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Administrative Law - Licences, Certificates and Approvals. Registrar, Alcohol and Gaming Commission of Ontario v. Giesz-Ramsay
In Registrar, Alcohol and Gaming Commission of Ontario v. Giesz-Ramsay (Div Court, 2023) the Divisional Court considers the Alcohol and Gaming Commission of Ontario's (AGCO) JR application of a LAT ruling that set aside a "Notice of Proposal to Refuse Licence", here for a 'cannabis retail manager' [under s.5(6) of the Cannabis Licence Act, 2018 (CLA)].
In these quotes the court considers the appropriate LAT standard of proof, which by virtue of s.5(4)1 of the CLA, is "reasonable grounds to believe":Did the LAT Apply the Wrong Standard of Proof?
[13] The AGCO takes the position that in applying s. 5(4)1 of the Act, the LAT erred by applying a standard of proof on a balance of probabilities as opposed to the “reasonable grounds to believe” standard. The AGCO submits that the evidence of the Respondent’s past criminal convictions, public defiance of the law, and promotion of her illegal cannabis dispensaries amply met the “reasonable grounds to believe” standard. The AGCO submits that had the LAT applied the proper standard of proof, it could not have concluded that there were not reasonable grounds to believe that the Respondent would not act in accordance with the law.
[14] I disagree that the LAT applied a standard of proof on a balance of probabilities or a standard higher than that required by s. 5(4)1 of the Act. The LAT, citing the Court of Appeal’s decision in Ontario (Alcohol and Gaming Commission of Ontario) v. 751809 Ontario Inc., 2013 ONCA 157, correctly noted that the “reasonable grounds for relief” standard of proof is lower than proof on a balance of probabilities. The LAT recognized that the standard requires “more than mere suspicion and an objective basis for the belief based on compelling and credible information.”
[15] The AGCO’s submission suggests that once it had adduced evidence of the Respondent’s past convictions and activity, the LAT was compelled to find that the “reasonable grounds to believe” standard was met. This submission fails to take into consideration the substantial evidence that the Respondent adduced before the LAT. The LAT found that despite the Respondent’s past criminal convictions and conduct, she had demonstrated a change in perspective regarding the necessity of complying with the law, as evidenced by her testimony and her conduct since her convictions. In applying the “reasonable grounds to believe” standard, the LAT was entitled, if not required, to weigh the entirety of the evidence before it, including the Respondent’s past or present conduct.
[16] The LAT did not err in law by applying a higher standard of proof than that required by s. 5(4)1 of the Act. Nor did the LAT misapply the “reasonable grounds to believe” standard which, in any event, would have constituted an error on a question of mixed fact and law (rather than an error of law) that would not be subject to appeal. . Manitoba Métis Federation Inc. v. Canada (Energy Regulator)
In Manitoba Métis Federation Inc. v. Canada (Energy Regulator) (Fed CA, 2023) the Federal Court of Appeal considers an appeal by a Metis organization of a decision of the Commission of the Canadian Energy Regulator (the Commission) involving a hydro project advanced by Manitoba Hydro. In these quotes the court considers when a tribunal must hold a hearing:[206] It is true that certain proceedings before the Commission must be public, including hearings if related to the issuance, suspension, or revocation of a certificate (CER Act, s. 52(1)). A public hearing may also be held for any other matters if appropriate (CER Act, s. 52(3)).
[207] In this case, the primary issue in the MMF’s Notice of Application was whether the MAP was a commitment under Condition 3 and whether Manitoba Hydro had failed to implement it; in other words, whether Manitoba Hydro was non-compliant with respect to Condition 3. The Commission found no such commitment and, as a result, found that Manitoba Hydro was compliant. The question of revocation or suspension therefore did not arise.
[208] A public hearing is not required under subsection 52(1) by the simple fact that a party requested the revocation or suspension of a certificate. Revocation or suspension must actually become a live issue before the Commission.
[209] Furthermore, the Commission is empowered to conduct its proceedings in a flexible manner and adapt them to the circumstances at hand, subject to the common law requirements of procedural fairness (Knight v. Indian Head School Division No. 19, 1990 CanLII 138 (SCC), [1990] 1 S.C.R. 653 at 685, 69 D.L.R. (4th) 489). Therefore, the factors used to determine what procedural rights are contained in the duty of fairness, set out in Baker v. Canada (Minister of Citizenship and Immigration), 1999 CanLII 699 (SCC), [1999] 2 S.C.R. 817, 174 D.L.R. (4th) 193 at paragraphs 22–28, apply to the Commission.
[210] Applications and proceedings before the Commission “must be dealt with as expeditiously as the circumstances and procedural fairness and natural justice permit” (CER Act, s. 31(3)). To this end, the Commission may make rules governing its procedures and practices (CER Act, s. 35(d); see also the National Energy Board Rules of Practice and Procedure, 1995, S.O.R. 95/208, which remain in effect). That is what the Commission did here. It was not required to hold a public hearing in these circumstances.
[211] In the present appeal, the MMF did not argue that it had not been heard or that it did not have the opportunity to provide fulsome submissions to the Commission regarding its concerns. There is no question here that the MMF was allowed to provide fulsome written submissions to the Commission over the course of several months.
[212] I am satisfied there was no breach of procedural fairness and find no error of law. . 1386146 Ont. Inc. v. 2520650 Ont. Inc. et al.
In 1386146 Ont. Inc. v. 2520650 Ont. Inc. et al. (Div Court, 2022) the Divisional Court considered the appeal of an interlocutory order from the Local Planning Appeal Tribunal (LPAT) under the Aggregate Resources Act. The case is useful for it's detailed review of the law of the entitlements of an aggregate license-holder, which - depending on the statute allowing license-granting - may have significant relevance to the law of licensing generally:The Aggregate Act
[16] The object of the Aggregate Act is expressly set out in section 2:The purposes of this Act are,
(a) to provide for the management of the aggregate resources of Ontario;
(b) to control and regulate aggregate operations on Crown and private lands;
(c) to require the rehabilitation of land from which aggregate has been excavated; and
(d) to minimize adverse impact on the environment in respect of aggregate operations. [17] It is important to note that, during the 1990’s when Schneider and Maniplex were decided by the OMB, the objectives of the Aggregate Act were identical to those contained in the current legislation.
[18] Section 11 of the Aggregate Act sets out the procedure governing applications for licences. As part of the issuance process, the matter may be referred to the Tribunal for an adjudication. Section 11(8) of the Aggregate Act specifically provides the Tribunal with certain powers during such a hearing, including the power to impose conditions when granting licences:Powers of Tribunal
(8) The following rules apply if an application is referred to the Tribunal:
1. The Tribunal may hold a hearing and direct the Minister to issue the licence subject to the prescribed conditions and to any additional conditions specified by the Tribunal, but the Minister may refuse to impose an additional condition specified by the Tribunal if he or she is of the opinion that the condition is not consistent with the purposes of this Act.
2. The Tribunal may hold a hearing and direct the Minister to refuse to issue the licence.
3. If the Tribunal is of the opinion that an objection referred to it is not made in good faith, is frivolous or vexatious, or is made only for the purpose of delay, the Tribunal may, without holding a hearing, on its own initiative or on a party’s motion, refuse to consider the objection. If consideration of all the objections referred to the Tribunal in connection with an application is refused in this way, the Tribunal may direct the Minister to issue the licence subject to the prescribed conditions.
4. If all of the parties to a hearing, other than the applicant, withdraw before the commencement of the hearing, the Tribunal may refer the application back to the Minister and the Minister shall decide whether to issue or refuse to issue the licence. [Emphasis added.] [19] Section 13 of the Aggregate Act governs amendments to licences. This section also allows for a hearing at the Tribunal. Section 13(9) of the Aggregate Act states that the Tribunal has specific powers to impose conditions in hearings regarding amendments to licences:Powers of Tribunal
(9) The Tribunal may direct the Minister to carry out, vary or rescind his or her proposal. [Emphasis added.] [20] Specific to this case, sections 18(1) and (8) of the Aggregate Act govern the transfer of licences. Of note, these sections do not include the power to impose conditions on licence transfers:Transfer of licence
18 (1) On application, the Minister may transfer a licence.
...
(8) The Local Planning Appeal Tribunal may direct the Minister to carry out or rescind his or her proposal. ....
Schneider and Maniplex
[31] As noted above, a key issue in the Tribunal’s ruling has to do with its interpretation of Schneider and Maniplex. The Tribunal distinguished these cases on the basis that the Aggregate Act, as it existed when Schneider and Maniplex were decided, empowered the OMB to make recommendations to the Minister when considering a licence transfer. While this is a relevant consideration, a further review of Schneider and Maniplex highlights another issue apposite to this appeal: the policies previously considered by the OMB.
[32] In Schneider, the OMB dealt with a situation where the OMB was asked to approve a non-consensual licence transfer. The OMB approved such a transfer and, at para. 19 and 20, the OMB recognized that an aggregate licence has an economic value:The Board accepts that the resource may "belong" to the landowner, who in this case is the proposed recipient of the transferred licence, but the resource has no exchange value without an extraction licence. If a transfer is permitted, this owner will have been able to gain licence permission to extract the resource having paid no more than the fee required to apply for a transfer. He will not have occasioned any of the expenses ordinarily necessary to gain an extraction licence, yet he will be able to reap the remaining benefits of the resource.
Mr. Schneider says that this would not be fair. The Board agrees with this position. To ignore the economic value of the licence is to trivialize the process by which the licence is granted. The Board finds that the licence has value, a value that is some function of the resource and the value added by the applicant for the licence. The mere fact that Mr. Seip earnestly seeks to have the licence transferred is proof enough of the economic value to him of the licence. [33] At paras. 21 and 22 of its decision, the OMB further found that, for policy reasons, financial compensation to the party losing an aggregate licence had to be considered by the OMB:Furthermore, the Board believes that there may be important practical consequences that must be considered. Permitting an "automatic" transfer to the landowner after the lease has expired could have far-reaching undesirable implications for many current lessees and perhaps ultimately for the public. Some lessors of lands on which valid licences are held by others may decide not to renew their leases. Instead there may be some incentive to letting the lease lapse so that they can then keep the balance of the resource and gain the licence by "automatic transfer" from the current licensee for the mere price of an application fee. This and other possible consequences could yield uncertainty in the management of the resource that would not be consistent with the purposes of the Aggregate Resources Act, under Section 2, and with stated Ministry policy to maintain adequate supplies of the resource and protect the public's interest in an orderly marketplace for materials.
Consequently, the Board recommends to the Minister that the Minister consent to the transfer of the licence but as a matter of principle, the transfer of the licence be accompanied by some financial consideration. This is not to recognize the proposition that a licence is a right, or in some way, is akin to property. The Board would affirm that a licence is a privilege, held at the discretion of the Crown, and to be maintained upon satisfactory completion of certain obligations and conditions. Nevertheless, a licence when granted has value and can be seen to have economic value. Where a licence held by a licensee in good standing, is to be transferred without the consent of the licensee, compensation to balance the gains and losses of economic value between parties is warranted as part of the consideration of the merit of the transfer. [Emphasis added.] [34] The OMB faced a similar situation in Maniplex. At paras. 21 to 23 of Maniplex, the OMB described its holdings in Schneider as follows:In my view, Re Schneider stands for three things. First, the Minister can consent to transfer a licence without the consent of the licence holder. This does not mean that the licence must be transferred. It is still to be considered on its merits.
Second, a licence has value:"The board accepts that the resource may "belong" to the landowner ... but the resource has no exchange value without an extraction licence. ..."
“To ignore the economic value of the licence is to trivialize the process by which the licence is granted. ... the licence has value, a value that is some function of the resource and the value added by the applicant for the licence." Finally, there is the matter of equity: equity goes to the merits of the transfer, and compensation for the loss of the privileges granted by the licence goes to equity:"Where a licence is held by a licensee in good standing, and is to be transferred without the consent of the licensee, compensation to balance the gains and losses of economic value between parties is warranted as part of the consideration of the merit of the transfer." Mr. Polowin's submissions deal only with value added by the licence holder. They do not deal with the value added to the resource by the permission to extract that resource. Without that permission represented by the licence, the aggregate has no exchange value. As the Board held in Re Schneider a licence is not a right, or in some way akin to property, but a privilege held at the discretion of the Crown. Mr. Polowin's submissions do not take account of this privilege. [35] Therefore, the OMB’s resort to equity occurred because the Aggregate Act did not explicitly contemplate a “hostile transfer” of a licence. Further, the Aggregate Act did not specifically direct the OMB to consider the financial positions of the transferor and the transferee as conditions precedent for the transfer of an aggregate licence. In Schneider and Maniplex, the OMB effectively held that principles of equity coupled with the policy objectives of the Aggregate Act required the OMB to consider such issues when determining whether to impose conditions on such a transfer.
Application to this Case
[36] In this case, the Tribunal stated in its decision that the sole relevant policy consideration was the need to “manage the supply of aggregate resources in a manner that protects the public interest. The public interest matters that the Minister and the Tribunal must have regard to do not include the financial interests of the landowner or the licensee”. As seen earlier in this decision, the OMB previously held it had to consider financial compensation when dealing with licence transfers. In the case before the court, therefore, the Tribunal effectively reversed course regarding this policy and found that the financial positions of the transferor and the transferee were no longer relevant considerations. Given the reasons in Schneider and Maniplex, the Tribunal needed to explain why this policy changed. Without such reasons, this court cannot provide a meaningful appellant review policy.
[37] Further, I agree that the Tribunal has no explicit power to make recommendations under the Aggregate Act. However, the doctrine of necessary implication is such that, if the previous policy regarding financial compensation remains in effect, the Tribunal must consider that policy when determining whether it has the power to enforce said policy as a result of necessary implication as described in ATCO Gas & Pipeline Ltd. It may yet be that the financial interests affected by the transfer may not meet the threshold associated with the doctrine of necessary implication. Such a finding, however, is a separate inquiry from whether, as a matter of policy, the Tribunal is capable of considering the financial interests of the affected parties. . D. Michael Goldlist v. Registrar, Alcohol, Cannabis and Gaming Regulations and Public Protection Act
In D. Michael Goldlist v. Registrar, Alcohol, Cannabis and Gaming Regulations and Public Protection Act (Div Ct, 2022) the Divisional Court considered the statutory licencing criteria of the Cannabis Licencing Act (which are similar to several other vice and quasi-criminal business licencing regimes), in the context of procedural fairness:[55] This panel must determine whether the appropriate level of procedural fairness was afforded (Brooks v Ontario Racing Commission, 2017 ONCA 833 at para 5).
[56] We find that the record discloses no denial of procedural fairness. The Appellant had an opportunity to know the issues and respond to them.
[57] The Tribunal was alive to the potential impacts of the regulatory process on the appellant, and it fulfilled its obligations to safeguard procedural fairness in this case.
[58] Baker, at paragraph 24, explains that the level of procedural fairness owed is elevated when a decision is determinative of the issue, further requests cannot be submitted, and no appeal procedure is provided in the statute.
[59] The Appellant submits that he is owed greater procedural fairness because “the Decision arises from a statutory right of appeal and takes place in the form of a hearing de novo”.
[60] However, the Appellant exercised his right of appeal in having a hearing de novo before the LAT. He then had a right to request a reconsideration of the Tribunal’s Decision which finally disposes of an appeal as well as a right of appeal to this Court on questions of law.
[61] The Appellant was aware of the case he had to meet. During the hearing de novo, he raised new issues and produced new evidence. Submissions were made with respect to the totality of the evidence. The LAT properly considered and weighed the evidence and submissions.
[62] Baker, at paragraph 25, sets out that, in the context of employment, “a high standard of justice is required when the right to continue in one’s profession or employment is at stake…” In the Appellant case, however, has never been licensed, nor legally employed, as a CRM. As a result, the impact of this decision on the Appellant’s continued employment is minimal to non-existent. The Decision has little to no impact on the Appellant’s employment. The Tribunal decision does not impact his right to work or his future employment in the cannabis industry.
[63] There is also no evidence that the Appellant’s ability to work in the cannabis industry would be significantly impacted by the absence of a CRM licence. The Appellant testified at length that he has maintained continuous employment as an entrepreneur in the cannabis industry since 2004. Since then, he established and operated several businesses, including headshops that sell and distribute cannabis and smoking accessories. He gave evidence before the Tribunal, though, that a CRM licence would allow him to share and build upon his experience and knowledge in the cannabis industry.
[64] Nonetheless, a CRM licence will not prevent the Appellant from continuing in his career of working and owning headshops, selling and/or distributing cannabis accessories, sharing his knowledge or expanding upon his cannabis related knowledge. It also does not prevent the Appellant from being employed in an authorized retail cannabis store and assisting and educating customers on various cannabis products.
[65] The Decision only prevents the Appellant from supervising or managing employees of a cannabis store; overseeing or coordinating the sale of cannabis; managing compliance issues in relation to the sale of cannabis; and having signing authority to purchase cannabis, enter into contracts and make offers of employments.
[66] In addition, after a two-year period from his being denied a CRM licence, the Appellant is eligible to re-apply for one.
[67] The Act sets out the regulatory model for the responsible, safe and lawful sale of cannabis in Ontario. The Act aims to protect the public by requiring that retail sales are carried out with honesty, integrity, in accordance with the law and in the public interest. In the case of Sticky Nuggz Inc. v Alcohol and Gaming Commission of Ontario, 2020 ONSC 5916 at paragraph 67, this Court held that the adverse impacts of a refusal under the Act are extraneous considerations within that statutory objective.
[68] Finally, given that hearings before the LAT are hearing de novo, there was no legitimate or reasonable expectation that the Tribunal would not consider the totality of the evidence. The Tribunal is not limited to the particulars set out in the Proposal.
[69] The Appellant is presumed to know the law and understand that the task before the LAT involves a consideration of the totality of the Appellant’s past and present conduct.
[70] The Proposal put the Appellant’s honesty, integrity, and his ability to act in compliance with the law and the public interest squarely at issue. The Appellant was aware that the allegations in the Proposal involved, amongst other things, misrepresentations regarding the nature of his civil litigation and his involvement in the illegal cannabis dispensary. He also received disclosure related to these particulars before the hearing commenced. . Toronto Quality Motors v. Registrar, Motor Vehicle Dealers Act
In Toronto Quality Motors v. Registrar, Motor Vehicle Dealers Act (Div Ct, 2022) the Divisional Court cited law respecting regulatory penalty appeals:[20] With respect to the appeal from the disposition, it is well-established that in order to overturn a penalty or disposition imposed by a regulatory tribunal, an appellant must show that the decision-maker made an error in principle or that the penalty or disposition was “clearly unfit”: Mitelman v. College of Veterinarians of Ontario, 2020 ONSC 3039 (Div. Ct.) at para. 18.
[21] In the criminal law context, case law in relation to a similar appellate standard of review describes the threshold for appellate intervention as a requirement to show that a sentence is: “demonstrably unfit”, “clearly unreasonable”, “clearly or manifestly excessive”, “clearly excessive or inadequate”, or representing a “substantial and marked departure” from penalties in similar cases. This high threshold also applies in the administrative law context. To be clearly unfit, a penalty or disposition must be disproportionate or fall outside the range of penalties for similar offences in similar circumstances. A fit penalty is guided by an assessment of the facts of the particular case and the penalties imposed in other cases involving similar infractions and circumstances: College of Physicians and Surgeons v. Peirovy, 2018 ONCA 420 at paras. 56-57.
....
[24] The appellants submit that revocation was disproportionate when compared to another case that the appellants submit is similar, Premium Cars Wholesale Limited et al. v. Registrar, Motor Vehicle Dealers Act, 2020 CanLII 27360 (ON LAT). In Premium Cars a suspension was imposed.
[25] The high threshold for appellate intervention on penalty or disposition reflects that crafting an appropriate disposition is a very fact-dependent exercise. However, whether similar dispositions have been imposed in similar cases is one aspect of considering whether a disposition is “clearly unfit”. We agree with the respondent that the Premium Cars case is distinguishable from this case. In Premium Cars among the factors that led the tribunal to conclude that a suspension was appropriate was that in a number of cases where written disclosure of vehicle history was not provided, the tribunal found as a fact that customers were aware of the relevant vehicle history and were not misled: Premium Cars at paras. 280, 295. That is different than the finding in this case, where the tribunal found that the appellants engaged in a pattern of dishonest conduct towards consumers that involved manipulating unsophisticated and inexperienced customers, and undermined regulatory requirements fundamental to the protection of consumers. This court has upheld revocation as within the range of reasonable dispositions for conduct involving a pattern of dishonest transactions with consumers: 1855456 Ontario Inc. v. Registrar, Motor Vehicle Dealers Act, 2021 ONSC 2905 at paras. 12-14. . Sobczyk v. Ontario
In Sobczyk v. Ontario (Div Ct, 2021) the Divisional Court considered a frequent ground of refusing a licence, ie. that there 'are reasonable grounds to believe that the Applicant will not comply with the Act and the regulations':[30] Section 6(2)1 of O. Reg 247/14 provides that the Minister is not authorized to issue a registration certificate if there are reasonable grounds to believe that the Applicant will not comply with the Act and the regulations, based on information provided to the Minister and based on the past conduct of the Applicant or a related party. It was under this section that the Applicant’s application for renewal of his certificates was declined.
[31] The “reasonable grounds to believe” standard requires something more than mere suspicion, but less than the standard applicable in civil matters of proof on the balance of probabilities. In essence, reasonable grounds will exist where there is an objective basis for the belief which is based on compelling and credible information. [See Mugesera v. Canada (Minister of Citizenship and Immigration 2005 SCC 40 (CanLII), [2005] 2 S.C.R. 100 at para. 114].
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