Administrative law – Decisions of administrative tribunals – Financial Consumer Agency – Natural justice – Judicial review – Procedural requirements and fairness – Compliance with legislation
MBNA Canada Bank v. Canada (Financial Consumer Agency),  F.C.J. No. 2037, Federal Court of Appeal, November 26, 2004, Von Finckenstein J.
The appellant, MBNA Canada Bank (“MBNA”), was an issuer of MasterCard credit cards. The Financial Consumer Agency of Canada (the “FCAC”) was a federal agency established under the Financial Consumer Agency of Canada Act to supervise financial institutions to ensure they were in compliance with the consumer provisions found in various statutes. In August 2003, the FCAC informed MBNA that their interest rate program did not comply with subsection 11(1) of the Cost of Borrowing (Banks) Regulations under the Bank Act because the program failed to disclose an “actual or regular interest rate” at the time of application for the credit card. A Notice of Violation was served on the appellant in which MBNA was invited to make representations with respect to the alleged violation. The Notice of Violation was signed by the Commissioner and had attached to it a document entitled “Commissioner’s Reason for Decision”, which was also signed by the Commissioner.
The issue on this application was whether or not the Commissioner breached the rules of natural justice as laid out in sections 21 to 23 of the FCACA by attaching to his Notice of Violation his Reason for Decision.
It was agreed that notwithstanding a right of appeal provided for in the FCACA, judicial review was available where the issue in question dealt with whether or not there was a failure to observe the principles of natural justice or breach of a procedural statutory provision.
In this case, section 22(3) of the Act required that the Commissioner “propose” a penalty in the Notice of Violation. If the recipient made any representations, the Commissioner was obliged to consider the representations and then decide, on a balance of probabilities, whether a violation of the Act had occurred.
In this case, the Commissioner attached to the Notice of Violation signed and dated “Reasons for Decision”. These reasons did not only outline the case that the FCACA staff made against MBNA but also contained an analysis of the issue and lengthy considerations regarding an adequate penalty.
The Court noted that the procedure outlined in sections 22 and 23 of the Act was not followed in this case. Not only did the Commissioner issue the “Reasons for Decision” but internal documents from the Agency revealed an email from November 2003 which indicated that the Commissioner considered the case in detail before making a decision. In this case, instead of giving the MBNA a fair hearing, the Commissioner in essence gave the MBNA only a right of appeal. This was not the right provided for under the FCACA nor the procedure called for therein. Thus, by proceeding in the manner in which he did, the Commissioner breached the rules of natural justice as particularized in the FCACA. Accordingly, his decision was set aside.
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