understandably, I was unable to uncover any decision in which a court was prepared to compel an adjudicative tribunal to reveal the actual exchange of post-hearing views of individual tribunal members. This leads me to ask whether it makes a difference that the tribunal voluntarily offers into evidence a transcript of its deliberations. Of course not.

The principle of deliberative secrecy cannot be transgressed at the whim of the adjudicative tribunal in order to overcome its failure to offer cogent reasons for its decision. Bluntly stated, transcripts of post-hearing deliberations cannot simply be used as spare tires for inadequate reasons. [ 43 ] My second reason for refusing to accept the transcript of the Board’s deliberations as part of the appeal record is umbilically tied to the first.

Not only is the transcript being used for purposes of “bootstrapping” materially deficient reasons for decision, it is being introduced on the mistaken assumption that the views exchanged by panel members and the Board’s actuary could pass the threshold test of “justification, transparency and intelligibility” articulated in Dunsmuir v. New Brunswick and discussed most recently in Burke v. Newfoundland and Labrador Assn. of Public and Private Employees , 2010 NLCA 12 , [2010] N.J. No. 62 (QL).

As one would expect, the transcript is simply a compilation of disjointed exchanges between panel members and relatively lengthy discourses tendered by the Board’s actuaries with respect to several discrete issues. The Attorney General uses the transcript as evidence of misguided ruminations by misguided adjudicative decision-makers.

In my respectful view, it is pure folly to believe that a transcript of disjointed questions, observations, musings and even expressions of opinion by individual decision-makers and their experts, is an acceptable substitute for a set of reasons that should be as cogent as they are persuasive and represent the collective views of only those who have the statutory right to decide. [ 44 ] I wish to make one final point with respect to the “transcript” issue.

While the presence of the Board’s independent actuaries during the post-hearing deliberations does not invite negative comment, it is worth stating that the role of any expert is to outline and explain the competing arguments advanced by each party. The expert may explain the pros and cons of each position and may ultimately express an opinion on a discrete issue.

In the present case, the expert has already expressed an opinion, and just as the Board panel that deliberated on the Dominion application is disqualified from hearing the matter anew, so too are the actuaries who advised the Board with respect to Dominion’s application. This direction should not be regarded as a negative reflection on their part. Disqualification simply avoids the allegation that without such a direction the decision-makers may be unable to fairly and objectively distance themselves from their initial decision or, in the case of the actuaries, from the advice originally given. VIII.

The Proper Relief

[ 45 ] As noted earlier, this Court has to grapple with the question of whether it has the power to set aside the Board’s decision to approve Dominion’s application and to remit the matter to the Board for a hearing in accordance with these reasons for judgment. The question arises because the English version of s. 19.8(4) of the Insurance Act provides that this Court may “confirm, modify, vary or reverse” the order or decision of the Board. This leads one to ask whether the power to “reverse” was meant to include the power to set aside and remit the matter to the Board for a redetermination.

But I cannot address that question without first turning to the French version of s. 19.8(4) which states that the Court has the power to “confirmer, modifier ou infirmer” the order or decision of the Board. In short, the English version outlines four remedial options while the French version offers three. Frankly I do not see any substantive difference between the words “modify” and “vary” as used in the English version.

Accepting this to be so, the only difference between the English and French versions is that the English version uses the word “reverse”, while the French version uses the word “infirmer” which means to invalidate, annul or quash. [ 46 ] Obviously, the interpretative issue at hand does not turn on the difference between the two language versions of s. 19.8(4). Neither expressly states this Court has the power to set aside a Board decision and to remit the matter for rehearing. Hence, we must decide whether such a power may be inferred.

In my view, a positive response is warranted on the ground of practical necessity. Let me explain. [ 47 ] Assume for the sake of argument, this Court does not have the power to remit the matter to the Board for a rehearing in order to remedy the breaches of the fairness duty. One remedial option is simply to “quash” or “infirmer” the Board’s decision in which case Dominion is left in the dark as to whether it may resubmit its application as the Insurance Act is silent on this point. Another option is to “reverse” the decision of the Board.

This would mean that we would have to rule that the Board erred in not rejecting the application. This makes no sense because there has been no final ruling on the merits of the application. Because of these ambiguities, I am prepared to hold that the words “reverse” and “infirmer” must, by necessary implication, have the extended meaning being proposed. This

interpretation is consistent with the position of the parties, the jurisprudence of this Court, and the objectives of the Insurance Act. As to the jurisprudence of this Court and the need for reading words into a statute see Town of Woodstock v. Stone, 2006 NBCA 71 , 302 N.B.R. (2d) 165 and Agnew v. Smith , 2001 NBCA 83 , 240 N.B.R. (2d) 63. [ 48 ] In

summary, I would allow the appeal, set aside the Board’s decision to approve Dominion’s rate application and remit the matter to a differently constituted panel of the Board for a determination in a manner consistent with these reasons for judgment. This is not a case where costs should be ordered. Neither party is at fault for the omission and, by order of a judge of this Court, the Board’s intervener status is as a Friend of the Court and not as a party. ____________________________________ J.T. ROBERTSON, J.A. WE CONCUR: ____________________________________ J. ERNEST DRAPEAU, CHIEF JUSTICE OF NEW BRUNSWICK _____________________________________ BRADLEY V. GREEN, J.A.