) ) LSBF CANADA INC. Applicant – v. –, 2013 ONSC 4772

CITATION : LSBF CANADA INC. v. ALLAN SCOTT, 2013 ONSC 4772 DIVISIONAL COURT FILE NO.: 230/13 DATE: 20130715 ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT LAX, SWINTON & NORDHEIMER JJ. BETWEEN: ) ) LSBF CANADA INC. Applicant – and – ALLAN SCOTT, SUPERINTENDENT OF PRIVATE CAREER COLLEGES, MINISTRY OF TRAINING, COLLEGES AND UNIVERSITIES Respondent )) )) )) )) ))))) B. Bowen , for the applicant L. Favreau & A. Fok , for the respondent ) ) ) HEARD at Toronto: July 9, 2013 NORDHEIMER J. : [ 1 ] The applicant operates a private career college in Toronto.

In the Fall of 2009, prior to commencing its operations, the applicant sought a determination from the respondent, Superintendent of Private Career Colleges, that the applicant did not require registration, and its programs did not require approval, under the Private Career Colleges Act, 2005 , S.O. 2005, S.O. 2005, c. 28,

Schedule L (the “ PCCA ”). [ 2 ] Initially, through a pre-screening process, the respondent advised, in January 2010, that, given the information provided by the applicant, the proposed programs did not require registration and approval, because the programs were intended to prepare students specifically and only to write qualifying examinations. In February 2011, the applicant commenced its operations.

In January 2012, the respondent provided a further determination that another program the applicant wished to offer did not require registration or approval because, based on the information provided, the program was not vocational. [ 3 ] Some time later, information came to the attention of the respondent that lead him to instigate an investigation of the applicant’s programs, including a visit to the school site, interviews with some staff and examination of teaching materials.

As a consequence of the investigation, the respondent determined that two programs being offered by the applicant did in fact require approval and that the applicant was required to be registered because the programs were “vocational” within the meaning of the PCCA . Without advising the applicant of the results of the investigation or asking for a response, the respondent issued a Notice of Contravention on April 17, 2013, including the imposition of administrative penalties.

The respondent also issued a Restraining Order that required the applicant to notify him by April 24, 2013 that it had stopped providing the programs; stopped charging fees; stopped operating a private career college and stopped advertising the programs. Subsection 46(1) of the PCCA allows the Superintendent to order a person to restrain from contravening the PCCA or the regulations if he believes that the person has contravened the PCCA or the regulations.

[4] Subsection 39(6) allows a person who has received a Notice of Contravention to, within fifteen days, exercise a right ofreview to the Minister of Training, Colleges and Universities. Upon receipt of the Notice of Contravention and the Restraining Order,the applicant sought a review of the Notice of Contravention by the Minister and asked for an extension for compliance with theRestraining Order to May 2 so that it could make submissions to the Superintendent on the Restraining Order.

As a consequence of therequest for a review, pursuant to s. 49(1)(b), the respondent was precluded from publishing particulars of the Notice of Contraventionuntil such time as the Minister made a decision on the review. The respondent was not, however, precluded from publishing particularsof the Restraining Order during this time, as s. 49(2) confers a discretion on the Superintendent whether to publish particulars of aRestraining Order.

The respondent published the Restraining Order on its website and also informed Immigration Canada. [5] Through this application for judicial review, the applicant initially sought to review both the Notice of Contravention andthe Restraining Order. The respondent argued that the application was premature. After the initial hearing was adjourned to obtainfurther evidence on the prematurity issue, the applicant advised, at the outset of the return of the application, that it sought only toreview the Restraining Order.

The applicant requested either an order setting aside or quashing the Restraining Order or, in thealternative, an order suspending the Restraining Order until such time as the Minister rules on its request for a review. [6] The respondent submitted that any review of the Restraining Order was premature. The respondent pointed to the fact thatthe applicant had engaged in its right to a review by the Minister of Training, Colleges and Universities of the Notice of Contravention.

The respondent submitted that the applicant should have to await the results of that review prior to seeking this remedy since, if theMinister finds that the PCCA was not contravened, the Restraining Order would fall with that decision. Thus, the applicant is said tohave an adequate alternative remedy. [7] We began by hearing submissions on the prematurity issue. At the conclusion of the argument on that issue, we ruled thatthe issue regarding the Restraining Order was not premature and that we would hear submissions on the applicant’s request for a reviewof the Restraining Order.

In terms of that threshold issue, I note that the Restraining Order is a remedy in s. 46 that stands separate andapart from the Notice of Contravention in s. 39. There was no requirement that the respondent issue a Restraining Order as part andparcel of issuing a Notice of Contravention.

The Notice of Contravention and the Restraining Order are not therefore so linked thatconsideration of the validity of one must necessarily involve a consideration of the validity of the other. [8] In addition, I would note there is also no authority in the Minister under the PCCA to review the fairness of the process forthe issuance of a Restraining Order. The propriety of the process leading to the Restraining Order is, consequently, not something thatthe applicant can challenge through the Minister. There is therefore no adequate alternative remedy for the applicant to employ.

Thatfact distinguishes this case from cases relied upon by the respondent such as Volochay v. College of Massage Therapists of Ontario(2012), 2012 ONCA 541 , 111 O.R. (3d) 561 (C.A.). Further, unlike the Notice of Contravention that is essentially suspendedwhile the review by the Minister is undertaken, the Restraining Order continues to be of full force and effect. As I shall develop morefully below, the Restraining Order had immediate and significant effects on its own. [9] Having reached that conclusion, the issue then became the validity of the Restraining Order.

The applicant offered twogrounds of attack on the Restraining Order. One was that there was a failure to provide procedural fairness to the applicant prior to thedecision of the respondent to issue a Restraining Order, as part and parcel of the decision to issue a Notice of Contravention, withoutproviding notice and an opportunity to respond. The other was that the respondent had acted in bad faith in enforcing the RestrainingOrder. [10] We did not call on the respondent to respond to the bad faith argument.

That same issue is raised in the review by theMinister regarding the Notice of Contravention and appropriately falls to be determined through that procedure. [11] On the other ground of attack, I have concluded that there was a failure to provide procedural fairness to the applicant prior tothe decision being made to issue the Restraining Order.

Where administrative action will result in a decision which directly affects theinterests of individuals, a duty of procedural fairness applies (Congrégation des témoins de Jéhovah de St-Jérôme-Lafontaine v.Lafontaine (Village), 2004 SCC 48 , [2004] 2 S.C.R. 650 at para. 3). [12] The factors that determine the content of the duty of fairness are set out in Baker v. Canada (Minister of Citizenship andImmigration), (SCC), [1999] 2 S.C.R. 817 at paras. 23-26. Those factors include: (

i) The nature of the decision being made and the process followed in making it; (ii) The nature of the statutory scheme and the terms of the statute governing the decision-making body; (iii) The importance of the decision to the individuals affected; (iv) The legitimate expectations of the person challenging the decision; (

v) The choices of procedure made by the decision-making body. In my view, a review of these factors establishes that there was a duty on the respondent to provide, at a minimum, an opportunity for theapplicant to make submissions before a decision was made to issue a Restraining Order. I reach that conclusion for the followingreasons. [13] Of the Baker factors, the most significant one here is the importance of the decision to the individuals affected.

The record inthis application demonstrates that the Restraining Order had an immediate effect not only on the applicant’s business but perhaps moreimportantly on the students who were attending the programs involved. The evidence shows that some of these students are only in thiscountry based on student visas arising from their enrollment in the applicant’s programs. Their status in this country has been put at riskbecause of the respondent’s decision to issue the Notice of Contravention and the Restraining Order. That risk was significantly

increased as a result of the respondent taking it upon himself to advise Immigration Canada of the Notice of Contravention and theRestraining Order.

While s. 49(2) of the PCCA confers a discretion on the respondent to publish the particulars of a restraining order,there is nothing in the PCCA that requires or expressly authorizes the respondent to communicate such matters to other governmentagencies such as Immigration Canada.[1] The communication of this information, in turn, lead Immigration Canada to question thelegality of the presence of some of those students in this country. [14] The respondent attempted to deflect the consequences of those events, by submitting that the Restraining Order was of noeffect because the respondent had not come to court to seek its enforcement.

I find no merit in that submission. Among other things, itignores the practical impact that the Restraining Order had as is amply demonstrated on the record before this court. It had a significantadverse effect on the applicant’s business; it jeopardized the continued education of the students involved and, as I have mentioned, it putat risk the legal status of many students. The “no effect” submission also borders on the disingenuous.

Presumably the respondentconsidered that there was some utility or need for the Restraining Order (doubtless with a concomitant expectation that it would beobeyed), otherwise he would not have issued it.

With that reality in mind, it hardly lies in the mouth of the respondent to then suggestthat this court should not review the Restraining Order because it is, in essence, ineffective. [15] In my view, given the history of the dealings between these parties, the applicant had a reasonable expectation that therespondent would offer it an opportunity to make submissions in some form before any change in the respondent’s position regarding thestatus of its programs was adopted, including any suggested contravention of the PCCA.

Certainly, the applicant was entitled to expect,given the background, that the respondent would provide it with an opportunity to be heard before any enforcement action, such as aRestraining Order, was undertaken. The applicant had participated in the pre-screening process and received not one but two exemptionsfrom approval. The applicant had also received a third exemption from approval for certain changes it made to one of its programs.

Granted, each of these exemptions were clearly stated to be based on the information provided by the applicant but that does not alter thereasonable expectation that, if the respondent learned of new or different information that impacted on its original determinations, itwould, at least, communicate that potential change to the applicant and allow it an opportunity to respond. On that point, the respondentasserts that the applicant was aware that it was conducting an investigation and therefore could have made submissions to therespondent.

That assertion ignores the salient point that the applicant was unaware of the results of the investigation and the need tomake submissions, because of the resulting change in the respondent’s position, until it received the Notice of Contravention and theRestraining Order. [16] I appreciate that there may be circumstances in which the respondent will have determined that there was no need forregistration or approval based on what turns out to be patently false information and, as a consequence, there may be a need to take swiftaction to protect students.

I do not intend, by the decision here, to preclude the respondent from being able to so react in appropriatecircumstances. That is not this case, however.

There is nothing in the record before this court to which the respondent pointed thatdemonstrates the existence of exigent circumstances that required the immediate imposition of the extraordinary remedy of a RestrainingOrder such that no reasonable opportunity could have been extended to the applicant to respond. [17] I also do not accept the submission by the respondent that there is a risk of inconsistency if this court addresses the issue ofthe Restraining Order and the Minister deals with the issue of the Notice of Contravention.

Both in the hearing before this court, and inthe manner in which the Notice of Contravention and the Restraining Order were issued, it is apparent that the respondent treats the twoas inseparable. There is nothing in the PCCA that justifies that approach. As is clear from s. 46 of the PCCA, the issuance of aRestraining Order is a stand-alone discretionary authority and it should be approached as such by the respondent. It should not be treatedas a result that automatically follows whenever a contravention is suspected.

Indeed, given the ramifications that can flow from theRestraining Order, as are demonstrated by this case, coupled with the fact that there is no prohibition on the respondent publishing theexistence of the Restraining Order even while a review is being undertaken, there is all the more reason for caution to be exercised, andfairness to be accorded, by the respondent before deciding to invoke that authority.

It is evident in this case that the respondent did notexercise that caution nor did he separately consider whether a Restraining Order was necessary in these circumstances. [18] I acknowledge that there is very strong authority that provides, generally, that administrative proceedings should not be dealtwith piecemeal. I do not view this application as offending that authority. As I have said, the Restraining Order is a separate issue fromthe contravention issue and its impact is immediate and ongoing.

Students have been detrimentally affected not only in terms of theirongoing studies but, in certain instances, as to their very presence in this country. [19] The appropriate remedy for a breach of procedural fairness in a case such as this would normally be to quash the RestrainingOrder and remit the matter to the respondent for reconsideration by him after providing the applicant with the requisite degree ofprocedural fairness. However, it is a fact that, in this case, the applicant did have the opportunity, after the fact, to make submissions tothe respondent regarding these issues.

The respondent considered those submissions and, for reasons given, he concluded that theRestraining Order should stand. It is recognized that a failure to provide procedural fairness can be cured by providing a subsequentopportunity to be heard – see, for example, McNamara v. Ontario (Racing Commission), (ON CA), [1998] O.J. No.3238 (C.A.) at para. 26.

It would elevate form over substance to quash the Restraining Order in the present situation where thatreconsideration has already taken place, including providing the applicant with the opportunity to be heard. [20] As a consequence of that reality, the application must be dismissed notwithstanding the respondent’s failure to provideprocedural fairness in the first instance. However, given that failure, it is my view that the respondent should not be awarded any costsof this proceeding. Accordingly, I make no order as to costs. NORDHEIMER J.

LAX J. SWINTON J. Date of Reasons for Judgment: July 15, 2013 Date of Release: July 15, 2013 CITATION : LSBF CANADA INC. v. ALLAN SCOTT, 2013 ONSC 4772 DIVISIONAL COURT FILE NO.: 230/13 ONTARIO SUPERIOR COURT OF JUSTICE DIVISIONAL COURT LAX, SWINTON and NORDHEIMER JJ. BETWEEN: LSBF CANADA INC. Applicant – and – ALLAN SCOTT, SUPERINTENDENT OF PRIVATE CAREER COLLEGES, MINISTRY OF TRAINING, COLLEGES AND UNIVERSITIES Respondent REASONS FOR JUDGMENT NORDHEIMER J. Date of Reasons for Judgment: July 15, 2013 Date of Release: July 15, 2013