Jan 17, 2023

Challenging tribunal decision for procedural unfairness

By Marco P. Falco
The Lawyer’s Daily View original

Procedural fairness is one of the hallmarks of an administrative proceeding. A lack of due process compromises the very merits of the decision itself. 

From the outset of a tribunal proceeding, an applicant is entitled to, among other things, notice of the case to be met, the right to be heard, reasons for decision, the legitimate expectation that a certain procedure will be followed and an unbiased tribunal. 

A recent decision of the Ontario Divisional Court, Fox North Bay Inc. v. Ontario (Alcohol and Gaming Commission, Registrar), 2022 ONSC 5898, serves as a useful reminder of the basic principles guiding the scope and content of the duty of fairness. 

Fox North Bay establishes that a tribunal proceeding that does not adhere to rudimentary elements of natural justice will be quashed on judicial review. 

Denying right to know and respond 

Fox North Bay involved a decision by the Registrar of the Alcohol and Gaming Commission of Ontario (AGCO) to indeterminately ban the related applicant companies (the companies) from employing Nathan Taus (the applicant) in any position of business pursuant to the companies' liquor and cannabis licences under the Liquor Licence Act (the LLA) and the Cannabis Licence Act (the CLA). 

The ban followed allegations that the applicant had, among other things, committed various acts of non-compliance with the LLA, including exceeding lawful capacity limits at the companies' restaurants and permitting drunkenness. 

The Registrar sent a "Designation Letter" to the applicants' counsel on Nov. 19, 2020, advising of general categories of risk that the applicants posed to public safety. The letter, however, did not particularize the specific allegations related to these general categories. 

The Registrar issued its decision on Dec. 22, 2020 confirming the applicants' level of risk and imposing six conditions on the applicants' liquor licence, including prohibiting the applicant from being employed in any capacity at the restaurant (the decision). A similar condition was imposed on the companies' cannabis licences, on consent. 

The applicants challenged the decision in June 2021, raising the unfairness of the proceeding and the fact that the restaurant at issue was operated by an owner with an exemplary record. 

The Registrar rejected the applicants' request to remove the employment ban (the reconsideration decision) on Nov. 2, 2021. 

For the first time, the Registrar, in the reconsideration decision, disclosed a "Revised Risk Assessment Summary" (RRAS), which included six allegations of non-compliance by the applicant. 

Before being advised of the reconsideration decision, the applicants were denied the opportunity to respond to at least three of the allegations in the RRAS. Further, the applicants were denied the opportunity to respond to the original allegations set out in a Nov. 17, 2020, risk assessment which was only produced by the Registrar after the applicants started their application for judicial review challenging the decision and the reconsideration decision. 

On the application for judicial review, the Divisional Court quashed the decision and the reconsideration decision, remitting the matter back to the Registrar for reconsideration.

In reaching this conclusion, the court established a number of key principles about the scope and nature of the duty of procedural fairness: 

1. Procedural fairness involves a contextual analysis.

In its leading decision, Baker v. Canada (Minister of Citizenship and Immigration), 1999 2 S.C. R. 817, the Supreme Court of Canada established that on any application for judicial review alleging a breach of natural justice, the court considers the following factors: 

  • The nature of the decision being made and process in making it;
  • The nature of the statutory schemes and terms of the statutes pursuant to which the body operates;
  • The importance of the decision to the individual affected;
  • The legitimate expectations of the person challenging the decision; and
  • Choices of procedures made by the agency itself.

As the court in Fox North Bay observed, the principle underlying the Baker factors is that the court must ensure that "administrative decisions are made using a fair and open procedure, appropriate to the decision being made and its statutory, institutional, and social context .... "

2. Reconsideration may not cure a procedural defect.

In Fox North Bay, the Registrar failed to provide notice to the applicant with details of the case they had to meet in order to challenge the decision of the indefinite ban on the applicant's employment. 

This lack of notice was repeated when the Registrar reached the reconsideration decision. The applicant did not receive a detailed risk summary of his conduct until after the reconsideration was denied. 

Normally, Ontario case law holds that even if there has been a breach of procedural fairness, if that breach is cured in a subsequent reconsideration, the applicant's application for judicial review should be dismissed: see Khan v. University of Ottawa, 1997 O.J. No. 2650; Interpaving Ltd. v. Greater Sudbury (City), 2018 ONSC 3005 at para. 40. 

In Fox North Bay, however, both the decision and the reconsideration constituted "two flawed processes which result[ed] in the [indefinite] employment ban being imposed [on the applicant] and then left in place." 

The reconsideration could not cure the fundamental flaws of the original decision. 

3. The timing of procedural fairness matters.

The court further held that it made no practical difference that the applicant was entitled to make further submissions to the Registrar after the reconsideration decision was rendered. If an applicant is denied basic due process rights before the decision is made, then the decision-maker has violated the duty to provide natural justice: 

It is not an answer to the lack of notice that counsel for the applicants provided further submissions after the reconsideration decision. Procedural fairness requires that there be a right to know the allegations being made and the right to respond before the decision is made. 

4. 'Legitimate expectations' apply to procedure, not results.

One of the Baker factors the court must consider is the "legitimate expectations of the person challenging the decision." 

In Canadian administrative law, a party can have a legitimate expectation that a specific procedure will be followed: see, for example, Mount Sinai Hospital Center v. Quebec (Minister of Health and Social Services), 2001 sec 41. 

There can be no expectation, however, in a substantive result, i.e. that the Registrar in Fox North Bay would revoke the indefinite ban, for example. 

The court held that while the applicants could not have a legitimate expectation in requiring a hearing, they did have a legitimate expectation that they would "know the case [against them] that they had to meet". 

5. The effect of the decision on the individual matters.

The Registrar's indefinite ban on employment would have a significant impact on the applicant's ability to earn a living. The Divisional Court held that the "serious effect on [the applicant's] livelihood points toward a high duty of fairness." 

Accordingly, the more serious the impact of the administrative decision on the lives and welfare of the individual, the more heightened the requirement that the process be fair. 

Broadly speaking, Canadian courts apply less judicial scrutiny to procedural fairness issues where the decision at issue affects exclusively commercial interests; that being said, if those commercial interests affect the ability of an individual to practise a profession or maintain employment, a lack of fairness mandates judicial intervention. 

The tenets of fairness: Notice, response and reasons 

Fox North Bay illustrates the primacy courts place on the basic aspects of procedural fairness - the right to notice of the allegations, the right to respond to them and proper reasons for the decision. Where any of these elements are lacking, the decision will be quashed and possibly remanded back to the tribunal for reconsideration. 

Broadly speaking, it is easier to have a decision quashed on the basis of procedural unfairness than by way of substantive review. Courts show deference to the expertise of tribunals in their delegated subject-matter. 

By contrast, the purview of the courts is natural justice and procedural fairness. If due process is violated, courts are more than willing to apply judicial scrutiny to the tribunal's decision. 

This article was originally published in The Lawyer's Daily