Non-Public Property: Unraveling The Mystery
By Mary Turner
Canadian Forces Legal Advisor
In this article which is designed to explain the unique and sometimes complex world of Non-Public Property, or NPP, I will be describing the legal nature of NPP, the legal status of NPP organizations and Staff of the Non-Public Funds, Canadian Forces.
NPP is a legally defined term, found in section 2 of the National Defence Act (NDA). Although it is often referred to as non-public “funds”, NPF is not a legally defined term. While it is true that there are money accounts, or “funds”, created for non-public purposes, the general use of the term “funds” does not reflect the fact that NPP is a much broader term. The legal meaning of “property”, although it does include money or “funds”, also includes every other type of property of every nature and kind, such as physical assets, real estate and rights. It is therefore more correct and appropriate to describe our organizations, activities and property as NPP, as opposed to NPF.
The NDA also establishes, in sections 38 to 41, the specific legal provisions governing NPP. Those sections provide, among other matters, that NPP is vested in the Chief of the Defence Staff (CDS) and Base, Wing and Unit Commanders for the benefit of serving and former CF members and their dependents. These provisions, together with the fact that the property is called “non-public”, sometimes lead people to conclude that NPP is not Crown property. Such a conclusion is wrong. The words “non-public” are not legally the equivalent of “not Crown”. NPP is public property in the sense that it is Crown property. NPP is merely a special class of Crown property created by the NDA.
The major difference between “public” and “non-public” property, is that NPP is not subject to the rules and regulations governing the administration of public property found in the Financial Administration Act (FAA) and the regulations made pursuant to the FAA. The reason those rules do not apply, is that the NDA specifically states that the FAA does not apply to NPP. The CDS is responsible for establishing the rules governing how NPP is to be administered. Even so, because the CDS and Base, Wing and Unit Commanders are always acting in their official capacities when carrying out their NPP responsibilities, and because the NDA makes the Minister of National Defence ultimately responsible for NPP, there is always accountability to the Crown for how NPP is administered.
While NPP is unique in Canadian Law, many countries have established similar special classes of property or funds administered by military organizations in support of their troops, all of which operate outside the rules governing how “public” (or “appropriated”) property is administered. In the United States, for example, this class of property is called “Non-Appropriated Funds”.
Since 1969, the Government of Canada has recognized that personnel support is a public responsibility, and public support for a system of NPP organizations has been formally authorized. Indeed, the relationship between Her Majesty in Her public capacity and Her Majesty in Her non-public capacity, is one that is truly symbiotic.
Pursuant to their authority under the National Defence Act, the Chief of the Defence Staff and Commanding Officers have established a number of NPP organizations. These organizations administer and deliver NPP programs, services and activities, and assist the Department in delivering departmental programs and services in support of operational readiness and effectiveness. At the national level, these organizations include CFMWS, CANEX, SISIP FS and PSP. At the Base, Wing and Unit level, these organizations are numerous, and include messes, museums, cable television operations, and sports and recreational clubs and facilities.
This section discusses the legal status of these organizations and some of the implications of that status.
In general, the law recognizes individuals, partnerships and corporate entities as distinct legal “persons”, capable of suing or being sued in their own names, and capable of entering into contractually binding arrangements in their own names. Unless legislation provides otherwise, most government organizations, including NPP organizations, are not distinct legal “persons” in their own right. That is, they are not capable of suing or being sued in their own names, or entering into legally binding contracts in their own names. Further, whereas government Departments are creatures of statute, specifically established or created by law, NPP organizations have been established, not by statute, but by decisions of those responsible for administering NPP.
Legally, NPP organizations are therefore considered to be “administrative constructs” of either the CDS or Commanding Officers acting in their official NPP capacities. As such, whenever these organizations have to be described for legal purposes, such as in a contract or lawsuit, they are described as “Her Majesty the Queen in right of Canada”. For example, CFMWS is legally described as “Her Majesty the Queen in right of Canada, as represented by the Chief of the Defence Staff in his non-public property capacity, through the Canadian Forces Morale and Welfare Services (“CFMWS”)”.
The fact that NPP organizations constitute “Her Majesty”, at law, is interesting from a number of different perspectives. For example, if a NPP organization is to be charged with committing any offence under federal legislation, such as under environmental, tax or tobacco related offences, then the result would be that Her Majesty (in one capacity) would be charging Her Majesty (in a different capacity) with an offence. This is called an “R. vs. R.” (Regina versus Regina) situation, and no information can be laid against the NPP organization without first acquiring the approval of the Deputy Attorney General for Canada.
In addition, pursuant to the Department of Justice Act, Justice Canada is responsible for the legal affairs of the government as a whole and for providing legal services to individual departments and agencies through functions related to the offices of the Attorney General for Canada and the Minister of Justice. These services include providing legal advice, preparing legal documents, drafting legislation, regulating or conducting litigation, and overseeing all legal mechanisms used to achieve the overall objectives of the government. Therefore, the Attorney General for Canada will represent NPP organizations when they are suing or being sued by other persons, and all other legal services to NPP organizations must be provided by the Department of Justice, or by legal advisors approved through the Department of Justice.
Contract law requires that the parties to contracts not only be legal “persons”, but that they be “separate and distinct” legal persons. As a consequence, NPP organizations cannot enter into contracts with other organizations that are also legally “Her Majesty the Queen in right of Canada”, such as the Department of National Defence. At law, they are the same legal “person” (Her Majesty), even though that legal person is represented by different officials acting in different capacities, such as the Minister of National Defence on the one hand, and the Chief of the Defence Staff, in his non-public capacity, on the other. Therefore, for example, NPP organizations are not eligible to bid on Departmental Requests for Proposals for supplying goods or services to the Department, because the successful bidder must be capable of entering into a contract with the Department that will govern the terms and conditions of the supply to Her Majesty of the goods or services.
CFMWS is legally described as “Her Majesty the Queen in right of Canada, as represented by the Chief of the Defence Staff acting in his Non-Public Property capacity, through the Canadian Forces Morale and Welfare Services [“CFMWS”]”
While NPP organizations cannot legally enter into contracts with the Department, they can and do enter into arrangements that are not contractual in nature, usually to assist the Department with its delivery of programs and services in support of operational readiness and effectiveness, or publicly funded morale and welfare programs and services. These types of arrangements or agreements between the Department and NPP organizations are normally memorialized through the use of Memoranda of Understanding or Service Level Agreements. While intended to be morally and politically binding, there is no intent that either organization ever sue or be sued by the other for a failure to comply with an obligation contained in the written arrangement.
Another important question is whether or not NPP organizations are legally a “part” of the Department of National Defence. The short answer is “no”. Although NPP organizations are “Her Majesty”, the Department of National Defence is a separate creature of statute. The Canadian International Trade Tribunal (the “CITT”) has accepted our position that NPP organizations are not a part of the Department in at least one case, and therefore not subject to the jurisdiction of the CITT with respect to NPP procurement policies and procedures. The determination that NPP organizations are independent of the Department is based, in part, on the fact that NPP staff is employed by Staff of the Non-Public Funds, Canadian Forces, a Separate Employer under the Public Service Labour Relations Act.
In this section, I will address some of the misconceptions with respect to employees of Staff of the Non-Public Funds, Canadian Forces (NPF Staff), and discuss some of the legal issues relevant to NPF Staff.
As people who are dedicated to providing the programs and services that support the CF community, NPF Staff work closely with both CF members and Department of National Defence civilian employees. While NPF Staff know that they are not members of the CF, they are sometimes not clear on what the difference is between themselves and DND civilians, often believing that the distinction is that the DND civilians are "public servants", whereas they are not. NPF Staff may also be under the impression that their employer is the CFMWS or DGMWS. Neither of these statements is correct.
In fact, both DND civilians and NPF Staff are employed by Her Majesty the Queen in right of Canada, meaning that both groups of employees are part of the federal public administration, or "public servants". The difference between NPF Staff and DND civilians is who their employer is. The Public Service Labour Relations Act defines "employer" as follows: "employer" means Her Majesty in right of Canada as represented by
(a) the Treasury Board, in the case of a department named in Schedule I to the Financial Administration Act; and (b) the separate agency, in the case of a portion of the federal public administration named in Schedule V to the Financial Administration Act.
As DND is a Department, DND civilians are employed by "Her Majesty in right of Canada as represented by Treasury Board". Among the many separate agencies referred to in part (b) above, are the Canadian Security Intelligence Service, the Communications Security Establishment, the Office of the Auditor General, the National Capital Commission and the Staff of the Non-Public Funds, Canadian Forces (not the CFMWS). Because the Staff of the Non-Public Funds, Canadian Forces is one of the separate agencies named in Schedule V of the Financial Administration Act, the employer is: "Her Majesty in right of Canada as represented by the Staff of the Non-Public Funds, Canadian Forces". Note that the term "non-public funds" (as opposed to "non-public property") appears in the name of the separate agency (employer), and therefore should be used in human resources references.
Some sources have incorrectly equated the label CFMWS with the title DGMWS. Director General Morale and WelfareServices (DGMWS) is the title assigned by the CF Chief of Military Personnel for the role of administration of the functions that have been designated by DND for Alternate Service Delivery through NPP. DGMWS is therefore the title of a job function whereas CFMWS is an administrative construct.
For the majority of public servants in Departments, Treasury Board is responsible for personnel management, and the Public Service Commission is responsible for establishing the rules with respect to appointments to positions. The effect of being a separate agency is that the Governor in Council can decide who will be responsible for setting personnel management policies and the rules regarding appointments to positions.
In 1978, the Minister of National Defence was named by Order in Council as the person responsible for personnel management for the Staff of the Non-Public Funds, Canadian Forces. The Minister delegated this authority to the Chief of the Defence Staff or his sub delegate.
Between 1978 and 1982 the Public Service Commission remained responsible for establishing the rules with respect to appointments to positions within NPF Staff, but in 1982 the Minister was authorized by Governor in Council Regulations to assume those responsibilities as well. That authority has also been delegated to the CDS or his sub delegate.
All of this simply reflects the fact that the federal public administration has been organized so that different persons or bodies are responsible for the appointment of public servants and for personnel management within the various elements of the public service. In the case of NPF Staff, the CDS or his delegate has the power to set the rules governing both appointments to positions and personnel policies. Treasury Board policies that may apply to other elements of the public service do not apply to NPF Staff.
However, employees should be aware that numerous other federal employment and employment-related statutes do apply to NPF Staff. These include the Official Languages Act, the Public Service Labour Relations Act (dealing with employer/employee relations, bargaining and disputes), Part II of the Canada Labour Code (dealing with occupational health and safety), the Employment Equity Act (dealing with correcting conditions of disadvantage), the Canadian Human Rights Act (dealing with equal opportunity and discrimination) and the Canadian Charter of Rights and Freedoms (dealing with the protection of personal rights and freedoms, equality of treatment and providing a means to challenge government decisions, programs and laws).
To conclude, the next time anyone asks, NPF Staff can say with confidence that they are public servants, and that their employer is Her Majesty the Queen in right of Canada, as represented by the Staff of the Non-Public Funds, Canadian Forces.