Friesen (Brian Neil) Dental Corp. et al. v. Date:, 2011 MBCA 71

Citation: Friesen (Brian Neil) Dental Corp. et al. v. Date: 20110826 Director of Companies Docket: AI 10-30-07343 Office (Man.) et al., 2011 MBCA 71 IN THE COURT OF APPEAL OF MANITOBA Coram: Madam Justice Freda M. Steel Mr. Justice Martin H. Freedman Mr. Justice Richard J. Chartier BETWEEN : BRIAN NEIL FRIESEN DENTAL ) CORPORATION AND ZDAN ROMAN ) (DE LELIVA) SHULAKEWYCH DENTAL ) N. D. M. Hamilton CORPORATION carrying on business as

a) for the Appellant partnership under the firm name and style ) IMAGES DENTAL CENTRE ) ) S. D. Boyd (Applicant) Appellant ) for the Respondent ) Director of Companies - and - ) Office (Manitoba) ) DIRECTOR OF COMPANIES OFFICE ) (MANITOBA) and SV DENTAL ) K. T. Williams and CORPORATION carrying on business as ) P. J. Karsten DENTAL IMAGE THERAPY CENTRE ) for all other Respondents ST. VITAL, also known as DENTAL ) IMAGE and MARK JOHNSTON in ) Appeal heard: partnership with M.J.

DENTAL ) September 20, 2010 CORPORATION, LINDA PATRICIA ) SIMPSON DENTAL CORPORATION and ) Judgment delivered: G&D DENTAL CORPORATION ) February 9, 2011 carrying on business as DENTAL IMAGE ) THERAPY CENTRE GARDEN CITY ) Supplemental reasons: ) August 26, 2011 (Respondents) Respondents ) STEEL J.A. 1 On February 9, 2011, this court delivered reasons in this case ( Friesen (Brian Neil) Dental Corp. et al. v. Director of Companies Office (Man.) et al. , 2011 MBCA 20 , 262 Man.R. (2d) 197).

The parties requested that the court hear further submissions on two issues arising from those reasons; the nature of the further hearing ordered by this court, and the question of costs. Remedial Options 2 In the previous decision, this court found that the Director of Companies Office (Manitoba) (the Director) issued insufficient reasons with respect to his decision declining to issue a name change direction under s. 13 of The Business Names Registration Act , C.C.S.M., c. B110 (the Act ).

It held that the Director’s reasons “are not susceptible to effective appellate review and clearly do not evidence a decision-making process of ‘justification, transparency and intelligibility’” (at para. 99). 3 In so holding, this court accepted the appellant’s submission that the applications judge erred in finding the Director’s decision to be reasonable. Consequently, the Director’s decision was vacated and the matter remitted back for a further hearing. 4 The appellant and the respondents were invited by the Director to agree on how that further hearing should be conducted, but were unable to agree.

To avoid further litigation in a matter that has attracted sufficient litigation and resources already, the Director has requested this court’s assistance in resolving the issue. The Director does not have a position as to how the hearing

should be conducted. 5 The appellant submits that the further hearing should be by way of a hearing de novo, allowing the Director toconsider any relevant facts and arguments put before him up to the present time. It argues that a hearing de novo is required for threereasons. First, the Director’s duty of procedural fairness as a quasi-judicial decision-maker requires him to take all relevantconsiderations into account when making a decision under s. 13 of the Act. See Cardinal et al. v.

Director of Kent Institution, (SCC), [1985] 2 S.C.R. 643 at 653-54, and David Phillip Jones, Q.C. & Anne S. de Villars, Q.C., Principles of AdministrativeLaw, 5th ed. (Toronto: Thomson Reuters Canada Limited, 2009) at 237. 6 Second, the appellant submits a new hearing is required to provide public accountability, with a view to justice beingseen to be done, and third, to promote transparency in the hearing process and the Director’s reasons. 7 The respondents propose that the further hearing be conducted either by the Director issuing more detailed reasonsfor his original decision or by reconsidering all the material originally submitted to the Director, with no new submissions, evidence orother material provided by the parties.

In other words, the respondents submit that the hearing should be strictly on the record as it wasoriginally before the Director. 8 The respondents argue that there is no reason which would require a further hearing with new material or newsubmissions. So, for example, this is not a situation where the Director acted improperly or failed to consider all applicable provisions ofthe governing statute. Therefore, it is submitted, a complete reconsideration of the appellant’s original complaint is not necessary.

Decision on Remedy - quash the decision or order further reasons? 9 The requirement to give adequate reasons may be seen both as a matter of procedural fairness subject to a correctnessstandard of review, and as one perspective of the reasonableness of the decision subject to the standard of reasonableness. 10 Regardless of which analysis is used, where a court has concluded that a tribunal has not given adequate or sufficientreasons, the decision of the tribunal is liable to be quashed or vacated. See Donald J.M. Brown, Q.C. & The Honourable John M.

Evans,Judicial Review of Administrative Action in Canada, loose-leaf (Toronto: Canvasback Publishing Inc., 2010) vol. 3, ch. 12 at para.12:5520, and Singh v. Canada (Minister of Citizenship & Immigration), 2008 FC 673, 73 Imm. L.R. (3d) 21. 11 A court may quash the decision and order nothing further. If the decision is quashed, it puts the parties back to thecircumstances that prevailed prior to the decision. Or, in addition to quashing the decision, the court may refer the matter back to thetribunal to be reconsidered, with directions as to what the tribunal may or may not do.

See Sara Blake, Administrative Law in Canada,4th ed. (Markham: LexisNexis Canada Inc., 2006) at 220. 12 Those directions may (Brown & Evans at para. 12:5520): … [R]emit the matter back to the administrative agency for adequate reasons, possibly to a different officer or panel, for a rehearing, forreconsideration, … stay the implementation of a decision until reasons are provided, remit for rehearing only that part of the decision forwhich the reasons were inadequate, permit the introduction of an affidavit rendered necessary by the “extremely sparse” reasonsgenerated by the tribunal or it may give its own decision on the merits. …. 13 The fact that this court vacated the Director’s decision and ordered a further hearing, rather than merely ordering thatthe Director issue more detailed reasons, indicates that something different and more is required. 14 To simply order the Director to issue reasons for his decision rather than ordering a further hearing does not satisfy therequirement that justice must be seen to be done.

By this I am not suggesting that the reasons, once detailed by the Director, wouldsimply be a rationalization of a decision previously made. However, such a remedy does not provide the type of accountability that isrequired and would, in effect, render the litigation that has ensued up to the present time a hollow exercise. 15 As was stated by the Nova Scotia Court of Appeal in the case of Future Inns Canada Inc. v. Nova Scotia (LabourRelations Board) (1997), 1997 NSCA 29 , 4 Admin. L.R. (3d) 248, leave to appeal to S.C.C. refused, [1997] S.C.C.A.

No. 265(QL) (at para. 78): Counsel for the Union suggested that this court remit the matter to the Board with an order that it furnish reasons for its decision. TheBoard has already made its decision. It was a decision reached in a patently unreasonable manner and contrary to the rules ofnatural justice. To ask it to make up reasons after the fact would be a futile exercise. 16 It is true that some authors consider that the automatic quashing of a decision for inadequate reasons is not always themost appropriate remedy. So, in the case of Walsh v. Council for Licensed Practical Nurses, 2010 NLCA 11, 9 Admin.

L.R. (5th) 302,the Newfoundland and Labrador Court of Appeal acknowledged that the failure of an agency to give adequate reasons could beaddressed by the review court requiring the agency to provide reasons that were proper rather than quashing the decision and remitting itback for rehearing. 17 As well, the authors Robert W. MacAulay, Q.C. & James L.H. Sprague, Practice and Procedure Before AdministrativeTribunals, loose-leaf (Toronto: Thomson Canada Limited, 2004) vol. 3, ch. 22, argue that (at 22-78.3):

Because the consequences of a lack of formal reasons do not go to the correctness of the decision or the fairness of the hearing the remedy for the breach of the duty to provide such reasons should result in the reasons being forced by a judicial order for mandamus , and not the subject decision being quashed. 18 However, MacAulay & Sprague also admit that, in the majority of cases where insufficient reasons are given, courts quash the decision and that this approach is consistent with the approach of the Supreme Court of Canada in criminal trials where the decision of the trial judge is quashed as a result of insufficient reasons and a new trial is ordered (at 22-78.3, note 135.3): ….

By far the most common (if not perhaps pro forma ) response of the courts faced with inadequate reasons where there is a duty to give reasons is to quash the decision itself and remit it for redetermination.

And, see also, MacAulay & Sprague at 22-78.2. - further hearing on the record or new hearing? 19 Once the matter has been sent back for a further hearing or redetermination, justice and common sense require that, in this case, this be a hearing de novo where the parties would be free to submit whatever facts and argument they wish, with or without incorporating by reference the submissions of fact and argument previously made. The Director would be free to consider any relevant facts and argument put before him up to the time of rendering a new decision. 20 The wording of the Act supports this choice of remedy.

Section 13 of the Act contemplates that the Director may direct changes to be made to an existing business name if he is satisfied that it is the same as a name already registered or so similar to it that it is likely to be confused therewith. In that regard, the Director may make a decision and direction under s. 13 at any time. 21 However, s. 13 does not establish any determinative dates or deadlines for the Director to make a decision.

In fact, on the face of it, s. 13 does not preclude the Director from making a decision at one point in time and subsequently making a different decision on the basis of new information arising at any time after the Director has accepted a declaration. 22 Therefore, I agree with the submission of the appellant that it could initiate new proceedings before the Director at any time, which would require the Director to make a determination on the basis of new facts put before him in those new proceedings. 23 Consequently, if the Director were to make a decision based only on the evidence or submissions that were before him three years ago in the summer of 2008, that decision could prove to be a waste of everyone’s time.

The appellant could file a fresh declaration arguing that new facts, which arose after 2008, presented a different situation that required yet another hearing. Many things can change in three years. Costs - against the Director 24 The previous decision in this case dealt with costs in the following manner (at para. 102): The appellant will have its costs against the respondents in this court and the court below. The Director is a decision-maker whose decision was under review. His submissions were restricted to the nature of the review under s. 14 of the BNRA and the remedy.

He made no submission with respect to the merits of the decision and did not ask for costs from any party. Consequently, no order of costs will be made against him. 25 Although the respondents submit that no submissions on costs were made at the hearing of the appeal, the Director did deal with the issue in his original factum. Nonetheless, given the present request to make submissions on costs and the fact that this court has now given directions as to the specific nature of the remedy, it is just and appropriate for the court to reconsider the issue of costs.

No certificate of decision has been taken out, so the court is not functus . 26 The respondents argue that both they, and the appellant, should be awarded their costs against the Director in this court.

They submit that the appeal was allowed because of the Director’s action in providing inadequate reasons. 27 The Director argues that his conduct both in the original hearing and before both levels of court was not such that an order of costs against him is justified. 28 Statutory provisions aside, at common law, where the decision-maker’s involvement is limited to the issue of its jurisdiction, costs will not be awarded against it. An example of the traditional rule with respect to the exposure of a participating tribunal to an award of costs was expressed in Salkeld and Dola v.

Labour Board (Man.) and United Food and Commercial Workers,

Local 111 (1985), (MB CA), 37 Man.R. (2d) 59 (C.A.), where Twaddle J.A. stated (at para. 10): With respect to costs, the usual practice was stated by Osler, J. in R. v. Ontario Labour Relations Board, ex parte Labourers’International Union of North America, Local 183 (1969), (ON SC), 4 D.L.R. (3d) 485, at p. 489: … when counsel for the Board confines himself to the question of the Board’s jurisdiction and makes no submission on the merits of itsposition, there will be no costs for or against the Board. This position was reaffirmed more recently in Fletcher v.

Manitoba Public Insurance Corp et al., 2005 MBCA 53 at para. 4, 192 Man.R.(2d) 227. 29 Mark M. Orkin, Q.C., The Law of Costs, 2d ed., loose-leaf (Aurora: Thomson Reuters Canada Limited, 2010) vol. 1,ch.2, states (at 2-58.12): ….

The rationale is that since government agencies have a statutory duty to act, they should not be punished for pursuing their duties,absent unreasonable actions, or special or exceptional circumstances. 30 Again, as noted in Brown & Evans, the assessment of costs against tribunals “may be awarded only in unusual orexceptional cases, and then only with caution” (vol. 2, ch. 5 at para. 5:2560, quoting from St. Peters Estates Ltd. v. Prince Edward Island(Land Use Commission) (1991), (PE SCTD), 2 Admin. L.R. (2d) 300 at para. 7 (P.E.I.S.C. (T.D.))). 31 The decision of the British Columbia Court of Appeal in Lang v.

British Columbia (Superintendent of Motor Vehicles),2005 BCCA 244, 28 Admin. L.R. (4th) 299, identified two exceptional circumstances in which a court might assess costs against atribunal (at para. 48): … 1. misconduct or perversity in the proceedings before the tribunal; or 2. the tribunal argues the merits of a judicial review application rather than its own jurisdiction. 32 The second category is not relevant here since this decision-maker did not argue the merits of the judicial reviewapplication.

The Director confined himself to submissions on the appropriate standard of review and remedy. 33 In the first category, one would include such matters as a bias among tribunal members which necessitated a newhearing, or acting without diligence in dealing with the matter before it. In some cases, where the actions of the agency areunreasonable, even though not amounting to bad faith, costs may be awarded against it. See Orkin at 2-58.12. 34 An example of costs being awarded against a tribunal occurred in Radlinsky et al. v.

Sheet Metal Workers’International Association, Local 511 et al. (1997), (MB KB), 122 Man.R. (2d) 130, where the Manitoba Court ofQueen’s Bench awarded court costs against the Manitoba Labour Board in a situation where bias had been established in the impugnedproceedings. Another example lies in the decision of the Supreme Court of Canada in Blencoe v.

British Columbia (Human RightsCommission), 2000 SCC 44, [2000] 2 S.C.R. 307, where both the majority and the minority awarded costs against the British ColumbiaHuman Rights Commission in respect of its conduct in the delay of its proceedings in that case. 35 On the other hand, costs were not awarded against a provincial Registrar of Companies who had inadvertentlyregistered companies with similar names. See Dorset Seafoods Ltd. v. Registrar of Companies (1988), (NL CA), 69Nfld. & P.E.I.R. 105 (Nfld. C.A.). 36 There was no misconduct here.

The issue of the adequacy of the Director’s reasons in a hearing under the Act has notbeen raised before. While a number of appeals from the Director’s decisions have been taken to the Queen’s Bench, these were beforethe Supreme Court of Canada decision in Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, and the adequacy of theDirector’s reasons did not attract judicial comment at that time. Even with respect to those cases decided before Dunsmuir, as this courthas indicated in its previous reasons, the jurisprudence was unclear. See Italia (Azzurri) Soccer Club Inc. v.

Director of CorporationsBranch (Man.) et al. (1988), (MB KB), 55 Man.R. (2d) 273 (Q.B.), and Tire Specialists (Manitoba) Ltd. v. Director of

Corporations (Man.) et al. (1991), (MB KB), 74 Man.R. (2d) 240 (Q.B.). 37 With respect to the Tire Specialists case, the Director points out that, while costs were awarded against him in that case,the Director did not make an appearance or a submission on costs and it is not clear why the court departed from the usual principle thata statutory decision-maker is not generally subject to an order for costs. 38 The law as to the provision of reasons has evolved and, as the submissions of the Director indicate, his practice willnow evolve with it.

However, he did not misconduct himself and special circumstances do not exist which would justify an award ofcosts against him. 39 For the above reasons, I would not vary the court’s initial ruling on the issue of costs as against the Director. It accordsboth with the limited role that the Director played in the appeal and with the status of the Director as an impartial decision-maker. - against the respondents 40 In the alternative, the respondents argue that no order of costs at all should be made in this court.

The Director takes noposition on the issue of costs as between the appellant and the other respondents. 41 The appellant was successful in this appeal in that the appeal was allowed.

The respondents acknowledge that costsshould generally follow the result and that, again as a general rule, a successful party may expect to receive an award of costs. 42 Nonetheless, the court retains discretion to refuse or limit those costs in the interests of justice. “… [A] successfulparty has no legal right to costs but only a reasonable expectation of receiving them, subject to the court’s discretion in that regard”(Orkin at 2-59). 43 The respondents submit that, in this case, there are very good reasons not to make any award of costs.

First, it issubmitted that the respondents were successful on two legal issues which were argued on appeal – whether the hearing at the Queen’sBench level should have been a trial de novo and whether it should have been on the record. 44 Second, as previously outlined, it is argued that the appeal was allowed because the Director did not provide adequatereasons for his decision, not because of any conduct on the part of either the respondents or appellant or any argument presented by themat the hearing of the appeal. 45 Finally, the respondents suggest that an award of costs in this court is premature to a final resolution of this matter.

They argue that if, after a further hearing, the Director’s decision does not change, then it would be unjust to award costs against therespondents in respect of that decision. 46 The appellant responds by pointing out that the essence of its appeal was that the applications judge erred in finding theDirector’s decision to be reasonable and this court agreed with that argument. It was unreasonable not because of its outcome, butbecause of the way in which that outcome was reached.

However, an appeal is taken from a decision, not from the specific grounds forthe decision. 47 The appellant argues that there are no good reasons to depart from the long-standing rule that the successful partyshould be awarded costs. It submits that there are four categories of situations which may constitute good reasons for not awarding coststo the successful party: misconduct of the parties, miscarriage in the procedure, oppressive and vexatious conduct of proceedings and“other cases.” 48 Such “other cases” include, inter alia, cases (Orkin at 2-79 – 2-82): … [W]here it involves the

interpretation of a new or ambiguous statute; or a new or uncertain or unsettled point of practice; or law; or ina case of first instance; or where there were no previous authoritative rulings by courts; or decided cases on point; or where anapplication concerned a matter of public interest and both parties acted in complete good faith; or where both sides operated with publicfunds; or where the practice was altered by a recent English decision; or the case involved difficult and sensitive issues of fact; or on anapplication by a charitable institution for exemption from a real property assessment; or where the action was a test case; or where it wasdesirable to resolve a conflict in the case law; or where success was divided; or where the court was unable to conclude that one partywas more successful than the other; .... 49 This is one of those “other cases” where, although the issue is not novel generally, it is novel in respect of this decision-maker.

The law with respect to the duty of a decision-maker to issue reasons and the sufficiency of those reasons has evolved. This isthe first time the sufficiency of the Director’s reasons has been the subject of judicial comment in this court. Conclusion 50 The further hearing to be conducted by the Director, as ordered by this court in the previous decision, should include aconsideration of all relevant evidence available to the Director at the time of making his earlier decision, as well as any new evidencethat the parties wish to file that relates to events up to the time of the further hearing.

51 With respect to costs, I agree with the respondents that there are good reasons for departing from the general rule in this case. This was a case “where there were no previous authoritative rulings by courts; or decided cases on point” with respect to this decision-maker (Orkin at 2-80). 52 In their submission, the respondents argued that there should be no order of costs in this court. However, if I accept their reasoning as to why that should be the case, which I do, then it follows that there should be no order of costs in either the lower court or this court. J.A. I agree: J.A. I agree: J.A.