Egerton v. Appraisal Institute of Canada, 2009 ONCA 390

CITATION: Egerton v. Appraisal Institute of Canada, 2009 ONCA 390

DATE: 20090511

DOCKET: C48443

COURT OF APPEAL FOR ONTARIO

Goudge, Simmons and Juriansz JJ.A.

BETWEEN

Andrew Egerton

Plaintiff (Respondent)

and

The Appraisal Institute of Canada

Defendant (Appellant)

Robert L. Falby and Ryan T. Sills, for the appellant

Lou-Anne F. Farrell, for the respondent

Heard: March 9, 2009

On appeal from the judgment of Justice W. Tausenfreund of the Superior Court of Justice dated February 5, 2008.

Goudge J.A.:

[1] The appellant, the Appraisal Institute of Canada, is a not-for-profit corporation that regulates the appraisal profession for individuals that qualify and subscribe for membership in it. It sets standards of practice for its members. It supports the standards with a process for disciplining a member who is shown to have breached them. It maintains three committees, which each play a part in that process: an Investigating Committee, an Adjudicating Committee and an Appeal Board. All three committees are established and regulated by regulations made pursuant to the appellant’s by-laws.

[2] It is uncontested in this appeal that these committees have a duty to deal fairly with members against whom complaints have been made. The issue is whether that happened in the respondent’s case. The trial judge found that it did not, and awarded judgment to the respondent. In my view, he erred in doing so, and for the reasons that follow, I would allow the appeal.

THE BACKGROUND

[3] The respondent is a real estate appraiser. He is a member of the appellant and has been designated by it as an accredited appraiser of the Institute.

[4] In September 1997, the appellant received a complaint from someone for whom the respondent had prepared an appraisal report. It referred the complaint to its Investigating Committee. Pursuant to the relevant regulation, the Committee Chair appointed one of its members, James Clark, to investigate. A copy of the complaint was sent to the respondent, and his responses were obtained to the questions it raised about his appraisal report. Mr. Clark then prepared a brief for the Investigating Committee. In it, he reported on deficiencies in the respondent’s appraisal report and described the discipline charges that he proposed that the Committee recommend in light of those deficiencies. In paragraph 9 of the brief he also described the respondent’s response to the investigation as slow and uncooperative, although none of his proposed charges were based on this. Finally, he recommended that the respondent receive the discipline of “censure” and be required to take some additional courses.

[5] In September 2001, the Investigating Committee, including Mr. Clark, met to consider the complaint against the respondent. Its governing regulation provided that it was not required to afford someone in the respondent’s position a hearing or an opportunity to make submissions, and it did not do so.

[6] The Committee’s report concluded that many, but not all, of the charges proposed in Mr. Clark’s brief warranted discipline, and only those that did should go forward to the Adjudicating Committee if the respondent did not agree to the penalties it proposed. Its proposed discipline was that the respondent should receive a private reprimand (the least onerous sanction possible, a lesser sanction than recommended by Mr. Clark), some remedial course work and should pay costs of $500.

[7] The appellant provided the respondent with a copy of the report of the Investigating Committee. It advised him that if he did not accept the recommended discipline he was entitled to a hearing of the charges it recommended before the appellant’s Adjudicating Committee. The respondent declined to accept the discipline proposed by the Investigating Committee and requested a hearing before the Adjudicating Committee.

[8] The regulation governing the Adjudicating Committee requires that it hold a hearing in such circumstances. The Committee that has referred the charge to the Adjudicating Committee prosecutes the case and must give prior disclosure to the member charged of all the documents it proposes to use. The member has the right to be present, to have counsel, to cross-examine witnesses called by the referring committee, to call evidence in reply, and to make argument.

[9] The hearing of the Adjudicating Committee took place on May 3, 2002. The respondent was present and represented by counsel. The Committee had received the brief prepared by the Investigating Committee some 30 days earlier. It received the respondent’s brief at the hearing. The representative of the Investigating Committee (not Mr. Clark, who had by then left that Committee) gave evidence explaining the reasons for the proposed charges and the proposed discipline. He was subjected to cross-examination by counsel for the respondent. The respondent then gave evidence on his own behalf. After hearing argument, the Adjudicating Committee retired. On June 26, 2002, it issued its decision, finding that 9 of the 12 recommended charges had been proven. It imposed a private reprimand, ordered the respondent to redo the appraisal in compliance with current standards, and assessed costs of $2,500 against the respondent.

[10] As he was entitled to under the applicable regulation, the respondent appealed to the appellant’s Appeal Committee. He raised 22 points challenging the decision of the Adjudication Committee. The Appeal Committee held its hearing on November 28, 2003. Again the respondent was represented by counsel.

[11] The Appeal Committee issued its decision on January 21, 2004. It concluded that only three of the charges had been proven, but sustained the discipline imposed by the Adjudicating Committee save for costs, which it reduced to $1,000.

[12] The respondent then commenced this action, seeking to quash the decisions of the Appeal Committee and the Adjudicating Committee, an order that he be repaid the $1,000 costs he had paid, an injunction preventing further discipline, and damages for breach of contract.

[13] The respondent succeeded at trial. The trial judge found that the appellant had an implied contractual obligation to treat the respondent fairly in conducting its discipline process. The trial judge found that this process had become fatally flawed at the Investigating Committee stage (and thereafter was beyond rehabilitation) because the respondent had a right to a hearing at that stage and did not receive it.

[14] The trial judge also expressed concern with four other aspects of the discipline process:

(a) the inclusion of paragraph 9 in Mr. Clark’s brief to the Investigating Committee;

(b) the fact that Mr. Clark participated in the deliberations of the Investigating Committee, having prepared the brief being considered by it;

(c) the impact that the report of the Investigating Committee appeared to have on the final outcome of the discipline process; and

(d) the fact that the Adjudicating Committee received the brief of the Investigating Committee some 30 days before it received that of the respondent.

[15] In the end, the trial judge ordered that the findings against the respondent and the sanctions imposed on him be struck, the costs paid be refunded to him, and that he receive costs of the trial fixed at $25,000.

ANALYSIS

[16] For the following reasons, I cannot agree with the order made by the trial judge or with his reasoning.

[17] The appellant concedes that its relationship with the respondent is governed by contract and that it owes the respondent an implied contractual duty of fairness in conducting the various stages of its discipline process. It is therefore unnecessary to determine whether, apart from contract, the appellant owes a common law duty of fairness, either because of some element of public character it may have, or because of the nature of the discipline process it carries on. The real question is what the duty of fairness requires of it at each stage of the discipline process and whether any of the aspects of that process that concerned the trial judge can properly be said to breach that duty.

[18] Most important for the trial judge was the fact that the respondent was not accorded a hearing before the Investigating Committee. In my view, for three reasons this did not breach the appellant’s duty to treat the respondent fairly.

[19] First, the implied contractual obligation of fairness must be informed by the meaning of the regulation which the appellant’s by-laws empower it to make governing that stage of the discipline process. The regulation sets out how members can expect to be treated. It expressly provides that the Investigating Committee is not required to afford the respondent a hearing.

[20] Second, the Investigating Committee can impose no sanction or substantive consequence on the respondent. It can do no more than recommend charges and proposed penalties for the Adjudicating Committee to consider. In other words, this stage can impose no sanctions on the respondent. It can do no more than cause a hearing before the Adjudicating Committee. The requirements of the duty at this stage are therefore extremely minimal.

[21] Third, the respondent was in fact afforded the opportunity at this stage to know what the complaint against him was and to respond in writing to Mr. Clark about the questions it raised. Fairness requires no more.

[22] In my view, therefore, the absence of a hearing before the Investigating Committee did not deprive the respondent of any element of procedural fairness.

[23] The other four considerations that appeared to have concerned the trial judge can be easily dealt with.

[24] While Mr. Clark included paragraph 9 in his brief to the Investigating Committee, the adverse comments he made about the respondent’s response to the investigation had no consequences for the respondent. Mr. Clark recommended no charges based on these comments. Nor did the report of the Investigating Committee. The comments were the subject of no further scrutiny in the discipline process. They created no fairness obligation that the appellant failed to discharge.

[25] The same is true of Mr. Clark’s participation in the deliberations of the Investigating Committee. The governing regulation authorized the Committee to delegate to him the task of investigating but did not preclude his subsequent participation in deciding what charges to recommend to the Adjudicating Committee. That task is not quasi-judicial. Procedural fairness requires no separation between this Committee and the individual to whom it has delegated its investigation function. Indeed it could properly have conducted the investigation itself and then decided what charges to recommend.

[26] The concern about the impact that the Investigating Committee’s report may have had on the final outcome of the discipline process also cannot be sustained. It is not suggested that the Adjudicating Committee exhibited any bias. Any impact the report may have had can only have been through it being tendered in evidence before the Adjudicating Committee in a hearing that accorded the respondent the right to cross-examine and to call evidence in response. In that context, the impact of the Investigating Committee’s report could not be a breach of procedural fairness.

[27] Finally, the fact that the Adjudicating Committee received the respondent’s written brief only at the hearing, some 30 days after it received the Investigating Committee’s brief, does not constitute a breach of the appellant’s duty of fairness. The Adjudicating Committee reserved its decision for almost two months. There is no basis to suggest that it did not fully consider the respondent’s brief before deciding.

[28] In summary, I can find no breach by the appellant of its contractual duty of fairness. The appeal must be allowed, the judgment below set aside, and the respondent’s action dismissed. Costs of the appeal to the appellant fixed at $10,000 inclusive of disbursements and G.S.T. Since the respondent abandoned its argument about costs of the trial, there should be no costs of the trial to either party.

RELEASED: May 11, 2009 “STG”

“S.T. Goudge J.A.”

“I agree Janet Simmons J.A.”

“I agree R.G. Juriansz J.A.”