Could a Prime Minister Poilievre Fire the Governor of the Bank of Canada?

The short answer is, “yes”, subject to complying with the duty of procedural fairness and providing a reasoned justification for doing so.

After Mr Poilievre’s election as leader of the Conservative Party of Canada at the weekend, the online publication Central Banking asked me and several others whether he could follow through on his commitment to ‘fire’ the Governor of the Bank of Canada (article here: access requires signing up for a trial). The issue of the independence of administrative agencies, especially one as powerful as the Bank of Canada, is an important one, so I think the question deserves brief analysis (on which I welcome thoughts and comments).

Under the Bank of Canada Act, RSC 1985, c B-2, the Governor (and Deputy Governor) holds office for a seven-year term subject to “good behaviour”: s. 6(3)(a). The Governor is appointed by the federal cabinet on the advice of the directors of the Bank: s. 6(1). Notably, the directors serve during “good behaviour” but, in addition, can only be removed for “cause”, a provision which does not apply to the Governor: s. 9(1).

Appointees to offices subject to a “good behaviour” requirement can be removed by the federal cabinet by way of an order in council.

In a series of Federal Court cases judges have examined the substantive and procedural criteria for taking the step of ‘firing’ an office-holder subject to a “good behaviour” requirement. There is an excellent discussion in Strickland J’s reasons in Shoan v. Canada (Attorney General), 2017 FC 426.

Procedurally, the process for removing an office-holder subject to a “good behaviour” requirement is relatively demanding. Fairness obviously includes the basic obligation to provide notice of the federal cabinet’s concerns and an opportunity to respond but equally obviously does not require full trial-type procedures.

Given the stakes, however, with a person’s reputation and livelihood likely on the line, the procedure must be appropriately robust. In Vennat v. Canada (Attorney General), 2006 FC 1008, [2007] 2 FCR 647, Noël J held that a “personalized inquiry” into the underlying facts was required, in the context of the removal of the President of the Business Development Bank of Canada, to which the individual concerned has a “right to respond” (at para. 166):

With respect to the term “personalized” used to describe the inquiry, it means that the inquiry leading to the removal must contemplate the person(s) facing the removal procedure. This does not exclude the possibility that several persons be contemplated by the same personalized inquiry, as long as the inquiry targets the individual actions of each of these persons and they have the right to a personalized response. The inquiry must, in short, make it possible to shed light on the specific conduct of the person affected. The choice that I made to use the expression “personalized inquiry” is based in part on the nature of the proceeding that must be followed. In my opinion, it would be wrong to say that the Governor in Council was only bound to conduct a simple review regarding the applicant’s conduct, considering the complexity of the matter. The procedure followed in [previous cases] was not a simple review. Instead, an independent investigation of the facts was carried out by the decision maker, and that investigation was personalized (at paras. 178-179).

There is also a basic obligation of “fair play” and “transparency” (at paras. 185-190). The procedure in Vennat was held to be insufficiently rigorous.

However, in Shoan, Strickland J noted that the onerousness of the “personalized inquiry” in the prior case arose from the “complexity” of the matter and the fact that the termination process was initiated after comments in a court decision to which Vennat was not a party. In other words, the obligation to put an individual on notice of the federal cabinet’s concerns will vary from case to case, with the ultimate touchstone being whether the particulars of the allegedly problematic conduct have been “identified and documented” (Shoan, at para. 103).

Substantively, the “good behaviour” requirement involves an assessment of conduct of the individual concerned “to assess whether it is consistent with the measure of integrity the Governor in Council deems necessary to maintain public confidence in federal institutions and the federal appointment process” (Wedge v. Canada (Attorney General), 1997 CanLII 5331, per MacKay J).

The courts have consistently taken the view that the “good behaviour” requirement vests “broad discretion” in the federal cabinet (Wedge, at paras. 32-33; Shoan, at para. 158) requiring a high level of deference on the part of the courts (Shoan v. Canada (Attorney General), 2018 FC 476, at para. 91). The absence of a “cause” requirement in respect of the Governor (and Deputy Governor) when one exists in respect of directors would also indicate that the federal cabinet has a broad margin of appreciation in determining whether an individual has fallen short of the appropriate standard of conduct.

True, the law relating to the review of federal cabinet decisions is evolving rapidly but the courts have charted a consistent course over the past few decades. A “good behaviour” requirement is more demanding than the standard that applies to “at pleasure” appointments (Keen v. Canada (Attorney General), 2009 FC 353, at para. 57, per Hughes J, obiter) but should nonetheless be satisfied by a suitably reasoned justification from the federal cabinet pursuant to the relatively demanding process required in respect of “good behaviour” appointments.

It seems to me, therefore, that a federal cabinet led by Prime Minister Poilievre could indeed ‘fire’ the Governor of the Bank of Canada, including for failure to foresee and adequately respond to the current surge in inflation, subject to following an appropriately rigorous procedure. Given the complexities of monetary policy in a global world riven by a pandemic, a “personalized inquiry” might be time-consuming and complex but there is no reason in principle that one could not be conducted in a procedurally fair manner and a termination supported by a sufficiently reasoned justification.

There is perhaps a simpler route to the same destination. Under the Bank of Canada Act, the Minister of Finance can, in specified circumstances, give directives to the Bank on monetary policy where there is disagreement between the Minister and the Bank. If a Governor were to resist a demand to, say, permit cryptocurrencies, end quantitative easing or cut interest rates, the Minister could “give to the Governor a written directive concerning monetary policy, in specific terms and applicable for a specified period, and the Bank shall comply with that directive”: s. 14(2). Refusal to comply with any such directive would, I think, undoubtedly constitute grounds for dismissal under s. 6.

Whether a Prime Minister Polievre should ‘fire’ the current Governor, or any other Governor, is quite another question, of course. But the law would not stand resolutely in his way.

This content has been updated on September 13, 2022 at 19:31.