CITATION: Bloch Holdings Corporation v. Ministry of Children, Community and Social Services, 2019 ONSC 4227
DIVISIONAL COURT FILE NO.: DC-18-00000482-00JR
DATE: 20190711
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Conway, D. Wilson and Favreau JJ.
B E T W E E N :
BLOCH HOLDINGS CORPORATION AND DOUG BLOCH-HANSEN
Applicants
– and –
DIRECTOR, MINISTRY OF CHILDREN, COMMUNITY, AND SOCIAL SERVICES, HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTER OF CHILDREN, COMMUNITY, AND SOCIAL SERVICES
Respondents
B. Pooran, F. Bhabha and J. Macko
for the Applicants
V. Glasser
for the Respondents
HEARD: July 5, 2019
By the Court:
Overview
[1] Doug Bloch-Hansen's adult daughter, Shannon, has significant cognitive and mental health disabilities. Shannon receives funding from the respondent Ministry of Community and Social Services (the "Ministry") for supports and services she requires due to her disabilities. The Ministry currently provides the funding to a transfer payment agency that, in turn, pays the funds out to the respondent Bloch Holdings Corporation ("Bloch Holdings"). Bloch Holdings is a not-for-profit corporation set up to manage Shannon's care.
[2] In 2018, Mr. Bloch-Hansen asked the Ministry for additional funding for Shannon's care and requested that all funding be paid directly by the Ministry to Bloch Holdings, rather than to the third party transfer agency. The Ministry approved the request for additional funding but not the request that payments be made directly to Bloch Holdings.
[3] Mr. Bloch-Hansen and Bloch Holdings seek judicial review of the Ministry's decision not to pay the funding directly to Bloch Holdings. The applicants do not challenge the amount of funding the Ministry provides for Shannon's care.
[4] For the reasons that follow, the application is dismissed.
Background facts
[5] Shannon is 21 years old. She has Feingold syndrome, which is a rare disorder that causes cognitive and mental health disabilities. Shannon requires around the clock support from personal support workers and various therapies.
[6] At the time this dispute arose, the Ministry paid approximately $225,000 per year for Shannon's care. The Ministry provides the funding for Shannon’s care to the Durham Area Family Respite Services, which is a transfer payment agency (the "Agency"). The Agency then pays the funding to Bloch Holdings.
[7] Bloch Holdings is a not-for-profit corporation, referred to as a "microboard". According to the applicants, microboards are not-for-profit corporations that provide support to people with disabilities. Shannon's family established Bloch Holdings in 2015 for the purpose of managing Shannon's funding and to organize her services and supports. Mr. Bloch-Hansen is a director of Bloch Holdings.
[8] In February and March 2018, Mr. Bloch-Hansen wrote to the Ministry to request an increase in the funding for Shannon's care and to ask the Ministry to provide the funding directly to Bloch-Holdings rather than to the Agency.
[9] In a letter dated May 2, 2018, the Ministry notified Mr. Bloch-Hansen that it would not agree to provide the funding for Shannon's support directly to Bloch Holdings. The Ministry explained the rationale for its decision as follows:
I appreciate you would like the Ministry to directly fund Bloch-Holdings Corporation; the Ministry is not in a position to enter into individualized funding contracts at this time. Transfer Payment Agencies comply with several oversight and accountability measures which are requirements of the Ministry. The contractual relationship with the Ministry will remain with the current approved Transfer Payment Agency through the contract we have in place with Durham Family Respite services, or another approved Transfer Payment Agency with an existing funding relationship with the Ministry. Durham Area Family Respite Services are in agreement to continue to have oversight and a contractual relationship with Bloch-Holdings as is currently in place.
[10] In its May 2, 2018 letter, the Ministry also notified Mr. Bloch-Hansen that it was increasing the base funding for Shannon's care to $259,835, with an additional amount of $20,000 for therapy.
[11] While the parties' records on the application do not include subsequent correspondence from Mr. Bloch-Hansen to the Ministry, it is evident that he requested that the Ministry reconsider its decision on at least two occasions, and that the Ministry denied these requests.
[12] In a letter dated June 14, 2018, the Ministry indicated that it was responding to Mr. Bloch-Hanson's correspondence of June 5, 2018, and that its position remained the same. The Ministry stated that it had a funding contract with the Agency, which is an "approved service agency", for the provision of supports and services to Shannon. The Ministry asked Mr. Bloch-Hansen to contact the Agency for the purpose of entering into a new contract that would reflect the increase in funding.
[13] In a further letter dated July 3, 2018, the Ministry indicated that it was responding to Mr. Bloch-Hansen's correspondence of June 15, 2018. In that letter, the Ministry again confirmed the availability of the additional funding allocated to Shannon and that the funding would not be paid directly to Bloch Holdings because it is not an "approved service agency". The Ministry went on to urge Mr. Bloch-Hansen to contact the Agency in order to access the additional funding.
Relevant statutory regime
[14] The applicants rely on section 11.1 of the Ministry of Community and Social Services Act, R.S.O. 1990, c. M.20, in support of their argument that the Ministry has the authority to provide direct funding to Bloch Holdings. Section 11.1 of the Act gives the Minister of Community and Social Services the discretion to provide grants to people with disabilities either directly or through an organization or agency:
11.1 (1) The Minister may from time to time, out of money appropriated by the Legislature, make a grant to or on behalf of a person who has a disability and who is at least sixteen years old, to assist the person in obtaining goods and services that the person requires as a result of the disability.
(2) The Minister may from time to time, out of money appropriated by the Legislature, make a grant to an organization, agency or other entity, if the organization, agency or other entity has entered into an agreement with the Crown in right of Ontario to transfer the grant to or on behalf of persons who have a disability and who are at least sixteen years old to assist such persons in obtaining goods and services that they require as a result of the disability.
[15] The Ministry acknowledges section 11.1 of the Ministry of Community and Social Services Act, but relies on sections 9 and 10 of the Services and Supports to Promote the Social Inclusion of Persons with Developmental Disabilities Act, 2008, S.O. 2008, c. 14, as the Minister’s authority to enter into agreements with third party agencies for the purpose of providing services or funding to people with developmental disabilities:
9 The Minister may fund services and supports for persons with developmental disabilities using the following methods of funding:
The Minister may enter into funding agreements with service agencies under section 10.
In a funding agreement with an application entity described in subsection 8 (10), the Minister may agree to provide funds to the entity for purposes of direct funding agreements that the entity enters into under section 11 with persons with developmental disabilities or other persons on their behalf.
10 (1) The Minister may enter into a written agreement with a service agency to fund the agency for the provision of specified services and supports to, or for the benefit of, persons with developmental disabilities…
Issues raised by the parties
[16] The applicants make the following four arguments in support of the application:
a. The Ministry's decision was procedurally unfair because the Ministry did not give the applicants an opportunity to make full submissions on whether Shannon's funding should be provided directly to Bloch Holdings;
b. The Ministry did not give reasons for its decision;
c. The Ministry fettered its discretion by adhering to its practice of providing the funding through a transfer payment agency without considering whether providing the funding directly to Bloch Holdings was preferable in this case; and
d. The Ministry's decision is unreasonable because the Ministry did not consider its statutory authority to pay the funds directly to Bloch Holdings and its policies of promoting the independence and dignity of people with disabilities.
[17] In response, the Ministry raises the two following arguments:
a. The applicants do not have standing to bring the application because only Shannon, and not the applicants, has a direct interest in the funding; and
b. The issue of whether the funding should be paid directly to Bloch Holdings is not justiciable because the Ministry has no obligation to enter into a contract with any particular person.
[18] Given that the issues raised by the Ministry are threshold preliminary issues, they are addressed first, after which the standard of review and the issues raised by the applicants are addressed.
Do the applicants have standing?
[19] The Ministry argues that neither of the applicants has standing to bring this application because only Shannon has standing to challenge a decision about the funding for her care.
[20] We agree that Bloch Holdings does not have standing. As held in Finlay v. Canada (Minister of Finance), [1986] 2 S.C.R. 607 at para. 19, a person may only bring a proceeding to challenge the decision of a public body where the person's private rights or interests are directly affected by the decision. Shannon's family set up Bloch Holdings to manage Shannon's care and funding. However, the corporation has no direct right or interest in the funding. Only Shannon has such an interest or right.
[21] For similar reasons, we find that Mr. Bloch-Hansen does not have personal standing to bring the application on his own behalf. However, it would be overly technical to dismiss the application on the basis that Mr. Bloch-Hansen lacks standing altogether. During the argument on the application, counsel for the applicants confirmed that Mr. Bloch-Hansen is Shannon's substitute decision maker. On that basis, Mr. Bloch-Hansen could have brought the application on Shannon's behalf in the capacity of her litigation guardian. To dismiss the application on the basis that he has no personal standing would cause unnecessary delay and expense to both sides. Therefore, for the purpose of addressing the balance of the issues raised in this matter, we accept that Mr. Bloch-Hansen has standing to bring the application on his daughter's behalf.
Is the issue of whether the funding should be paid directly to Bloch Holdings justiciable?
[22] The Ministry argues that the issue raised on this application is not justiciable because the government is free to contract with whom it wants, and therefore there is no legal basis for requiring the Ministry to enter into a contract with Bloch Holdings.
[23] As indicated above, we agree that Bloch Holdings does not have standing. However, given our assumption for the purpose of this application that Mr. Bloch-Hansen has standing to act on his daughter's behalf, then the question is whether the issue of how Shannon receives her funding is justiciable. In our view, and as conceded by the Ministry's counsel during argument, the issue is justiciable given that the funding is paid out pursuant the Ministry's exercise of a statutory power.
[24] Section 2(2) of the Judicial Review Procedures Act, R.S.O. 1990, c.J.1, provides that the Divisional Court has jurisdiction to hear an application for judicial review where the application seeks a declaration in relation to the exercise of a statutory power.
[25] As reviewed above, the Ministry has the authority to provide direct funding or funding through third party agencies to people with developmental disabilities. This authority is derived from section 11.1 of the Ministry of Community and Social Services Act and sections 9 and 10 of the Services and Supports to Promote the Social Inclusion of Persons with Development Disabilities Act, 2008.
[26] As discussed further below in the section dealing with the reasonableness of the Ministry's decision, there is no doubt that the Ministry has very broad discretion in relation to whether, how much and how to fund services for people with disabilities. However, as held by the Federal Court of Appeal in Canadian Arab Federation v. Canada (Minister of Citizenship and Immigration), 2015 FCA 168, at para. 35, "while decisions of this type are given a wide margin of appreciation, they are not immune from review".
[27] Similarly, in this case, while the Ministry may have very broad discretion under the relevant statutes about how to pay out the funding for Shannon's care, in our view, the Ministry's decision is not immune from judicial review.
Standard of review
[28] The parties agree that the standard of review in relation to the substance of the Ministry's decision is reasonableness. As held in Dunsmuir v. New Brunswick, 2008 SCC 9, at para. 47, reasonableness is concerned with whether the decision is justified, intelligible and transparent, and whether it falls within a range of reasonable outcomes.
[29] There is no standard of review with respect to issues of procedural fairness. Rather, the Court is to determine whether the requisite procedural fairness was afforded to the applicants in the circumstances of the case: London (City) v. Ayerswood Development Corp., [2002] O.J. No. 4859 (C.A.), at para. 10.
Was the Ministry's decision making process procedurally unfair?
[30] The applicants argue that the way in which the Ministry made its decision was procedurally unfair because they were not given an opportunity to make full submissions to the Ministry about why the Ministry should pay Shannon's funding directly to Bloch Holdings.
[31] In our view, if the Ministry owed any duty of procedural fairness, it was at the low end of the spectrum and the Ministry met its obligations.
[32] A decision-maker has a duty of procedural fairness if he or she makes a decision that is not legislative in nature, and that affects the rights, privileges or interests of an individual: Canada (Attorney General) v. Mavi, 2011 SCC 30, at para. 38.
[33] As recently held in Wauzhushk Onigum Nation v. Minister of Finance (Ontario), 2019 ONSC 3491, at para. 122, "[t]he right to procedural fairness is a participatory right - that is, it grants rights of notice and participation in a proceeding, with the scope of the duty varying in accordance with the nature of the proceedings and the interests affected".
[34] The requirements of procedural fairness vary depending on the five factors established by the Supreme Court of Canada in Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817, at paras. 23-28. In this case, all of the factors support a finding that any rights to procedural fairness are at the low end of the spectrum:
a. The nature of the decision: The decision was purely administrative and was not made in an adjudicative or quasi-adjudicative context;
b. The nature of the statutory scheme and the terms of the statute under which the decision maker operates: The statutory provisions give the Ministry broad discretion over how to make funding available to people with disabilities;
c. The importance of the decision to the individual affected by it: The issue is not whether Shannon will receive funding or how much funding she will receive. The issue is not even about whether Bloch Holdings can receive and administer the funding on Shannon's behalf. Rather, the issue is limited to whether the Ministry should pay the funds directly to Bloch Holdings or to Bloch Holdings through the Agency. While the applicants' counsel stated during the argument of the application that this is an important issue to Shannon and people with disabilities generally, there was no evidence in the record about the effects on Shannon of paying her funding through the Agency. Accordingly, while Shannon and her family may feel strongly about this issue, they have not established that it has a significant impact on her rights or interests;
d. The legitimate expectations of the individual affected by the decision: There is no evidence that the Ministry made representations to the applicants about a procedure that would be followed to make the decision or of procedures followed in the past for making decisions of this nature. Therefore, the applicants have not established that they had a legitimate expectation of higher participatory rights.
e. Respect for the procedural choices made by the decision-maker itself: There is no formal process set up by the Ministry for challenging the manner in which funding for services for persons with disabilities is paid out.
[35] Based on a review of these factors, at most, the applicants were entitled to make the request that the Ministry provide the funding directly to Bloch Holdings, and to a response from the Ministry.
[36] In his correspondence to the Ministry in February and March 2018, Mr. Bloch-Hansen made a request that the Ministry provide the funding directly to Bloch Holdings. He did not provide his rationale for making such a request. However, he certainly could have done so in his this initial request. Similarly, it appears from the Ministry's correspondence that Mr. Bloch-Hansen made at least two requests that the Ministry reconsider its decision, which again were opportunities for Mr. Bloch-Hansen to make submissions about why it would be preferable for Shannon’s funding to be paid directly to Bloch Holdings.
[37] For its part, the Ministry provided an explanation for its decision in its letter of May 2, 2018, and responded to Mr. Bloch-Hansen's two subsequent letters.
[38] In our view, there was no breach of procedural fairness in this case. Mr. Bloch-Hansen had an opportunity to make the request and provide his rationale for the request, and the Ministry considered and responded to his request. No more was required in this case.
Did the Ministry provide sufficient reasons?
[39] The applicants argue that the decision was procedurally unfair because the Ministry did not provide any reasons for its decision. In making this argument, the applicants claim that the Ministry's letter of July 3, 2018 was the "decision letter".
[40] We do not accept this argument for two reasons.
[41] First, the letter of July 3, 2018 cannot be isolated as the Ministry's decision. The Ministry sent three letters in total responding to Mr. Bloch-Hansen's request that the funding be provided directly to Bloch Holdings. The July 3rd letter was the last letter and it responded to an apparent second request for reconsideration. The first letter of May 2, 2018 set out the Ministry's reasons for not providing the funding directly to Bloch Holdings, including that the Ministry is not in a position to enter into "individualized funding contracts at this time" and that "Transfer Payment Agencies comply with several oversight and accountability measures which are requirements of the Ministry". Therefore, while the reasons are brief, the Ministry did provide reasons for its decision.
[42] Second, in Newfoundland and Labrador Nurses' Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62, at paras. 20-22, the Supreme Court made clear that the insufficiency of reasons is not a matter of procedural fairness. The Court held that, in some circumstances, the complete absence of any reasons may constitute a breach of procedural fairness. However, while deficiencies in reasons may lead to the conclusion that a decision is unreasonable, flawed reasons cannot lead to a finding that a process was unfair.
[43] In this case, looking at the record as a whole, the Ministry did provide reasons, and therefore there was no breach of procedural fairness on this basis.
Did the Ministry fetter its discretion?
[44] The applicants argue that the Ministry fettered its discretion by failing to consider the range of options available for funding Shannon's care pursuant to section 11.1 of the Ministry of Community and Social Services Act, and in particular the Ministry's authority to make direct grants under section 11.1(a).
[45] An administrative decision maker entrusted with discretionary decision making power must not fetter its discretion by pre-judging an issue or binding itself in advance to a particular outcome: Wauzhushk Onigum Nation v. Minister of Finance (Ontario), at para. 136.
[46] In our view, there is no evidence that the Ministry fettered its discretion in this case.
[47] In its letter of May 3, 2018, the Ministry stated that it was not in a position to enter into "individualized funding contracts at this time". It is open to the Ministry to determine how to allocate its resources for the purpose of administrating discretionary funding it pays out to third parties, including people with disabilities. By stating that the Ministry is not entering into individualized funding contracts at this time, it is clear that the Ministry is not foreclosing the possibility of entering into such contracts altogether or in appropriate circumstances.
[48] As noted above, Mr. Bloch-Hansen did not provide any rationale to the Ministry for his request that the funding be paid directly to Bloch-Holdings. Under the circumstances, there were no individual circumstances for the Ministry to consider in reaching its decision.
Was the Ministry's decision reasonable?
[49] In our view, the Ministry's decision was reasonable because governments are given great latitude in making discretionary decisions of this nature, and there is no evidence that the decision was irrational or inconsistent with the objectives of the relevant statutes.
[50] As mentioned above, reasonableness is, in part, concerned with whether a decision falls within a range of reasonable outcomes. The range of outcomes necessarily varies depending on the nature of the decision. In Canadian Arab Federation v. Canada (Minister of Citizenship and Immigration), at para. 32, the Federal Court of Appeal explained that the context in which a decision is made “shapes” the range of reasonable outcomes. At para. 38, the Court stated that “a decision authorized by statute is unreasonable if it is made for arbitrary reasons or for reasons unrelated to the objects of the statute”.
[51] In this case, the decision relates to how the Ministry chooses to provide funds for the services provided to Shannon. In its letter of May 3, 2018, the Ministry provided a rationale for paying Shannon's funding to the Agency. It stated that it was not in a position at that time to provide the funding directly to Bloch Holdings, and that transfer payment agencies are required to comply with various standards.
[52] The Ministry's decision was not irrational or made for reasons unrelated to the purposes of the relevant legislation. On the contrary, it makes sense that the Ministry chooses not to administer individual funding agreements, but rather relies on local transfer payment agencies to do so. The agencies are required to comply with various standards and accountability measures imposed by the Ministry. This ensures oversight over how the funds are used, without requiring the Ministry to directly oversee the funding provided to individuals. This approach to Shannon’s funding is not irrational, and it falls well within the broad margin of discretion given to the Minister by the relevant legislation.
[53] The applicants argue that the Ministry's decision is unreasonable because it does not promote the dignity or independence of people with disabilities. However, the Ministry’s decision does not prevent Bloch Holdings from playing a role in managing Shannon’s care. While the funding is first paid to the Agency, Bloch Holdings ultimately receives the funds, and is therefore able to administer the funds and manage Shannon’s care.
[54] Accordingly, we find that the Ministry's decision was reasonable.
Costs
[55] At the conclusion of the hearing, we gave the parties an opportunity to agree on costs. The parties advised the panel that they had agreed that the successful party should be entitled to $12,500.
[56] Costs awards are to be reasonable and proportionate to the issues in the litigation. While the Ministry was ultimately successful on the application, it did not succeed on the first two preliminary issues that it raised. In our view, an award of $5,000 in costs to the Ministry is appropriate in this case having regard to all of the circumstances.
Conclusion
[57] For the reasons above, the application for judicial review is dismissed. The applicants are to pay $5,000 in costs to the respondent, if requested.
CONWAY J.
D. WILSON J.
FAVREAU J.
RELEASED: July 11, 2019
CITATION: Bloch Holdings Corporation v. Ministry of Children, Community and Social Services, 2019 ONSC 4227
DIVISIONAL COURT FILE NO.: DC-18-00000482-00JR
DATE: 20190711
ONTARIO
SUPERIOR COURT OF JUSTICE
DIVISIONAL COURT
Conway, D. Wilson and Favreau JJ.
B E T W E E N :
BLOCH HOLDINGS CORPORATION AND DOUG BLOCH-HANSEN
Applicants
– and –
DIRECTOR, MINISTRY OF CHILDREN, COMMUNITY, AND SOCIAL SERVICES, HER MAJESTY THE QUEEN IN RIGHT OF ONTARIO AS REPRESENTED BY THE MINISTER OF CHILDREN, COMMUNITY, AND SOCIAL SERVICES
Respondents
REASONS FOR JUDGMENT
By the Court
RELEASED: July 11, 2019