T-2395-88
Toronto Independent Dance Enterprise (Appli-
cant)
v.
Canada Council (Respondent)
INDEXED AS: TORONTO INDEPENDENT DANCE ENTERPRISE V.
CANADA COUNCIL (T.D.)
Trial Division, Rouleau J.—Toronto, May 9 and
10; Ottawa, June 20, 1989.
Federal Court jurisdiction — Trial Division — Application
to quash Canada Council decision to discontinue funding —
Federal Court lacking jurisdiction to review Council decision
— Council not 'federal board, commission or other tribunal"
— At arm's length from Parliament — Granted absolute
discretion to develop standards and procedures to carry out
mandate.
Judicial review — Prerogative writs — Certiorari —
Application to quash Canada Council decision to terminate
funding — Dance company twice warned of impending termi
nation — Council relying on recommendations of Dance Sec
tion, in turn based in part on confidential reports of independ
ent assessors — Providing copies of negative assessments —
Applicant denied opportunity to make oral representations
prior to Council rendering decision — Although Council deci
sions final unless new information substantially altering basis
of decision, Council informally hearing applicant's submis
sions — Certiorari available where decision affecting rights of
Canadians generally — No rights created under Canada
Council Act — Content of principles of natural justice and
fairness varying with circumstances — Considering large
number of applications, procedures adequate — Applicant
aware of procedures — Warnings and rehearing meeting fair
ness requirements — Failure to identify assessors not breach
of fairness — Necessary to weigh extent of disclosure against
prejudice to scheme of Act — Application of law in realistic
and practical manner.
This was an application for certiorari quashing the respon
dent's decision to refuse funding for the 1988-1989 year. The
applicant, a contemporary dance company, had received fund
ing from the Canada Council for the past several seasons. The
applicant was advised that grants were intended as support on a
trial basis, were offered to companies applying for the first time
and were subject to annual re-application. The Council relies
upon recommendations from the Dance Section, comprised of
professionals and support staff, concerning all applications for
funding. Among other things, the Dance Section looks at
confidential reports prepared by independent assessors. These
are one of the most important factors in Council's decisions.
Council's Board decisions are final unless new factors substan
tially altering the basis of the decision subsequently come to
light. It was found that the applicant was not continuing to
grow artistically. Its funding was frozen in 1986-1987 and it
was warned of the possibility of termination of funding. The
funding was reduced in 1987-1988 and the warning was repeat
ed. Although the Council did not allow the applicant to make
oral representations before it made its decision, it did provide
copies of all negative reports although the identity of the
assessors was not disclosed. The Council has adopted that
practice to protect assessors from abuse by disappointed appli
cants. Subsequently, representatives of the Board met informal
ly with representatives of the applicant who fully presented its
case. The Board decided that there were not sufficient new
grounds to reconsider the application.
The applicant submitted that the Council, as a public body
created by Parliament to distribute government funds and
accountable to Parliament, is subject to the duty of fairness. It
argued that it had become financially dependent on the grants
and should have been given the opportunity to make submis
sions before the decision to terminate funding was taken. It also
submitted that it was unfair for the Council to rely so heavily
on the opinion of independent assessors without input from the
applicant. Further, by taking this position, the Council fettered
its discretion. The respondent argued that it was not subject to
judicial review as it was not a federal board, commission or
other tribunal, and it was independent of government control,
with absolute discretion in establishing its procedure. The
Canada Council Act allows the Council to make by-laws
governing its procedure, and provides that it is not an agent of
the Crown. The issues were whether the Council is a federal
board, commission or other tribunal, and if so, what the
requirements of fairness and rules of natural justice were in the
circumstances and whether they were complied with.
Held, the application should be dismissed.
The Court has no jurisdiction to review the actions of the
Canada Council. It is doubtful that it is a board, commission or
other tribunal within the Federal Court Act, paragraph 2(g)
definition. It was created to be at arm's length from the
government. It was given a broad mandate to foster the arts
and absolute discretion in developing its own standards and
procedures.
Certiorari is available only where a public body has the
power to decide matters affecting the rights, interests, property,
privileges or liberty of Canadians generally. The Council's
actions do not do so. The project grant was a benefit for which
the applicant had to qualify annually. No right was created
under the Act.
The content of the principles of natural justice and fairness
varies with the circumstances. Considering the thousands of
applications submitted each year, the procedure and guidelines
developed by the Council were adequate. They were well known
to the applicant. It had been warned of its precarious position
and, subsequent to the decision was afforded opportunities to
provide additional information in an attempt to reverse the
Council's finding. Fairness may sometimes be achieved by
providing the substance of the case without disclosing the
precise evidence or sources of information. The extent of the
disclosure required by natural justice may have to be weighed
against the prejudice to the scheme of the Act which disclosure
may involve. No right was being taken away, but the confiden
tiality of the sources of information was essential to the Coun
cil's legitimate reliance on professional peers for their assess
ments. The rehearing cured any possible defect.
The rules of fairness must be applied on a realistic basis,
having regard to the nature of the endeavour. The Council
developed its own standards of artistic criteria as well as the
procedures by which it allocated funds. It was unlikely that the
Court would intervene in such a situation. Council is in the best
position to decide what criteria should be applied. From a
practical standpoint, it would be impossible to grant a hearing
to all applicants.
STATUTES AND REGULATIONS JUDICIALLY
CONSIDERED
Access to Information Act, S.C. 1980-81-82-83, c. 111.
Sch. I.
Business Corporations Act, R.S.O. 1980, c. 54.
Canada Council Act, R.S.C. 1970, c. C-2.
Canada Council Act, R.S.C., 1985, c. C-2, ss. 3, 5, 8, 12,
20, 21.
Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, ss.
2(g), 18.
Income Tax Act, S.C. 1970-71-72, c. 63.
Public Service Superannuation Act, R.S.C. 1970, c. P-36.
CASES JUDICIALLY CONSIDERED
APPLIED:
Martineau v. Matsqui Institution Disciplinary Board,
[1980] 1 S.C.R. 602; Regina v. Gaming Board for Great
Britain, Ex parte Benaim and Khaida, [1970] 2 Q.B. 417
(C.A.); Russell v. Duke of Norfolk, [1949] 1 All E.R.
109 (C.A.); Pearlberg v. Varty, [1972] 1 W.L.R. 534
(H.L.).
CONSIDERED:
Re Webb and Ontario Housing Corporation (1978), 22
O.R. (2d) 257 (C.A.).
REFERRED TO:
Paine v. University of Toronto et al. (1981), 34 O.R. (2d)
770 (C.A.); Harelkin v. University of Regina, [1979] 2
S.C. R. 561.
AUTHORS CITED
Wade, H. W. R. Administrative Law, 5th ed. Oxford:
Clarendon Press, 1982.
COUNSEL:
John J. Chapman for applicant.
David W. Scott, Q.C. and Guy J. Pratte for
respondent.
SOLICITORS:
Miller, Thomson, Sedgewick, Lewis & Healy,
Toronto, for applicant.
Scott & Aylen, Ottawa, for respondent.
The following are the reasons for order ren
dered in English by
ROULEAU J.: The applicant seeks certiorari
quashing the respondent's decision to refuse fund
ing for the 1988-1989 year, together with man-
damus compelling the respondent to reconsider the
matter in accordance with the requirements of
fairness.
The issues in this case are whether the Canada
Council is a "federal board, commission or other
tribunal" amenable to judicial review under sec
tion 18 of the Federal Court Act [R.S.C. 1970
(2nd Supp.), c. 10], and, if so, what the require
ments of fairness and the rules of natural justice
are in the circumstances and whether these have
been complied with.
The Toronto Independent Dance Enterprise
("TIDE") is a contemporary dance company
which has been performing across Canada since
1978. It is incorporated under the Business Corpo
rations Act [R.S.O. 1980, c. 54] and is also a
registered charity under the Income Tax Act [S.C.
1970-71-72, c. 63]. Since the 1981-1982 season, it
has been the recipient of annual funding from the
Canada Council; it was denied for the 1988-89
season.
The Canada Council ("The Council") was
created in 1957 by the Canada Council Act
(R.S.C. 1970, c. C-2; now R.S.C., 1985, c. C-2) to
"foster and promote the study and enjoyment of,
and the production of works in, the arts ..." (sec-
tion 8). In furtherance of this objective, one of its
functions is to provide grants to various dance
companies, such as the applicant. Its twenty-one
members and two chief executive officers are
appointed by the Governor in Council (sections 3
and 5). The Act specifically indicates that the
Council is not an agent of Her Majesty, and
except for purposes of the Public Service Superan-
nuation Act [R.S.C. 1970, c. P-36], is not a part of
the public service of Canada (section 12). It is
accountable to Parliament through the filing of a
yearly report (section 21), and to the Auditor
General of Canada by way of an annual audit
(section 20).
The operation of the Council can be briefly
summarized as follows: the Canada Council dis
tributes approximately $100,000,000 annually in
the form of grants. In any one year, they receive
approximately 15,000 applications; of these,
approximately 10,500 are denied. There are two
forms of grants: project grants and operating
grants. Project grants, which TIDE had been
receiving, and described by the Council as "sup-
port on a trial basis", are offered to companies
applying for the first time and subject to annual
re-application can be available for a number of
years thereafter. Operating grants, on the other
hand, represent long-term commitment of the
Council. In 1987-1988, it received 112 applications
from dance organizations of which 68 were grant
ed in whole or in part.
An Information Kit accompanying each applica
tion describes the two types of grants as set out
above, and also gives a detailed explanation of the
process. Briefly, it outlines the following: the
Dance Section of the Council, a unit of four
professionals and three support staff, prepare
recommendations for Council for all applications
for funding. Council's Board meets four times a
year, and generally, though not in every case,
accepts the recommendations submitted to them.
In the case of dance companies, the Council looks
at continuing growth, change and development in
its artistic accomplishment. The Dance Section, in
preparing their recommendations, rely on reports
prepared by independent assessors. These assessors
are knowledgeable professionals hired by the
Council in order to assess the artistic quality of
applicants, which is one of the most important
factors in Council's decision. The assessors are
given written guidelines as to what areas are to be
covered in their reports, and attend a minimum of
three performances per year of an applicant. They
then submit confidential reports to the Dance Sec
tion based on their observations. The Dance Sec
tion, in turn, in preparing the recommendations for
Council, review these assessments along with the
applicant's financial status, administrative compe
tence, proposed budgets and other factors such as
relative merit vis-a-vis other applicants in view of
budgetary restraints. Once Council makes their
decision on funding, the applicant is informed of
the decision through a grant letter. Board decisions
are final unless new factors subsequently come to
light which would substantially alfer the informa
tion on which the decision was based.
According to the respondent, the TIDE dance
company was expected to continue to grow, change
and develop in its artistic accomplishment. The
assessments indicated it was not achieving the
stated goals and as a result it was first warned of
the possibility that its funding would not be
renewed in the letter accompanying its 1986-1987
grant. It was warned again in its grant letter for
the 1987-1988 season. It should be noted that its
funding was frozen for the 1986-1987 season, and
decreased in 1987. This the respondent argues is in
itself a warning. Although the applicant disputes
that any warning was contained in these letters, I
find as a fact that, although the Council was very
polite in phrasing the warning, tact is to be expect
ed in these circles; I have no doubt that the
respondent was apprehensive. Subsequent to
receipt of the 1987 grant letter, TIDE requested a
meeting with a member of the Dance Section,
which was held October 23, 1987. At that time
they were undoubtedly told of the seriousness of
their situation.
At a further meeting held June 9, 1988, TIDE
was informed that the Dance Section was recom
mending discontinuance of funding. It then
requested an opportunity to make oral representa
tions to Council before it rendered its decision. It
also requested that it be provided with all negative
reports. In accordance with past practice, Council
did not allow it to appear. On the other hand, the
request for negative reports was complied with
upon receipt, and these were forwarded to the
applicant having deleted the identity of the asses
sors, which was the practice followed by Council in
order to protect the identity of the assessors who
are few in number and often subject to abuse by
disappointed applicants. Unfortunately these
requests were not submitted to the Council until
the day the decision was rendered. Later, copies of
all assessments, both negative and positive, were
obtained by the applicant under the Access to
Information Act [S.C. 1980-81-82-83, c. 111, Sch.
I].
By letter dated July 20, 1988, TIDE sought an
opportunity to appeal Council's decision. Although
the Chairman did not feel that substantially new
information had been raised, she nevertheless
offered to and did meet with representatives of
TIDE. This meeting was held at the Chairman's
home along with two other Board members as well
as the Assistant Director and Secretary of the
Council. The applicant's submissions were pro
vided in writing to each person who attended.
TIDE was given the opportunity to fully present its
case. At the conclusion of the meeting, the Chair
man informed them that they would review the
question of whether there were sufficient new
grounds to reconsider the application. Subsequent
ly, by letter dated November 24, 1988, the solici
tors for the Council advised TIDE that the ques
tion of a reconsideration would be studied at the
next Board meeting. The solicitor for TIDE reject
ed this offer. Nevertheless, the Board did review
this matter, at which time it unanimously decided
that there were no additional grounds or substan
tially new information for such reconsideration.
This was communicated to the applicant in
writing.
TIDE submits that Canada Council, as a public
body created by an Act of Parliament, distributing
government funds and accountable to Parliament,
is subject to the duty of fairness. The applicant
had become financially dependent upon the grants,
to the point of reliance. It received approximately
one-third of its annual budget since 1982 from
these grants. As a result, it ought to have been
given the opportunity to make submissions before
the decision to terminate the funding was taken. It
relies on Re Webb and Ontario Housing Corpora
tion (1978), 22 O.R. (2d) 257 (C.A.) that where
legitimate expectation arises one ought not be
deprived of an opportunity to respond and should
be informed prior to a decision being reached. This
it says even though it may not have a "right" to
the grants.
It is further argued that the method of decision-
making did not comply with the requirement of
natural justice. It is unfair that without input from
the applicant, the Canada Council should reach
decisions relying heavily on the opinion of
independent assessors. Further that by taking this
approach, the Council fettered its discretion in
relying almost exclusively on the criteria of artistic
merit as judged by the assessors. The right to
analyse the material and submit comment was
fundamental. Finally, the decision not to reconsid
er their decision was not a "reconsideration" of the
matter that would cure the breach of natural
justice.
The respondent argues in reply that the Canada
Council is not a board, commission or other tri
bunal as defined in paragraph 2(g) of the Federal
Court Act; further, that the application does not
fall within the scope of review of section 18 of the
Federal Court Act, since the Canada Council was
created independent of government control, with
absolute discretion in establishing its procedure as
well as in the exercise of its mandate: that of
fostering and promoting the arts in Canada.
Sections 9 and 12 of the Canada Council Act
provide as follows:
9. The Council may make by-laws regulating its proceedings
and generally for the conduct and management of its activities,
including the appointment of honorary officers and advisory
committees.
12. The Council is not an agent of Her Majesty and, except
as provided in section 11, the members, Director, Associate
Director and employees of the Council are not part of the
public service of Canada.
Should I determine that the Court does have
jurisdiction and that its decision is amenable to
review under section 18 of the Federal Court Act,
it argues that the fairness doctrine is not appli
cable. There is no statutory entitlement to funding,
it is purely discretionary; nor can it be claimed
that there is any legitimate expectation to be
protected, unlike in Re Webb, supra. It was a well
known fact that the applicant was subject to
annual application for a grant as well as review in
each year by assessors before they qualified. Fur
ther, that TIDE acquiesced in the procedure util
ized by the Council, having been aware of the
process and having submitted applications for the
preceding seven years.
In the alternative, if fairness is applicable, it
argues that the restrictive procedures enacted
through regulation by the respondent were neces
sary in order to preserve the funds for the arts
community rather than divert them into a cumber
some and expensive bureaucracy. The Council was
given as part of its mandate autonomy with respect
to setting up procedures and standards, which the
Court has no right to interfere with.
On the lack of disclosure of the assessments it is
argued that they need not be disclosed in every
detail in order to satisfy the requirements of fair
ness. The applicant was informed of the substance
of the reports and given an opportunity to remedy
the problem. As well, the respondent submitted
that its method of using independent professionals
in order to assess the artistic merit of dance com
panies was the most fair and impartial method to
use, since the judgment was made by peers who
were the most knowledgeable in the field. It was
also submitted that the adversarial process would
be inappropriate here, since the staff acted on
behalf of the applicants and were objective in
preparing their submissions.
Finally, the respondent submits that if there was
any procedural defect, this was cured by the subse
quent consideration given by Council to the appli
cant's concerns, both at the meeting in the Chair-
man's home and at a subsequent full meeting of
the Board.
I am satisfied that this Court has no jurisdiction
to review the actions of the Canada Council and
this application should be dismissed with costs. I
intend to deal with each of the issues raised.
I have some doubt that the Canada Council is a
"board, commission or other tribunal" within the
meaning of paragraph 2(g) of the Federal Court
Act over which this Court has jurisdiction. Under
the Canada Council Act, this body was purposely
created to be at arm's length from the government.
It has been given a broad mandate to foster the
arts in Canada, with fixed or limited funding. The
government exercises absolutely no control over
the allocation of funds and the only requirement is
that of an annual report and audit. Above all, it
was given absolute discretion in developing its own
standards and procedures in order to carry out its
mandate. Creation by government and distribution
of public funds is not by itself determinative.
If it is resolved that I do have jurisdiction, what
are the requirements of fairness and the rules of
natural justice applicable in these circumstances?
To exercise my discretion and grant certiorari, I
should be guided by Mr. Justice Dickson [as he
then was], who in Martineau v. Matsqui Institu-
tion Disciplinary Board, [ 1980] 1 S.C.R. 602,
suggested [at page 628], and I paraphrase, that
the remedy should be available where the public
body has the power to decide any matter affecting
the rights, interests, property, privileges or liberty
of any person. The Council is not staffed by public
servants, but by an independent qualified staff who
are familiar with the arts in Canada. Their actions
do not affect the rights, interests, property, privi
leges or liberty of Canadians generally. The
project grant is a benefit for which an applicant
must qualify annually. There is no right created
under the Act.
It was the applicant's submission that, as a
result of receiving these project grants for a
number of years, it had a legitimate expectation in
receiving this benefit which ought to be protected.
This reliance-type interest was afforded procedural
protection in Re Webb, supra, at page 265:
Once the appellant became a tenant she acquired a very real
substantial benefit because of her reliance on and eligibility for
welfare. The determination to grant her this benefit was made
when she was accepted as a tenant. That decision was one
which in my view, could be made by O.H.C. without any
intervention of a rule or principle of procedural "fairness".
However, once she became a tenant and thus "qualified" for
and received a very real benefit of a reduced and subsidized
rent, the situation changed .... In my opinion, O.H.C., in
exercising its power of termination and thereby depriving the
appellant of the benefit of the lease, was required, under the
circumstances, to treat the appellant fairly by telling her of the
complaint(s) or case against her and giving her an opportunity,
if she wished, to make an answer to those complaints.
In that case, the appellant qualified for subsi
dized housing as a result of a statutory entitlement
to welfare benefits. It was, if you like, an ancillary
right.
The applicant argued that it was entitled to
know the case it had to meet and should be
afforded an opportunity to appear before Council.
Copies of the assessments should have been pro
vided in order for it to comment before staff made
their recommendation. Failure to make provisions
for this procedure was in breach of fairness and
the rules of natural justice. Considering the thou-
sands of applications that are submitted annually,
I am satisfied that the procedure and guidelines
developed by the Council are adequate when one
considers their circumstances.
As Dickson J. wrote in Martineau, supra, at
page 630, referring to Russell v. Duke of Norfolk,
[1949] 1 All E.R. 109 (C.A.), at page 118:
The content of the principles of natural justice and fairness in
application to the individual cases will vary according to the
circumstances of each case ....
Further, the House of Lords in Pearlberg v. Varty,
[1972] 1 W.L.R. 534, at page 547 (per Lord
Pearson):
Fairness ... does not necessarily require a plurality of hearings
or representations and counter-representations. If there were
too much elaboration of procedural safeguards, nothing could
be done simply quickly and cheaply. Administrative or execu
tive efficiency and economy should not be too readily
sacrificed.
In the present case, the Council developed its
own standards of artistic criteria as well as the
procedure by which it allocated funds. The Court
is less likely to intervene in such situations (Paine
v. University of Toronto et al. (1981), 34 O.R.
(2d) 770 (C.A.)), at page 774. Further, this proce
dure was well known to the applicant. Though
informed of the substance of the criticism follow
ing the decision, it had some knowledge of its
precarious position because of the warnings and
the meetings with a member of the Dance Section.
It was also afforded subsequent opportunities to
provide additional information in an attempt to
reverse the Council's finding. It is a well-known
principle of administrative law that fairness may
sometimes be adequately achieved by providing
the substance of the case without disclosing the
precise evidence or the sources of the information.
The extent of the disclosure required by natural
justice may have to be weighed against the preju
dice to the scheme of the Act which disclosure
may involve.'
The case of Regina v. Gaming Board for Great
Britain, Ex parte Benaim and Khaida, [1970] 2
Q.B. 417 (C.A.) is more applicable to the facts of
the present case. There, the Court held it was
' Wade, H. W. R. Administrative Law, 5th ed., at pp.
481-482.
sufficient in refusing to grant a licence to tell the
applicant the substance of the information on
which they based their decision. There were not
required to disclose the details nor the sources,
since he did not have to meet charges, and to
disclose this might endanger their sources. Simi
larly here: there is no right which is being taken
away, and, the confidentiality of the sources of
information is essential to the Council's legitimate
reliance on professional peers for their assess
ments. It should also be remembered that there is
no adversarial relationship here, nor should one be
encouraged.
Finally, the reconsideration of this matter by
Council upon TIDE's request was more than suffi
cient to cure any defect. In the Information Kit
accompanying each application, there was a state
ment to the effect that Board decisions were final,
and will only be reconsidered if "new factors come
to light which substantially alter the information
on which the decisions were based". By letter July
20, 1988, TIDE requested the opportunity to
appeal Council's decision. Although the Chairman
did not feel that substantially new information had
been raised, she nevertheless offered to and did
meet with representatives of TIDE. The latter's
submissions were also provided in writing to each
Board member. At the conclusion of this meeting
which lasted three hours, and at which TIDE was
given the opportunity to fully present its case, the
Chairman informed TIDE that it would review the
question of whether there were sufficient grounds
to reconsider the application. TIDE rejected this
offer, but nevertheless the Board did review this
matter at their next meeting, and unanimously
decided that there were no grounds for such recon
sideration. This rehearing was adequate to cure
any possible defect (Harelkin v. University of
Regina, [1979] 2 S.C.R. 561).
Given the objectives of the Canada Council and
given the enabling legislation, it is obvious that it
was permitted a liberal scope to achieve its objec
tives. The rules of fairness must be applied on a
realistic basis having regard to the nature of the
endeavour. The Council has determined its own
standards as to artistic evaluation and put in place
its own procedure. I am satisfied that it is in the
best position to decide what criteria should be
applied. What right does the Court possess to
impose its own views or standards and interfere
with the decision-making process? From a practi
cal standpoint it would be impossible to grant a
hearing to all applicants. The law as it relates to
the activities and deliberations of the Canada
Council must be applied in a realistic manner
rather than on an abstract theoretical plane.
I therefore order that this application be dis
missed with costs.
It is hereby further ordered that the confiden
tiality order shall remain in full force and effect
with respect to those documents presently under
seal.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.