Simon's Megalomaniacal Legal Resources

Judicial Review - Against Rules, Not Decisions

. Harold The Mortgage Closer Inc. v. Chief Executive Officer of the Financial Services Regulatory Authority of Ontario

In Harold The Mortgage Closer Inc. v. Chief Executive Officer of the Financial Services Regulatory Authority of Ontario (Div Court, 2024) the Divisional Court considered a motion to quash a JR, here which challenged the issuance of a 'notice of proposal' by the 'Financial Services Regulatory Authority' (FSRA) tribunal to revoke and refuse to renew a mortgage broker license, to impose administrative penalties - and as well of the FSRA's publication of tribunal enforcement policy documents, and more. The applicants also filed for a full de novo hearing before the Financial Services Tribunal in relation to this matter.

Here the court addresses the Authority's "publication decisions" - including aspects of the public 'notice of proposal', which the court does not quash out of concern that the 'notice of proposal' contained some defamatory-like statements which had been shown to "to slag them in the marketplace":

[8] Under the applicable statutory scheme, the applicants will be entitled to a full hearing process before the tribunal in respect of the allegations contained in the regulator’s notice of proposal. A very high degree of procedural protection is available to the applicants in light of the serious nature of the relief sought against them. The hearing is a full trial de novo. It is not just an appeal from the notice of proposal. The hearing outcome will be based on the evidence to be admitted, after pre-hearing disclosure, cross-examination of witnesses, and submissions.

[9] The regulator rightly distinguishes two types of claims brought by the applicants. They each result in different outcomes.

....

[23] The other aspect of the case involves the regulator’s publication decisions. The regulator submits that it did not exercise a statutory power of decision when it adopted its publication guidelines. They are not binding on anyone and do not have the force of law. They just tell the marketplace when to expect enforcement steps to be publicized by the regulator.

[24] Similarly, the regulator submits that it has no statutory duty to publish the applicants’ request for a hearing although the applicants dispute the facts in the notice of proposal and ask the regulator to be fair and balanced.

[25] The applicants can also show that competitors have used the notice of proposal as published by the regulator to slag them in the marketplace. They submit that the regulator’s decisions to publish the notice of proposal and the decision to refuse to publish their request for hearing impair its reputation and impact its legal rights.

[26] As I am not quashing these requests for judicial review, I will say little about them. The SCC has recognized peoples’ legal interest in their reputation. While I am dubious that the applicant has standing to challenge the publication guidelines or that the publication of the guidelines was an exercise of a statutory power, to the extent that the guidelines become an excuse or justification for the regulator’s publication decisions, I would not put challenging them beyond the applicants’ reach.

[27] But the real focus of the applicant is on the regulator’s decision to publish the notice of proposal and the decision to refuse to publish the request for a hearing. It is not impossibly far-fetched that ss. 3 and 6 of the Financial Services Regulatory Authority of Ontario Act impose constraints (if not a duty) on the activity of the regulator especially where reputational harm of a registrant is at risk (or is intended rightly or wrongly). Moreover, since the notice of proposal is not a dead letter in the tribunal hearing, issues of procedural fairness may arise concerning the regulator’s conduct if it affects the fairness of the hearing.

[28] I cannot say that it is plain and obvious that the applicants have no rights vis-à-vis the regulator’s decisions about what to publish or not publish concerning the applicants. I expressly leave open to the panel of the Divisional Court the possibility that it may find this issue too best dealt with first before the Financial Services Tribunal. But while the validity of the notice of proposal and its contents is squarely before the tribunal, I am less sure that this issue will necessarily be before the tribunal.

[29] I am in no way endorsing the strength of the claims to challenge either the guidelines themselves or the publication decisions surrounding the notice of proposal, I do not accept the regulator’s submissions that it is plain and obvious that they are either unreviewable private decisions or decisions that do not impair the legal rights or interests of the applicants.

[30] Mr. Solmon asks me to defer to the panel the question of whether the applicants need or ought to be granted more time to bring their applications under s. 5 (2) of the JRPA. Having quashed the claims against the notice of proposal, perhaps this is no longer an issue. Regardless, in my view, the panel that hears matters on their merits is generally better armed to assess the equities involved in the balancing of interests under s 5 (2). I therefore defer that issue to the panel.

. Caruso v. The Law Society of Ontario

In Caruso v. The Law Society of Ontario (Div Court, 2023) the Divisional Court considered (and dismissed) a JR by an Ontario paralegal challenging the accepted constitutional governage of immigration consultants, specifically whether LSO By-law 4 ['Licensing'] governed the issue as opposed to s.91(2) ['Representation or Advice'] of the Immigration and Refugee Protection Act.

In these quotes the court considers it's discretionary JR jurisdiction over a challenge to the LSO By-laws:

Court’s Jurisdiction

[29] In the ordinary course, this issue (the proper interpretation of By-Law 4) would come to the Divisional Court as an appeal under s. 49.38 (b) of the Law Society Act from a discipline proceeding against a paralegal who did not comply with the LSO’s interpretation of By-Law 4.

[30] In the present case, the parties have agreed that the matter can proceed to the Divisional Court, even though Mr. Caruso was not subject to a discipline proceeding.

[31] The enactment of By-Law 4 by the LSO was clearly an “exercise ... of a statutory power”, within the meaning of s. 2(1) 2 of the Judicial Review Procedure Act, R.S.O. 1990, c. J.1 (JRPA), and the remedy sought by the Applicant is a declaration in relation to that exercise of a statutory power, bringing the relief requested within the jurisdiction of the Divisional Court under ss. 2(1) and 6(1) of the JRPA.

[32] While there may be some circumstances where it would be preferable to wait for an appeal from a Law Society Tribunal discipline hearing before the Divisional Court weighs in on the merits of the declarations sought, I am satisfied that this is not such a case. Firstly, the Law Society’s interpretation of By-Law 4 has been made abundantly clear to its members. Second, that interpretation has already been accepted by the Law Society Tribunal in other discipline cases: Law Society of Upper Canada v. Ghaneshirazi, 2017 ONLSTH 208, at paras. 7 and 12; Law Society of Ontario v. Belovari, 2023 ONLSTH 33, at paras. 41 and 43. In these circumstances, it is neither necessary nor appropriate to require Mr. Caruso to violate the clear direction of the Law Society and invite disciplinary proceedings before permitting him to seek the declarations sought in this case.

. Mammarella v. Ontario College of Teachers

In Mammarella v. Ontario College of Teachers (Div Court, 2023) the Divisional Court considered a JR of a specific tribunal 'rule change' (not of a case decision or order), here of the 'Rules of Procedure of the Discipline and Fitness to Practise Committee' of the Ontario College of Teachers (OCT) relating to third party evidence disclosure.

The case (which also considers private and public interest 'standing' arguments at paras 4-9) questions whether a JR may be brought against Rules as such - as opposed to against orders or decisions of a specific case before the tribunal:

[7] The rule in question relates to proceedings before the Discipline Committee and the Fitness to Practise Committee and the applicant is not currently the subject of either type of proceeding. He was previously the subject of discipline proceedings and brought a third party record application that was addressed applying the test in R. v. O’Connor, after which allegations of sexual abuse were withdrawn. Other allegations resulted in a finding of professional misconduct. Those discipline proceedings concluded in December 2022. The applicant submits that his prior discipline experience and current membership in the OCT are sufficient for private interest standing. We disagree.

[8] The applicant has no personal and direct interest in the rule change because he is not currently the subject of proceedings under which that rule would apply. If he were, he could attempt to challenge the rule as unfair within the context of the related discipline or fitness to practice proceedings. This application is unlike Green v. Law Society of Manitoba, 2017 SCC 20, [2017] 1 S.C.R. 360, where the appellant lawyer was subject to the mandatory professional development rules at issue and was suspended for non-compliance.

...

[10] Even if the applicant had standing, we would dismiss this application. Subsection 25.1(1) of the Statutory Powers Procedure Act, R.S.O. 1990, c. S.22, provides that a tribunal may make rules governing the practice and procedure before it, and these two committees have done so. The applicant accepts that the OCT can change the rules but submits that this change is different because it imposes a different test for the production of third party records and is unreasonable.

[11] The applicant submits that the rule in R. v. Mills is stricter, limiting access to third party records, and in turn limiting a member’s ability to obtain exculpatory information. The applicant submits that it also should not be applied outside the context of sexual offences yet fails to address the fact that R. v. O’Connor also arose in that context. The applicant relies on the absence of reasons for the Committees’ decision to change the rule. The applicant further challenges the memorandum put forward to the Committees in support of the then proposed change.