Nagy v. Registrar, Real Estate Business Brokers Act, 2002, 2012 ONSC 325

Nagy v. Registrar, Real Estate Business Brokers Act, 2002

Nagy v. Registrar, Real Estate Business Brokers Act, 2002 [Indexed as: Nagy v. Real Estate Business Brokers Act, 2002 (Registrar)]

109 O.R. (3d) 106

2012 ONSC 325

Ontario Superior Court of Justice,

Divisional Court,

Swinton, Harvison Young and Ray JJ.

January 25, 2012

Administrative law -- Licensing -- Real estate agents -- Licence Appeal Tribunal having jurisdiction to impose conditions on real estate agent despite finding that his past conduct did not afford reasonable grounds for belief that he would not carry on business in accordance with law and with integrity and honesty -- Tribunal not erring in finding that "past conduct" threshold was not met where agent was convicted of assaulting his estranged girlfriend and breaching conditional sentence order -- Tribunal properly recognizing that there must be clear link between past conduct and future risk. [page107]

N was convicted of assaulting his estranged girlfriend and breaching a conditional sentence order. The Registrar issued a notice of proposal to revoke N's registration as a real estate agent on the grounds in s. 10(1)(a)(ii) of the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sch. C -- that is, that his past conduct afforded reasonable grounds for belief that he would not carry on business in accordance with law and with integrity and honesty. The Licence Appeal Tribunal allowed N's appeal. The tribunal found that N's conduct did not meet the statutory threshold set out in s. 10(1)(a)(ii) of the Act to revoke his registration, but that it nevertheless warranted the imposition of conditions upon him. The Registrar appealed.

Held, the appeal should be dismissed.

Per Harvison Young J. (Swinton J. concurring): The Licence Appeal Tribunal has jurisdiction to impose conditions on a registrant in the absence of a finding that the registrant's conduct met the threshold in s. 10(1)(a)(ii) of the Act. The tribunal did not err in undertaking its own research on legislative history without receiving submissions on it from the parties. It was open to the tribunal to interpret the Act using extrinsic aids. The tribunal did not require a clear and unequivocal nexus between the criminal conduct and the business of real estate. Rather, it properly recognized that there must be a clear link between the past conduct and future risk. The tribunal did not apply a different standard to existing registrants than to new ones. It simply referred to the practical reality that a registrant will have a record in the business, and an applicant will not. There was evidence to support the tribunal's conclusion that the s. 10 threshold was not met.

Per Ray J. (dissenting): Absent a finding that the threshold in s. 10(1)(a)(ii) of the Act, the tribunal did not have jurisdiction to impose conditions. The tribunal erred in failing to consider the full extent of N's criminal misconduct, including the breach of the conditional sentence. A purposive inquiry required that evidence related to integrity and honesty be undertaken. The tribunal also erred in purporting to apply a different test to existing registrants and new registrants.

APPEAL from a decision of the Licence Appeal Tribunal allowing an appeal against the notice of proposal to revoke the real estate agent's registration.

Cases referred toLapcevich v. Ontario (Real Estate and Business Brokers Act, Registrar), [2010] O.J. No. 946, 2010 ONSC 1145 (Div. Ct.), not folld McDonald v. Ontario (Real Estate and Business Brokers Act, Registrar), [2009] O.J. No. 3466, 2009 43664, 179 A.C.W.S. (3d) 985 (Div. Ct.), apld Other cases referred to Alberta (Information and Privacy Commissioner) v. Alberta Teachers' Assn., [2011] 3 S.C.R. 654, [2011] S.C.J. No. 61, 2011 SCC 61, 2011EXP-3798, J.E. 2011-2083, 424 N.R. 70, 339 D.L.R. (4th) 428, 208 A.C.W.S. (3d) 434, 28 Admin. L.R. (5th) 177; Alves v. Ontario (Superintendent of Financial Services), 2009 36993 (ON SCDC), [2009] O.J. No. 2950, 251 O.A.C. 276, 179 A.C.W.S. (3d) 450 (Div. Ct.); Amerato (Re) (2005), 77 O.R. (3d) 241, [2005] O.J. No. 3713, 257 D.L.R. (4th) 146, 202 O.A.C. 11, 22 M.V.R. (5th) 189, 2005 31577, 142 A.C.W.S. (3d) 173 (C.A.); Bazinet (Re), [2005] O.L.A.T.D. No. 30 (L.A.T.); Canadian Pacific Railway Co. v. James Bay Railway Co. (1905), 1905 70 (SCC), 36 S.C.R. 42, [1905] S.C.J. No. 28; Casale (Re), [2005] O.L.A.T.D. No. 311 (L.A.T.); Cecilio v. Tarion Warranty Corp., [2007] O.J. No. 1692, 57 R.P.R. (4th) 23 (Div. Ct.); Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, [2008] S.C.J. No. 9, 2008 SCC 9, 329 N.B.R. (2d) 1, 64 C.C.E.L. (3d) 1, 164 A.C.W.S. (3d) 727, EYB 2008-130674, J.E. 2008-547, [2008] CLLC Â220-020, 170 L.A.C. (4th) 1, 372 N.R. 1, 69 Imm. L.R. (3d) 1, 291 D.L.R. (4th) 577, 69 Admin. L.R. (4th) 1, 95 L.C.R. 65, D.T.E. 2008T-223; Nagy (Re), [2009] O.L.A.T.D. No. 325 (L.A.T.); [page108] Ontario (Registrar of the Real Estate and Business Brokers) v. Faccenda, [1994] O.J. No. 954, 47 A.C.W.S. (3d) 456 (Div. Ct.); Ontario (Registrar of Real Estate & Business Brokers) v. Vogelsberg, [1994] O.J. No. 226 (Div. Ct.); Pic-N-Save Ltd. (Re), 1972 1199 (ON SC), [1973] 1 O.R. 809 (S.C.); Rizzo & Rizzo Shoes Ltd. (Re) (1998), 1998 837 (SCC), 36 O.R. (3d) 418, [1998] 1 S.C.R. 27, [1998] S.C.J. No. 2, 154 D.L.R. (4th) 193, 221 N.R. 241, J.E. 98-201, 106 O.A.C. 1, 50 C.B.R. (3d) 163, 33 C.C.E.L. (2d) 173, 98 CLLC Â210-006, 76 A.C.W.S. (3d) 894; Roncarelli v. Duplessis, 1959 50 (SCC), [1959] S.C.R. 121, [1959] S.C.J. No. 1, 16 D.L.R. (2d) 689 Statutes referred to Licence Appeal Tribunal Act, 1999, S.O. 1999, c. 12, Sch. G, s. 11 [as am.] Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 30, Sch. B [as am.] Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sch. C [as am.], ss. 10 [as am.], (1) [as am.], (a), (ii), 13-14 [as am.], 13(1), (2), (b), 14(2), (5) Authorities referred to Sullivan, Ruth, Sullivan on the Construction of Statutes, 5th ed. (Markham, Ont.: LexisNexis Canada, 2008)

Andrew Stastny, for applicant (respondent in appeal). Kelvin Kucey, for respondent (appellant in appeal).

HARVISON YOUNG J.: -- Introduction and Background

1The Registrar of the Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30, Sch. C ("REBBA") brings this appeal from a decision of the Licence Appeal Tribunal ("LAT") [Nagy (Re), [2009] O.L.A.T.D. No. 325 (L.A.T.)]. That decision granted an appeal brought by Andrew Nagy against a notice of proposal to revoke his registration as a real estate agent.

2The background facts may be briefly stated. As summarized by the LAT reasons, which are not in dispute, the respondent, Mr. Nagy, committed a brutal assault on his estranged girlfriend. He was convicted on October 19, 2007, and a conditional sentence and probation orders were issued on November 15, 2007. The conditional sentence order provided for a sentence of two years less a day to be served in the community. It also required that Mr. Nagy abstain from the purchase, possession and consumption of alcohol and drugs, and not carry any weapons. He was also required to attend some rehabilitative programs and comply with a curfew.

3On December 9, 2008, Mr. Nagy was found to have violated the conditions of his conditional sentence and sentenced to serve 30 days in jail. Shortly thereafter, the Registrar issued the [page109] notice of proposal to revoke his registration on the grounds in s. 10(1)(a)(ii) of REBBA -- namely, that his past conduct afforded reasonable grounds for belief that he would not carry on business in accordance with law and with integrity and honesty.

4The LAT found that the conduct of Mr. Nagy did not meet the statutory threshold set out in s. 10(1)(a)(ii) of REBBA necessary to revoke his registration, but that it nevertheless warranted the imposition of conditions upon him. These included, inter alia, abstention from alcohol and non- prescription drugs.

The Issues

5The central issue on this appeal is whether conditions may be imposed on a registrant in the absence of a threshold finding under s. 10(1)(a)(ii) of REBBA that ". . . the past conduct of the applicant or of an interested person in respect of the applicant affords reasonable grounds for belief that the applicant will not carry on business in accordance with law and with integrity and honesty . . .". On this issue, the Registrar argues that the LAT, having found Mr. Nagy's conduct did not meet the "past conduct threshold" set out in s. 10 of REBBA, lacked jurisdiction to impose conditions on his continuing registration.

6Mr. Nagy had originally taken the position that the LAT had erred in imposing conditions in the absence of a threshold determination. He changed his position, however, having been advised of some conflicting authority on the issue: see Lapcevich v. Ontario (Real Estate and Business Brokers Act, Registrar), [2010] O.J. No. 946, 2010 ONSC 1145 (Div. Ct.) ("Lapcevich") and McDonald v. Ontario (Real Estate and Business Brokers Act, Registrar), [2009] O.J. No. 3466, 2009 43664 (Div. Ct.) ("McDonald"). The parties had appeared before another panel of this court on March 16, 2011, which ordered an adjournment of the hearing to permit the parties to file supplementary materials respecting these cases, which they did.

7In addition to the central issue, the Registrar raises several other arguments. He argues that the LAT erred in its approach to the evidence and its interpretation of the statute. In particular, he submits that the LAT should have found that Mr. Nagy met the threshold, and that it failed to do so, in part, because it erroneously found that s. 10(1)(a)(ii) of REBBA requires a nexus to exist between criminal conduct and the business of real estate before reasonable grounds will be found, and because the LAT erroneously created a distinction between existing registrants and new applicants in applying the test. The Registrar also took issue with what is characterized as the LAT's [page110] use of legislative history and extrinsic evidence in interpreting REBBA in the absence of submissions from the parties.

8The Registrar also argues that the LAT erred in failing to find that Mr. Nagy had met the "past conduct" threshold, which, he argues, is a condition precedent for the revocation of registration under REBBA.

9Mr. Nagy submits that the LAT correctly interpreted the "past conduct threshold" in s. 10 and reasonably concluded that his conduct had not met the threshold. He also submits that the LAT did not err in imposing conditions absent a threshold finding. He argues that such a finding is only required if the LAT is exercising jurisdiction to carry out a proposal of the Registrar to revoke or prohibit a registration.

10The parties submit that the standard of review to be applied is correctness on questions of law, including the LAT's jurisdiction, and reasonableness on evidentiary matters.

11The two related issues that must be considered in turn, then, are (i) whether the LAT has jurisdiction to impose conditions in the absence of a finding that a registrant has met the s. 10 "past conduct" threshold; and (ii) whether the LAT erred in concluding, in the circumstances of this case, that the respondent had not met the "past conduct" threshold. I will address them in turn.

Standard of Review

12It is important to note at the outset that all parties agree that a registration may not be revoked in the absence of a finding that the "past conduct" threshold has been met.

13The Registrar argues that a proper construction of REBBA, however, also requires a threshold finding as a condition precedent for the imposition of conditions upon registrants. He submits that to interpret otherwise would give him an open-ended and unfettered discretion, contrary to the basic and longstanding principles concerning the rule of law that were articulated in Roncarelli v. Duplessis, 1959 50 (SCC), [1959] S.C.R. 121, [1959] S.C.J. No. 1, and contrary to the legislative scheme under REBBA. He also submits that the case law on this point, while somewhat conflicting, does not support the argument that conditions may be imposed in the absence of a finding that the s. 10 threshold has been met. This issue required the LAT to interpret REBBA. Both parties submitted that the standard of correctness would apply to this issue.

14In light of the recent decision of the Supreme Court of Canada in Alberta (Information and Privacy Commissioner) v. Alberta Teachers' Assn., [2011] 3 S.C.R. 654, [2011] S.C.J. No. 61, 2011 SCC 61, [page111] it could be argued that the standard of review on the interpretation of this provision should be one of reasonableness. Paragraph 34 of the majority decision reads as follows:

. . . unless the situation is exceptional, and we have not seen such a situation since Dunsmuir, the interpretation by the tribunal of "its own statute or statutes closely connected to its function, with which it will have particular familiarity" should be presumed to be a question of statutory interpretation subject to deference on judicial review.

15The LAT regularly interprets this legislation and that of analogous professional regulatory regimes, and particularly the past conduct provisions, and it is therefore arguable that this presumption of deference would therefore apply.

16It is not necessary to decide that issue in this case, however, because for the reasons that follow, I conclude that the LAT interpretation of the statutory provisions was correct. The statute does contemplate that conditions may be imposed in circumstances where the LAT (or the Registrar) concludes that while the revocation or refusal of a registration is not warranted, it is in the public interest to impose conditions.

17The parties also agree that the standard of review to be applied to the question of whether the past conduct threshold had been met in the circumstances is one of reasonableness as a question of mixed fact and law: see, e.g., Cecilio v. Tarion Warranty Corp., [2007] O.J. No. 1692, 57 R.P.R. (4th) 23 (Div. Ct.), at paras. 26-29. This standard also applies to the consideration of the conditions imposed by the LAT, and the appellant's submissions on this issue will be addressed below after the discussion of the LAT imposition of conditions in the absence of finding that the threshold had been met.

I. The imposition of conditions on a registrant in the absence of a finding that the "past conduct" threshold of s. 10(1)(a)(ii) has been met

(a) The statutory framework

18To begin with, it is necessary to consider the statutory framework.

19As the Registrar pointed out, REBBA was enacted in the public interest, for purposes that include consumer and public protection, and regulation of real estate trading consistent with the promotion of a fair, safe and informed marketplace. The Registrar and the LAT are components of an integrated statutory framework that regulates the real estate brokerage industry in Ontario. [page112]

20Pursuant to REBBA, a person who meets certain requirements is entitled to be registered as a salesperson unless one of the exceptions to entitlement applies. One such exception applies where past conduct suggests that the salesperson "will not carry on business in accordance with law and with integrity and honesty". Subsection 10(1)(a) provides as follows:

10(1) An applicant that meets the prescribed requirements is entitled to registration or renewal of registration by the registrar unless, (a) the applicant is not a corporation and, (i) having regard to the applicant's financial position or the financial position of an interested person in respect of the applicant, the applicant cannot reasonably be expected to be financially responsible in the conduct of business, (ii) the past conduct of the applicant or of an interested person in respect of the applicant affords reasonable grounds for belief that the applicant will not carry on business in accordance with law and with integrity and honesty, or (iii) the applicant or an employee or agent of the applicant makes a false statement or provides a false statement in an application for registration or for renewal of registration[.]

21Sections 13-14 of REBBA provide as follows:

13(1) Subject to section 14, the registrar may refuse to register an applicant or may suspend or revoke a registration or refuse to renew a registration if, in his or her opinion, the applicant or registrant is not entitled to registration under section 10.

(2) Subject to section 14, the registrar may, (a) approve the registration or renewal of a registration on such conditions as he or she considers appropriate; and (b) at any time apply to a registration such conditions as he or she considers appropriate.

14(1) The registrar shall notify an applicant or registrant in writing if he or she proposes to, (a) refuse under subsection 13(1) to grant or renew a registration; (b) suspend or revoke a registration; or (c) apply conditions to a registration or renewal to which the applicant or registrant has not consented.

22Pursuant to s. 14(2), the notice of proposal ". . . shall set out the reasons for the proposed action . . . " and the applicant or registrant is entitled to a hearing before the LAT. Section 14(5) stipulates as follows:

14(5) If a hearing is requested, the Tribunal shall hold the hearing and may by order direct the registrar to carry out the registrar's proposal or [page113] substitute its opinion for that of the registrar and the Tribunal may attach conditions to its order or to a registration.

23The clear wording of these provisions supports the argument that the LAT may order conditions in the absence of a finding that the "past conduct" of the applicant met the threshold.

24First, it is clear from s. 10(1) as set out above that registration is an entitlement where an applicant meets the prescribed requirements, subject only to a number of explicitly delineated exceptions which are set out there. Section 13(1) vests the Registrar with the authority to suspend, revoke or refuse to renew a registration if the Registrar is of the opinion that the applicant in question is not entitled to registration due to a failure to meet any one of the enumerated requirements of REBBA set out in s. 10.

25It is clear, and the parties agree, that the Registrar may only propose to prohibit a registration where he is of the view that one or more of the prerequisites in s. 10 is met: see, e.g., Ontario (Registrar of Real Estate & Business Brokers) v. Vogelsberg, [1994] O.J. No. 226 (Div. Ct.).

26REBBA makes no mention, however, of any need for a threshold finding in order for the Registrar to attach conditions to a registration. Section 13(2), as set out above, unlike s. 13(1), contains no reference to s. 10. Rather, its language is permissive. It refers instead to the Registrar approving any application "on such conditions as he or she considers appropriate", and s. 13(2)(b) refers to the Registrar at "any time" applying "such conditions as he or she considers appropriate" to a registration.

27Section 13(2) should be interpreted through comparison and contrast with its related, surrounding provisions, which in this case would include s. 13(1). Comparison with other, related provisions within the same act is an essential tool of statutory interpretation in Ruth Sullivan, Sullivan on the Construction of Statutes, 5th ed. (Markham, Ont.: LexisNexis Canada, 2008), at pp. 360-61:

In adopting a contextual approach, the courts focus on any provision or series of provisions that in their opinion is capable of shedding light on the interpretive problem at hand . . . . More specifically, it is assumed that language is used consistently, that tautology is avoided, that the provisions of an Act all fit together to form a coherent and workable scheme.

28Moreover, Sullivan notes that part of this interpretive exercise involves pointing out "similarities and differences among the provisions" being examined, and "show[ing] how these similarities and differences fit rationally into a coherent plan that services the legislature's purposes" (at p. 362). [page114]

29The Registrar submits that by finding s. 13(2) does not require the same threshold determination necessary to exercise the power under s. 13(1), the Registrar (or LAT on appeal) is accorded an unfettered discretion that is undesirable in a free and democratic society and which is not justified on the basis of the legislative regime.

30As discussed above, the legislative scheme does accord the Registrar the discretion under s. 13(2) of REBBA to impose conditions absent a threshold finding under s. 10. The discretion is not, however, completely unfettered. The Registrar's jurisdiction is limited by the purpose and objects of REBBA. The Registrar's ability to regulate by imposing conditions must be connected to the purpose and objects of REBBA, and must be exercised in accordance with, among other things, principles of natural justice. This is consistent with the most basic principles of law and limits on executive authority: see, e.g., Roncarelli v. Duplessis.

31The Act sets out some other protections. When the Registrar proposes to impose conditions, an applicant or registrant can request a hearing. If an applicant or registrant takes issue with any proposal made by the Registrar, either to prohibit registration outright, or in a situation where the Registrar seeks to impose conditions on a registration, the applicant has the statutory right to appeal to the tribunal. Section 14(5) of REBBA provides as follows:

14(5) If a hearing is requested, the Tribunal shall hold the hearing and may by order direct the registrar to carry out the registrar's proposal or substitute its opinion for that of the registrar and the Tribunal may attach conditions to its order or to a registration.

32As discussed above, since entitlement to registration is the default position for an applicant or registrant (s. 10(1)), there is no jurisdiction for the LAT to refuse registration absent a threshold finding pursuant to s. 10(1)(a)(ii).

33The scheme of the Act, then, does provide protection against the unfettered exercise of discretion.

34This matter itself illustrates the point. The LAT determined that Mr. Nagy's conduct did not meet the s. 10 threshold for revocation, but did warrant the imposition of conditions in the public interest. The LAT did not agree, given the lengthy record of Mr. Nagy as a real estate agent which it characterized as "exemplary", that Mr. Nagy was ungovernable.

35In imposing a number of conditions which included abstention from drugs and alcohol, the LAT wrote [LAT reasons, at para. 52]:

In the Tribunal's view, the condition is also rationally connected to the Act and more particularly consumer protection. Specifically, in this case there [page115] was ample evidence that the Applicant has, at material times, had a substance abuse problem. There was also ample evidence that alcohol abuse played a significant role in the events of October 16, 2006. In the circumstances, the Tribunal is concerned that the more the Applicant consumes alcohol or non-prescription drugs, the more likely he is to commit a serious offence. It cannot be in the interests of Mr. Nagy's clients to have him in and out of jail again with the obvious disruption that this causes in the continuity of service. An abstention condition provides a basis for improvement of Mr. Nagy's chances to stay out of trouble with the law, which in turn will improve consumer protection for his existing and future clients.

36Other conditions imposed included the requirement that Mr. Nagy immediately inform the office of the Registrar of any criminal charges, as well as the requirement that he not apply for a transfer of his registration without prior written authorization from the Registrar, and the requirement that any new broker acknowledge the conditions in writing. The LAT clearly linked the conditions imposed to the protection of the public. In short, the existence of the right to appeal the Registrar's proposal to impose conditions, as well as the requirement that the conditions be linked to the purposes and objects of REBBA, serve to contain the discretion.

37There is another reason why this construction of the statutory scheme makes sense. The standard of conduct necessary for revocation of the right to earn a livelihood is a high one, and is generally recognized as such in professional regulation regimes. That means that the s. 10 threshold is a high one, as it clearly applies to decisions to revoke or refuse to register. If conditions under s. 13(2) can only be made if a revocation could be made, there will be many cases which, while falling short of warranting revocation, would nevertheless require some intervention in the public interest.

38The Registrar's position implies that in all but the very most egregious cases warranting revocation, he would be entirely unable to protect the public through the imposition of conditions. I do not agree that this accords either with the proper construction of this statute or with professional regulatory regimes in general.

(b) The conflicting case law

39It is common ground that there has been some apparently contradictory case law on the question of whether conditions on a registration may be imposed absent a threshold finding pursuant to s. 10. The parties drew our attention to McDonald and Lapcevich. They submitted the appellants' facta in these two cases, which provided this court a fuller record than we [page116] otherwise would have had before us concerning the issues that were argued.

40The factual background of McDonald is very similar to that in the present case. The Registrar had proposed to revoke Mr. McDonald's registration. On appeal to the LAT, the LAT declined to find that, in the words of Carnwath J., at para. 7,

. . . there were reasonable grounds to believe that Mr. McDonald, the appellant, would not conduct his business in accordance with law. The Tribunal concluded he was perilously vulnerable to being used by dishonest third parties. It found he was capable of learning from his mistakes.

41As noted by Carnwath J., at para. 8, the LAT "imposed conditions on Mr. McDonald's registration, which it concluded would protect the public from any perceived risk of future conduct". This court upheld that decision by way of a brief endorsement, rejecting the submission that the tribunal lacked the jurisdiction to impose conditions on Mr. McDonald's registration.

42The appellant submits that McDonald conflicts with Lapcevich. There, the Registrar had proposed to revoke a broker's licence. The LAT upheld the revocation of the broker's licence, but ordered that he be registered as a salesperson subject to specific terms and conditions intended to protect the public. While finding that the past conduct was of concern, the LAT did not make the s. 10 threshold determination. In brief oral reasons allowing the appeal and remitting the matter back to the LAT for a rehearing, Lederman J. stated for the court, at para. 3:

In the absence of such determinations, there was no jurisdiction in LAT to order the revocation of the respondents' registrations as a broker or brokerage or impose conditions. (See Ontario (Registrar of Real Estate & Business Brokers) v. Vogelsberg, [1994] O.J. No. 226 (Ont. Div. Ct.)).

43He also stated (at para. 4): "Absent a threshold finding that one of the provisions of s. 10 applies, LAT is without authority to order any particular remedy and its jurisdiction is limited to rejecting the Registrar's proposal."

44The Registrar urges us to find that Lapcevich was correctly decided and is binding on this court in this matter. The respondent argues that Lapcevich was correct to the extent that it held that the LAT did not have jurisdiction to revoke the registration in the absence of a threshold finding, but he argues that the court was not correct in finding that the LAT could not impose conditions in the absence of a threshold finding.

45While the issues before this court in the present case and that of Lapcevich overlap significantly, they are not identical. The LAT in Lapcevich ordered the revocation of a registration in the absence of a threshold finding. It also ordered registration as [page117] a salesperson and imposed conditions when that issue was not before it (at para. 5). The comment on jurisdiction to impose conditions in the absence of a threshold finding was bound up with the question of jurisdiction to revoke in the absence of a threshold finding. Moreover, the court did not engage in a detailed analysis of the statutory framework.

46This is very different from the present case, where the LAT refused to order the revocation of Mr. Nagy's registration because it found that his past conduct had not met the s. 10(1) (a)(ii) threshold. Thus, the major issue before this court is the LAT's power to impose conditions in the absence of a threshold finding. It was common ground that there was no jurisdiction to revoke registration in the absence of a threshold finding.

47This is a significant difference. There is no way of knowing what the decision would have been in Lapcevich had the issue before it been whether conditions could be imposed in the absence of a threshold finding. The court does not discuss the issue and consider the relevant statutory provisions in relation to the power to revoke (s. 13(1)) as distinct from the power to impose conditions (s. 13(2)). To the extent that the analysis in the case refers to the registration, it is correct as it is clear that registration is an entitlement under s. 10(1) of REBBA absent a threshold finding under s. 10(1)(a) (ii).

48Given the statutory framework as discussed above, however, Lapcevich is not correct to the extent it states that a threshold determination is a prerequisite to the imposition of conditions. McDonald is a case in which the issue of conditions was isolated and clear. There, this court upheld the LAT's decision to impose conditions where it had found that the threshold had not been met, but where conditions on the registration were rationally connected to consumer protection. In my view, it is correctly decided and should be followed.

49In conclusion, the statutory scheme contemplates that, before a registration may be refused or revoked, there must be a finding that "the past conduct of the applicant . . . affords reasonable grounds for belief that the applicant will not carry on business in accordance with law and with integrity and honesty". It is clear from s. 13(1), which refers back to s. 10, that this threshold determination is a condition precedent to refusing or revoking a registration.

50Section 13(2), which addresses the power to impose conditions, does not contain a reference to s. 10 and the threshold determination. A straightforward construction of the statutory provisions supports the conclusion that a threshold determination is not a condition precedent for the imposition of [page118] conditions in the public interest and is consistent with the purposes of REBBA.

51This conclusion is reinforced by the policy considerations that apply to this regime as well as to other professional areas. Chief among these considerations is the importance of protecting the public and permitting a regulator to regulate conduct that, while falling short of being completely inconsistent with continued practice, nonetheless requires correction or oversight. The Registrar's position would create a regulatory vacuum for those cases where the Registrar or the LAT does not find reasonable grounds to believe that the applicant will not carry out his, her or its business with integrity and honesty, and in accordance with the law, but where there is some lesser cause for concern for the public's protection that warrants the imposition of conditions under s. 13(2) of REBBA, as opposed to a licence suspension, refusal or revocation under 13(1).

52Moreover, this conclusion is supported by the McDonald case, which I find persuasive.

II. The LAT finding that the past conduct threshold had not been met

53Although the Registrar concedes that the reasonableness standard of review applies generally to the question of whether the threshold was met in the circumstances, the Registrar submits that the LAT committed a number of errors of law, with respect to which the standard is correctness. The Registrar argues that the LAT erred (a) in considering its own research on legislative history without receiving submissions on it from the parties; (b) in interpreting s. 10(1)(a)(ii) of the Act as requiring a nexus to exist between criminal conduct and the business of real estate before reasonable grounds will be found; (c) in "creating an entitlement distinction between existing registrants and new applicants"; and (d) in arriving at a conclusion inconsistent with decisions made in other regimes, and unsupported by the evidence.

54I will address these in turn.

55The Registrar argues that the LAT erred in law by "unilaterally" undertaking its own research following the hearing on the legislative history of the provision without giving the parties the opportunity to make submissions. I do not agree [page119] that the LAT erred or was unreasonable in considering the legislative history.

56The LAT wrote thorough reasons. In the course of its reasons, it considered the legislative history of the provisions. It was, in my view, open to the LAT to interpret REBBA using extrinsic aids. This is consistent with a purposive method of statutory interpretation as approved of by the Supreme Court of Canada in Rizzo & Rizzo Shoes Ltd. (Re) (1998), 1998 837 (SCC), 36 O.R. (3d) 418, [1998] 1 S.C.R. 27, [1998] S.C.J. No. 2, and is an accepted tool to be relied upon: see Canadian Pacific Railway Co. v. James Bay Railway Co. (1905), 1905 70 (SCC), 36 S.C.R. 42, [1905] S.C.J. No. 28; Pic-N-Save Ltd. (Re), 1972 1199 (ON SC), [1973] 1 O.R. 809 (S.C.).

57In considering the legislative history, the LAT was not taking judicial notice of any facts that were not before it. Rather, it was simply using accepted principles of statutory interpretation to apply REBBA in a manner consistent with its purpose, object and legislative intent.

58Second, the Registrar argues that the LAT erred in requiring a nexus to exist between criminal conduct and the business of real estate in the course of interpreting s. 10(1) (a)(ii) before finding that the threshold had been met.

59I find nothing in the reasons that would justify this court's intervention in this respect. The LAT correctly and reasonably held, at para. 42 of its reasons, that the consumer protection purpose of REBBA requires that ". . . where the issue on appeal relates to past criminal conduct, that conduct must be assessed in relation to the ability of the party in question to conduct the business of being a realtor and serve the interests of consumers".

60The Registrar's submission that the LAT required a "clear and unequivocal" nexus between the criminal conduct and the business of real estate is not borne out by a fair reading of the reasons. Rather, the reasons recognize that there must be a clear link between the past conduct and future risk. At para. 38 of its reasons, the LAT wrote: "The privilege of continued registration, in the face of a criminal record, will depend on the nexus between the criminal record and the business of real estate. There is no general morality ground upon which to revoke a registration."

61The LAT, having carefully considered the applicable case law and the legislative history, concluded that the focus must be on the link between the past conduct and future risk. The considerations applied by the LAT in this respect were consistent with the statute, and it committed no reviewable error in this respect. [page120]

62Third, the Registrar submits that the LAT erred in "creating an entitlement distinction between existing registrants and new applicants", suggesting that a different standard applies with respect to a long-standing registrant than for a new one. With respect, I do not agree that it did so. At para. 41 of the reasons, the LAT states as follows:

Of course, in examining a party's past conduct to determine the existence of reasonable grounds as to a lack of honesty and integrity in business, the distinction between a registrant and an aspiring registrant is important. A registrant has a record in the real estate business and that record will be a highly relevant fact in the ss. 10 and 13 analysis. An Applicant for registration has no track record and past misdeeds will weigh more heavily. (Emphasis added)

63Read in context, the LAT was simply referring to the practical reality that a registrant will have a record in the business, which an applicant will not. It did not purport to set out a legal test. Rather, it is considering one aspect of an inquiry which is very fact specific, because each person's history in the business will differ in its length and other specifics, as will the factors that bear on the "future risk" assessment. I find no merit to the appellant's submission on this point.

64Finally, the Registrar submits that the conclusion reached by the LAT is inconsistent with decisions made in other regimes, and is unsupported by the evidence that was before it. I do not agree with either submission.

65The cases to which the Registrar referred the court as being inconsistent are distinguishable on the facts and or the applicable law: see, for example, Alves v. Ontario (Superintendent of Financial Services), 2009 36993 (ON SCDC), [2009] O.J. No. 2950, 251 O.A.C. 276 (Div. Ct.) ("Alves"). In any event, this submission presupposes a standard of correctness, and the standard of review on this issue is clearly one of reasonableness as it involves a question of the application of the test to the particular facts: see Alves, para 8.

66The LAT reasons for reaching its conclusion on the application of the test met the test of transparency, intelligibility and justification. The result was within the range of possible outcomes, even if another decision-maker might have reached a different result on the application of the threshold: see Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190, [2008] S.C.J. No. 9, para. 47.

67There was evidence before the LAT to support its conclusion that the s. 10 threshold was not met. The LAT thoroughly and carefully considered all aspects of Mr. Nagy's criminal record and substance abuse issues and concluded that although [page121] the s. 10 threshold had not been met and the revocation proposal should be rejected, the circumstances justified imposing conditions on his registration in the public interest.

Conclusion

68In summary, the LAT carefully reviewed the evidence relating to Mr. Nagy, as well as the law and legislative history and framework, applied appropriate legal considerations to the evidence and facts before it, and reached a reasonable decision. There is no basis for this court to intervene.

69The appeal is dismissed. The parties agree that there should be no costs, and accordingly, none are ordered.

RAY J. (dissenting): -- Introduction

70The Registrar, Real Estate and Business Brokers Act, 2002, S.O. 2002, c. 30 appeals the decision of the Licence Appeal Tribunal ("LAT") dated November 30, 2009 [Nagy (Re), [2009] O.L.A.T.D. No. 325 (L.A.T.)] pursuant to the Licence Appeal Tribunal Act, 1999, S.O. 1999, c. 12, Sch. G, s. 11. At Andrew Nagy's request, the LAT conducted a hearing concerning the proposal of the Registrar under the Real Estate and Business Brokers Act, 2002 ("REBBA") to revoke Mr. Nagy's registration as a salesperson. The LAT's decision was to direct the Registrar to terminate his proposal to revoke the registration of the registrant, Andrew Nagy, and to re-register him but with certain conditions.

71The Registrar, by notice dated February 2, 2009, had proposed to revoke the registration of Mr. Nagy as a salesperson under the REBBA on the ground that his uncontested cumulative criminal record and related past conduct afforded "reasonable grounds for belief that (he) will not carry on business in accordance with law and with integrity and honesty" (s. 10(1)(a)(ii) of the REBBA). Of specific concern were events arising on and following October 16, 2006 for which Mr. Nagy was charged with attempted murder for his attack and stabbing of an individual. Mr. Nagy received a conditional sentence of two years less a day. Then, because of his failure to abide by the terms of the conditional sentence, he was re- arrested and sentenced to 30 days in jail.

72Mr. Nagy sought a hearing before the LAT, which took place on September 29 and 30, 2009. The underlying facts were not in issue. The particular conduct was admitted. The LAT exercised its authority under s. 13(1) and (2) of the REBBA and, after hearing from Mr. Nagy's employer concerning his [page122] work history, concluded that according to the evidence, Mr. Nagy had demonstrated a lengthy and unblemished record in real estate. It further concluded that the fact his broker was willing to preserve a job for him, deserved to be given greater weight than the fact of his criminal record and the breaches of his conditional sentence. The LAT held [at para. 48] that the past conduct of Mr. Nagy did not afford "reasonable grounds for the belief that he will not carry on business in accordance with law and with integrity and honesty", and directed the Registrar to re-register Mr. Nagy but with a number of conditions.

Standard of Review

73I agree with the standard of review as described by Harvison Young J. above.

Issues

74The issues on this appeal relate to (a) the proper test to be applied under s. 10(1)(a)(ii) of REBBA to determine whether there are reasonable grounds for belief that Mr. Nagy will not carry on business in accordance with law and with integrity and honesty; (b) whether a different test applies to first time applicants under s. 10 of REBBA than to existing registrants under s. 13 [of] REBBA; and (c) whether the LAT may impose conditions on an applicant or registrant without first making a finding under s. 10(a)(1) (ii) of REBBA.

(a) The proper test

75The Registrar's position is that the test applied by the LAT was wrong because the LAT unduly narrowed the test by requiring "proof of a clear and unequivocal nexus between a registrant's criminal record and the business of trading in real estate". Mr. Nagy's position is that it was correct in applying a test which was a purposive and literal interpretation of the Act, and its consumer protection purposes, by requiring that past conduct be assessed in relation to the person's ability to conduct business appropriately.

76The REBBA requires that the Registrar determine if there are reasonable grounds for belief that the applicant will not carry on business in accordance with law and with integrity and [page123] honesty in connection with new applicants, and with existing registrants (s. 10(1)(a)(ii)) and s. 13).

77The evidence and its analysis require a focus on indicia of honesty and integrity in the context of compliance with the law. While clearly a contextual approach requires that it be the law as it relates to the business of real estate that is in issue, as opposed to the general law, nonetheless a purposive enquiry requires that evidence related to integrity and honesty be undertaken. This is not a moral enquiry, and neither is it necessary to give undue weight to the fact of a criminal conviction. Where, however, there is a criminal conviction it is the misconduct giving rise to the conviction that must be given careful scrutiny as part of a "a more qualitative assessment of the entire conduct of an applicant to determine whether past conduct affords reasonable grounds for belief that he or she will not carry on business in accordance with law and with integrity and honesty" (Ontario (Registrar of Real Estate and Business Brokers) v. Faccenda, [1994] O.J. No. 954, 47 A.C.W.S. (3d) 456 (Div. Ct.), at para. 5).

78I am not of the view that the LAT applied the correct test [at para. 28] nor conducted a sufficient enquiry. While it was not an error to state the test to be "whether the past criminal misconduct of [Mr. Nagy] affords reasonable grounds to believe that [Mr. Nagy] will not carry on business in accordance with law and with integrity and honesty, such that his registration should be revoked", in considering the test, it failed to consider the full extent of the criminal misconduct including the breach of the conditional sentence. In fact, in restating the test [at para. 38] as "the privilege of continued registration, in the face of a criminal record, will depend on the nexus between the criminal record and the business of real estate", it tacitly acknowledged that its enquiry would be limited to Mr. Nagy's criminal record and would not include the underlying conduct. In my opinion, that was an error in law.

(b) Test for existing or new registrants

79A long history of unblemished work, whether in real estate or otherwise, is a factor to be considered in the overall enquiry. The test is the same, however, for new registrants or previous registrants. It is not a balancing of previously unblemished work history as against a more recent incident of misconduct, but an enquiry that requires a balancing of the applicant's livelihood and the public interest ((Re) Casale, [2005] O.L.A.T.D. No. 311 (L.A.T.), at para. 58)).

80In purporting to apply a different test to existing registrants, the LAT was in error. [page124]

Application of the test by the LAT

81As noted, it is my view that the LAT failed to consider the correct test. It follows therefore the standard of reasonableness cannot be met. Specifically, the standard of reasonableness fails in the following respects. The LAT purported to give undue preference to prior conduct and a work history that it concluded was above reproach while no enquiry was conducted beyond Mr. Nagy's current employer and an acquaintance. Mr. Nagy did not give evidence. Similarly, the LAT failed to extend its enquiry beyond the mere fact of the criminal conviction and the fact of the breach by Mr. Nagy of the terms of his conditional sentence.

82The LAT failed to consider that the imposition of the conditional sentence following the conviction for aggravated assault had been on the written undertaking of Mr. Nagy to comply with certain conditions. These conditions were important conditions and formed the basis of Mr. Nagy being granted a conditional sentence as opposed to being incarcerated. The seriousness of his failure to comply with his written undertaking was underscored by his arrest and the consequent imposition of a jail term. Mr. Nagy's failure to give evidence at the hearing for the purpose of explaining his breach ought to have been given considerable weight, since it resulted in the LAT being unable to conduct a full enquiry. Neither ought it to have drawn conclusions concerning Mr. Nagy's work record by relying only on the evidence of an acquaintance and Mr. Nagy's employer, including that the employer wished to continue to employ him.

(c) Imposition of conditions by the LAT

83In making its finding that the threshold in s. 10 had not been met and remitting Mr. Nagy back to the Registrar with a direction to re-register, it also imposed a number of conditions. The Registrar's position is that in order to impose conditions, a finding must first be made under s. 10 that the threshold has been met. Mr. Nagy takes the position that a threshold finding is not necessary before the imposition of conditions; that the threshold finding is only necessary before revocation may be ordered.

84In Bazinet (Re), [2005] O.L.A.T.D. No. 30 (L.A.T.), in which the LAT (dealing with a similar section but as it related to motor vehicle dealers) found, in the circumstances of that case, that the threshold was not met. There, the LAT directed the Registrar to allow the applicant's registration with specified conditions. [page125]

85The Ontario Court of Appeal considered the issue of the LAT imposing conditions in an appeal from this court in Amerato (Re) (2005), 77 O.R. (3d) 241, [2005] O.J. No. 3713, 2005 31577 (C.A.). The appeal involved the Motor Vehicle Dealers Act, 2002, S.O. 2002, c. 30, Sch. B ("MVDA"), which contains similar provisions as in the REBBA at ss. 10 and 13. The court held that the LAT could not impose conditions on a registration and grant the Registrar the authority to revoke the registration in the event of a breach of condition, because revocation can only occur if the applicant's past conduct falls within the conduct described in the equivalent of ss. 10 and 13 of the REBBA in the MVDA.

86The LAT in Casale (Re) considered it had the authority under the REBBA for the following options: an outright revocation of the applicant's registration, permitting the applicant to retain her registration but with restrictive terms and, finally, suspension of registration for a fixed period of time. The LAT concluded that the evidence before it was insufficient for a finding that the applicant was forever unworthy of holding a registration, but also insufficient for it to conclude that the public interest would be protected by permitting registration. Instead, it imposed a one year suspension -- "a period of time apart from the industry during which the applicant can reassure the industry and the regulator that she is once again suitable to hold a registration is in the Tribunal's opinion the most appropriate" (Casale (Re), at paras. 60 and 61). It elected not to impose conditions because it considered that option to be futile in the face of Amerato (Re).

87This court held in McDonald v. Ontario (Real Estate and Business Brokers Act, Registrar), [2009] O.J. No. 346, 2009 43664, 179 A.C.W.S. (3d) 985 (Div. Ct.) that conditions could be imposed without the need to make a threshold finding under s. 10. It relied upon s. 14(5) that the LAT "may by order direct the registrar to carry out the registrar's proposal or substitute its opinion for that of the registrar and the Tribunal may attach conditions to its order or to a registration" -- as giving jurisdiction to the LAT to attach conditions to a registration, and that there is nothing in the Act to limit its discretion "where . . . the conditions carry out the intention of the Act, that is, protection of the public". The court specifically noted "we find a rational connection between the conditions imposed and the intention of the Act to provide protection to consumers" (para. 3).

88The LAT decision in the present appeal was released November 30, 2009. In imposing conditions on Mr. Nagy, it noted [at para. 49] that he "conceded . . . that he should be ordered to comply with conditions" if his registration was not revoked, and [page126] further noted that both parties had submitted that the LAT had the jurisdiction to impose conditions following the decision in McDonald v. Registrar. It directed the Registrar to revoke its proposal to revoke Mr. Nagy's registration. It did not, in accord with McDonald, make a finding under s. 10 of the REBBA.

89After the LAT decision in the present appeal, this court decided Lapcevich v. Ontario (Real Estate and Business Brokers Act, Registrar), [2010] O.J. No. 946, 2010 ONSC 1145 (Div. Ct.). It held that before the LAT can revoke a person's licence, it must make a finding under s. 10(1)(a) of the REBBA. This case also involved an appeal from the LAT concerning a registrant under the REBBA. The registrant was a broker and the LAT proposed to revoke the registration as a broker and to direct the Registrar to register the registrant as a "real estate salesperson", essentially an alteration of his registration. In holding that the LAT had no jurisdiction to do what it did, this court stated: "Absent a threshold finding that one of the provisions of s. 10 applies, LAT is without authority to order any particular remedy and its jurisdiction is limited to rejecting the Registrar's proposal" (para. 4). The court referred to Ontario (Registrar of Real Estate & Business Brokers) v. Vogelsburg, [1994] O.J. No. 226 (Div. Ct.) as authority for the proposition that the LAT cannot reject a proposal from the Registrar to revoke registration without first making a finding under s. 10 of the REBBA. It must be noted that this court's decision in McDonald was not brought to the court's attention in Lapcevich.

90Mr. Nagy contends that the Lapcevich decision is correct insofar as it applies to the revocation of a registration by the LAT, but that its comments concerning the requirement of a threshold finding before the imposition of "any particular remedy" (for example, imposing conditions as opposed to the revocation of registration) is obiter.

91These cases demonstrate that the public interest may require the imposition on an applicant of a wide variety of remedies as a consequence of their regulation. Revocation clearly requires a threshold finding. However, other remedies, such as suspension for a specified period, refusal of re- registration as a real estate broker but acceptance as a real estate salesperson, or the imposition of conditions, while in the public interest, have a punitive quality with potentially very serious consequences for the registrants.

92The Registrar's position on this appeal is that Lapcevich is correct and that as the regulator of Real Estate and Business Brokers, it considers that a finding concerning the conduct described in s. 10 should be required before any remedy should [page127] be fashioned. Mr. Nagy takes the position that a specific finding under s. 10 is unnecessary but acknowledges that there must be sufficient evidence to demonstrate a "rational connection" with the imposed conditions.

93I find the wide range of remedies available to be imposed are implicitly for the purpose of limiting the activities of the registrant and for the imposition of greater scrutiny on a registrant than would otherwise be the case. In the proper case, the public interest requires it. The Registrar is required to be alive to the public interest. There is also a public interest in protecting a registrant from undue restriction of their livelihood. It is axiomatic that a person's freedoms ought not to be restricted, impaired or revoked without a finding that would justify such limitations. I do not agree that the statute is structured in such a way as to make it clear that conditions may be imposed on an applicant or registrant without the requirement of a threshold finding. Nowhere in the Act is it suggested that there need be only a rational connection between the purpose of the Act and the imposed condition.

94The REBBA sets forth, in s. 10, the prescribed conduct and the test to be applied that the legislature considered deserving of intervention by the regulator. The threshold "reasonable grounds for belief" is not a high threshold. But it is a threshold, nonetheless, that the regulators have had long experience with. They have developed an expertise in assessing and adjudicating the requirements of the public interest and the rights of the individuals. These are thresholds that are known to registrants. A requirement that no remedy may be fashioned without a finding under the threshold as decided in Lapcevich gives certainty to the regulation of these persons in the context of the public interest. To sanction the imposition of conditions, or other remedies short of revocation, such as suspension, without the requirement of meeting the threshold in the REBBA has the potential for the imposition of serious limitations on a person's freedoms but without a standard against which the limitations can be imposed. It follows that at the lower end of the threshold, where the conduct might be of less concern, simple conditions might be the appropriate remedy. Greater limitations or interventions such as suspension up to revocation might be appropriate toward the higher end of the threshold, where the conduct is serious and of concern. It is acknowledged that there are frequently conditions agreed to between the registrant and the registrar where they are appropriate. However, when the remedy must be imposed, the threshold must be met. [page128]

95I would allow the appeal and direct the LAT to conduct a fresh review based on the correct test with a differently constituted tribunal, and with the direction that absent a finding under the threshold provisions in the REBBA, it has no jurisdiction to order conditions or a suspension.