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Fairness - Forfeiting Security Bond. Haulage Network Driving Academy Inc. v. Ontario (Superintendent of Career Colleges)
In Haulage Network Driving Academy Inc. v. Ontario (Superintendent of Career Colleges) (Div Ct, 2025) the Divisional Court allowed a JR, here regarding the question of whether the "Superintendent [is] empowered to immediately forfeit a college’s security bond every time she issues a proposal to suspend, revoke or refuse to renew the college’s registration" (a LAT appeal was allowed).
Here the court considers the procedural fairness to be accorded when forfeiting an administrative security bond:Was the Superintendent’s forfeiture decision procedurally fair?
[13] Haulage submits the forfeiture decision was procedurally unfair because Haulage did not receive notice of the Superintendent’s intention to forfeit the funds. It had no ability to challenge the forfeiture before it occurred. When the Superintendent wrote to Haulage on May 25, 2023, advising that its registration was suspended effective immediately, it notified Haulage that it was entitled to a hearing before the Licence Appeal Tribunal, but not that its security bond would be declared forfeit before that hearing. When the Superintendent wrote to the bank on June 1, 2023 advising it to make payment of Haulage’s letter of credit to the Minister of Finance within two days, it did not advise Haulage that it was doing so.
[14] I find the Superintendent’s actions to have been procedurally unfair. Applying the Baker factors, Haulage was entitled to some degree of procedural fairness as described below:
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Conclusion on Baker Factors
[30] Haulage submits that where a college appeals to the Tribunal, the Superintendent should wait until the outcome of an appeal before forfeiting the funds. I do not agree that waiting until the conclusion of the Tribunal hearing is necessarily required in every case. The Superintendent may reasonably conclude that doing so would unfairly prejudice the affected students in the circumstances of the case. In considering whether to exercise her discretion to forfeit funds before a Tribunal hearing, the Superintendent may consider factors such as whether the affected college has commenced an appeal, the timing of the Tribunal hearing, the complexity and strength of the appeal to the Tribunal, the anticipated impact on students of delay, and the anticipated impact on the college in the circumstances of each case. Proceeding with the forfeiture before the outcome of the Tribunal hearing may outweigh waiting for the proceeding to be completed.
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[34] Haulage was entitled to some level of procedural fairness before its security was forfeited. Applying the factors above, forfeiture was a discretionary and not mandatory decision that should have involved looking at the circumstances of the individual case including the severe impact on Haulage and the strength of Haulage’s appeal. Because of the nature of the decision, the impact to Haulage and its legitimate expectation that the Superintendent’s approach would consider its circumstances, Haulage was entitled to notice that the Superintendent intended to forfeit the funds and an opportunity to respond.
Was the Superintendent’s forfeiture decision reasonable?
[35] For similar reasons, the Superintendent’s forfeiture decision was unreasonable. To be reasonable, a decision must be transparent, intelligible and justified in respect of the facts and the law: Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, at paras. 15, 85.
[36] Here, the only justification found in the Superintendent’s internal memo recommending forfeiture and in its letter to RBC is that Haulage had ceased its operation and discontinued its programs before all students had completed their training. The Superintendent invoked s. 34(1) of the Regulation but did not attempt to justify the immediate forfeiture of the security in the circumstances of the case. Similarly, in this court, counsel did not suggest the court should find justification for the Superintendent’s decision in the record. The Superintendent’s position instead is that she is entitled to forfeit immediately in every case where notices like the ones in the current case are issued.
[37] The Superintendent’s decision regarding whether to forfeit funds is the type of discretionary decision that would attract significant deference from the court. However, as I have set out above, the Superintendent was required to consider the circumstances of the case to determine whether immediate forfeiture was appropriate. Having failed to do so, her decision was unreasonable.
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