HydroQuébec v. Canada (Attorney General)

Hydro- Québec v. Canada (Attorney General)
Court (s) Database
Federal Court Decisions
Date
2024-05-08
Neutral citation
2024 FC 669
File numbers
T-236-20
Decision Content
Date: 20240617
Docket: T-236-20
Citation: 2024 FC 669
[ENGLISH TRANSLATION]
Ottawa, Ontario, June 17, 2024
PRESENT: The Honourable Madam Justice St-Louis
BETWEEN:
HYDRO-QUÉBEC, a company incorporated under the Hydro-Québec Act, CQLR, c H-5
Applicant
and
ATTORNEY GENERAL OF CANADA
Respondent
PUBLIC JUDGMENT AND REASONS
(Identical to the Confidential Judgment and Reasons issued on May 8, 2024)
I. Overview [1] The applicant, Hydro-Québec, a company incorporated under the Hydro-Québec Act, CQLR, c H-5, is seeking judicial review of a portion of the decision dated December 4, 2019, [the Decision] by David Spicer, then acting on behalf of the Minister of Industry [Minister] under the aegis of section 29.16 of the Electricity and Gas Inspection Act, RSC 1985, c E-4 [the Act].
[2] Mr. Spicer, who is also Measurement Canada’s Vice President, Regulatory Modernization, acted as the person designated to determine, on behalf of the Minister [Minister’s Delegate], the outcome of the challenge lodged by Hydro-Québec, pursuant to paragraph 29.13(2)(b) of the Act, against Notice of Violation number 2018-05-EG drawn up by Measurement Canada on February 1, 2019 [Notice of Violation].
[3] Before the Court, Hydro-Québec is challenging the portion of the Decision in which the Minister’s Delegate (1) concluded that Hydro-Québec was liable for the violations alleged in the Notice of Violation with respect to 246 meters located on non-Indigenous lands, under subsection 12(1) and paragraph 33(1)(e) of the Act; and (2) imposed a penalty of $123,000.00 on Hydro-Québec pursuant to the provisions of the Act and those of the Electricity and Gas Inspection Regulations, SOR/86-131 [Regulations].
[4] Furthermore, Hydro-Québec does not dispute the Minister’s Delegate’s conclusion that Hydro-Québec was not liable for the alleged violations regarding 443 meters located on Indigenous territory.
[5] In support of its application for judicial review, Hydro-Québec argues that the decision-making process leading to the Decision was compromised by significant breaches of the principles of natural justice and procedural fairness that fatally tainted the Decision. Hydro-Québec points out that the Minister’s Delegate, supposedly an independent decision-maker, had communications with the other party to the dispute, i.e., Measurement Canada, without the presence and knowledge of Hydro-Québec, and that the Minister’s Delegate also had communications with, or retained the services of, Measurement Canada’s counsel, without Hydro-Québec’s knowledge. Thus, Hydro-Québec maintains that it did not receive the impartial hearing by an independent decision-maker to which it was entitled.
[6] In addition, Hydro-Québec argues that the Decision was unreasonable and unintelligible because the Minister’s Delegate misapplied the Act, failing to examine the condition of each meter or seal, and ignored the evidence. Hydro-Québec points out in particular that the Decision confirms a violation in connection with each and every one of the 246 meters in non-Indigenous territory, en masse whereas the evidence reveals that there were no violations for at least some of the meters at the time of the Ministerial Review; that there were no reasonable grounds to believe in a violation for at least some meters at the time the Notice of Violation was issued; and that the due diligence defence applied in respect of at least some of the meters in non-Indigenous territory.
[7] Hydro-Québec is asking the Court to allow the application for judicial review, declare that it was not open to the Minister’s Delegate to conclude that violations had occurred with respect to the 246 meters in non-Indigenous territory, set aside part of the Decision and vacate the Notice of Violation.
[8] The respondent, the Attorney General of Canada [the AGC], essentially argues that the evidence on the record demonstrates that no reasonable apprehension of bias arose from Measurement Canada’s conduct and that no breach of procedural fairness occurred.
[9] The AGC added that it was reasonable for Measurement Canada to have found that Hydro-Québec had not exercised due diligence to prevent meters with expired seals from remaining in service.
[10] For the reasons set out below, the application for judicial review is allowed.
[11] In short, Hydro-Québec first demonstrated that it did not receive the impartial hearing by an independent decision-maker that it was entitled to expect, and it also demonstrated that this fatally tainted the Decision. This reason alone was sufficient to set aside the Decision.
[12] Alternatively, Hydro-Québec has also demonstrated that the Decision was unreasonable.
[13] First, in subsections 29.11(1), 29.12(1) and 29.12(4), the Act requires that each violation be proven, which the AGC does not dispute, recognizing also that a finding of violation must, and can, relate to only one meter. Hydro-Québec provided evidence that some of the meters had been replaced at the time of the Ministerial Review, whereas the Minister’s Delegate did not mention, discuss, dismiss or identify evidence that contradicted his conclusion that a violation had occurred and that the seals had expired on all of the meters. The Minister’s Delegate therefore failed to consider the individual condition of each meter, as required by the Act, or disregarded the evidence submitted to that effect, or both.
[14] In addition, Hydro-Québec provided proof that some of the meters had been replaced when the inspector issued his Notice of Violation. However, the Minister’s Delegate did not mention, discuss, discard or distinguish the evidence that contradicted his determination that the inspector did in fact have reasonable grounds to believe a violation had occurred, for all of the meters, at the time he issued the Notice of Violation. The Minister’s Delegate therefore disregarded the individual condition of each meter, as required by the Act, or disregarded the evidence submitted to that effect, or both.
[15] In addition, the Court finds that the Minister’s Delegate also fatally erred in assessing the due diligence defence open to Hydro-Québec under subsection 29.2(1) of the Act, since the Minister’s Delegate did not take into account the specific condition of each of the meters in non-Indigenous territory, some of which were not even in a situation of violation, as he should have done, or ignored the evidence to that effect, or both.
[16] The Decision is therefore untenable in light of the relevant factual and legal constraints (Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 at para 101 [Vavilov]) and the Court’s intervention is therefore warranted.
II. Background [17] In 2013, Hydro-Québec undertook a project to replace nearly 3.8 million electromechanical electricity meters with new-generation meters. As part of these replacements, Hydro-Québec submitted applications to Measurement Canada for temporary dispensations from the verification requirement set out in paragraph 12(1)(a) of the Act. On May 6, 2013, Measurement Canada granted a dispensation to Hydro-Québec, in accordance with subsection 9(2) of the Act, allowing it to use electricity meters without reverification until December 31, 2015. In 2015, 2017 and 2018, Measurement Canada granted additional temporary dispensations. Between 2013 and 2018, Hydro-Québec and Measurement Canada met regularly to discuss the status of the deployment of the new meters.
[18] On September 27, 2018, Measurement Canada sent Hydro-Québec a Violation Warning. In that warning, Measurement Canada expressed concern about 1,420 meters with expired seals, noting that this contravened subsection 12(1) and paragraph 33(1)(e) of the Act and could result in the imposition of sanctions. Measurement Canada therefore asked Hydro-Québec to remove said meters no later than December 31, 2018, and to correct the violation. Measurement Canada also pointed out that the dispensation for 6,074 meters, valid until December 31, 2018, could not be renewed. Lastly, Measurement Canada asked Hydro-Québec to submit an action plan by October 27, 2018 (Applicant’s Record at 141–42, Exhibit PGL-3 of Patrick Grignon-Labine’s affidavit (Exhibit HQ-6 of the Ministerial Review file)). On October 26, 2018, Hydro-Québec submitted this action plan to Measurement Canada by email.
[19] On November 20 and December 11, 2018, a Measurement Canada inspector visited Hydro-Québec to validate the steps in the documentation being done by Hydro-Québec at the time in connection with meters with expired seals and performed verifications on a sampling of 16 meter records.
[20] On January 2, 2019, Measurement Canada asked Hydro-Québec to provide, by January 7, 2019, the complete list of meters with expired seals still installed that were included in the Violation Warning dated September 27, 2018, and whose action plan had ended on December 31, 2018. Measurement Canada then listed 10 types of information that Hydro-Québec was required to record for each meter.
[21] On January 11, 2019, after receiving an extension of the initial deadline, Hydro-Québec sent Measurement Canada a list of 844 meters and included, for each one, some brief pieces of information, including the reason for the delay in replacing them and the steps currently being taken (Applicant’s Record at 409–19, Exhibit PGL-3 of Patrick Grignon-Labine’s affidavit (Exhibit HQ-13 of the Ministerial Review file)). Hydro-Québec then offered to meet with Measurement Canada’s representatives to show them details of the steps taken for each meter.
[22] On or about January 18, 2019, Measurement Canada issued a Violation Report which would be used to draft the Notice of Violation. The report states that during its two-day inspection visit on November 20 and December 11, 2018, Measurement Canada verified a total of 16 meter records. The Measurement Canada inspector recorded the following comments in the Appendix to the Violation Report:
[translation]
HQ’s efforts with regard to some of the meters with expired seals in 2014 are insufficient. We have evidence that some customers were contacted only once or twice over very long periods of time. In some of these cases, after HQ received Measurement Canada’s violation warning letter, we noticed an increase in warning/moderated letters sent by them.
Verification of HQ’s documentation shows that a systematic and uniform approach had not been applied over the years, as HQ had committed to for all of the meters with expired seals.
[23] On February 1, 2019, a designated Measurement Canada official, Mario Dupuis, issued the Notice of Violation pursuant to subsection 29.12(1) of the Act. In it, Mr. Dupuis stated his opinion that the alleged violator, Hydro-Québec, had committed a violation of subsection 12(1) and paragraph 33(1)(e) of the Act by allowing a meter to remain in service beyond the date set for a new verification. In the section of the Notice of Violation relating to the alleged facts, Mr. Dupuis noted that on January 1, 2019, Hydro-Québec still had 844 meters with expired seals and that these meters were covered by the Violation Warning that had been issued on September 27, 2018. Mr. Dupuis further noted that after reviewing the measures taken by Hydro-Québec to replace the remaining meters with expired seals, Measurement Canada exempted 155 meters from the administrative penalty, assessing that Hydro-Québec was not using them for customer billing or had exercised due diligence in removing them from service, and that 689 meters with expired seals were therefore subject to the administrative penalty.
[24] Mr. Dupuis also pointed out that under section 49 and subsection 50(1) of the Regulations, the violation was described as very serious, and the penalty for a very serious violation was $1,000. However, in view of the past history (subsection 50(2) of the Regulations), he reduced the penalty by half to $344,500.00, which in turn would be reduced by half if the penalty was paid within 15 days.
[25] The Notice of Violation confirmed the three options available to the alleged violator in response to the Notice of Violation: (1) pay the penalty and correct the violation immediately; (2) request to enter into a compliance agreement with Measurement Canada; or (3) request a review of the facts of the alleged violation or of the amount of the penalty.
[26] On February 4, 2019, the Notice of Violation was served on Hydro-Québec. On February 18, 2019, Mr. Dupuis confirmed to Hydro-Québec that he expected a response to the Notice of Violation by March 6 and that Hydro-Québec would then have an additional 30 days to submit supporting documents.
[27] On March 5, 2019, Hydro-Québec submitted a response form to the Notice of Violation to Measurement Canada pursuant to paragraph 29.13(2)(b) of the Act and requested a ministerial review of the facts of the alleged violation or of the amount of the penalty.
[28] Hydro-Québec attached to this form written submissions and exhibits identified as HQ-1 to HQ-20 (Applicant’s Record, Exhibit PGL-3 of Patrick Grignon-Labine’s affidavit). Hydro-Québec then argued that (1) the proceedings in respect of a violation were null and void, since they were prescribed; (2) the penalty claimed was unlawful, since it exceeded $2,000 (subsection 29.11(3) of the Act) and included multiple alleged acts in the same notice of violation; (3) the Notice of Violation was unlawful, since a notice of violation had to be issued for each violation, which was not done (subsections 29.11(1) and 29.12(1) of the Act) and the inclusion of 689 alleged violations within the same Notice of Violation did not allow for a response adapted to each situation; (4) Hydro-Québec could not be found liable since it did not commit the alleged violation; and (5) there were no reasonable grounds (subsection 29.12(1) of the Act) since, in particular, the Notice of Violation was drawn up on the basis of information that Measurement Canada knew to be incomplete, and the requirement of reasonable grounds for each violation under the Act was incompatible with the sampling process. By way of example, Hydro-Québec pointed out that the meter bearing number 392J7683695 had nevertheless been replaced on May 1, 2018, by the meter bearing number G9SJ3579648 and that the meter bearing number 320H6089201 had been replaced on November 15, 2018, by the meter bearing number G4SXB001332 and that no violation therefore existed for these meters on January 1, 2019 (Applicant’s Record at 2436).
[29] Also in response to the Notice of Violation, Hydro-Québec argued that a breach of procedural fairness had occurred, that it had a due diligence defence and that it had exercised due diligence to prevent the commission of the alleged violation. Hydro-Québec also indicated that the supporting documents in support of the due diligence defence, with respect to the meters covered by the Notice of Violation, would be submitted no later than April 4, 2019.
[30] On March 19, 2019, in response to the response form and Hydro-Québec’s choice to challenge the Notice of Violation before the Minister, Diane Allan, President of Measurement Canada, instructed Mr. Spicer to proceed, on behalf of the Minister, with the review of the challenge.
[31] That same day, Mr. Dupuis confirmed to Hydro-Québec that Measurement Canada had received the request for review and pointed out that the request and written submissions would be forwarded to an independent reviewer. Mr. Dupuis also informed Hydro-Québec that Mr. Spicer had been appointed to conduct the review.
[32] On April 3, 2019, without waiting for the submission of supporting documents announced by Hydro-Québec on the previous March 5, Mr. Dupuis transmitted Measurement Canada’s response to Hydro-Québec’s submissions to the Minister’s Delegate. Mr. Dupuis then confirmed in particular that the Notice of Violation had been served on Hydro-Québec on the basis of the follow-up information submitted on January 11, 2019, for each of the meters in question. He also pointed out that Measurement Canada had incorporated the same alleged act involving a total of 689 meters into a single Notice of Violation, and [translation] “that a group of meters that were covered by the same dispensation and subsequent action plan will also be included on the same notice of violation. The calculation then takes into account the maximum amount provided by apparatus . . . ” (Applicant’s Record at 2453). On page 3 of his reply, Mr. Dupuis pointed out that [translation]“[a]ccording to Measurement Canada, the Régie de l’énergie provides [Hydro-Québec] with powers of entry, and according to a legal opinion obtained by [Measurement Canada], they are entitled to exercise their right of entry provided for in the [Electricity and Gas Inspection Act]” (Applicant’s Record at 2454). Mr. Dupuis did not include a copy of that legal opinion with his reply. Lastly, Mr. Dupuis referred to the evidence available at the time and left it to the Minister’s Delegate to consider Hydro-Québec’s arguments regarding procedural fairness and the due diligence defence.
[33] On April 4, 2019, Hydro-Québec submitted its amended written submissions. Hydro-Québec then maintained that it had exercised due diligence to prevent the commission of the alleged violation, and added a voluminous file of over 1,500 pages containing supporting documents, namely Exhibits HQ-21 and HQ-22, detailing the measures taken in connection with each of the meters on non-Indigenous and Indigenous lands respectively (see Exhibit PGL-3 of Patrick Grignon-Labine’s affidavit). Hydro-Québec then suggested, among other things, that Measurement Canada had only reviewed the information that Hydro-Québec had provided on January 11, 2019, when it transmitted the requested list, and in November and December 2018, when it inspected 16 meters by sampling. Hydro-Québec therefore maintains that it is incorrect to assert that Measurement Canada reviewed the measures taken to replace the 844 meters.
[34] Hydro-Québec then pointed out that between January 11, 2019, and the date of issuance of the Notice of Violation, 33 meters had already been replaced, so that the review carried out by Measurement Canada could not have been contemporaneous with the issuance of the Notice of Violation, whereas the reasonable grounds required by the Act to issue the Notice of Violation must be contemporaneous with it. Hydro-Québec pointed to other factual situations that demonstrate, in its opinion, that Measurement Canada had limited itself to using the information provided by Hydro-Québec at the time the list of meters was sent on January 11, 2019, that Measurement Canada had interpreted the information on the list based on the information obtained during the November 20 and December 11, 2018, verifications of a sample of 16 meters, and essentially, that Measurement Canada did not perform its own verifications with respect to each meter and each violation following receipt of the list of meters with expired seals. Lastly, Hydro-Québec maintains that it exercised due diligence and took the necessary precautions to prevent the commission of the alleged violation. Hydro-Québec is therefore requesting that the Notice of Violation be set aside or, alternatively, that the amount of the penalty be revised to $500 for a single violation, in accordance with the Act. In addition, Hydro-Québec added examples of meters that had allegedly been replaced, including the meter bearing number 392JD011677, which had been replaced by the meter bearing number G9SJ3722660 on September 21, 2018, well before the Notice of Violation was issued.
[35] At the beginning of April 2019, Measurement Canada representatives had discussions with the Minister’s Delegate, unbeknownst to Hydro-Québec. This is the first of the issues raised by Hydro-Québec to support the allegation of the violation of the principles of natural justice, examined later in these reasons.
[36] On April 18, 2019, Hydro-Québec sent the Minister’s Delegate its reply to Measurement Canada’s response dated April 3, 2019. Hydro-Québec also emphasized that (1) Measurement Canada’s response had been issued before the expiry of Hydro-Québec’s deadline for submitting its supporting documents; (2) the supporting documents sent by Hydro-Québec on April 4 comprised several thousand pages; (3) Measurement Canada referred to a legal opinion without providing a copy of that legal opinion, which Hydro-Québec had requested; and (4) the Notice of Violation cannot be based on a sample of 16 verifications, since each violation requires reasonable grounds for believing that a violation was committed in support of the alleged facts.
[37] On May 6, 2019, the Minister’s Delegate, writing to the parties, indicated that they should [translation] “ . . . ensure that all parties have access to the same documents” (Applicant’s Record at 3511).
[38] In May 2019, Sherri Anderson, Measurement Canada’s counsel who helped draft the Notice of Violation, communicated with the Minister’s Delegate without Hydro-Québec’s knowledge. This is the second of the problematic issues raised by Hydro-Québec, which is examined later in these reasons.
[39] In the fall of 2019, Measurement Canada representatives met with the Minister’s Delegate once again to discuss Hydro-Québec’s request for an extension of the dispensation, once again without Hydro-Québec’s knowledge. This is the third issue Hydro-Québec has identified as problematic.
[40] In this context, on December 4, 2019, the Minister’s Delegate issued his Decision and Hydro-Québec applied for judicial review before the Federal Court.
[41] As part of its application for judicial review, Hydro-Québec filed a request for transmission of the tribunal record pursuant to Rule 317 of the Federal Courts Rules, SOR/98-106 [Rules].
[42] On September 14, 2020, in response to this request for transmission under Rule 317, Measurement Canada transmitted its Certified Tribunal Record [CTR] to the parties, although certain portions were redacted. Hydro-Québec requested disclosure of the redacted information, but Measurement Canada objected under Rule 318 of the Rules, invoking solicitor-client privilege. Measurement Canada then filed a Motion to object to the transmission of the tribunal record and for an order of confidentiality, pursuant to Rules 369, 151, 152, 317 and 318 of the Rules. One of the redacted documents was the legal opinion dated December 28, 2018, prepared by the aforementioned Measurement Canada counsel, for Ms. Campeau and Mr. Dupuis, Measurement Canada officials. In fact, Mr. Dupuis referred to this legal opinion in his April 3, 2019, reply to the Minister’s Delegate and it was this legal opinion that was delivered, in May 2019, by the counsel to Mr. Spicer while he was acting as the Minister’s Delegate.
[43] On April 26, 2021, Associate Justice Mireille Tabib allowed Measurement Canada’s motion to object and concluded that the parts of the CTR identified as being covered by solicitor-client privilege should not be disclosed. Hydro-Québec is appealing the part of that decision that redacts the legal opinion.
[44] In this appeal, Measurement Canada argues, among other things, that the disclosure of a document protected by solicitor-client privilege from one government institution to another, let alone from one public servant to another working for the same institution, does not entail a waiver of the privilege. Measurement Canada therefore maintains that the official acting as Minister’s Delegate and Measurement Canada officials shared the same solicitor-client privilege. Measurement Canada further submits that administrative decision-makers may seek and obtain a legal opinion from a counsel.
[45] On October 26, 2021, the Court allowed Hydro-Québec’s appeal and ordered that Hydro-Québec be provided with an unredacted version of the legal opinion dated December 28, 2018. The Court noted, among other things, that the Minister’s Delegate could not share the same solicitor-client privilege as the Measurement Canada officials who issued the Notice of Violation that the Minister’s Delegate was tasked with reviewing. Measurement Canada did not appeal that decision.
III. Impugned decision [46] In his Decision, the Minister’s Delegate explained that his role as a reviewer is to (1) determine whether Hydro-Québec has committed the violation or established that it has exercised due diligence to prevent the commission of the violation; and (2) determine whether the amount of the penalty has been established in accordance with the Regulations. He emphasized his obligation to review all of the relevant documents relating to the Notice of Violation submitted by the parties. The Minister’s Delegate provided an overview of the facts and noted that, despite the measures taken by Hydro-Québec to replace the meters, in actual fact, there were still 844 meters whose seals had expired as of January 1 , 2019.
[47] As part of his analysis, the Minister’s Delegate addressed the acts or omissions constituting an alleged violation (Part 1) and the amount of the penalty (Part 2).
[48] In Part 1, the Minister’s Delegate pointed out that it is clear from the documentary evidence provided by the parties that the 844 meters referred to in the Notice of Violation had expired seals and that both parties were aware of the meters and had additional details on each of those meters. He noted that despite Hydro-Québec’s best efforts, the meters did not meet the requirements of section 12 of the Act. He concluded that Hydro-Québec had therefore committed the violation set out in the Notice of Violation.
[49] Still in Part 1, the Minister’s Delegate then addressed the four arguments raised by Hydro-Québec which were, in his opinion, necessary and relevant in this case, namely that (1) Measurement Canada did not meet the requirements of section 29.26 of the Act; (2) there should be a separate Notice of Violation for each meter and a corresponding penalty under section 29.11 of the Act; (3) the inspector had no reasonable grounds for issuing a Notice of Violation under section 29.12; and (4) Measurement Canada failed to meet the requirements of procedural fairness and Hydro-Québec had exercised all due diligence.
[50] As for the argument that Measurement Canada failed to meet the requirements of section 29.26 of the Act, the Minister’s Delegate pointed out that the concept of a six-month limitation period did not seem to apply, since a regular succession of temporary dispensations had been granted. He added that, just as the temporary dispensation exempts meters from the Act’s sealing and verification requirements, the temporary dispensation must also exempt parties from the requirements of section 29.26 of the Act.
[51] As for the argument that there should be a separate Notice of Violation for each meter and a corresponding penalty under section 29.11 of the Act, the Minister’s Delegate opined that, since it was the failure to replace meters whose seals had expired that constituted a violation, it was open to Measurement Canada to include all of the meters associated with this violation in a single Notice of Violation and attach the appropriate penalty, which is the sum of the penalties for each meter.
[52] As for the argument that the inspector had no reasonable grounds for issuing a Notice of Violation under section 29.12, the Minister’s Delegate pointed out that Hydro-Québec had provided several examples of situations in which Measurement Canada had not met the threshold of reasonable grounds for issuing a Notice of Violation. Nevertheless, the Minister’s Delegate noted that the fact remains that according to Hydro-Québec’s list, the seals on the meters in question had expired, which contravened the Act and constituted sufficient grounds for Measurement Canada to issue a Notice of Violation.
[53] Lastly, with respect to the argument that Measurement Canada failed to meet the requirements of procedural fairness and that Hydro-Québec had exercised due diligence, the Minister’s Delegate further argued that, for the purposes of this application, from the documents he had reviewed, (a) it appeared that Hydro-Québec had sufficient opportunity to resolve a number of difficult cases; (b) in some situations there were gaps of several months or years between communications; (c) it appears that no systematic approach was adopted by Hydro-Québec for regular and ongoing communications; (d) Hydro-Québec could have asked Measurement Canada for assistance on difficult cases; (e) having been granted several temporary dispensations, it is possible that Hydro-Québec was not motivated to do more; (f) due diligence is established on a case-by-case basis and is measured against the balance of probabilities; and (g) the evidence clearly demonstrated a lack of due diligence with respect to the meters located on non-Indigenous lands.
[54] In Part 2 of his analysis, the Minister’s Delegate concluded that the amount of the initial penalty of $689,000 (reduced by half to $344,500) was correct in light of the provisions of the Act and its Regulations, and given the facts set out in the Notice of Violation.
[55] The Minister’s Delegate therefore determined that Hydro-Québec had failed to exercise due diligence with regard to the meters located on non-Indigenous lands, and consequently the violations related to those 246 meters were upheld. The Minister’s Delegate therefore found that the amount of the penalty to be imposed was $246,000 and that, in accordance with subsection 50(2) of the Regulations, the penalty was reduced by half to $123,000.
IV. Issues [56] In light of the parties’ submissions, the Court must determine:
whether the decision-making process violated the principles of procedural fairness in such a way as to taint the Decision;
whether Hydro-Québec has established that the Decision was unreasonable; and
if so, what the appropriate remedies would be.
V. Analysis A. Alleged breach of principles of natural justice (1) Parties’ positions [57] Hydro-Québec maintains that the process leading up to the issuance of the Decision was fundamentally tainted by significant breaches of the principles of natural justice.
[58] Hydro-Québec argues that, contrary to what had been presented to it, the decision-making process was not objective and independent, since the Minister’s Delegate maintained communications with Measurement Canada officials during his deliberations and without Hydro-Québec’s knowledge, which constitutes a violation of the principles of procedural fairness and fatally taints the Decision.
[59] Hydro-Québec points out that the most worrying communication was certainly the one that emerged from a chain of emails dated April 3 and 4, 2019. Hydro-Québec maintains that the content of these exchanges is troubling since (1) they demonstrate that exchanges took place without Hydro-Québec’s knowledge between the allegedly independent decision-maker, the Minister’s Delegate, , and one of the parties to the dispute that the decision-maker was responsible for adjudicating; (2) these exchanges concerned the substance of the debate before the Minister’s Delegate and the arguments to be raised in response to Hydro-Québec; (3) these exchanges themselves refer to other exchanges between the Minister’s Delegate and the author of the disputed Notice of Violation; and (4) certain exchanges confirm that it was neither a coincidence nor an oversight that Hydro-Québec was not kept informed of the exchanges between Measurement Canada and the Minister’s Delegate.
[60] Next, Hydro-Québec points out that, again without its knowledge, the Minister’s Delegate communicated directly with Ms. Anderson, the counsel retained by Measurement Canada to prepare a legal opinion for the issuance of the Notice of Violation. It is understood that Ms. Anderson would then communicate to Mr. Spicer, in his capacity as Minister’s Delegate, the legal opinion she had prepared for Measurement Canada in connection with the preparation of the Notice of Violation.
[61] Finally, in the fall of 2019, while the Minister’s Delegate was deliberating, he exchanged several emails with Measurement Canada officials about the meters covered by the Notice of Violation, again without Hydro-Québec’s knowledge.
[62] Hydro-Québec states that it learned of these exchanges when it received the CTR on or about September 11, 2020, well after the Decision had been issued.
[63] Hydro-Québec maintains that there is no doubt that these numerous exchanges were inappropriate and constitute clear violations of the most elementary principles of procedural fairness, that they manifestly contravene the procedure adopted by Measurement Canada and the assurances given by Mr. Dupuis and the Minister’s Delegate as to the objectivity and independence of the process, and demonstrate the absence of any basis for Ms. Allan’s claims with respect to the transparency of the process.
[64] The AGC replies that there was no breach of procedural fairness. He points out that the following factors must be analyzed here, namely (1) the nature of the decision sought and the process for reaching it; (2) the nature of the applicable statutory scheme; (3) the importance of the decision to the individuals affected; (4) the legitimate expectations of those individuals; and (5) the procedural choices of the decision-maker (Baker v Canada (Minister of Citizenship and Immigration), 1999 CanLII 699 (SCC), [1999] 2 SCR 817 at paras 21–28 [Baker]). In short, the AGC argues that his analysis demonstrates that Hydro-Québec was entitled to a moderate level of procedural fairness.
[65] The AGC adds that the decision-maker’s conduct gives rise to no reasonable apprehension of bias under the established test (Committee for Justice and Liberty v National Energy Board), 1976 CanLII 2 (SCC), [1978] 1 SCR 369 [Committee for Justice and Liberty]). Moreover, the AGC adds that since Measurement Canada is not a quasi-judicial administrative tribunal, the application of the impartiality test is relaxed (Baker at para 44, Newfoundland Telephone Co. v Newfoundland (Board of Commissioners of Public Utilities), [1992] 1 SCR 623, 89 DLR (4th) 289 at 636 [Newfoundland Telephone Co.]; Enquête Énergie v Comm. de contrôle de l’énergie atomique, [1985] 1 FC 563, 14 DLR (4th) 48 at 584 [Enquête Énergie]; Gardaworld Cash Services Canada Corporation v Smith, 2020 FC 1108 at para 33 [Gardaworld]; Patrice Garant, Droit administratif, Montreal, Yvon Blais, 7th ed, 2017 at ch X, L’impartialité - Introduction, L’impartialité décisionnelle : La crainte raisonnable de partialité, L’impartialité - La situation des organismes exerçant des fonctions administratives) and adds that the burden of proof resting on Hydro-Québec is high because of the presumption of impartiality enjoyed by administrative decision-makers (Committee for Justice and Liberty at 394; Telus Communications Inc. v Telecommunications Workers Union, 2005 FCA 262 at paras 36–38).
[66] As for the first exchange of emails dating from April 2019, the AGC maintains that the Minister’s Delegate did not participate in these exchanges and that they were simply forwarded to him by the President of Measurement Canada, Ms. Allan, in order to ensure greater transparency in the decision-making process. The AGC qualifies the fact that one email contained a brief discussion between the Minister’s Delegate and a Measurement Canada official as insinuations, suppositions and suspicions.
[67] The AGC acknowledges that a decision-maker should not communicate with one party in the absence of the other party (Gardaworld at para 38; Canada (Minister of Citizenship and Immigration) v Tobiass, [1997] 3 SCR 391, 151 DLR (4th) 119 at paras 74–75 [Tobiass]). However, the AGC maintains that a party can conversely communicate with the decision-maker on the substance of the case without including the other party in that communication. The AGC adds that there is no apprehension of bias if the decision-maker subsequently forwards this communication to the opposing party (Gardaworld at para 39; GRK Fasteners v Leland Industries Inc., 2006 FCA 118 at para 17 [GRK Fasteners]).
[68] As for the second exchange in June 2019 between the Minister’s Delegate and Ms. Anderson, the AGC points out that the exchange was redacted in application of solicitor-client privilege. Since Measurement Canada and the Minister’s Delegate were bound by solicitor-client privilege, the AGC further argues that the redaction was challenged by Hydro-Québec and upheld by the Federal Court, and that Hydro-Québec’s argument is therefore based on innuendo and must be rejected.
[69] The AGC also maintains, paradoxically, that the Minister’s Delegate could seek and obtain legal advice in the course of his duties and that, in fact, the Minister’s Delegate retained the services of Measurement Canada’s counsel as his legal counsel. The AGC suggested at the hearing that the hiring of the same counsel by Measurement Canada and the Minister’s Delegate may have resulted from operational constraints within Measurement Canada.
[70] As for the third exchange between the Minister’s Delegate, Mr. Dupuis, and other Measurement Canada officials, the AGC notes the subjects of the exchanges, namely the meters to be replaced, a question about the expected timing of the decision and an exchange beginning with a request for an extension of Hydro-Québec’s dispensation. He points out that what emerges from these exchanges is that the Minister’s Delegate indicated that he could not answer [translation] “any of the applicant’s questions in this regard” due to his limited role in evaluating the evidence and written submissions. The AGC adds that Measurement Canada was raising issues of a procedural nature regarding the status of the meters covered by the request for ministerial review, which does not concern the substance of Hydro-Québec’s challenge. The AGC argues that since the communications were administrative in nature, they constituted an exception to the general principle prohibiting ex parte communications with only one of the parties (Gardaworld at paras 33, 39; Grey v Whitefish Lake First Nation No. 459, 2020 FC 949 at paras 44–51. See also Baker at para 44; Newfoundland Telephone Co. at 636; Enquête Énergie at 584).
(2) Decision (a) Standard of review [71] With respect to procedural fairness, no standard of review is applied, but the Court’s exercise of review is “best reflected in the correctness standard” (Canadian Pacific Railway Company v Canada (Attorney General), 2018 FCA 69 at para 54 [Canadian Pacific Railway Company], citing Eagle’s Nest Youth Ranch Inc v Corman Park (Rural Municipality #344), 2016 SKCA 20 at para 20; see also Canadian Hardwood Plywood and Veneer Association v Canada (Attorney General), 2023 FCA 74 at para 57). Thus, the Court must ask whether the process was fair in view of all the circumstances (Canadian Pacific Railway Company at paras 54–56).
[72] In Canadian Pacific Railway Company, the Federal Court of Appeal emphasized that the ultimate question, regardless of the deference accorded to administrative tribunals, “remains whether the applicant knew the case to meet and had a full and fair chance to respond” (Canadian Pacific Railway Company at para 56).
[73] As Hydro-Québec points out, the Act stipulates that, in the event of a dispute, the Minister is to consider only written evidence and written submissions in determining whether a person has committed a violation. The Act also provides that the Minister’s decision, in the event of a dispute as to the facts, shall be based on a balance of probabilities (subsection 29.16 (5) and section 29.21 of the Act).
[74] In terms of fairness, the Supreme Court of Canada empha