[2011] S.C.J. No. 30

2011 SCC 30

Supreme Court of Canada

McLachlin C.J. and Binnie, LeBel, Deschamps, Fish, Abella, Charron, Rothstein and Cromwell JJ.

June 10, 2011

The Appellant Attorneys General were largely unsuccessful in an appeal of the Ontario Court of Appeal’s decision imposing procedural fairness obligations on the governments when attempting to collect sponsorship debts from sponsors of immigrants applying for permanent resident status.

The Respondent sponsors are eight individuals who supported their relatives in applying for permanent residence status in Canada (the “Sponsors”). The relatives were foreign nationals applying based upon their familial status and therefore did not need to meet the financial and other requirements for permanent residence status. The procedure involved having their Sponsors undertake to fulfill certain obligations. The Immigration and Refugee Protection Act (and the Regulations) required the Sponsors to reimburse the government for the cost of any social assistance benefits collected by their relatives during the term of their undertaking. The undertakings are contractual and statutory in nature. The relatives of the Sponsors did receive social assistance and the government of Ontario took steps to collect those amounts as debts owed by the Sponsors. The Sponsors started proceedings to avoid the payment of those debts.

The issues before the Superior Court of Justice and the Court of Appeal were whether the government had discretion in the collection of sponsorship debts and whether the government owed a duty of procedural fairness to the Sponsors in default. The Judge in the Superior Court held the government did not have discretion and did not have a duty of fairness. The Court of Appeal allowed the appeal and held the government has discretion and owes a duty of fairness. The Court of Appeal also held that the Ontario government improperly fettered its discretion by prohibiting a settlement for less than the full amount of the debt (which was specifically contemplated by the federal legislation). The Attorney General of Canada (the “AGC”) appealed the decision to the Supreme Court of Canada. The Attorney General of Ontario (the “AG of Ontario”) argued that the governments had discretion but had not fettered it.

With respect to discretion, the Court held that the language of section 145(2) was important. It states that an amount payable by a sponsor pursuant to an undertaking is “payable on demand” to the federal and provincial governments and “may be recovered” by either the province or the federal government. The permissive language was also included in the previous version of the legislation and the Court held this indicated the governments had discretion to delay collection but not forgive sponsorship debts.

With respect to the duty of procedural fairness, the Court upheld the finding that the governments owed such a duty to the Sponsors. The AGC and the AG of Ontario argued that the undertakings were contractual and therefore not subject to the duty of procedural fairness. They also argued that the legislation overrode the application of the duty of fairness. Both arguments were rejected by the Court.

The Court considered the content of the duty to be minimal in the circumstances. More specifically, the governments were only required to notify the Sponsors of the default (before filing a certificate of debt), to provide the Sponsors an opportunity to explain their own personal financial circumstances, to consider any relevant circumstances brought forward, and to notify the Sponsors of the government’s decision. The governments did not need to provide reasons in each case.

Finally, the Court accepted the AG of Ontario’s argument that the Ontario policy did not inappropriately fetter the government’s discretion. The legislation permits the government to defer but not forgive the sponsorship debts.  Ontario’s policy did not conflict with the legislation. In this regard, the appeal was allowed. The Court otherwise reached the same result as the Court of Appeal and further held the duty of procedural fairness was complied with in each of the Sponsors’ cases.