Link: Case Summary Document
Citation:  ONCA 553
Acknowledgement:The Pemsel Case Foundation thanks The Australian Centre for Philanthropy and Nonprofit Studies for its contribution in the drafting of this Case Note.
Whether a funding framework allowing students to opt out of ancillary fees, particularly student association fees, was lawful.
1. The question before the Court was whether a funding framework that provided billions of dollars to colleges and universities in Ontario could be conditioned on colleges and universities allowing students to opt out of payments that were deemed to be non-essential ancillary fees, including fees charged by student associations. Such fees had previously been compulsory.
2. All colleges and universities in Ontario are nonprofit organisations, but they differ in that colleges are established pursuant to the Ontario Colleges of Applied Arts and Technology Act, 2002, S.O. 2002, c. 8, Sched. F (the OCAATA), and operate as highly controlled agents of the Crown. In contrast, each university is established by a separate Act and operates independently in accordance with its statutorily mandated governance structure.
3. Both colleges and universities are funded, in part, through annual operating grants made by the Minister of Training, Colleges and Universities from the Ministry’s budget. These grants amount to over $5 billion annually, or about one-third of overall operating revenue.
4. Students pay compulsory ancillary fees to colleges and universities in addition to tuition fees. These fees cover nonacademic services provided by the college or university such as athletic centres and career services, as well as fees paid to student associations.
5. Ontario has long used college directives and university guidelines to regulate tuition fees, imposing tuition freezes and limits on tuition increases as conditions in its operating grants. The Minister revised the college directives and university guidelines in 2019 to require a 10% reduction in tuition fees, and in addition established a framework governing ancillary fees called the “Student Choice Initiative” (the framework). Compliance with the framework is enforced by the threat of reductions to the colleges and universities’ operating grants.
6. The stated purpose of the framework was to help reduce the cost of education, while enhancing transparency regarding fee payment and giving students greater choice regarding the services and activities they wished to support. The framework differentiates between what are deemed essential and non-essential services and requires that the payment of fees for non-essential services be made optional.
7. Essential services include athletics, career services, student buildings, health and counselling, academic support, student ID cards, student achievement and records, financial aid offices, and campus safety programs, subject to compliance with the definitions set out in the guidelines. All other ancillary fees are deemed non-essential and so must be optional, including the fees of student associations.
8. The Canadian Federation of Students (CFS) is an umbrella organisation of college and university student federations. Student associations remit fees to the CFS, which are collected by colleges and universities in the same manner as tuition fees. CFS and York University’s YFS brought an application for judicial review seeking to quash the framework. They argued that the framework:
a) was inconsistent with the statutory schemes regulating colleges and universities;
b) was made for an improper purpose and in bad faith; and
c) was made in breach of the requirements of procedural fairness.
9. The Divisional Court at first instance held that the question was justiciable and that for colleges, the effect of the ancillary fee directives was to restrict student associations from carrying out their normal activities, in contravention of section 7 of the OCAATA. For Universities, the question did not arise since, each having their own Acts, these occupied the field, and the Minister had no authority to make directions about student association fees. Thus, the Divisional Court quashed the framework on the basis that it was inconsistent with the OCAATA and the University Acts.
10. On appeal to the Court of Appeal, the Minister argued that the Divisional Court erred in law by holding, first, that section 7 of the OCAATA prohibited the Minister from implementing the framework, and second, that the University Acts occupied the field such that they displaced or limited the exercise of the Crown’s spending power.
11. The Divisional Court had characterised the Minister’s spending power as a prerogative power. Prerogative powers are unique in nature – vestiges of powers once enjoyed by the Monarch and now exercised by the Crown, whether federally or provincially. The prerogative includes such things as the conduct of international relations and the granting of honours.
12. The Court of Appeal did not agree with this characterisation. It said that the Crown’s so-called “spending power” is not a prerogative power. Rather, it is a description of executive authority to spend money in support of government policies and programs. The framework was not authorised by legislation, but was an example of this executive authority.
13. As to colleges, no question as to the legality of the framework would have arisen but for section 7 of the OCCATA, which deals with student associations. That section provides:
Nothing in this Act restricts a student governing body of a college elected by the students of the college from carrying on its normal activities and no college shall prevent a student governing body from doing so.
14. The Minister’s submissions as to the statutory interpretation of section 7 of the OCAATA were not accepted by the Court of Appeal. The Court of Appeal said that the Divisional Court properly interpreted section 7 as prohibiting the Minister from exercising her statutory authority over colleges in a manner that would interfere in the ability of student associations to carry out their normal activities, and properly concluded that the framework had precisely this effect.
15. Therefore, the Court of Appeal held that the Minister could not impose the ancillary fees framework on colleges. If an opt-out ancillary fees framework was to be established, the OCAATA would have to be amended.
16. With respect to universities, which are not Crown agents and are self-governing in Ontario, the Court of Appeal said that there was no residual ministerial or government authority concerning university operations. Therefore, the ancillary fees framework was inconsistent with all the University Acts and could not be imposed on universities by executive action.
Implications of the case:
The case has a parallel in a least one other jurisdiction, where the matter was eventually dealt with statutorily. In the 1970s, the overtly political nature of the Australian Union of Students that conducted a number of progressive campaigns, led to a conservative minority within that organisation to call for voluntary student organisation membership.
In Australia, on 9 December 2005, the Higher Education Support Amendment (Abolition of Compulsory Up-front Student Union Fees) Bill 2005 was passed, and received the Royal Assent on 19 December 2005. Since 1 July 2006, Australian universities have faced fines of A$100 per student for compelling payment for any non-academic good or service.
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