CITATION: Fox North Bay Inc. v. Registrar (Alcohol and Gaming Commission of Ontario), 2022 ONSC 5898

DIVISIONAL COURT FILE NO.: DC-21-2176

DATE: 20221019

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

RSJ Edwards, Backhouse and O'Brien JJ.

B E T W E E N:

FOX NORTH BAY INC., REAL BOSS INC. AND NATHAN TAUS

Applicants

– and –

REGISTRAR (ALCOHOL AND GAMING COMMISSION OF ONTARIO)

Respondent

Jay Naster and Marcela Ahumada

for the Applicants

Emtiaz Bala and Joanna Chan

for the Respondent

HEARD in Toronto by videoconference on September 14, 2022

Backhouse J.:

REASONS FOR JUDGMENT

Overview

[1] The applicants seek to quash a condition attached to the liquor licence of the applicant, Fox North Bay, and the cannabis licence of the applicant, Real Boss Inc. The condition prohibits both companies from employing the former owner and manager of a Fox North Bay restaurant, Nathan Taus, in any position in the business. The ban on Mr. Taus's employment in any position constitutes an indeterminate ban on Mr. Taus for at least the duration of the licences. The ban has already been in place for over 20 months in the case of the liquor licence. Under Risk Based Licensing (RBL), a procedure available under both the Liquor Licence Act and Cannabis Licence Act, the Registrar will be entitled to continue the ban under any renewal of the licence that may be issued without any right to a hearing or right to appeal. The applicants challenge the employment ban on the ground that the process was unfair, the condition is unreasonable and the decision violates Charter rights.

[2] The applicants were not provided with adequate notice, disclosure or the right to be heard in the proceedings leading up to the December 12, 2020 and November 2, 2021 decisions imposing and maintaining the conditions in the licences. For the reasons set out below, the application is allowed and the decisions of December 12, 2020 and November 2, 2021 are quashed on the grounds that the applicants were denied procedural fairness. The matters are remitted to the Registrar for reconsideration in accordance with these reasons.

Background

[3] The applicants Fox North Bay Inc. and Real Boss Inc. are related companies. In January 2020, Fox North Bay Inc. took over ownership from the applicant, Nathan Taus, of a restaurant and bar, Fox & Fiddle, in North Bay (the "Restaurant"). Nathan Taus had been the owner and manager for the previous 10 years and the intention was that he would continue to be the manager under the new ownership. Under Mr. Taus's previous ownership, the Restaurant was licenced to sell liquor under the Liquor Licence Act, R.S.O. 1990, c. L.19 [LLA][^1]. Upon the ownership transfer, Fox North Bay Inc. applied on February 13, 2020 to have the liquor licence transferred, which resulted in 6 conditions being imposed. Three of the conditions are not in issue. The other three conditions related to a complete ban on Mr. Taus being involved in any way with the business which included a ban on him attending the premises or being employed in any capacity.

[4] Terry Tsianos, the owner of Real Boss Inc. (who is also the owner of Fox North Bay Inc.), was asked to and consented to the same conditions banning Mr. Taus on Real Boss Inc.'s cannabis licence.

[5] Six months after the ban was imposed, the applicants made a reconsideration request to remove the ban of Mr. Taus. The conditions which prohibited Mr. Taus from being at the licensed premises or being involved in the business operation were removed but the request to remove the most stringent condition on the liquor licence and the cannabis licence which banned Mr. Taus's employment in any capacity was refused.

The Statutory Context

[6] The Alcohol and Gaming Commission of Ontario ("AGCO") is established by the Alcohol and Gaming Commission of Ontario Act[^2], as a Crown agent statutorily empowered to administer and enforce the LLA and Cannabis Licence Act ("CLA")[^3]. Sellers who want to sell liquor or cannabis must apply for and obtain a licence or permit under the respective act. Under the CLA¸ a seller must obtain two licences, one for the store and one for the manager. The Registrar enforces the acts through monetary penalties, refusing new applications, or granting applications with conditions.

[7] Pursuant to the LLA and the CLA, the Registrar may impose conditions on a licence to which the licence holder has not consented by two different procedural choices:

1. by issuing a Notice of Proposal which entitles the licensee to a hearing before the License Appeal Tribunal ("LAT") conducted in accordance with the Statutory Powers Procedure Act[^4] and a further right to appeal on a question of law to the Divisional Court; or

2. pursuant to a regime created in 2006 referred to as Risk Based Licensing ("RBL"), provided for in the LLA and CLA to mitigate foreseeable risk, permitting the Registrar to make a decision imposing conditions with no right to a hearing or right of appeal.

[8] The Registrar has the same procedural choices to proceed by way of Notice of Proposal or Risk Based Licensing where, as in the instant case, an application is made to transfer a licence pursuant to s.17 of the LLA.

[9] In determining whether to afford an applicant the right to a hearing, or to proceed pursuant to RBL, the legislation is silent on the criteria to be considered by the Registrar. Similarly, in determining whether there has been a "change in circumstances", the only avenue provided to remove a condition imposed under RBL, the legislation is silent on the criteria to be applied. A representative of the AGCO, Ms. Stephanie Balaban, who was called by the respondent to explain the RBL system, further confirmed that there are no directives, guidelines, benchmarks or standards in existence as to the criteria to be applied by the Registrar in making the procedural choice to deny a right to a hearing, or in determining whether there has been a "change in circumstances".

[10] The Liquor Operations Manual ("LOM")[^5] intended to guide Staff through the process of administering applications under the LLA provides no guidance respecting the Registrar's discretion to deny an applicant a right to a hearing, or the Registrar's discretion respecting what constitutes a "change in circumstances".

[11] When RBL came into effect, a Policy Paper[^6] presented to the AGCO Board, stated that "the hearing process [Notice of Proposal] will be used for matters that involve greater public safety and public interest risks, or where there is an enhanced level of risk of noncompliance" and that "less significant changes in circumstances will be managed by redesignating the license and adding, removing or changing conditions on the license [RBL]."

[12] The risk criteria established by the AGCO Board for RBL include past conduct and infractions against the applicant. The most serious infractions include intoxication (over-service of alcohol), disorderly conduct, sale and service to minors, over-capacity, and selling outside prescribed hours or conditions of licence. The Board has specified 89 LLA conditions and 33 CLA conditions that the Registrar can impose under RBL. The Registrar may designate licence-holders according to risk level pursuant to the criteria established by the Board, and impose conditions specified by the Board (LLA s. 8.1(3); CLA s. 6(6)). The Registrar can redesignate a licensee's risk level and remove or change a condition imposed under the RBL regime if there is a change in circumstances (LLA s. 8.1(4); CLA s. 6(6)).

The Transfer of the Liquor Licence and Conditions Imposed

[13] On February 13, 2020, Fox North Bay Inc. applied to the respondent AGCO to transfer Mr. Taus's liquor licence to it, effective March 1, 2020. Fox North Bay Inc. owns and operates over 15 licensed establishments in the Province of Ontario and has "No Adverse Operational History." On the transfer application, Mr. Taus was listed as the manager of the Restaurant.

[14] The AGCO conducted an Initial Risk Assessment Summary ("IRAS"). At the time the assessment was conducted in November, 2020, neither the applicants nor the establishment had been assigned any risk level designation. Under Mr. Taus’s tenure, there had been no suspension or revocation of the license or convictions under the LLA.

[15] An incident occurred on October 30, 2020 around the time that the assessment was being conducted which the applicants maintain was the precipitating event for the ban against Mr. Taus. A compliance officer attended the Restaurant for an inspection and alleged that Mr. Taus was not wearing a mask or social distancing, a patron was allegedly overserved and Mr. Taus made an inappropriate comment to the compliance officer, causing him to leave the establishment without completing the inspection. No written report or written warning was issued regarding the October 30, 2020 incident and the applicants were not provided with an opportunity to test the allegations. They were made aware of the incident through conversations with the compliance officer. After viewing the video footage of the incident, in the interest of mitigating the compliance officer's concerns and getting the license transfer approved, they proposed that the establishment would suspend Mr. Taus from employment for a period of three months.

[16] The IRAS was completed on November 17, 2020 but was not disclosed to the applicants until the Record of Decision was filed in these proceedings. The risk assessment conducted by the eligibility officer resulted in a score of 19. According to the Liquor Operations Manual and the evidence of Ms. Balaban[^7], a score of 0 to 34 results in either a no designation or level I (lower risk) designation. A score of 35 to 89 will result in a level II (medium risk) designation. A score of 90 and above will result in a level III (high risk) designation.

[17] The IRAS identified that under the tenure of Nathan Taus, the Restaurant manager on the transfer application and the licensee of record at the premises since April 3, 2012:

• “there had been numerous infractions related to permit drunkenness and exceed lawful capacity of premises (as noted below);

• Compliance Officials have raised concerns regarding LOR, Nathan Taus and multiple incidents of non-compliance at the establishment.

• On December 13, 2018, AGCO Compliance Officials received information from Public Health Officials that the licensee did not comply with a closure order (inspection #398094). The licensee reportedly removed the closure notice, which was posted at the premises by Public Health Officials.

• On May 15, 2019, AGCO Compliance Officials requested surveillance camera recordings from the licensee, in response to complaints received that the licensee was drunk at the premises. Compliance Officials attempted to obtain the surveillance recordings, however, were advised that the footage had been overwritten. Please refer to inspection #583509 for more details.

• An incident occurred on October 30, 2020, which involved Compliance Official, Lorne Blais and Nathan Taus. Mr. Taus was uttering threats to Mr. Blais and Failed to Facilitate Inspection due to Mr. Taus refused to maintain social distancing, wearing a mask and putting Mr. Blais at risk and for his safety. Other cited violations include Permit Disorderly Behaviour, Fail to Maintain Control in Premises, Honesty & Integrity and Fail to Comply with Other Prescribed Legislation. Compliance Official, Lorne Blais has obtained surveillance recordings of the incident.

• Infractions: 2016-04-09: Warning Letter Issued for OVC – Exceed Lawful Capacity of Premises

• 2019-11-24: Amended Monetary Penalty of $1000 for TOX – Permit Drunkenness X2 (PAID)

• 2020-10-30:

1. DOB – Permit Disorderly Behaviour

2. FCP – Fail to Maintain Control in Premises

3. FFI – Fail to Facilitate Inspection

4. NHI – Honesty & Integrity (Emergency Order, Serving after 11 pm)

5. OSO – Fail to Comply With Other Prescribed Legislation (Health Promotion and Protection Act, Smoke Free Ontario Act)

• Please Note: One of the individuals who was cited for Permit Drunkenness was LOR, Nathan Taus.

• Identified Risk(s): Permit Drunkenness Overcrowding Fail to maintain surveillance camera recordings Honesty & Integrity Threat to Public Safety B439 B906 d8175e49846b4900a63687607512ce83-183

• Reason for Proposed Designation and Condition(s):

Recommend Level 2 Risk Designation and the above noted OP29, P3, P4, PP1, PP2 and PP3 conditions as a result of non-compliance and the fact that NATHAN TAUS has been identified as the manager on the application. Mr. TAUS should be prohibited onsite since he would oversee the day-to-day operations, which raises a concern based on his non-compliance history at this establishment and is a threat to public safety.”

[18] On November 19, 2020, the Registrar sent a "Designation Letter" to applicants' counsel advising that the preliminary risk based assessment of the applicant/licence holder and premises had been completed and the following risks to the public safety, public interest and non-compliance with the law were identified:

• Permit Drunkenness

• Overcrowding

• Fail to maintain surveillance camera recording

• Honesty & Integrity

• Threat to public safety

[19] None of the particulars set out in the IRAS apart from the above categories were disclosed. The letter went on to advise that based on the risks identified above, a Level II designation for the licence holder and premises was proposed and pursuant to s. 8.1(3) of the LLA, six conditions to the liquor licence.

[20] The letter requested a response regarding the identified risks, the proposed designation and/or the proposed conditions within fifteen days, following which the designation would be finalized and the conditions may be imposed. The letter ended: "If you would like further information or have any questions you can refer to the AGCO website …or contact Michelle Chan, Eligibility Officer at Michelle.Chan@agco.ca."

[21] In its response, counsel for the applicants accepted the Level II designation and proposed that the conditions in relation to Mr. Taus be placed on the licence for six months. This was rejected and on December 22, 2020, the Registrar issued a decision confirming the Level II risk designation and imposing the six conditions. There were no grounds for the decision set out in the December 12, 2020 letter.

[22] Conditions (1), (2) and (3) are not at issue. Condition (4) prohibited Mr. Taus from being at the licenced premises, Condition (5) prohibited Mr. Taus from being involved in the business operations of the Restaurant, and Condition (6) prohibited Mr. Taus from being employed in any capacity at the Restaurant. Conditions 4 and 5 were subsequently removed in a Reconsideration Request which is dealt with in more detail below.

[23] In March 2021, the AGCO wrote to Terry Tsianos, whose company owns both Fox North Bay Inc. and Real Boss Inc., in regard to its application for a cannabis licence. It sought consent to the same ban of Mr. Taus to be imposed on the cannabis licence as it had imposed on the liquor licence. Mr. Tsianos provided consent.

[24] Mr. Taus applied to the AGCO for a Cannabis Retail Manager Licence. This was denied for similar reasons that his ban was imposed as conditions on the liquor licence. He commenced a late appeal to the Licence Appeal Tribunal and was unsuccessful on the motion to extend time.

The Reconsideration Request & Decision

[25] In June 2021, counsel for the applicants requested a change in conditions pursuant to s. 8.1(4) of the LLA and s. 6(6) of the CLA, raising the unfairness of the process and arguing that the change in circumstances was that the Restaurant was now corporately owned and the owner had an exemplary record of compliance. The applicants also provided an explanation for Mr. Taus's behaviour in regard to several incidents.

[26] On July 30, 2021, the AGCO wrote to the applicants' counsel and requested clarification, including providing a "description of the change(s) in circumstances…that would support the removal or change of the conditions." The respondent characterized the applicants’ response as referring "to factors already cited in their request for reconsideration” and that they “took the opportunity to expand on these various factors."

[27] On November 2, 2021, the Registrar rejected the request to remove the employment ban. This left in place the most stringent condition affecting the applicants, the employment ban in any capacity of Mr. Taus.

[28] For the first time a "Revised Risk Assessment Summary" was produced to the applicants. The Registrar in his reconsideration decision agreed with and relied upon the Revised Risk Assessment Summary. The summary included 6 allegations of non-compliance by the applicants relating to Mr. Taus. It refers to explanations from counsel for the applicant in regard to three of the incidents. No risk assessment score was included.

[29] The Registrar was not satisfied that there was a change in circumstances warranting a new risk level designation. Conditions (4) and (5) were removed, but Condition (6) banning Mr. Taus's employment in any capacity was to remain. The Registrar noted that Mr. Taus demonstratively failed to take his regulatory obligations seriously on at least five occasions, and his conduct had put the public and Compliance Officials at risk.

[30] Prior to being informed of the Registrar's Reconsideration Decision, the applicants were not given an opportunity to respond to at least 3 of the allegations of non-compliance set out in the Revised Risk Assessment Summary which informed the Registrar's Reconsideration Decision. Nor did they have an opportunity to respond to the allegations in the November 17, 2020 IRAS which was only produced after this application was commenced. Applicants' counsel did provide a detailed response after the Reconsideration Decision had been made in an email to AGCO counsel on March 23, 2022 and was informed by email on April 14, 2022 that "the information provided does not affect the decision or process because it is either not a new or material submission."

Issues

[31] The Respondent raises the following preliminary issues via motion:

1. Should portions of Nathan Taus and Mark TenEycke's affidavits be struck?

2. Should the applicants be prevented from relying on an alleged breach of s.2(d) of the Charter raised in the Amended Notice of Constitutional Question on the basis that it was delivered outside the timelines set out in s.109 of the Courts of Justice Act?

[32] The Applicant raises the following issues:

1. Was the Decision made in a procedurally unfair manner?

2. Does the Decision violate ss. 2(d) or 7 of the Charter?

3. Is the Decision unreasonable?

Court's Jurisdiction

[33] The Court has jurisdiction pursuant to ss. 2 and 6 of the Judicial Review Procedure Act.

Standard of Review

[34] The parties agree that the standard of review on this application is reasonableness. For allegations of procedural unfairness, there is no standard of review. Instead, the Court must consider whether the requisite level of procedural fairness was provided in the circumstances

Preliminary Issues

[35] The Registrar submits that paras. 2-56 and 60-64 of the Taus affidavit, and paras. 6-27 and 35-38 of the TenEycke affidavit should be struck since they provide material evidence that was not before the decision-maker. It is conceded that the remaining paragraphs provide information on procedural fairness which is admissible.

[36] The applicants submit that key documents were omitted from the Record and the affidavits properly adduce those documents and provide a factual basis for the Charter arguments.

[37] As there were few references in the argument to the affidavits and no objections, it is not necessary to make a ruling.

[38] Similarly, as the applicants' primary position was lack of procedural fairness, and as this is the basis for this Court's decision, it is not necessary to make a ruling with respect to whether the applicants could rely upon the Amended Notice of Constitutional Question to argue a breach of s.2(d) of the Charter.

Position of the Parties

Issue 3: Was the Decision made in a procedurally unfair manner?

[39] The applicants submit that the decision-making process which led to the removal of Mr. Taus’s ability to earn his livelihood as the general manager of the Restaurant was procedurally unfair. They submit that the Baker factors point toward a high duty of fairness which required a hearing and there is no justification for the Registrar's choice of procedure.

[40] The Registrar submits that the duty of fairness in this case requires notice, an opportunity to respond, and reasons, all of which were met.

Analysis

[41] First it must be clarified which decisions this Court is reviewing. The Amended Notice of Application, in addition to seeking to quash the decisions of November 2, 2021 (the reconsideration decision) and March 10, 2021 (the decision imposing conditions on consent under the CLA), seeks an order that the prohibited person ban was imposed in a manner which denied the applicants procedural fairness (para.78a). It seeks an order declaring that the prohibited person ban may only be imposed by the Registrar following a procedure which accords procedural fairness to the applicants including but not limited to a right to a hearing before the LAT (para.78b). The applicants' factum at para.75 submits that the December 20, 2020 decision to impose a Level II designation and prohibited person condition banning Mr. Taus from the establishment was unreasonable.

[42] The respondent submits that the applicants chose not to commence judicial review of the December 2020 decision but instead sought reconsideration of it which was altered by the November 2021 reconsideration decision. It submits that in these circumstances, the December 2020 decision has been superseded.

[43] In the circumstances of this case, the reconsideration decision was closely intertwined with the decision which imposed conditions that removed Mr. Taus’s ability to earn his livelihood as the general manager of the Restaurant. A lack of openness and transparency of what circumstances were taken into account when the conditions were imposed would affect whether there was a meaningful opportunity to meet the requirement of a change of circumstances. Both decisions will be referred to collectively as the “Decision”.

Consideration of the Baker factors

[44] The criteria to be considered in determining the content of the duty of procedural fairness include:

(1) the nature of the decision being made and the process followed in making it;

(2) the nature of the statutory schemes and the terms of the statute pursuant to which the body operates;

(3) the importance of the decision to the individual affected;

(4) the legitimate expectations of the person challenging the decision; and

(5) choices of procedures made by the agency itself.[^8]

[45] As stated in Baker, "underlying all these factors is the notion that the purpose of the participatory rights contained within the duty of procedural fairness is to ensure that administrative decisions are made using a fair and open procedure, appropriate to the decision being made and its statutory, institutional, and social context, with an opportunity for those affected by the decision to put forward their views and evidence fully and have them considered by the decision-maker."[^9]

(1) The nature of the decision being made and the process followed in making it

[46] The remaining ban on Mr. Taus's employment in any position constitutes an indeterminate ban on Mr. Taus for at least the duration of the licence, which expires on April 28, 2023. The ban has already been in place for over 20 months. Under RBL, the Registrar will be entitled to continue the ban under any renewal of the licence that may be issued without any right to a hearing or right to appeal.

[47] The Registrar's decision to impose the ban was purportedly based on allegations of non-compliance with the LLA, as referred to in the IRAS dated November 17, 2020. The IRAS was not disclosed to the applicants prior to either the December, 2020 decision or the reconsideration decision of November, 2021. The applicants were accordingly unaware when they consented to the Level II (medium risk) designation that their risk assessment "score" was 19 which, according to the evidence, results in either no designation or a level I (lower risk) designation. The applicants were also unaware that the IRAS stated that under Mr. Taus's tenure, "there have been numerous infractions related to permit drunkenness and exceed lawful capacity of premises" and that Mr. Taus was "non-compliant" and "a threat to public safety". Five of the infractions which were attributed to Mr. Taus in the IRAS related to the October 30, 2020 incident, immediately prior to the IRAS. No written report or written warning was issued with respect to the October 30, 2020 incident and the applicants were not provided an opportunity to test the allegations.

[48] The November 19, 2020 Designation Letter which the respondent relies upon as providing notice to the applicants cited only broad categories of concern and did not give particulars of the incidents it was relying upon. There is no explanation for why the IRAS was not provided to the applicants which would have enabled them to know the case they had to meet and to make submissions in regard to the issues. In these circumstances I cannot agree with the respondent's submission that a party's knowledge of a case can be inferred from the surrounding circumstances. Nor is it an answer for the respondent to have referred the applicants to the website or the Eligibility Officer for further information or if they have questions. It is unreasonable to expect a party to request disclosure it did not even know it needed.

[49] While the respondent characterizes the conditions which were imposed on December 22, 2020 as consensual in large part, the imposition of an indefinite ban on Mr. Taus was not on consent. The applicants agreed that the incident of October 30, 2020 merited Mr. Taus's suspension from employment for a period of time and suggested that a proportionate response would be three months. When that was not accepted, they were prepared to agree to six months. What they were not prepared to agree to was an indefinite ban. They were entitled to know the case they had to meet with respect to an indefinite ban. The December, 2020 decision stated only the conclusion and lacked any particulars to understand the basis of the decision.

[50] Unfortunately the lack of notice in regard to the December 22, 2020 decision was continued in the case of the reconsideration decision. Not knowing the particulars that had been taken into account in the December 22, 2020 decision, it was a guessing game as to what factors needed to be addressed to establish a change of circumstances. It was only after the reconsideration request was denied that the 10 page very detailed Revised Risk Assessment Summary was provided as part of the reconsideration decision which specified 6 allegations of non-compliance by Mr. Taus. Counsel for the applicants had made submissions in the reconsideration request in regard to only 3 of these. This is understandable, given the lack of notice of the particulars upon which the Registar relied in the initial decision to impose the conditions and what the applicants therefore considered the case they had to meet in a reconsideration request.

[51] It is certainly true that reconsideration by a tribunal can cure procedural defects in an earlier decision: Khan v. University of Ottawa, 34 O.R. (3d) 535, at p. 548; Interpaving Ltd. v. Greater Sudbury (City) (Div. Ct.), at para. 40. However, in this case there were two flawed processes which resulted in the employment ban being imposed and then left in place.

[52] It is not an answer to the lack of notice that counsel for the applicants provided further submissions after the reconsideration decision. Procedural fairness requires that there be a right to know the allegations being made and the right to respond before the decision is made. A process where further submissions are made after the decision is made raises serious questions of whether there is an open mind or it is a matter of self-justification.

[53] The respondent raises that Mr. Taus had the right to appeal the denial of a Cannabis Retail Manager Licence to the LAT where he could have challenged the denial for similar reasons that his ban was imposed as a condition on the liquor licence. As noted above, Mr. Taus commenced a late appeal to the LAT and was unsuccessful on the motion to extend time.

[54] Even if Mr. Taus had been successful on the appeal, as entirely separate legislation and a different licence, it is not clear that it would have resulted in or affected the outcome of the ban in the case of the liquor licence.

(2) The nature of the statutory schemes and the terms of the statute pursuant to which the body operates

[55] As noted above, the LLA and the CLA give the Registrar the choice of proceeding by way of Notice of Proposal or Risk Based Licensing. There is no criteria established for when the Registrar should choose one procedure over the other.

[56] The applicants submit that no deference should be shown to the Registrar's choice of procedure for the following reasons:

i) The RBL process is not transparent. It is being used to replace the hearing process under the Notice of Proposal scheme regardless of whether matters involve greater public safety, public interest risks or enhanced level of risk of noncompliance making the hearing process appropriate as was represented when the RBL process first came into effect.

ii) The risk level is arbitrary and not applied according to the AGCO's scorecard.

iii) Further, the Registrar is not required to disclose the Risk Assessment Summaries, giving the applicants no meaningful opportunity to answer the case against them.

iv) The Registrar has unfettered discretion to impose conditions in perpetuity, and breach of a condition could lead to penal sanctions.

[57] While the Registrar has procedural choices under the LLA and the CLA, it is certainly arguable that the Notice of Proposal procedure with its right to a hearing and appeal would have been a more appropriate procedural choice where the Register sought conditions which had the serious effect of imposing an indeterminate ban on Mr. Taus’s livelihood. This would be in keeping with the Policy Paper which was presented at the time RBL came into effect which stated that the hearing process will be used for more serious matters. However, in the circumstances of this case where the applicants consented to the conditions banning Mr. Taus for six months, the choice of the RBL procedure was not procedurally unfair, provided that it was exercised in a procedurally fair way.

[58] For RBL to be exercised in a procedurally fair way required that notice be given which set out the allegations sufficient to enable the parties to know the case they had to meet. This would have provided procedural fairness to the applicants to enable them to address the change of circumstances requirement. It was this that was lacking in the process around the decision which imposed the employment ban and continued on into the reconsideration case.

(3)The importance of the decision to the individual affected

[59] Mr. Taus's ability to carry on business and earn a livelihood was put at risk. Banning him from his employment in a position he had occupied for the past 10 years in an industry that he had been employed in for the past 25 years was of high importance to Mr. Taus. The Registrar acknowledges that the Decision is important to Mr. Taus but submits that it is of much less importance to the corporate applicants.

[60] The corporate applicants acquired the Restaurant on the basis that Mr. Taus would continue to manage it. In my view, it was important to them as well.

(4) The legitimate expectations of the person challenging the decision

[61] The applicants' legitimate expectation was not necessarily to have a hearing but to know the case that they had to meet.

(5) Choices of procedures made by the agency itself

[62] The Registrar had the choice under the LLA and CLA as to which procedure to apply, the Notice of Proposal or RBL. However, the way the process was implemented lacked transparency and openness.

Summary of the Baker factors

[63] The serious effect on Mr. Taus’s livelihood points toward a high duty of fairness. As set out above, the Registrar was not obliged to use the Notice of Proposal procedure in the circumstances of this case. However, as the final decision maker where the procedure invoked does not provide for a hearing or right of appeal, the Registrar was required to comply with the principles of disclosure and allow the applicants to know the case to be made against them. The respondent concedes that the duty of fairness in this case requires notice, an opportunity to respond, and reasons. I agree. However, I do not agree with the respondent's submission that this duty of fairness was met for the reasons set out above.

[64] In 1657575 Ontario Inc. v. Corporation of City of Hamilton[^10], a hearing was held to consider revoking the appellant's licence to operate an adult entertainment parlour. The City failed to disclose the grounds for the revocation or disclose the issues to be determined. While a revocation of a licence was at issue in that decision which resulted in a hearing being held, in my view the principles of disclosure required by natural justice and knowing the case to be made against them are equally applicable here. Rouleau JA for the Court of Appeal stated:

[25] Disclosure is a basis element of natural justice at common law and, in the administrative context, procedural fairness generally requires disclosure unless some competing interest prevails.

The courts have consistently held that a fair hearing can only be had if the persons affected by the tribunal's decision know the case to be made against them. Only in this circumstance can they correct evidence prejudicial to their case and bring evidence to prove their position. Without knowing what might be said against them, people cannot properly present their case.

[27] in cases involving breaches of procedural fairness, the court will generally set aside the decision without considering whether the result would have been the same had there been no unfairness.

Issue 4: Does the Decision violate ss. 2(d) or 7 of the Charter?

[65] The applicants submit that the Decision violates ss. 7 and 2(d) of the Charter. First, the applicants submit that s. 7 is engaged because any contravention of conditions is an offence punishable by imprisonment and this is akin to a bail condition. Second, the applicants submit that the principles of fundamental justice were not followed through the denial of procedural fairness. For s. 2(d), the applicants submit that this right encompasses the freedom to associate for the purposes of employment since 2(d) must be interpreted in a purposive fashion. For example, an individual prohibited from attending university constituted a mild impairment on s. 2(d).[^11] By analogy, the applicants submit that the ban in this case infringed the applicants' rights to join with others to achieve collective action. The applicants submit that the appropriate remedy is to strike down s. 8.1.

[66] The respondent submits that the Charter application should be dismissed for insufficient notice and no infringements. The applicants' Amended Notice of Constitutional Question, which added the s. 2(d) claim, was provided on August 25, 2022, after the evidence was finalized. It is submitted that this Court should decline to consider the Charter claims on this basis. In the alternative, the respondent submits that s. 7 is not engaged because the obligation to comply with the employment condition is directed at the two corporations, not Mr. Taus, since he is not the licensee, and even if Mr. Taus was charged with an offence he would have procedural protections. Further, s. 2(d) is not engaged since this right is about forming a union and striking, which is not engaged here.

[67] The applicants do not specify the type of association contemplated in their case. If there is a violation, the respondent submits it would be saved under s. 1 using the Dore framework, and the Decision reflects a proportionate balancing of the applicants' Charter rights with the objectives of the statute.

[68] In my view this application is primarily about procedural fairness and does not fit easily into s. 7 and 2(d) of the Charter. I am not persuaded that the applicants' Charter rights have been breached.

Issue 5: Is the Decision unreasonable?

[69] As noted above, in cases involving breaches of procedural fairness, the court will generally set aside the decision without considering whether the result would have been the same had there been no unfairness. In my view, that is the correct approach.

Conclusion

[70] In this case the breach of procedural fairness extended to the initial imposition of the conditions (the December 22, 2020 decision) as well as the reconsideration decision (November 2, 2021 decision).

[71] The conditions proposed by the Registrar under the CLA and consented to arose as a direct consequence of the Registrar’s decision to impose conditions under the LLA. Although the conditions which attached to the CLA licence were initially consented to, the applicants’ request for reconsideration included the conditions on the CLA licence and was subject to the same lack of notice of the case to be met as in the case of the LLA licence. Accordingly, the same result should apply in the case of both licences.

[72] Accordingly, the decisions of December 22, 2020 and November 2, 2021, are quashed and the matters are remitted to the Registrar for reconsideration in accordance with these reasons.

Costs

[73] In accordance with the parties' agreement, the parties shall bear their own costs.

Backhouse J.

I agree _______________________________

RSJ Edwards

I agree _______________________________

O'Brien J.

Released: October 19, 2022

CITATION: Fox North Bay Inc. v. Registrar (Alcohol and Gaming Commission of Ontario), 2022 ONSC 5898

DIVISIONAL COURT FILE NO.: DC-21-2176

DATE: 20221019

ONTARIO

SUPERIOR COURT OF JUSTICE

DIVISIONAL COURT

RSJ Edwards, Backhouse and O'Brien JJ.

B E T W E E N:

FOX NORTH BAY INC., REAL BOSS INC. and NATHAN TAUS

Applicants

• and -

REGISTRAR (ALCOHOL AND GAMING COMMISSION OF ONTARIO)

Respondent

REASONS FOR JUDGMENT

Released: October 19, 2022

[^1]: The LLA was repealed on November 29, 2021 and replaced by the Liquor Licence and Control Act, 2019 SO 2019, c.15,Sch 22; As the decision at issue was made prior to November 29, 2021, the applicable law was the LLA. The same powers at issue on this application continue to exist under the Liquor Licence and Control Act.

[^2]: Alcohol and Gaming Commission of Ontario Act,2019, S.O. 2019, c.15, Sched.1, ss.1.1 and 3(1)2.

[^3]: Cannabis Licence Act, 2018, S.O. 2018, c.12, Schedule 12 ("CLA"). The Alcohol and Gaming Commission of Ontario Act,2019 is also empowered to administer and enforce the gaming and horse racing statutes which are not engaged on this application.

[^4]: Statutory Powers Procedure Act, R.S.O. 1990, c.S.22.

[^5]: Exhibit J to Affidavit of Stephanie Balaban.

[^6]: Policy Paper dated February 14, 2008 presented by Staff to the Board of the AGCO.

[^7]: Stephanie Balaban, an employee of the respondent, was produced for cross-examination.

[^8]: Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817 at paras.21-23.

[^9]: Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817 at paras.211-212.

[^10]: 1657575 Ontario Inc. v. Hamilton (City).

[^11]: Jackson v. University of Western Ontario (2003), 111 C.R.R. (2d) 63 (Ont. Sm. Cl.).