The principle of procedural fairness governs all aspects of tribunal hearings.

From the outset of the proceeding, an applicant is entitled to 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 – among other requirements.

Canadian Courts approach challenges to administrative fairness, usually by way of an application for judicial review, in context: what is fair in one hearing may not be in another.

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

Fox North Bay establishes that a tribunal proceeding that does not adhere to rudimentary concepts of due process will be quashed on judicial review.

The Permanent Ban

Fox North Bay arose out of 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 Mr. Nathan Taus (the “Applicant”) in any position of business pursuant to the Companies’ liquor and cannabis licenses under the Liquor License Act (the “LLA”) and the Cannabis License Act (the “CLA”).

The ban followed allegations by the Registrar 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 on the premises.

On November 19, 2020, the Registrar sent a “Designation Letter” to the applicants’ counsel advising of general categories of the risk that the applicants posed to public safety. The letter did not particularize the specific allegations related to these general categories.

On December 22, 2020, the Registrar issued its decision confirming the applicants’ level of risk and imposing six conditions on the applicants’ liquor license, including prohibiting the Applicant from being employed in any capacity at the restaurant (the “Decision”).

A similar condition was imposed on the Companies’ cannabis licenses, 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 November 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 in relation to 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 November 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.

The Court’s reasoning was driven largely by concerns that the applicants were denied the essential elements of due process, including notice, the right to respond, and the right to reasons.

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

1. The Baker Factors Matter.

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 must consider 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 Does Not Always Cure a Procedural Defect.

In Fox North Bay, the Registrar failed to provide notice to the applicants 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 received 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 of the decision, then the applicant’s application for judicial review should be dismissed: see Khan v. University of Ottawa, 1997 CanLII 941; 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”.

3. Procedural Fairness is Required Before a Decision is Made.

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. The timing of procedural fairness matters.

If an applicant is denied basic due process rights before the decision is made, then the decision-maker has violated the duty, full-stop:

It is not an answer to the lack of notice that counsel for the applicants provided further submissions after the [R]econsideration [D]ecision. 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. An Applicant Can Have a “Legitimate Expectation” in a Process, Not a Result.

One of the Baker factors the Court must consider is the “legitimate expectations of the person challenging the decision”.

In 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 SCC 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 Impact on the Individual Determines the Level of Fairness.

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 requires judicial intervention.

Fairness Matters.

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 in an administrative decision or process, judicial review necessitates the quashing of the decision and a possible reconsideration of it by the tribunal.

It is worth noting that attacking a tribunal procedure is generally easier than asking the Court to review the reasonableness of the decision itself.

Courts have significant expertise ensuring procedural fairness and will not hesitate to remedy an unfair process. However, Courts are less comfortable questioning the merits of a substantive ruling made by an expert tribunal.

Administrative decisions are more vulnerable to attack where due process has been compromised.