By Ryan M. Prendergast

Foundations are not exempt from judicial review or from having to act in a procedurally fair manner when acting as contractors for government bodies and administering government programs, according to the Court of Appeal for British Columbia in Nova-BioRubber Green Technologies Inc. v. Investment Agriculture Foundation British Columbia, released on July 13, 2022.

The respondent foundation, Investment Agricultural Foundation British Columbia (the “Foundation”) is a society incorporated under the British Columbia Societies Act, and administers provincial and federal government grants, including the Canadian-BC Agri-Innovation Program (the “Program”). The appellant, Nova-BioRubber Green Technologies Inc. (“Nova”), had filed two applications with the Foundation for funding under the Program, and both were rejected by the Foundation on the ground the applications did not meet Program eligibility requirements.

Nova filed a petition for judicial review of the Foundation’s decisions to reject its applications (the “Decisions”) on the grounds that the Decisions were procedurally unfair and substantively unreasonable.

After the Supreme Court of British Columbia dismissed Nova’s petition, Nova appealed the decision, arguing in part that the trial judge did not consider issues raised about “a lack of transparency, fairness, and intelligibility in the Foundation’s decision-making process.”

In considering its jurisdiction for judicial review, the Court of Appeal asked whether the Decisions were of a “sufficiently public character” and referred to the Supreme Court of Canada’s decision in Highwood Congregation of Jehovah’s Witnesses (Judicial Committee) v Wall, discussed in greater detail in Church Law Bulletin No. 54. In this regard, the court examined whether the Decisions “involve[d] questions about the rule of law and the limits of an administrative decision maker’s exercise of power”. It found that the Program is directed at achieving certain government objectives, and that the Foundation derives its authority to administer the Program pursuant to a shared cost arrangement that requires the submission of quarterly reports to the province and compliance with provincial instructions. It therefore held that the government cannot “immunize the administration of a public program from the scope of the court’s supervisory review by assigning adjudicative duties to a contractor”, and that the Program was “of sufficiently public character to render their adjudicative decisions subject to judicial review.” The court also found that the Decisions were not non-justiciable matters.

The court further found that that trial judge had erred when it dismissed the petition without first reviewing the Foundation’s reasons in its Decisions or considering Nova’s complaints of procedural unfairness. In this regard, the Court of Appeal found that it was true that Nova had no right to Program funding, but also found that the Foundation owed a duty of fairness. Rather than rejecting the applications and failing to disclose its reasons to Nova, and providing Nova with no opportunity to respond, the Foundation should have reviewed applications in a fair and open manner. The Court of Appeal therefore found that the Foundation’s decision-making process was procedurally unfair, and allowed Nova’s appeal, setting aside the trial judge’s order and remitting Nova’s applications to the Foundation for reconsideration.

This decision serves as a helpful reminder to charities and not-for-profits of the fact that their decisions may be subject to judicial review where their decisions are of a sufficiently public character, such as administering government funding. Further, when making decisions in such circumstances, it is important that the decision-making process remains fair and open where such decisions may affect third parties.

​Read the August 2022 Charity & NFP Law Update