Ottawa, Ontario, December 2nd, 2005
PRESENT: THE HONOURABLE MR. JUSTICE KELEN
BETWEEN:
AGUSTAWESTLAND INTERNATIONAL LTD.
and
MINISTER OF PUBLIC WORKS AND GOVERNMENT SERVICES CANADA
and SIKORSKY INTERNATIONAL OPERATIONS, INC.
REASONS FOR ORDER AND ORDER
[1] This is a motion by the applicant Agustawestland International Limited for an order converting this application to an action claiming damages against the Crown. The respondent Sikorsky made no submissions. The respondent Minister opposed the motion.
BACKGROUND FACTS
[2] This application for judicial review, filed on September 1, 2004, is with respect to the procurement and servicing of 28 maritime helicopters to replace the fleet of naval Sea King helicopters operated by the Department of National Defence. The contract is worth approximately $5 billion. The application seeks four declarations as remedies:
No. 1. The manner in which the helicopter procurement has been carried out raises a reasonable apprehension of bias by the Minister;
No. 2. The Minister has conducted the procurement in violation of his legal obligations applicable to public invitations to tender;
No. 3. The Minister has structured and carried out the procurement in a manner that violates the principles of natural justice and procedural fairness in that the procurement was designed to discriminate against the applicant; and
No. 4. The Minister has exceeded his legal authority by conducting the procurement for an irrelevant and improper purpose to avoid the political embarrassment that would have resulted if the applicant were successful in this procurement.
[3] The "grounds" for judicial review are set out in the application under the heading "Overview" as follows:
No. 1. The Minister acted in a manner that gives rise to an apprehension of bias in that the procurement was structured to prevent the applicant's helicopter from being selected;
No. 2. The Minister evaluated the bids for the procurement in a biased and unfair manner, in particular:
i. The Minister used a "fairness monitor" who:
• was a registered and paid lobbyist for one of the principal partners in the Sikorsky bid;
• was a registered and paid lobbyist for other defence contractors; and
• was a long-time associate of officials who were conducting the procurement and evaluating the bids.
ii. The Minister evaluated the Sikorsky bid as compliant even though the Minister knew that:
• Sikorsky cannot deliver the maritime helicopter within the 48-month mandatory delivery deadline stipulated in the procurement; and
• Sikorsky intentionally provided a certificate in its bid that misrepresented its ability to meet the deadline.
No. 3. The Minister made exceptions and accommodations on other non-compliant elements in the Sikorsky bid; and
No. 4. The Minister committed serious errors in the evaluation of Sikorsky's bid which favoured Sikorsky and discriminated against the applicant.
The law regarding motions to convert
[4] The law regarding motions to convert has been set out by Mr. Justice Jim Russell in Chen v. Canada(Minister of Citizenship and Immigration), [2005] 3 F.C.R. 82. First, at paragraph 3, Russell J. sets out the statutory authority for directing that an application for judicial review be converted to an action:
The discretion to direct that the judicial review applications ... be treated and proceeded with as actions is governed by section 18.4 [as enacted by S.C. 1990, c. 8, s. 5; 2002, c. 8. s. 28] of the Federal Courts Act [R.S.C. 1985, c. F-7, s. 1 (as am. by S.C. 2002, c. 8, s. 14)]:
18.4 (1) Subject to subsection (2), an application or reference to the Federal Court under any of sections 18.1 to 18.3 shall be heard and determined without delay and in a summary way.
(2) The Federal Court may, if it considers it appropriate, direct that an application for judicial review be treated and proceeded with as an action.
[5] At paragraph 4, Russell J. sets out the general rule that applications for judicial review be proceeded with as motions so that they can be determined "without delay and in a summary way". A motion to convert is an exception to the general rule only to be allowed in the clearest of circumstances.
[6] Russell J. notes that the 1994 decision of the Federal Court of Appeal in Macinnis v. Canada (Attorney General), [1994] 2 F.C. 464, per Décary J.A. held that a motion to convert should only be permitted where the facts cannot be satisfactorily established or weighed through affidavit evidence. Mr. Justice Décary held at paragraph 9 of Macinnis:
It is, in general, only where facts of whatever nature cannot be satisfactorily established or weighed through affidavit evidence that consideration should be given to using subsection 18.4 (2) of the Act. In the case at bar, I am satisfied, after reviewing the affidavits and the cross-examinations, that there is a need for viva voce evidence to assess the demeanour and credibility of the witnesses and to allow the Court to have a full grasp of the whole of the evidence. Moreover, this case "cries out for the full panoply of a trial".
[7] In paragraph 5, Russell J. finds that Macinnis represents a "narrow approach" to subsection 18.4(2), and refers in paragraph 6 to Drapeau v. Canada (Minister of National Defence) (1995), 179 N.R. 398 per Hugessen J.A. which held a motions judge can give consideration to the desirability of converting to an action to avoid a multiplicity of proceedings. Mr. Justice Hugessen said in Drapeau at paragraph 1:
... In our view, s.18.4(2) places no limits on the considerations which may properly be taken into account in deciding whether or not to allow a judicial review application to be converted into an action. The desirability of facilitating access to justice and avoiding unnecessary costs and delay is certainly one of them ...
Delays to the expeditious hearing of this application
[8] On December 22, 2004, I ordered, as Case Management Judge, that this application for judicial review be expedited. Instead, the application has been stalled due to a number of factors, including the complexity of the subject matter, the volume of the material, and numerous objections by the Minister during cross-examinations, which were overruled by a Prothonotary and by two Judges of this Court (including myself).
[9] The delays encountered in this application no longer make it possible for this application to be heard and determined "without delay and in a summary way".
First delay
[10] The first delay was caused by a motion to strike the application for judicial review. On November 3, 2004 I rendered a 33-page decision which dismissed this motion and concluded at paragraphs 59 and 60:
¶ 59. With respect to the first part of the test, I am satisfied that the applicant's allegations of bad faith in the award of a major contract warrant a proper hearing. The procurement involves the expenditure of billions of dollars, and a 10-day extension of time is necessary "to do justice" between the parties in this case.
¶ 60. With respect to the second part of the test, the applicant has raised an arguable case for setting aside the July 23, 2004 decision to award the contract to Sikorsky. The applicant alleges that the contract was awarded to Sikorsky in bad faith. In particular, the evaluation process was biased so that the applicant's bid was rejected. These serious allegations may prove unfounded but at this stage they do raise an arguable case.
Second delay
[11] On December 22, 2004, upon a case management teleconference to fix a timetable so that the Court could conduct this judicial review in an expeditious manner, the respondent Minister insisted that the preparation of their affidavits would require extensive time due to the complexity and importance of the case, so that the 30-day time period for filing their affidavit evidence must be extended. At the same time, the respondents undertook to use their best efforts to deliver as many of their affidavits as soon as possible, and the parties agreed to time limits for completing the cross-examinations. The Minister requested three months to file his affidavits. The Court ordered that the respondents file their affidavits by March 11, 2005 and that the cross-examinations on the affidavits be completed by April 20, 2005 so that the parties would be available for the hearing of this application during the weeks of May 30 and June 6, 2005.
Third delay
[12] Unfortunately, the parties incurred substantial delays in completing the cross-examinations, and on April 15, 2005 advised the Court that the hearing dates cannot be met. The hearing was tentatively rescheduled for the weeks of September 19 and 26, 2005.
Fourth delay
[13] The respondent Minister objected to questions at the cross-examinations and counsel for the Minister, Mr. Ciavaglia, allegedly improperly interfered with the cross-examination. On June 4, 2005 Prothonotary Tabib ordered that the respondent Minister's witnesses re-attend for cross-examination at their own expense to answer the questions and directed counsel for the Minister to limit his interventions. Costs were awarded against the respondent Minister in any event of the cause.
[14] The Order of Prothonotary Tabib was appealed to a Judge of this Court. On July 29, 2005 Mr. Justice Martineau delivered a 10-page Order which found that the Prothonotary did not err so that the Minister's appeal was dismissed with costs in favour of the applicant.
Fifth delay
[15] On July 21, 2005 another motion was filed by the applicant for an order directing that the Minister's witnesses re-attend at cross-examinations at their own expense to answer other questions that were objected to or were taken under advisement. After the motion was filed, the respondent Minister withdrew most of the objections and undertook to answer most questions so that only two questions remained for resolution by the Court. On August 15, 2005 I ordered that both of the remaining questions objected to were relevant and that the Minister's witnesses re-attend for cross-examination to answer those questions with costs awarded against the Minister in any event of the cause.
[16] Also, on August 15, 2005 the parties advised the Court that the delays in completing the cross-examinations means that they would not be ready for the hearing of this application on September 19, 2005. At that time, the parties were asked by the Court to take under advisement whether this application for judicial review ought be converted to an action so that critical witnesses can be heard by the Court in person with viva voce evidence, as opposed to affidavit evidence.
[17] At a subsequent teleconference on September 19, 2005 the parties agreed that a motion for conversion would be brought which led to this motion before the Court.
[18] It is clear to the Court that the fifteen months of delay since this application was filed means that this application can no longer be determined "without delay and in a summary way". Moreover, the Court's Order dated December 22, 2004 which was to fix a timetable so that the Court can conduct this judicial review in an expeditious manner, has been completely frustrated. Therefore, the purpose of the general rule that judicial review applications be heard by motion is no longer applicable.
Can the facts be satisfactorily established or weighed through affidavit evidence?
[19] As the Case Management Judge for the past year, it has struck me that the opposing views of the witnesses on several sophisticated issues of aerospace engineering and aircraft performance cannot be satisfactorily established or weighed without viva voce evidence. For example, in the Order dated August 15, 2005, I ordered the Minister's witnesses answer questions with respect to a change in the performance testing specifications for the outside operating temperature for the helicopters. Agusta submits that this change for the helicopter specifications was designed to favour Sikorsky. The Minister allegedly changed the outside operating temperature conditions with which to test the performance of these helicopters from the International Standards Association recommended temperature of 20 º C to 35 º C. There is a conflict in the evidence on this subject which the Court would have difficulty resolving based on simply reading affidavit evidence and transcripts of cross-examinations.
[20] Other difficult issues involving credibility, and the weighing of conflicting evidence include:
1. whether the Minister's evaluators knew, as contended by Agusta, that Sikorsky could not deliver its helicopters within the four year delivery deadline set out in the Request For Proposals;
2. whether the evaluators for the Minister evaluated the Agusta bid without seeing three of the eight binders which constituted the Agusta bid;
3. whether witnesses were properly answering questions at the cross-examinations since they were not before a Judge; and
4. whether certain witnesses for the Minister who gave one answer at cross-examinations and subsequently changed their answers by correspondence, are credible witnesses. More particularly, whether the witness intentionally misrepresented the answer in the first instance.
[21] I am satisfied that these and many more issues can only be satisfactorily established and weighed with viva voce evidence to assess the demeanour and credibility of the witnesses and to allow the Court to have a full grasp of this sophisticated evidence.
[22] At the same time, I agree with counsel for the Minister that the complexity of legal issues is not a reason to convert, the fact that a witness changed his answer does not necessarily make him not credible, and that the volume of material does not warrant converting the application to an action.
Avoiding unnecessary multiplicity of proceedings
[23] I am satisfied, based on the evidence, that Agusta will commence an action for damages with respect to the same subject matter as this application for judicial review if this motion to convert is dismissed. When a $5 billion contract is at stake, an action for damages is inevitable if there are any possible grounds. Moreover, Agusta advised in its application for judicial review filed on September 1, 2004 that it will bring a motion to convert this application to an action for damages. Also, the affidavit of William MacDonald filed by Agusta in support of this motion deposes that Agusta will commence an action in damages against the Crown if this motion to convert is denied.
[24] Agusta has the absolute right to commence an action for damages in this Court or another Court against the Crown with respect to the same subject matter of this application at any time within the limitation period, which is approximately five years from now.
[25] As discussed above, the motion to convert can take into account the desirability of facilitating access to justice, and avoiding unnecessary cost and delay caused by a multiplicity of proceedings. I am satisfied that converting this application to an action will accomplish this purpose. It will be desirable to ensure that the cross-examinations which have taken place are utilized to serve as part of the examinations for discovery in an action for damages. Moreover, the Court may choose to bifurcate the issue of damages so that the question of liability can be determined in as expeditious manner as possible.
CONCLUSION
[26] The Court is satisfied that this motion to convert should be allowed for the following reasons:
1. this application for judicial review can no longer be determined "without delay and in a summary way" because of the numerous delays which have taken place;
2. the facts in this case are of a nature which cannot be satisfactorily established or weighed through affidavit evidence and there is a need for viva voce evidence to assess the demeanour and credibility of the witnesses and to allow the Court to have a full grasp of the evidence; and
3. converting this application to an action will avoid Agusta commencing the inevitable action in this Court for damages arising out of the same subject matter.
ORDER
THIS COURT ORDERS THAT:
1. this motion to convert this application for judicial review to an action is allowed with costs in the cause;
2. the applicant shall file its statement of claim within 15 days and the procedural steps and timelines set out in the Federal Courts Rules, SOR/98-106 for actions will thereafter apply;
3. the parties will decide how the affidavits and cross-examinations can be used as the examinations for discovery, and identify what further examinations for discovery will be necessary; and
4. the Court will conduct a case management teleconference on January 12, 2006 at 11:00 a.m. to consider outstanding procedural matters, including a possible order bifurcating the issue of damages from the issue of liability.
JUDGE
FEDERAL COURT
NAMES OF COUNSEL AND SOLICITORS OF RECORD
DOCKET: T-1605-04
STYLE OF CAUSE: AGUSTAWESTLAND INTERNATIONAL LIMITED
- and -
MINISTER OF PUBLIC WORKS AND GOVERNMENT SERVICES CANADA, and SIKORSKY INTERNATIONAL OPERATIONS INC.
PLACE OF HEARING: Ottawa, ON
DATE OF HEARING: November 30, 2005
REASONS FOR ORDER
AND ORDER: THE HONOURABLE MR. JUSTICE KELEN
DATED: December 2, 2005
APPEARANCES:
Mr. G. Cameron
Ms. M. Gardner FOR APPLICANT
Mr. J. Brongers FOR RESPONDENT
Minister of Public Works
and Government Services Canada
Mr. B. Mills FOR RESPONDENT
Sikorsky International Operations Inc.
SOLICITORS OF RECORD:
Blake Cassels & Graydon, LLP
Ottawa, ON FOR APPLICANT
John H. Sims, Q.C FOR RESPONDENT
Deputy Attorney General of Canada Minister of Public Works and Government Services Canada
McCarthy Tetrault FOR RESPONDENT
Ottawa, ON Sikorsky International Operations Inc.