Cyr: The clash of public and private law

Last Friday, the SCC rendered its judgment in Société de l’assurance automobile du Québec v. Cyr, 2008 SCC 13, a case which explores the distinction between public and private actions of a public authority and the boundaries of the duty of procedural fairness in administrative law. In this decision, which follows the SCC’s blockbuster Dunsmuir decision, the SCC held that even when a public authority contracts out a service to a private company, an employee of that company may be entitled to procedural fairness in the authority’s decision to revoke his accreditation to continue to work under the government contract.

The Société de l’assurance automobile du Québec (“SAAQ”) is a government agency which has the exclusive jurisdiction in Quebec to ensure the mechanical safety of certain types of road vehicles by inspecting vehicles and issuing compliance certificates. Instead of performing this function through its own employees, the SAAQ entered into a contract with a private party, Centre de vérification mécanique de Montréal (“CVMM”), to perform mechanical inspections on SAAQ’s behalf. An appendix to the contract designates Yvan Cyr, an employee of CVMM, as an “accredited mechanic” authorized to perform the inspections and holds him to certain regulatory standards. This appendix was signed by SAAQ, CVMM and Cyr.

Following several alleged breaches by Cyr of the inspection standards stipulated, SAAQ revoked his accreditation to conduct inspections on its behalf. As a result, Cyr’s employment with CVMM was terminated. Cyr and CVMM made a written request for reconsideration of the decision to revoke Cyr’s accreditation to SAAQ which was not answered. Thereafter, they made an application for judicial review of SAAQ’s decision. By the time the case came before the SCC, the discrete issue before the court was whether or not Cyr was entitled to procedural fairness in this decision, not a consideration of its merits.

In a split decision, the SCC held that Cyr was entitled to procedural fairness. The main point of contention between the majority and disssenting justices appears to be Cyr’s status within the contract between SAAQ and CVMM. The majority judgment held that Cyr was not a party to this contract and that there was no contractual relationship between SAAQ and Cyr, only between SAAQ and CVMM (and a further employment contract between CVMM and Cyr). Thus, the revocation of Cyr’s accreditation was the exercise of discretionary decision-making power by a governmental body, which normally garners the protection of procedural fairness under administrative law principles. Further, s.5 of the Act Respecting Administrative Justice (“AAJ”) provides that an administrative authority may not make an unfavourable decision concerning an administrative authorization without first advising the “citizen” of the pending decision with reasons, disclosing the substance of any complaints, and providing an opportunity to respond. In this instance, the majority found that the accreditation to perform inspections constituted an “authorization” and that Cyr was a “citizen” for the purposes of the AAJ. Thus he was entitled to and denied these procedural safeguards.

By contrast, the dissent held that Cyr was a party to the contract between SAAQ and CVMM and that his relationship with SAAQ was purely contractual. Further, the dissent examined the Highway Safety Code, the legislation from which SAAQ derives its statutory powers, and found that the legislature drew a distinction between decisions which affect road vehicle users and other decisions, expressly requiring procedural fairness soley for the former. The dissent concluded that Cyr was not entitled to procedural fairness and could not resort to public law remedies but instead must turn to the private law of contracts.

Because this decision is based in the AAJ, a Quebec statute, its relevance to the rest of Canada may be debated. However, the majority did note that the AAJ was essentially a codification of general administrative law principles and thus the judgment may affect the current law with respect to the duty of procedural fairness.