Mount Sinai Hospital Center v. Quebec (Minister of Health and Social Services), [2001] 2 S.C.R. 281, 2001 SCC 41

Minister of Health and Social Services Appellant

v.

Mount Sinai Hospital Center Respondent

and

Elliot L. Bier, Howard Blatt, Peter Erenyi,

Ruth Kovac, Mary Likoudis, Avrum P. Orenstein,

Charles Roth (in their capacity as directors of the

Mount Sinai Hospital Center) Respondents

and

Maimonides Hospital Geriatric Centre Respondent

Indexed as: Mount Sinai Hospital Center v. Quebec (Minister of Health and Social Services)

Neutral citation: 2001 SCC 41.

File No.: 27022.

2000: December 12; 2001: June 29.

Present: McLachlin C.J. and L’Heureux‑Dubé, Gonthier, Iacobucci, Major, Bastarache and Binnie JJ.

on appeal from the court of appeal for quebec

Administrative law – Judicial review – Ministerial discretion – Minister promising to issue modified permit upon Hospital Center’s relocation to Montreal – Minister subsequently refusing to issue modified permit – Whether ministerial discretion exercised – Whether exercise of ministerial discretion validly reversed – An Act respecting health services and social services, R.S.Q., c. S-5, ss. 138, 139.1.

Administrative law – Judicial review – Mandamus – Ministerial discretion – Minister promising to issue modified permit upon Hospital Center’s relocation to Montreal – Minister subsequently refusing to issue modified permit – Minister failing to act in accordance with prior exercise of discretion – Whether an order in the nature of mandamus appropriate – Code of Civil Procedure, R.S.Q., c. C-25, art. 100.

The Mount Sinai Hospital Center was originally established in Sainte‑Agathe, Quebec, as a long-term treatment facility dealing primarily with patients suffering from tuberculosis. During the 1950s, the Center began to introduce new programs and services and developed a general respiratory expertise in a setting with both long-term and short-term care facilities. This change in services was known to the government which throughout funded all of the Center’s activities. In 1984, negotiations between the Center and the Ministry of Health and Social Services to move the Center to Montreal began. At that time, the Center was operating under its original permit for 107 long-term care beds even though it had for 10 years been providing 57 long-term care beds and 50 intermediary or short-term care beds. The Center wanted its permit altered to reflect the reality of the services it offered. The Minister promised the Center that it would formally alter the permit once the Center moved to Montreal. The promise to issue the correct permit was reaffirmed on various occasions. Once the Center had moved to Montreal, in January 1991, it made a formal request to the Minister for a regularization of the permit. Without giving the Center an opportunity to make submissions on the issue, in October 1991, the Minister informed the Center that it would not receive the promised permit and would have to operate under the old unaltered permit. This was despite the fact that the services being offered still included short-term services funded by the government. The Center brought an action in mandamus before the Superior Court, requesting that the court order the Minister to issue the promised permit. Relying on the legitimate expectation created by the Minister’s conduct, the Superior Court allowed the mandamus application in part and ordered that the Minister hear the Center’s submissions before deciding whether the alteration of the permit was in the public interest. The Court of Appeal allowed the Center’s appeal. Applying the doctrine of public law promissory estoppel, the Court of Appeal ordered the Minister to issue the promised permit.

Held: The appeal should be dismissed.

Per L’Heureux-Dubé, Gonthier, Iacobucci, Major and Bastarache JJ.: It is unnecessary to decide whether the legitimate expectation created by the course of dealings between the Center and the Minister can result in a substantive remedy beyond the procedural protection provided by the right to be heard either within an expanded doctrine of legitimate expectations or under public law promissory estoppel. The facts of this case created a situation that cannot accurately be characterized as a renewal of an existing permit under s. 139.1 of the Act respecting health services and social services, R.S.Q., c. S-5. The purpose of s. 139.1 is to give the Minister a discretion that is confined to situations of permit renewal. Although s. 139.1 allows the Minister to change the category, class, kind or capacity indicated on the permit, these changes are confined to the context of a renewal application and are reserved for situations where the Minister is considering alterations that would be in the public interest at his or her own initiative. Since the entire mechanism of s. 139.1 does not apply to a situation where the change is raised by the party rather than the Minister, it does not apply in the present situation. Here, the Center’s request was to change its permit rather than renew it. This case falls to be decided under s. 138 of the Act which governs requests for a change to or alteration of an existing permit.

It cannot be said that the Center actually possessed the modified permit and that it was merely a matter of the wording of the permit that was at issue when it made the regularization request in January 1991. Being entitled to a permit is different than actually holding it. The Center was acting under its long-term care permit with the government’s acquiescence. The government’s behaviour, while not rising to the level of issuing an acquired or implied permit, did result in the exercise of the Minister’s discretion. Section 138 imputes to the Minister an exercise of discretion with respect to whether granting a particular temporary or permanent permit will be in the public interest. This discretion was exercised when the Minister promised the Center that it would receive the modified permit, encouraged the move to Montreal, endorsed the financing campaign focussed on the role of the Center as a long-term and short-term care hospital, and continued to fund the short-term care services despite the mismatch between those services and the Center’s permit. The specific conduct of the Minister in this case indicates that his discretion was exhausted and the Minister was bound when the Center made the request for the promised permit.

The evidence establishes that the Minister’s discretion under s. 138 was exercised by the date of the Center’s move to Montreal in January 1991. The decision to refuse to issue the modified permit in October 1991 was not a valid reversal of the exercise of the Minister’s discretion. First, the financial reasons cited for the Minister’s decision were groundless. Prior to the refusal, the issue of additional resources and funding had never been raised by ministerial officials. The evidence does not indicate that the Center would have to change any of its activities in order to satisfy the requirements of the permit it asked for, thereby requiring more funding. Second, the Minister’s behaviour since the October 1991 refusal of the permit modification is inconsistent with finding that the exercise of the discretion has in fact been genuinely reversed. The evidence indicates that, in his subsequent behaviour, the Minister has acted as if the original exercise of his discretion is what was actually in operation. Since the Minister decided that it was in the public interest for the Center to operate as a long-term and short-term care facility and having continued to see things this way even after the move, the Minister must issue the 1991-1993 permit recognizing the Center’s vocation as a provider of both long-term and short-term care. Where the Minister has failed to act in accordance with a prior exercise of his discretion, the criteria for the issuance of an order of mandamus are met and the Minister should be ordered to deliver the required permit. Although art. 100 of the Code of Civil Procedure provides that extraordinary remedies are not generally available against the Crown, this rule does not apply in circumstances where, as in this case, the Minister acts outside the limits of his competence.

Per McLachlin C.J. and Binnie J.: The appeal should be dismissed, but this conclusion should be reached by a different route. What is crucial to the Center’s case is not so much the Minister’s state of mind as the web of understandings and incremental agreements that came into existence with the concurrence, indeed encouragement, of successive Ministers. What began with an abstract notion of “the public interest” became, through private initiative and ministerial response, a specific embodiment of the public interest in terms of bricks and mortar, facilities and location. Not only did successive Ministers subscribe to this embodiment of the public interest, they encouraged the Center to act on it, and the Center did so.

Three hurdles must be surmounted in order for the Center to successfully obtain the requested permit: (1) the Minister’s decision not to issue the modified permit must be quashed; (2) the Minister is to be fixed with the conception of the public interest he and his predecessors agreed upon with the Center between 1984 and October 1991; and (3) based on that conception of the public interest, mandamus must be available to enforce the mandatory duty under s. 138 of the Act respecting health services and social services, R.S.Q., c. S-5, to issue the 1991‑1993 modified permit. The Minister’s power under s. 138 is framed as a broad policy discretion to be exercised “in the public interest”. This discretion, however broadly framed, is not unfettered.

The Minister’s failure to extend even minimal procedural fairness to the Center should result in the setting aside of his decision to refuse the application for a modified permit. The Center had no notice that the Minister was about to reverse his position, or the reasons for reversal, and no opportunity to present argument as to why the Minister’s earlier and long-standing view that the public interest favoured a modified Center should prevail.

The availability and content of procedural fairness are generally driven by the nature of the applicant’s interest and the nature of the power exercised by the public authority in relation to that interest. The doctrine of legitimate expectations, on the other hand, looks to the conduct of the public authority in the exercise of that power including established practices, conduct or representations that can be characterized as clear, unambiguous and unqualified. The expectations must not conflict with the public authority’s statutory remit. Although the doctrine of legitimate expectations is limited to procedural relief, it must be acknowledged that in some cases it is difficult to distinguish the procedural from the substantive. This distinction should be made on the basis of the underlying principle that broad public policy is preeminently for the Minister to determine, not the courts. On the facts of this case, the doctrine of legitimate expectations does not add to the relief otherwise available under the ordinary rules of procedural fairness.

Estoppel may be available to give substantive relief against a public authority, including a Minister, in narrow circumstances. The requirements of estoppel go well beyond the requirements of the doctrine of legitimate expectations. All the elements of private law promissory estoppel are present in this case. However, public law promissory estoppel requires an additional appreciation of the legislative intent embodied in the power whose exercise is sought to be estopped. Circumstances that might otherwise create an estoppel may have to yield to an overriding public interest expressed in the legislative text. The wording of the particular statutory power in question and the status of who wields it is important. Section 138 mandates the Minister in broad terms to act in the public interest, and if the public interest as he defines it is opposed to the award of the modified permit, then a court should not estop the Minister from doing what he considers his duty.

Decisions of Ministers of the Crown in the exercise of discretionary powers in the administrative context should generally be reviewable only on a standard of patent unreasonableness. The broad regulatory purpose of the permit in the context of the legislation designed to regulate the provision of health services “in the public interest” favours a high degree of deference as does the expertise of the Minister and his advisors, and the Minister’s position in the upper echelon of decision makers under statutory and prerogative powers. The exercise of the power turns on the Minister’s appreciation of the public interest, which is a function of public policy in its fullest sense. In this case, the Minister’s decision to refuse the modified permit was patently unreasonable in terms of the public interest as he and his predecessors had defined it over a period of seven years of consultation, encouragement and assurances to the Center, and in his total lack of regard for the implications for the Center of suddenly reversing his position and breaking his promises. While the Court ought to be and would be sensitive to any serious policy reason offered by the Minister for a redefinition of the public interest, no such policy reason was articulated in the Ministers’ decision.

In the result, in this case, there is a patently unreasonable decision reached by a procedure that was demonstrably unfair. The only option available to the Minister that is not patently unreasonable is to issue the 1991‑1993 modified permit based on the conception of the public interest espoused by the Minister and his predecessors up to that time. Once the present situation is regularized by the issuance of the 1991-1993 modified permit, the current status and entitlement of the Center can thereafter be assessed by the present Minister on the basis of the present law and the present circumstances.

Cases Cited

By Bastarache J.

Distinguished: Comeau’s Sea Foods Ltd. v. Canada (Minister of Fisheries and Oceans), 1997 CanLII 399 (SCC), [1997] 1 S.C.R. 12; referred to: Baker v. Canada (Minister of Citizenship and Immigration), 1999 CanLII 699 (SCC), [1999] 2 S.C.R. 817; C.W.C. v. Canada (Attorney General), 1988 CanLII 9454 (FC), [1989] 1 F.C. 643; Apotex Inc. v. Canada (Attorney General), 1993 CanLII 3004 (FCA), [1994] 1 F.C. 742, aff’d 1994 CanLII 47 (SCC), [1994] 3 S.C.R. 1100; Morin v. Driscoll College Inc., [1979] R.P. 198; Procureur général de la province de Québec v. Laurendeau, 1985 CanLII 2963 (QC CA), [1985] R.D.J. 513; Charles Bentley Nursing Home Inc. v. Ministre des Affaires sociales, [1978] C.S. 30.

By Binnie J.

Referred to: Calgary Power Ltd. v. Copithorne, 1958 CanLII 73 (SCC), [1959] S.C.R. 24; Nenn v. The Queen, 1981 CanLII 192 (SCC), [1981] 1 S.C.R. 631; Canada (Attorney General) v. Purcell, 1995 CanLII 3558 (FCA), [1996] 1 F.C. 644; Canadian Superior Oil Ltd. v. Paddon-Hughes Development Co., 1970 CanLII 3 (SCC), [1970] S.C.R. 932; Gilbert Steel Ltd. v. University Construction Ltd. (1976), 1976 CanLII 672 (ON CA), 12 O.R. (2d) 19; Hill v. Nova Scotia (Attorney General), 1997 CanLII 401 (SCC), [1997] 1 S.C.R. 69; Cleveland Board of Education v. Loudermill, 470 U.S. 532 (1985); Perry v. Sindermann, 408 U.S. 593 (1972); Mathews v. Eldridge, 424 U.S. 319 (1976); Barry v. Barchi, 443 U.S. 55 (1979); Roncarelli v. Duplessis, 1959 CanLII 50 (SCC), [1959] S.C.R. 121; Padfield v. Minister of Agriculture, Fisheries and Food, [1968] A.C. 997; Cardinal v. Director of Kent Institution, 1985 CanLII 23 (SCC), [1985] 2 S.C.R. 643; Nicholson v. Haldimand-Norfolk Regional Board of Commissioners of Police, 1978 CanLII 24 (SCC), [1979] 1 S.C.R. 311; Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), 1990 CanLII 31 (SCC), [1990] 3 S.C.R. 1170; Reference re Canada Assistance Plan (B.C.), 1991 CanLII 74 (SCC), [1991] 2 S.C.R. 525; Baker v. Canada (Minister of Citizenship and Immigration), 1999 CanLII 699 (SCC), [1999] 2 S.C.R. 817; Bendahmane v. Canada (Minister of Employment and Immigration), 1989 CanLII 9488 (FCA), [1989] 3 F.C. 16; Sous-ministre du Revenu du Québec v. Transport Lessard (1976) Ltée, 1985 CanLII 2965 (QC CA), [1985] R.D.J. 502; Aurchem Exploration Ltd. v. Canada (1992), 1992 CanLII 8524 (FC), 91 D.L.R. (4th) 710; Apotex Inc. v. Canada (Attorney General), 1994 CanLII 47 (SCC), [1994] 3 S.C.R. 1100, aff’g 1993 CanLII 3004 (FCA), [1994] 1 F.C. 742; Re Webb and Ontario Housing Corp. (1978), 1978 CanLII 1490 (ON CA), 22 O.R. (2d) 257; Hutfield v. Fort Saskatchewan General Hospital District No. 98 Board (1986), 1986 CanLII 1789 (AB KB), 49 Alta. L.R. (2d) 256, aff’d (1988), 1988 ABCA 220, 52 D.L.R. (4th) 562; Knight v. Indian Head School Division No. 19, 1990 CanLII 138 (SCC), [1990] 1 S.C.R. 653; Gingras v. Canada, 1990 CanLII 13026 (FC), [1990] 2 F.C. 68; Bloomfield v. Saskatchewan (Minister of Health), [1986] S.J. No. 675 (QL); R. v. Secretary of State for the Home Department, ex parte Khan, [1984] 1 W.L.R. 1337; R. v. Secretary of State for the Home Department, ex parte Ruddock, [1987] 2 All E.R. 518; R. v. Ministry of Agriculture Fisheries and Food, ex parte Hamble (Offshore) Fisheries Ltd., [1995] 2 All E.R. 714; R. v. North and East Devon Health Authority, ex parte Coughlan, [2000] 3 All E.R. 850; Webb v. Ireland, [1988] I.R. 353; Attorney-General (NSW) v. Quin (1990), 64 A.L.J.R. 327; Administrator, Transvaal v. Traub, 1989 (4) SA 731; R. v. Inland Revenue Commissioners, ex parte M.F.K. Underwriting Agents Ltd., [1990] 1 W.L.R. 1545; Haoucher v. Minister for Immigration, Local Government and Ethnic Affairs (1990), 19 A.L.D. 577; Minister of State for Immigration and Ethnic Affairs v. Teoh (1995), 183 C.L.R. 273; Martineau v. Matsqui Institution Disciplinary Board, 1979 CanLII 184 (SCC), [1980] 1 S.C.R. 602; Apotex Inc. v. Canada (Attorney General), 2000 CanLII 17135 (FCA), [2000] 4 F.C. 264; Canada (Attorney General) v. Canada (Commissioner of the Inquiry on the Blood System), 1996 CanLII 4069 (FC), [1996] 3 F.C. 259; Bawolak v. Exroy Resources Ltd., 1992 CanLII 3542 (QC CA), [1993] R.D.J. 192; Comeau’s Sea Foods Ltd. v. Canada (Minister of Fisheries and Oceans), 1997 CanLII 399 (SCC), [1997] 1 S.C.R. 12; Re Multi-Malls Inc. and Minister of Transportation and Communications (1976), 1976 CanLII 623 (ON CA), 14 O.R. (2d) 49; Kenora (Town) Hydro Electric Commission v. Vacationland Dairy Co-operative Ltd., 1994 CanLII 105 (SCC), [1994] 1 S.C.R. 80; Robertson v. Minister of Pensions, [1949] 1 K.B. 227; Lever Finance Ltd. v. Westminster (City) London Borough Council, [1971] 1 Q.B. 222; North Western Gas Board v. Manchester Corp., [1963] 3 All E.R. 442; Office of Personnel Management v. Richmond, 496 U.S. 414 (1990); United States v. Pennsylvania Industrial Chemical Corp., 411 U.S. 655 (1973); United States v. Asmar, 827 F.2d 907 (1987); Maracle v. Travellers Indemnity Co. of Canada, 1991 CanLII 58 (SCC), [1991] 2 S.C.R. 50; St. Ann’s Island Shooting and Fishing Club Ltd. v. The King, 1950 CanLII 28 (SCC), [1950] S.C.R. 211; The King v. Dominion of Canada Postage Stamp Vending Co., 1930 CanLII 87 (SCC), [1930] S.C.R. 500; Granger v. Canada (Canada Employment and Immigration Commission), 1989 CanLII 111 (SCC), [1989] 1 S.C.R. 141, aff’g 1986 CanLII 7610 (FCA), [1986] 3 F.C. 70; Associated Provincial Picture Houses, Ltd. v. Wednesbury Corp., [1948] 1 K.B. 223; MacMillan Bloedel Ltd. v. Minister of Forests of British Columbia, 1984 CanLII 734 (BC CA), [1984] 3 W.W.R. 270; Lazarov v. Secretary of State of Canada, [1973] F.C. 927; Re Stora Kopparbergs Bergslags Aktiebolag and Nova Scotia Woodlot Owners’ Association (1975), 1975 CanLII 1166 (NS CA), 61 D.L.R. (3d) 97; Canadian National Railway Co. v. Fraser-Fort George (Regional District) (1996), 1996 CanLII 3361 (BC CA), 140 D.L.R. (4th) 23; Maple Lodge Farms Ltd. v. Government of Canada, 1982 CanLII 24 (SCC), [1982] 2 S.C.R. 2; Re Sheehan and Criminal Injuries Compensation Board (1975), 1974 CanLII 439 (ON CA), 52 D.L.R. (3d) 728.

Statutes and Regulations Cited

Act respecting health services and social services, R.S.Q., c. S-4.2, ss. 81, 83, 119 [am. 1992, c. 21, s. 70], 126 [idem], 437 to 443, 441, 442.1, 444.

Act respecting health services and social services, R.S.Q., c. S-5 [now R.S.Q., c. S‑4.2], ss. 136, 137, 138, 139 [repl. 1981, c. 22, s. 92], 139.1 [ad. 1981, c. 22, s. 92], 140.

Code of Civil Procedure, R.S.Q., c. C-25, art. 100, 844.

Permits for Establishments (Issue and Renewal) Regulation, O.C. 1373-84, (1984) 116 G.O. II, 2370.

Authors Cited

Brown, Donald J. M., and John M. Evans. Judicial Review of Administrative Action in Canada. Toronto: Canvasback, 1998 (loose‑leaf updated January 2001).

Davis, Kenneth Culp, and Richard J. Pierce, Jr. Administrative Law Treatise, 3rd ed., vol. 2. Boston: Little, Brown, 1994.

de Smith, Stanley A. Judicial Review of Administrative Action, 5th ed. By Lord Woolf and Jeffrey Jowell. London: Sweet & Maxwell, 1995.

Ferland, Denis, et Benoît Emery. Précis de procédure civile du Québec, vol. 1, 3^e éd. Cowansville, Qué.: Yvon Blais, 1997.

Forsyth, Christopher. “Wednesbury protection of substantive legitimate expectations”, [1997] Pub. L. 375.

Gendreau, Paul-Arthur, et autres. L’injonction. Cowansville, Qué.: Yvon Blais, 1998.

MacLauchlan, H. Wade. “Transforming Administrative Law: The Didactic Role of the Supreme Court of Canada” (2001), 80 Can. Bar Rev. 281.

McDonald, Patrick. “Contradictory Government Action: Estoppel of Statutory Authorities” (1979), 17 Osgoode Hall L.J. 160.

Mullan, David J. Administrative Law. Toronto: Irwin Law, 2001.

Mullan, David. J. “Canada Assistance Plan -- Denying Legitimate Expectation a Fair Start?” (1993), 7 Admin. L.R. (2d) 269.

Mullan, David J. “‘Confining the Reach of Legitimate Expectations’ Case Comment: Sunshine Coast Parents for French v. School District No. 46 (Sunshine Coast)” (1991), 44 Admin. L.R. 245.

Roy, Claudine. La théorie de l’expectative légitime en droit administratif. Cowansville, Qué.: Yvon Blais, 1993.

Schønberg, Søren J. Legitimate Expectations in Administrative Law. New York: Oxford University Press, 2000.

Stewart, Cameron. “Substantive Unfairness: A New Species of Abuse of Power?” (2000), 28 Fed. L. Rev. 617.

Wright, David. “Rethinking the Doctrine of Legitimate Expectations in Canadian Administrative Law” (1997), 35 Osgoode Hall L.J. 139.

APPEAL from a judgment of the Quebec Court of Appeal, 1998 CanLII 12493 (QC CA), [1998] R.J.Q. 2707, 9 Admin. L.R. (3d) 161, [1998] Q.J. No. 2982 (QL), affirming a judgment of the Superior Court, J.E. 92-1815. Appeal dismissed.

Patrice Claude, Anne-Marie Brunet and Jean-François Jobin, for the appellant.

Gilles Poulin and Elliot L. Bier, for the respondents Mount Sinai Hospital Center and Elliot L. Bier et al.

No one appeared for the respondent Maimonides Hospital Geriatric Centre.

The reasons of McLachlin C.J. and Binnie J. were delivered by

[1] Binnie J. – I agree with my colleague Justice Bastarache that this appeal should be dismissed. I also agree with his rejection of the respondents’ claim that they already possessed the modified permit at the time of the Mount Sinai Hospital Center’s move from Sainte-Agathe to Montreal and that all that remained was to bring the wording of the permit into line with the legal reality. As my colleague points out in para. 97, “being entitled to the permit is different than actually holding it”. In government, nothing is done until it is done.

[2] My colleague, Bastarache J., puts the focus on the Minister of Health and Social Services and concludes that the Minister had in fact exercised his discretion under s. 138 of the Act respecting health services and social services, R.S.Q., c. S-5 (now s. 441 of the Act respecting health services and social services, R.S.Q., c. S-4.2),

culminating in the Center’s move to Montreal in January 1991 (para. 105). The various actions and communications by the Minister with the respondents are considered as evidence of how and when the discretion was exercised (para. 101). The issue, on this view, is whether the original exercise of the s. 138 discretion was validly reversed in the October 3, 1991 decision to deny the modified permit (para. 107).

[3] There is, of course, a distinction between the making of a decision and the documentation of it, but to apply that distinction here raises serious practical problems. When, precisely, did the Minister cross the boundary between deliberation and decision? How is the citizen and, importantly, how is the Minister to know when his or her decision-making power has been exercised? Is the allegation of an exercised power sufficient to expose the Minister to pre-trial discovery on his state of mind? How much mental commitment by the Minister will be held to be enough to lock in a “decision”?

[4] I prefer the approach of the Quebec Court of Appeal which rested its decision on an analysis of the relationship between the respondents and the Minister. The communications from the Minister are not simply evidence of the state of the Minister’s mind, but are the source of the respondents’ entitlement. In other words, if the successive Ministers had gone through the same cogitations and deliberations as they did between 1984 and 1991, but kept their thoughts to themselves, I think it unlikely the respondents would succeed in obtaining the order they seek.

[5] What is crucial to the respondents’ case is that successive Ministers not only communicated their view that the Center’s change of operations to include short-term care was in the public interest (in terms which amounted to a promise that the modified permit would be issued) but the respondents relied on those representations and communications. Inexplicably, once the respondents applied for the modified permit as promised, the ministerial wind shifted without notice. The Minister simply announced that short-term beds must be coupled with enhanced diagnostic and treatment facilities which the respondents had not proposed and which the Minister, despite his insistence, was not prepared to fund. This is what the Minister wrote:

[translation] The excellence achieved by this hospital in so-called intermediate care of respiratory illnesses was developed within the framework of a permit for 107 long-term beds. If 50 of those beds were now reclassified to become short-term beds, as you are asking, it would be necessary to strengthen the establishment’s capacity to deal with more acute and more complex clinical problems than at present. It would be necessary for that purpose to grant it additional resources, something which the Government is not able to do.

The review of the case conducted by my Department concludes that Mount Sinai Hospital’s permit should remain what it is, namely 107 long-term beds, an opinion which I share.

[6] It is evident on the face of the letter that no weight whatsoever was placed by the Minister on the implications for the respondents of the broken promises.

I. The Legal Issues

[7] The wording of s. 138 of the old Act is crucial:

138. Every person applying for a permit must send his application to the Minister in accordance with the regulations.

The Minister shall issue a permanent permit or a temporary permit if he considers that it is in the public interest. [Emphasis added.]

Accordingly, if the Minister forms the opinion, as a matter of policy, that the public interest would be served by the modified facility, then he shall (mandatory) issue the permit. There are thus three stages to the respondents’ challenge: (1) the October 3, 1991 decision is to be quashed; (2) the Minister is to be fixed with the conception of the public interest he and his predecessors agreed upon with the respondents between 1984 and October 2, 1991; and (3) based on that conception of the public interest, mandamus is to issue to enforce the mandatory duty under s. 138 (“shall”) to issue the modified permit.

[8] This case is not the simple scenario of an application for a permit followed by a refusal “in the public interest”. From 1984 onwards the respondents worked closely with Ministry regulators. A web of understandings and incremental agreements came into existence with the concurrence indeed encouragement of successive Ministers. What perhaps began with an abstract notion of “the public interest” became, through private initiative and ministerial response, a specific embodiment of the public interest in terms of bricks and mortar, facilities and location. Not only did successive Ministers subscribe to this embodiment of the public interest, they encouraged the respondents to act on it. If this were a private law situation there would likely be a breach of contract. This is not, of course, a private law situation.

II. The Case for the Appellant Minister

[9] Counsel for the Minister emphasized that s. 138 clearly shows a legislative intent that the public interest is to be determined by the Minister, not by the courts. The validity of the legislation is unchallenged. The Minister was entirely familiar with the Center and over the course of seven years had heard whatever the respondents had to say. Ministerial decisions in such circumstances command deference: Calgary Power Ltd. v. Copithorne, 1958 CanLII 73 (SCC), [1959] S.C.R. 24; Nenn v. The Queen, 1981 CanLII 192 (SCC), [1981] 1 S.C.R. 631; Canada (Attorney General) v. Purcell, 1995 CanLII 3558 (FCA), [1996] 1 F.C. 644 (C.A.). The Minister says that neither the doctrine of legitimate expectations nor estoppel operates to entitle the respondents to substantive relief, i.e., the modified permit. Estoppel can only be used as a shield, not a sword: Canadian Superior Oil Ltd. v. Paddon-Hughes Development Co., 1970 CanLII 3 (SCC), [1970] S.C.R. 932, at pp. 937-39; Gilbert Steel Ltd. v. University Construction Ltd. (1976), 1976 CanLII 672 (ON CA), 12 O.R. (2d) 19 (C.A.), at p. 23.

III. The Case for the Respondents

[10] The respondents do not dispute the general principle of deference to ministerial discretion. They rely, however, on the web of relationships developed in the seven years preceding the October 3, 1991 rejection. Their legal position may be rationalized in several different ways:

(1) They had a right to the modified permit to “regularize” the hospital bed situation brought about by the mutual agreement with the Minister. The Court should consider as done that which ought to have been done;

(2) Procedural fairness dictated that the application for a modified permit should have been granted;

(3) While there may have been no right as such to a modified permit, the respondents had a reasonable and legitimate expectation that the modified permit would issue. The Minister had so promised, it was within his statutory power to keep his promise, and there was no overriding public interest that might justify the promise being broken;

(4) The Minister was estopped by his representations from insisting on an unfettered discretion in October 1991 to grant or withhold the modified permit. Too much water had gone under the bridge. The representations, and conduct of successive Ministers from 1984 onwards, led the respondents to modify their operations to include short-term care, launch a fundraising campaign and move to a new facility in Montreal. The Minister could not belatedly escape this history on October 3, 1991. The discretion which he otherwise might have possessed was fettered;

(5) The ministerial decision should be set aside on one ground of abuse of discretion. The dealings of successive Ministers with the respondents between 1984 and 1991 reflected a considered view of the public interest which was repudiated on October 3, 1991 without any regard for a very relevant consideration, namely the implications of that decision for the respondents. If the Minister were to decide consistently with the view of the public interest he had previously espoused, the modified permit would issue. No plausible reason was given for the breach of the promise of a modified permit. The decision of October 3, 1991 was, in the circumstances, patently unreasonable.

[11] It will be noted that most of these claims would lead, if anywhere, to procedural relief. That is not, as stated, the respondents’ ultimate objective. While in some cases a litigant relies on a substantive claim to justify procedural protection, in this case the respondents rely to some extent on the alleged violation of their procedural rights to nourish the claim to a substantive remedy.

[12] I will address each of these legal arguments in turn.

A. Do the Respondents Possess an Acquired Right to a Modified Permit?

[13] In oral argument it was suggested that perhaps the respondents could bring themselves within the principle applied in Hill v. Nova Scotia (Attorney General), 1997 CanLII 401 (SCC), [1997] 1 S.C.R. 69. In that case a farm had been bifurcated by a new provincial highway. The farmer claimed that when expropriating his land for that purpose 27 years earlier, the province had included as part of the compensation package an equitable easement permitting him to move cattle and equipment across the highway from one side of his farm to the other. Both the farmer and the province had clearly acted on that basis for the previous 27 years. The province eventually repudiated the understanding contending that it had never acknowledged the interest in the land in writing as required by s. 21 of the Public Highways Act, R.S.N.S. 1954, c. 235. Our Court concluded that there had been “part performance” by the province, and “[q]uite simply equity recognizes as done that which ought to have been done. A verbal agreement which has been partly performed will be enforced” (per Cory J., at paras. 11-12).

[14] Hill involved an equitable interest in land. In the present case the respondents cannot be said to have a “right” much less a proprietary right to the award of a permit. The mere expectation of a favourable outcome to the application (when eventually made), fuelled by ministerial statements and conduct, is still no more than an expectation. The respondents had not even applied for the modified permit until they relocated to Montreal in 1991.

[15] In the United States a broad interpretation is sometimes given to the notion of “property” for the purposes of the due process clause (e.g., Cleveland Board of Education v. Loudermill, 470 U.S. 532 (1985) (state employment); Perry v. Sindermann, 408 U.S. 593 (1972); Mathews v. Eldridge, 424 U.S. 319 (1976) (right to social security disability benefits); and Barry v. Barchi, 443 U.S. 55 (1979) (renewal of horse trainer’s licence)), but even the U.S. cases seem to contemplate the possession and expected continuation of an existing permit or benefit, not the hoped-for acquisition of a new one.

[16] Putting aside, then, the initial challenge based on Hill, the other arguments that are marshalled in support of the respondents’ position proceed from very general propositions (e.g., the availability of procedural fairness) to narrower propositions that are highly specific to the dealings between the parties in this case (e.g., estoppel). Under whatever label, however, the steady drumbeat of the respondents’ complaint is that they were treated by the Minister in an unfair and high-handed manner. It is true, as the appellant points out, that the Minister’s power under s. 138 is framed as a broad policy discretion to be exercised “in the public interest”. Yet the discretion, however broadly framed, is not unfettered. At the very least the Minister must exercise the power for the purposes for which it was granted: Roncarelli v. Duplessis, 1959 CanLII 50 (SCC), [1959] S.C.R. 121, at p. 140; Padfield v. Minister of Agriculture, Fisheries and Food, [1968] A.C. 997 (H.L.), at p. 1030. The Minister must observe procedural fairness in dealing with the respondents’ interests in their application for a permit: Cardinal v. Director of Kent Institution, 1985 CanLII 23 (SCC), [1985] 2 S.C.R. 643; Nicholson v. Haldimand-Norfolk Regional Board of Commissioners of Police, 1978 CanLII 24 (SCC), [1979] 1 S.C.R. 311. Other limitations are more controversial. Where, as here, the Minister makes representations by word or conduct that someone will receive or retain a benefit, or that some procedural right will be afforded before a decision is taken, the availability and/or content of procedural fairness may be enlarged under the doctrine of legitimate expectation: Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), 1990 CanLII 31 (SCC), [1990] 3 S.C.R. 1170; Reference re Canada Assistance Plan (B.C.), 1991 CanLII 74 (SCC), [1991] 2 S.C.R. 525; Baker v. Canada (Minister of Citizenship and Immigration), 1999 CanLII 699 (SCC), [1999] 2 S.C.R. 817; Bendahmane v. Canada (Minister of Employment and Immigration), 1989 CanLII 9488 (FCA), [1989] 3 F.C. 16 (C.A.); C. Roy, La théorie de l’expectative légitime en droit administratif (1993). Where the representations were known to and relied upon by an individual affected, and such reliance would result in a detriment to that person if the Minister were to backtrack on his earlier representations, there is arguably (unless the statute or an overriding public interest dictates a contrary result) an estoppel: Sous-ministre du Revenu du Québec v. Transport Lessard (1976) Ltée, 1985 CanLII 2965 (QC CA), [1985] R.D.J. 502 (C.A.); Aurchem Exploration Ltd. v. Canada (1992), 1992 CanLII 8524 (FC), 91 D.L.R. (4th) 710 (F.C.T.D.). Moreover, if in light of the foregoing constraints, whether implied by law or self-imposed by the Minister, the resulting decision is patently unreasonable, it may be quashed (Baker v. Canada, supra) and an order in the nature of mandamus may be granted to require the Minister, again in the absence of an overriding public interest to the contrary, to issue the modified permit (Apotex Inc. v. Canada (Attorney General), 1994 CanLII 47 (SCC), [1994] 3 S.C.R. 1100, aff’g 1993 CanLII 3004 (FCA), [1994] 1 F.C. 742 (C.A.)). The list of limitations is not exhaustive.

[17] At the end of the day, the respondents’ main hurdle is that they do not seek procedural relief. They want the Court to grant substantive relief. They don’t want a hearing or more consultation. The events in question took place 10 years ago. The world has moved on. They want the Court to order the Minister to issue the 1991-1993 modified permit.

B. The Minister Failed to Observe Procedural Fairness

[18] If the respondents did not have a “right” to a modified permit, they nevertheless had a direct financial interest in the outcome of their application sufficient to trigger the duty of procedural fairness. They were, after all, existing permit holders. Their request was for permit modifications. As stated by Le Dain J. in Cardinal v. Director of Kent Institution, supra, at p. 653:

This Court has affirmed that there is, as a general common law principle, a duty of procedural fairness lying on every public authority making an administrative decision which is not of a legislative nature and which affects the rights, privileges or interests of an individual. . . .

[19] The respondents were entitled to procedural fairness irrespective of the existence of representations and pieces of correspondence from the Minister. The nature of the respondents’ interest was sufficient: Re Webb and Ontario Housing Corp. (1978), 1978 CanLII 1490 (ON CA), 22 O.R. (2d) 257 (C.A.), per MacKinnon A.C.J.O., at p. 265; Hutfield v. Fort Saskatchewan General Hospital District No. 98 Board (1986), 1986 CanLII 1789 (AB KB), 49 Alta. L.R. (2d) 256 (Q.B.), at pp. 262-64, aff’d on other grounds (1988), 1988 ABCA 220, 52 D.L.R. (4th) 562 (Alta. C.A.). Moreover,

[c]ontemporary administrative law takes a very broad view of the range of the rights, privileges and interests that will attract a right to procedural fairness.

(D. J. M. Brown and J. M. Evans, Judicial Review of Administrative Action in Canada (loose-leaf) vol. 2, at p. 7-31)

[20] Once triggered, the content of procedural fairness is generally a function of (i) the nature of the decision to be made, (ii) the relationship between the decision maker and the individual, and (iii) the effect of the decision on the individual’s rights: Knight v. Indian Head School Division No. 19, 1990 CanLII 138 (SCC), [1990] 1 S.C.R. 653, at p. 669.

[21] Even minimal procedural fairness was not extended to the respondents in this case. They had no notice that the Minister was about to reverse his position, or the reasons for the reversal, and no opportunity to present argument as to why the Minister’s earlier and long-standing view that the public interest favoured a modified Mount Sinai Hospital Center should prevail. These defects enable the respondents to achieve the first of their objectives, namely the setting aside of the Minister’s October 3, 1991 decision. However, as stated, they want more.

C. The Doctrine of Legitimate Expectation

[22] The respondents argue that the doctrine of legitimate expectations can be used to compel not only procedural protection but a substantive result provided such result is not contrary to law and is otherwise within the power of the Minister, which in this case it would be (see S. J. SchØnberg, Legitimate Expectations in Administrative Law (2000), ch. 4). The prior jurisprudence in this Court is against such a proposition: see Old St. Boniface, supra, at pp. 1203-4; Reference re Canada Assistance Plan, supra, at pp. 557-58; Baker v. Canada, supra, at para. 26. However, the respondents say that this doctrine is rapidly evolving and expanding, and has been employed in Canada and elsewhere to impose a substantive rather than merely procedural result on decision makers exercising statutory or prerogative powers. Relevant authorities include the decision of a panel of the Quebec Court of Appeal in Sous-ministre du Revenu du Québec v. Transport Lessard (1976) Ltée, supra; trial level decisions elsewhere in Canada including Gingras v. Canada, 1990 CanLII 13026 (FC), [1990] 2 F.C. 68 (T.D.), and Bloomfield v. Saskatchewan (Minister of Health), [1986] S.J. No. 675 (QL) (Q.B.); in England by Parker L.J. in R. v. Secretary of State for the Home Department, ex parte Khan, [1984] 1 W.L.R. 1337 (C.A.), and subsequently by Taylor J. (later Lord Chief Justice) in R. v. Secretary of State for the Home Department, ex parte Ruddock, [1987] 2 All E.R. 518 (Q.B.), and Sedley J. (later Lord Justice) in R. v. Ministry of Agriculture Fisheries and Food, ex parte Hamble (Offshore) Fisheries Ltd., [1995] 2 All E.R. 714 (Q.B.), at p. 724 (which contains a useful discussion of European law to the same effect). More recently in R. v. North and East Devon Health Authority, ex parte Coughlan, [2000] 3 All E.R. 850, the English Court of Appeal has resoundingly confirmed that in English law the doctrine of legitimate expectations does give rise to substantive remedies. Lord Woolf M.R. was unequivocal at para. 71:

Fairness in such a situation, if it is to mean anything, must for the reasons we have considered include fairness of outcome. This in turn is why the doctrine of legitimate expectation has emerged as a distinct application of the concept of abuse of power in relation to substantive as well as procedural benefits. . . . [Emphasis added.]

[23] A similar approach has been adopted in Ireland (Webb v. Ireland, [1988] I.R. 353 (S.C.)) and in a more tentative way was expressed by the High Court of Australia in Attorney-General (NSW) v. Quin (1990), 64 A.L.J.R. 327, per Mason C.J., at p. 336:

It is possible perhaps that there may be some cases in which substantive protection can be afforded and ordered by the court, without detriment to the public interest intended to be served by the exercise of the relevant statutory or prerogative power.

(Australia seems subsequently to have moved against the granting of substantive relief: C. Stewart, “Substantive Unfairness: A New Species of Abuse of Power?” (2000), 28 Fed. L. Rev. 617, at p. 634.) See also the decision of the Appellate Division of the South African Supreme Court in Administrator, Transvaal v. Traub, 1989 (4) SA 731. There is also some academic support for the extension of the application of the doctrine of legitimate expectations to substantive rights; see, e.g., C. Forsyth, “Wednesbury protection of substantive legitimate expectations”, [1997] Pub. L. 375. Against this is put the traditional view that “statutory authorities cannot disable themselves from the future exercise of their jurisdiction or powers by the giving of assurances”: D. J. Mullan, Administrative Law (2001), at p. 380.

[24] Part of the difficulty with the contending positions in this case is that in English law, and in the law of those jurisdictions that have followed the English lead in this matter, the doctrine of legitimate expectations performs a number of functions that in Canada are kept distinct. Lord Woolf M.R. in Coughlan, supra, identified the unifying theme as “administrative fairness” of which procedural fairness and substantive fairness are connected parts. (See also R. v. Inland Revenue Commissioners, ex parte M.F.K. Underwriting Agents Ltd., [1990] 1 W.L.R. 1545 (Q.B.), per Bingham L.J. (now in the H.L.), at pp. 1569-70.) On the substantive side, Lord Woolf M.R. summarizes his position thus at para. 82:

Policy being (within the law) for the public authority alone, both it and the reasons for adopting or changing it will be accepted by the courts as part of the factual data – in other words, as not ordinarily open to judicial review. The court’s task – and this is not always understood – is then limited to asking whether the application of the policy to an individual who has been led to expect something different is a just exercise of power. In many cases the authority will already have considered this and made appropriate exceptions . . . or resolved to pay compensation where money alone will suffice. But where no such accommodation is made, it is for the court to say whether the consequent frustration of the individual’s expectation is so unfair as to be a misuse of the authority’s power.

[25] In Coughlan itself a woman with severe physical disabilities was induced by the local health authority to move from a hospital to a nursing home on the promise that there she would have a “home for life” (para. 4). Five years later, after some consultation and for reasons that the court found to be perfectly rational (para. 65), the local health authority decided to close the nursing home. The decision was quashed because, though rational and reached after some consultation, the court concluded that the public authority had placed insufficient weight on its earlier promise of a “home for life”.

[26] It thus appears that the English doctrine of legitimate expectation has developed into a comprehensive code that embraces the full gamut of administrative relief from procedural fairness at the low end through “enhanced” procedural fairness based on conduct, thence onwards to estoppel (though it is not to be called that) including substantive relief at the high end, i.e., the end representing the greatest intrusion by the courts into public administration. The intrusion is said to be justified by the multiplicity of conflicting decisions by a public authority on the same point directed to the same individual(s), per Lord Woolf M.R. in Coughlan, supra, at para. 66:

In the ordinary case there is no space for intervention on grounds of abuse of power once a rational decision directed to a proper purpose has been reached by lawful process. The present class of case is visibly different. It involves not one but two lawful exercises of power (the promise and the policy change) by the same public authority, with consequences for individuals trapped between the two.

[27] In ranging over such a vast territory under the banner of “fairness”, it is inevitable that sub-classifications must be made to differentiate the situations which warrant highly intrusive relief from those which do not. Many of the English cases on legitimate expectations relied on by the respondents, at the low end, would fit comfortably within our principles of procedural fairness. At the high end they represent a level of judicial intervention in government policy that our courts, to date, have considered inappropriate in the absence of a successful challenge under the Canadian Charter of Rights and Freedoms.

[28] Canadian cases tend to differentiate for analytical purposes the related concepts of procedural fairness and the doctrine of legitimate expectation. There is, on the one hand, a concern that treating procedural fairness as a subset of legitimate expectations may unnecessarily complicate and indeed inhibit rather than encourage the development of the highly flexible rules of procedural fairness: D. Wright, “Rethinking the Doctrine of Legitimate Expectations in Canadian Administrative Law” (1997), 35 Osgoode Hall L.J. 139. On the other hand, there is a countervailing concern that using a Minister’s prior conduct against him as a launching pad for substantive relief may strike the wrong balance between private and public interests, and blur the role of the court with the role of the Minister.

[29] Under our case law the availability and content of procedural fairness are generally driven by the nature of the applicant’s interest and the nature of the power exercised by the public authority in relation to that interest: Brown and Evans, supra, p. 7-13 et seq.; D. J. Mullan, “‘Confining the Reach of Legitimate Expectations’ Case Comment: Sunshine Coast Parents for French v. School District No. 46 (Sunshine Coast)” (1991), 44 Admin. L.R. 245, at p. 248. The doctrine of legitimate expectations, on the other hand, looks to the conduct of the public authority in the exercise of that power (Old St. Boniface, supra, at p. 1204) including established practices, conduct or representations that can be characterized as clear, unambiguous and unqualified (Brown and Evans, supra, at p. 7-41). The expectations must not conflict with the public authority’s statutory remit.

[30] The doctrine of legitimate expectations is sometimes treated as a form of estoppel, but the weight of authority and principle suggests that an applicant who relies on the doctrine of legitimate expectations may show, but does not necessarily have to show, that he or she was aware of such conduct, or that it was relied on with detrimental results. This is because the focus is on promoting “regularity, predictability, and certainty in government’s dealing with the public”: S. A. de Smith, H. Woolf and J. Jowell, Judicial Review of Administrative Action (5th ed. 1995), at p. 417, to which the editors add, at p. 426, that insisting on estoppel-type requirements would

involve unfair discrimination between those who were and were not aware of the representation and would benefit the well-informed or well-advised. It would also encourage undesirable administrative practice by too readily relieving decision-makers of the normal consequences of their actions.

The High Court of Australia espouses a similar view:

But, more importantly, the notion of legitimate expectation is not dependent upon any principle of estoppel. Whether the Minister can be estopped in the exercise of his discretion is another question; it was not a question raised by the appellant. Legitimate expectation does not depend upon the knowledge and state of mind of the individual concerned, although such an expectation may arise from the conduct of a public authority towards an individual. . . .

(Haoucher v. Minister for Immigration, Local Government and Ethnic Affairs (1990), 19 A.L.D. 577, per Toohey J., at p. 590)

See also Minister of State for Immigration and Ethnic Affairs v. Teoh (1995), 183 C.L.R. 273 (H.C.).

[31] It is difficult at one and the same time thus to lower the bar to the application of the doctrine of legitimate expectation (for good policy reasons) but at the same time to expand greatly its potency for overruling the Minister or other public authority on matters of substantive policy. One would normally expect more intrusive forms of relief to be accompanied by more demanding evidentiary requirements.

[32] In Reference re Canada Assistance Plan, Sopinka J. (citing Old St. Boniface, supra) regarded the doctrine of legitimate expectations as “an extension of the rules of natural justice and procedural fairness” which may afford “a party affected by the decision of a public official an opportunity to make representations in circumstances in which there otherwise would be no such opportunity” (p. 557 (emphasis added)). In referring to the making of representations, of course, Sopinka J. was not limiting relief just to representations but intended to include whatever procedural remedies might be appropriate on the facts of a particular case. Procedure is a broad term. The door was shut only against substantive relief. It seems to me, notwithstanding the respondents’ argument, that this conclusion should be affirmed. If the Court is to give substantive relief, more demanding conditions precedent must be fulfilled than are presently required by the doctrine of legitimate expectation.

[33] In Reference re Canada Assistance Plan, supra, Sopinka J. went on to note two further limitations. He quoted at p. 558 from Martineau v. Matsqui Institution Disciplinary Board, 1979 CanLII 184 (SCC), [1980] 1 S.C.R. 602. The first limitation was that: “A purely ministerial decision, on broad grounds of public policy, will typically afford the individual no procedural protection, and any attack upon such a decision will have to be founded upon abuse of discretion” (p. 558 (emphasis added)). I will return to the notion of “abuse of discretion” below.

[34] The second limitation was that “public bodies exercising legislative functions may not be amenable to judicial supervision” (p. 558 (emphasis added)). Reference re Canada Assistance Plan dealt with the application of the doctrine of legitimate expectations to Parliament where the need for judicial restraint is obvious. There may be difficulty in other contexts in distinguishing when the legislative exception applies and where it does not, as debated in the Federal Court of Appeal in Apotex Inc. v. Canada (Attorney General), 2000 CanLII 17135 (FCA), [2000] 4 F.C. 264, especially Evans J.A. at para. 105 et seq. That issue remains open for another day.

[35] In affirming that the doctrine of legitimate expectations is limited to procedural relief, it must be acknowledged that in some cases it is difficult to distinguish the procedural from the substantive. In Bendahmane v. Canada, supra, for example, a majority of the Federal Court of Appeal considered the applicant’s claim to the benefit of a refugee backlog reduction program to be procedural (p. 33) whereas the dissenting judge considered the claimed relief to be substantive (p. 25). A similarly close call was made in Canada (Attorney General) v. Canada (Commissioner of the Inquiry on the Blood System), 1996 CanLII 4069 (FC), [1996] 3 F.C. 259 (T.D.). An undue focus on formal classification and categorization of powers at the expense of broad principles flexibly applied may do a disservice here. The inquiry is better framed in terms of the underlying principle mentioned earlier, namely that broad public policy is pre-eminently for the Minister to determine, not the courts.

[36] The classification of relief as “substantive” however should be made in light of the principled basis for its exclusion rather than as a matter of form. Where, as in Bendahmane v. Canada, relief can reasonably be characterized as procedural in light of the underlying principle of deference on matters of substantive policy, then generally speaking it should be.

[37] It follows from the foregoing that decisions of the English courts and other courts that give effect to substantive legitimate expectations must be read with due regard to the differences in Canadian law.

[38] In this case, as stated earlier, the Minister’s decision will be set aside through the application of the ordinary rules of procedural fairness. There is no need to expand either the availability or content of procedural fairness because of the conduct of successive Ministers which amounts, in this respect, only to an aggravating circumstance. There is, in short, no need to resort to the doctrine of legitimate expectations to achieve procedural relief and, as explained, substantive relief is not available under this doctrine.

D. Promissory Estoppel

[39] The Quebec Court of Appeal concluded (1998 CanLII 12493 (QC CA), [1998] R.J.Q. 2707) that while the Minister was not required by the doctrine of legitimate expectations to issue the modified permit, he was estopped by his earlier representations and conduct from refusing to do so. The evidence here went well beyond what is necessary to establish legitimate expectations. In determining that an estoppel remedy was available, Robert J.A. relied on, inter alia, Transport Lessard, supra, and Aurchem, supra. Reference should also be made to Bawolak v. Exroy Resources Ltd., 1992 CanLII 3542 (QC CA), [1993] R.D.J. 192 (C.A.), and D. J. Mullan, “Canada Assistance Plan -- Denying Legitimate Expectation a Fair Start?” (1993), 7 Admin. L.R. (2d) 269, at p. 290. Robert J.A. noted that the question whether estoppel is available against a Minister of the Crown was left open by this Court in Comeau’s Sea Foods Ltd. v. Canada (Minister of Fisheries and Oceans), 1997 CanLII 399 (SCC), [1997] 1 S.C.R. 12, per Major J., at para. 57. See also P. McDonald, “Contradictory Government Action: Estoppel of Statutory Authorities” (1979), 17 Osgoode Hall L.J. 160, at pp. 180-81.

[40] I agree with Robert J.A. that estoppel may be available against a public authority, including a Minister, in narrow circumstances. The interesting analysis of McDonald, supra, illustrates the variety of circumstances in which the issue has arisen, and the variegated responses given by the courts. A form of estoppel was applied not only by the Quebec Court of Appeal in Transport Lessard, supra, but by the Ontario Court of Appeal in Re Multi-Malls Inc. and Minister of Transportation and Communications (1976), 1976 CanLII 623 (ON CA), 14 O.R. (2d) 49, and by this Court (albeit against a municipality) in Kenora (Town) Hydro Electric Commission v. Vacationland Dairy Co-operative Ltd., 1994 CanLII 105 (SCC), [1994] 1 S.C.R. 80. Reference has already been made to the Aurchem decision of Strayer J. in the Federal Court, Trial Division, that estopped a mining recorder from refusing to register claims. There are several pertinent decisions in Britain, many of them authored by Lord Denning, that include Robertson v. Minister of Pensions, [1949] 1 K.B. 227, at p. 231, and Lever Finance Ltd. v. Westminster (City) London Borough Council, [1971] 1 Q.B. 222 (C.A.), but also North Western Gas Board v. Manchester Corp., [1963] 3 All E.R. 442 (C.A.), per Sellers L.J. at p. 451.

[41] In the more recent English cases estoppel too has been swallowed up under the general heading of fairness; see Coughlan, supra, at para. 80:

As Lord Donaldson MR said in R v ITC, ex p TSW (5 February 1992, unreported): “The test in public law is fairness, not an adaptation of the law of contract or estoppel”.

[42] It is to be emphasized that the requirements of estoppel go well beyond the requirements of the doctrine of legitimate expectations. As mentioned, the doctrine of legitimate expectations does not necessarily, though it may, involve personal knowledge by the applicant of the conduct of the public authority as well as reliance and detriment. Estoppel clearly elevates the evidentiary requirements that must be met by an applicant.

[43] In the United States (where administrative law is heavily influenced by the due process clause in the Constitution) the courts have shown reluctance to hold government estopped. There are policy reasons for this as well as legal reasons:

The federal government implements hundreds of extraordinarily complicated regulatory and benefit programs. Millions of civil servants give advice to citizens daily concerning their rights and duties under these programs. Erroneous advice is both inevitable and commonplace. The Internal Revenue Service (IRS) provides a good illustration. It is one of the federal agencies that is most respected for its competence. Yet, each year the General Accounting Office (GAO) conducts a study of the taxpayer advice provided by IRS, and each year that study shows that IRS gives erroneous advice in somewhere between 10 and 20 percent of all cases. Some taxpayers are injured by reliance on IRS’ advice, but millions of taxpayers are benefited by its availability.

(K. C. Davis and R. J. Pierce Jr., Administrative Law Treatise (3rd ed. 1994), vol. 2, at pp. 229-30)

[44] Decisions in which the U.S. Supreme Court has however refused to rule out public law estoppel entirely (at least in theory) include Office of Personnel Management v. Richmond, 496 U.S. 414 (1990), at p. 423, and United States v. Pennsylvania Industrial Chemical Corp., 411 U.S. 655 (1973). Circuit courts which have allowed estoppel against the government in exceptional circumstances are referred to in United States v. Asmar, 827 F.2d 907 (3rd Cir. 1987), at p. 911, note 4. Professors Davis and Pierce, supra, suggest at p. 231 that a successful claim for equitable estoppel in the United States would have to involve at least the following characteristics: “(1) unequivocal advice from an unusually authoritative source; (2) reasonable reliance on that advice by an individual; (3) extreme harm resulting from that reliance; and (4) gross injustice to the individual in the absence of judicial estoppel”.

[45] In this case Robert J.A. adopted the private law definition of promissory estoppel provided by Sopinka J. in Maracle v. Travellers Indemnity Co. of Canada, 1991 CanLII 58 (SCC), [1991] 2 S.C.R. 50, at p. 57:

The principles of promissory estoppel are well settled. The party relying on the doctrine must establish that the other party has, [1] by words or conduct, made a promise or assurance [2] which was intended to affect their legal relationship and to be acted on. Furthermore, the representee must establish that, [3] in reliance on the representation, [4] he acted on it or in some way changed his position. . . .

[T]he promise must be unambiguous but could be inferred from circumstances.

[46] If this were a private law case I would agree that the elements of promissory estoppel are present. The evidence goes well beyond what is necessary to trigger procedural fairness or the doctrine of legitimate expectations. Successive Ministers made clear and specific representations that were intended to be acted on, and were in fact acted upon by the respondents. Ministers encouraged the new mix of short and long-term care beds which they knew would impact the legal relationship, i.e., the respondents’ compliance with the existing permit, and the resulting need for permit modifications. Assurances were given with respect to the issuance of a modified permit. If the Minister is allowed to reverse his promise of a modified permit after the respondents had made changes to their hospital operations, including the fund-raising campaign and the move to Montreal, the respondents say they would have acted on the Minister’s promises to their detriment.

[47] However this is not a private law case. Public law estoppel clearly requires an appreciation of the legislative intent embodied in the power whose exercise is sought to be estopped. The legislation is paramount. Circumstances that might otherwise create an estoppel may have to yield to an overriding public interest expressed in the legislative text. As stated in St. Ann’s Island Shooting and Fishing Club Ltd. v. The King, 1950 CanLII 28 (SCC), [1950] S.C.R. 211, per Rand J., at p. 220: “there can be no estoppel in the face of an express provision of a statute” (emphasis added). See also The King v. Dominion of Canada Postage Stamp Vending Co., 1930 CanLII 87 (SCC), [1930] S.C.R. 500.

[48] Here the Minister is mandated in broad terms to act in the public interest, and if the public interest as he defines it is opposed to the award of the modified permit, then I do not think a court should estop the Minister from doing what he considers to be his duty. What is at issue is not so much the Minister’s ability to change policies but the fate of individuals caught in the transition between successive and inconsistent ministerial decisions on the same subject. As a matter of statutory interpretation, it seems clear from the broad test of s. 138 (“the public interest”) that the legislature intended the Minister, not the courts, to determine the appropriate transitional arrangements from the old policy (which welcomed a mix of 57 long-term care beds and 50 short-term care beds) to the new policy (50 short-term care beds would only be welcome if accompanied by enhanced diagnostic and treatment services in addition to the existing operating room, laboratories and radiology facilities).

[49] I mentioned at the outset that the wording of the particular statutory power in question and who wields it (a Minister) is important. The cases that are relied upon by the respondents generally deal with lesser powers or a narrower discretion at a lower level of officialdom. In Transport Lessard, supra, the issue was the interpretation of a sales tax provision in relation to the bulk sale of trucking equipment (and estoppel was applied despite the caution expressed by this Court in Granger v. Canada (Canada Employment and Immigration Commission), 1989 CanLII 111 (SCC), [1989] 1 S.C.R. 141, aff’g 1986 CanLII 7610 (FCA), [1986] 3 F.C. 70 (C.A.)). The issue in Re Multi-Malls, supra, was a Minister’s procedural decision to decline to refer a planning document to the Ontario Municipal Board for review. In Aurchem, supra, the issue was the refusal of a mining recorder to register certain mining claims because of defects of form. Strayer J. emphasized that the intended effect of his order was not to impede changes in policy but to protect people caught in the transition from a relaxed regime to a more strict regime. The regulatory requirements were matters of form not substance and the statute itself contemplated the possibility of waiver. In none of these cases was the statutory power of decision framed in broad policy terms comparable to s. 138 of the legislation at issue here.

[50] The appellant also complains that the Quebec Court of Appeal in this case used estoppel as a sword rather than a shield, but (as in Aurchem) this could be rationalized merely as having precluded the Minister from relying on factors that he was, in all the circumstances, estopped from taking into consideration.

[51] There is a public law dimension to the law of estoppel which must be sensitive to the factual and legal context. Here the primary considerations are the wording of s. 138 and the status of the decision maker. Estoppel is, in my view, not available on the facts of this case in the way in which it was applied by the Quebec Court of Appeal.

E. The Minister’s Decision Amounted to an Abuse of Discretion

[52] The final issue is whether the Minister’s decision was patently unreasonable in light of all the circumstances. This issue goes to the substance of the decision as opposed to the process by which it was reached. The respondents place weight in particular on five factors: (i) the view of the public interest that the Minister and his predecessors espoused to the respondents up to October 3, 1991, namely that the mix of facilities offered by the Center in Montreal would be in the public interest; (ii) representations by the Minister and reliance and detriment on the part of the respondents; (iii) the failure of the Minister to give a rational public interest justification for reneging on an otherwise lawful result; (iv) the Minister’s failure to take into consideration the impact of his sudden reversal on the respondents’ interest; and (v) in the circumstances, the patent unreasonableness of the resulting decision of October 3, 1991. In other words, the facts which gave rise to the arguments about procedural fairness, legitimate expectations and estoppel are recycled in the abuse of discretion analysis.

[53] I mentioned earlier the “abuse of discretion” exception to the customary deference paid to ministerial decision making as noted by Dickson J. in Martineau v. Matsqui, supra, and reported by Sopinka J. in Reference re Canada Assistance Plan, supra. Their concern was with procedural fairness. However, the English courts have long extended “abuse of discretion” to substantive decision making which they call “Wednesbury unreasonableness” after Associated Provincial Picture Houses, Ltd. v. Wednesbury Corp., [1948] 1 K.B. 223 (C.A.). The Wednesbury case was cited with approval in Baker v. Canada, supra, at para. 53. See generally H. W. MacLauchlan, “Transforming Administrative Law: The Didactic Role of the Supreme Court of Canada” (2001), 80 Can. Bar Rev. 281, at p. 285 et seq.

[54] Baker v. Canada established that the review for abuse of discretion may in principle range from correctness through unreasonableness to patent unreasonableness. The result, as noted by Professor D. J. Mullan in Administrative Law, supra, at p. 108, was to provide “an overarching or unifying theory for review of the substantive decisions of all manner of statutory and prerogative decision makers”. The unified approach was to some extent anticipated by earlier decisions in relation to the exercise of ministerial discretion by the British Columbia Court of Appeal in MacMillan Bloedel Ltd. v. Minister of Forests of British Columbia, 1984 CanLII 734 (BC CA), [1984] 3 W.W.R. 270, per Macfarlane J.A., at p. 282, and by the Federal Court of Appeal in Lazarov v. Secretary of State of Canada, [1973] F.C. 927, per Thurlow J.A., at pp. 938-39. See also Re Stora Kopparbergs Bergslags Aktiebolag and Nova Scotia Woodlot Owners’ Association (1975), 1975 CanLII 1166 (NS CA), 61 D.L.R. (3d) 97 (N.S.C.A.), and Canadian National Railway Co. v. Fraser-Fort George (Regional District) (1996), 1996 CanLII 3361 (BC CA), 140 D.L.R. (4th) 23 (B.C.C.A.).

[55] In Baker v. Canada itself, L’Heureux-Dubé J., speaking for the Court, concluded, at para. 62, that the appropriate standard of review in that case was reasonableness simpliciter. That conclusion must be seen in light of the special facts. The appellant, Mavis Baker, a woman with Canadian-born dependent children, was ordered deported. She then applied for an exemption based on humanitarian and compassionate considerations under s. 114(2) of the Immigration Act, R.S.C. 1985, c. I-2, from the requirement that an application for permanent residence must be made from outside of Canada. This application was supported by letters indicating concern about the availability of medical treatment in her country of origin and the effect of her possible departure on her Canadian-born children. Her application was refused on the ground that there were insufficient humanitarian and compassionate reasons to warrant processing the application in Canada. While the decision was made in the name of the Minister of Citizenship and Immigration, it was found as a fact that the decision had been made under delegated authority by an immigration officer whose notes were accepted as a written memorandum of the reasons for decision (para. 44). The immigration officer operated within guidelines laid down by the Minister. His mandate was to apply those guidelines, which required him to

be alert to possible humanitarian grounds, [to] consider the hardship that a negative decision would impose upon the claimant or close family members, and [to] consider as an important factor the connections between family members. (para. 72)

It was alleged that the immigration officer, who was required to operate within the four corners of the guidelines, had violated the express rules laid down by his own Minister. In these somewhat unusual circumstances the Court concluded that the decision should be reviewed on the basis of reasonableness simpliciter.

[56] The Court noted in Baker v. Canada, supra, per L’Heureux-Dubé J., at para. 53, that ordinarily ministerial decisions of a discretionary nature have been accorded a very high level of deference, citing Maple Lodge Farms Ltd. v. Government of Canada, 1982 CanLII 24 (SCC), [1982] 2 S.C.R. 2, at pp. 7-8. At para. 56, L’Heureux-Dubé J. states:

The pragmatic and functional approach can take into account the fact that the more discretion that is left to a decision-maker, the more reluctant courts should be to interfere with the manner in which decision-makers have made choices among various options.

[57] Deference may be enhanced by the particular language used in the legislation: Re Sheehan and Criminal Injuries Compensation Board (1975), 1974 CanLII 439 (ON CA), 52 D.L.R. (3d) 728 (Ont. C.A.), where s. 5 of the Law Enforcement Compensation Act, R.S.O. 1970, c. 237, required the Board to “have regard to all such circumstances as it considers relevant” (emphasis added).

[58] Decisions of Ministers of the Crown in the exercise of discretionary powers in the administrative context should generally receive the highest standard of deference, namely patent unreasonableness. This case shows why. The broad regulatory purpose of the ministerial permit is to regulate the provision of health services “in the public interest”. This favours a high degree of deference, as does the expertise of the Minister and his advisors, not to mention the position of the Minister in the upper echelon of decision makers under statutory and prerogative powers. The exercise of the power turns on the Minister’s appreciation of the public interest, which is a function of public policy in its fullest sense. The privative language in s. 139.1, while not directly relevant except to a renewal, reinforces the high level of deference owed in this case (“[t]he decision of the Minister is final and without appeal”).

[59] Accordingly, the appropriate standard of review in this case is patent unreasonableness.

[60] Resort to the doctrine of “unreasonableness” to test the validity of substantive decisions was elaborated in Baker v. Canada, supra, at para. 53:

A general doctrine of “unreasonableness” has also sometimes been applied to discretionary decisions: Associated Provincial Picture Houses, Ltd. v. Wednesbury Corporation, [1948] 1 K.B. 223 (C.A.). In my opinion, these doctrines incorporate two central ideas – that discretionary decisions, like all other administrative decisions, must be made within the bounds of the jurisdiction conferred by the statute, but that considerable deference will be given to decision-makers by courts in reviewing the exercise of that discretion and determining the scope of the decision-maker’s jurisdiction.

[61] Baker v. Canada went on to hold that the Minister and immigration officials had given insufficient weight to the impact of the decision on Ms. Baker and her Canadian-born children. This is part of the traditional Wednesbury test, as pointed out in Coughlan, supra, where Lord Woolf M.R. noted, at para. 58, that the test under Wednesbury “will be rationality and whether the public body has given proper weight to the implications of not fulfilling the promise” (emphasis added). He went to say at para. 81: “We would prefer to regard the Wednesbury categories themselves as the major instances (not necessarily the sole ones) . . . of how public power may be misused”. On that basis he subsumed “unreasonableness” into the global English concept of administrative unfairness.

[62] Where Canadian law parts company with the developing English law is the assertion, which lies at the heart of the Coughlan treatment of substantive fairness, of the centrality of the judicial role in regulating government policy. In Coughlan, it is said, at para. 76, that the decision to withhold substantive relief under the doctrine of legitimate expectation

can only be justified if there is an overriding public interest. Whether there is an overriding public interest is a question for the court. [Emphasis added.]

[63] In Canada, at least to date, the courts have taken the view that it is generally the Minister who determines whether the public interest overrides or not. The courts will intervene only if it is established that the Minister’s decision is patently unreasonable in the sense of irrational or perverse or (in language adopted in Coughlan, at para. 72) “so gratuitous and oppressive that no reasonable person could think [it] justified”. This high requirement is met here where the unreasonableness, as in Baker v. Canada, turns on the singular lack of recognition of the serious consequences the Minister’s sudden reversal of position inflicted on the respondents who were caught in the transition between the old policy (50 short-term care beds are in the public interest) and the new policy (50 short-term care beds must be coupled to enhanced diagnostic and treatment facilities).

[64] In my view the Minister’s decision of October 3, 1991, was “patently unreasonable” in terms of the public interest as he and his predecessors had defined it over a period of seven years of consultation, encouragement and assurances to the respondents, and in his total lack of regard for the implications for the respondents of the Minister’s broken promises.

[65] While the Court ought to be and would be sensitive to any serious policy reason offered by the Minister for a redefinition of the public interest in this case, particularly in light of the broad scope of the discretionary power to act “in the public interest” in s. 138, no such policy reason was articulated by the Minister in his decision letter of October 3, 1991. The Minister did not resile from the file history. He did not suggest the 50 short-term care beds were not in the public interest. The only new element is that he stated the public interest would be even further advanced by additional resources for diagnosis and treatment that he was not prepared to fund. As my colleague points out at para. 114, “[a]t the very least, [the Minister's decision] must correspond to the reality of the situation”.

IV. Conclusion

[66] We are therefore presented with a patently unreasonable ministerial decision reached by a process that was demonstrably unfair. The web of representation, conduct, reliance and detriment discussed above, coupled with the Minister’s failure to take the respondents’ interests into account on October 3, 1991, precluded the Minister from repudiating the concept of the public interest consistently espoused by Ministers over the seven-year period prior to that date.

[67] In light of this history, the Minister ought not to be heard now (i.e., 10 years later) to advance a new vision of the public interest at odds with what was earlier said and done There is, on the facts of this case, only one option available to the Minister that is not patently unreasonable and that option is to issue the 1991-1993 modified permit (i.e., according to s. 138 of the Act then in force, the modified permit shall issue). Thus, in the end, albeit for somewhat different reasons, I agree with the disposition proposed by my colleague, Bastarache J.

[68] The alternative would be for the Court to send the decision back to the Minister to be reconsidered in light of the legal constraints identified in this decision. Such a referral would amount to a direction to issue the 1991-1993 modified permit, and the whole procedure would, of course, have an air of unreality. The respondent hospital moved from Sainte-Agathe to Montreal 10 years ago. In the meantime, Ministers, policies and health budgets have come and gone. The governing legislation has been amended in significant and relevant aspects. If the present situation is regularized by the issuance of the 1991-1993 modified permit, the current status and entitlement of the respondents’ facilities can thereafter be assessed by the present Minister on the basis of the present law and the present circumstances.

[69] I would therefore dismiss the appeal.

The judgment of L’Heureux-Dubé, Gonthier, Iacobucci, Major and Bastarache JJ. was delivered by

[70] Bastarache J. — This appeal involves a determination of the legality of a refusal by the appellant, the Minister of Health and Social Services (the “Minister”), to regularize the operating permit of the respondent, the Mount Sinai Hospital Center (the “Center”).

I. Facts

[71] The Center was originally a long-term care treatment facility dealing primarily with patients with tuberculosis. During a time when treatment of tuberculosis consisted primarily of rest in an area where the air is pure, Sainte-Agathe was an appropriate location for such a centre. It was at that time perhaps best characterized as a sanatorium. However, during the 1950s, as the incidence of tuberculosis decreased and the nature and focus of respiratory disease and its treatment were changing, the Center began to introduce new programs and services, developing, in effect, a general respiratory expertise in a setting with both long-term and short-term care facilities. The short-term care services included palliative care, laboratory, radiology and operation services. Annual reports submitted to the government since 1974 indicate that this change in orientation, diversification and expansion into short-term care services was known to the government that throughout funded all of the Center’s activities. Given the Center’s distance from Montreal, where many of its patients requiring the short-term care services were now located, the impracticality of the Sainte-Agathe location became increasingly apparent. In 1984, negotiations between the Center and the Ministry of Health and Social Services to move the Center to Montreal began in earnest.

[72] During these negotiations, the Center made it clear that the Center’s permit was an important consideration. At that time, the Center was operating under its original permit for 107 long-term care beds despite the fact that by 1984, in addition to short-term care services and programs, it had for 10 years been providing 57 long-term care beds and 50 intermediary or short-term care beds. The Center wanted the permit altered to reflect the reality of the services it offered. It told the Ministry that its status as a provider of both long-term and short-term care was an important feature of its fund-raising campaign amongst the Jewish community in Montreal. The Ministry promised the Center that it would formally alter the permit once the Center made the move. Under the law in force at that time, An Act respecting health services and social services, R.S.Q., c. S-5, the Center suffered no prejudice by agreeing to wait, either administratively or financially. Subsequent years were spent raising the money to make the move, which ultimately cost six million dollars. Over that time, the promise to issue the correct permit was reaffirmed by subsequent occupants of the position of Minister.

[73] Once the Center had moved to Montreal, in January 1991, and as the expiry date on its permit was approaching (March 31, 1991), it made the formal request to the Minister for a regularization of the permit on January 31, 1991. New legislation presented on December 10, 1990 was brought into force progressively as of September 4, 1991; An Act respecting health services and social services, R.S.Q., c. S-4.2. Its status under the old unaltered permit now put the Center in the category of “residential and long-term care centre”, the practical consequence of which was the loss of its independent board of directors. Without giving the Center an opportunity to make submissions on the issue, the Minister wrote a letter, on October 3, 1991, informing the Center that it would not receive the promised permit and would have to operate under the old unaltered permit. This was despite the fact that the services being offered included short-term care services. The government continued to fund these services and did not require that they be discontinued. Although financial considerations were cited in the letter as the reason for the refusal, the Center had at no time asked for an increased level of funding for its short-term care services. It had provided these services since at least 1974 and there was no indication that it would not be able to continue to do so within its allocated budget.

[74] The Center brought an action in mandamus before the Superior Court, requesting that the court order the Minister to issue the promised permit. The Center also asked for the invalidation of the election of the unified board of directors in order to be able to elect its own board.

II. Legislation

[75] Due to the fact that the Center’s request was made on January 31, 1991, prior to the October 1, 1992 bringing into force of ss. 437 to 443 of the Act respecting health services and social services, R.S.Q., c. S-4.2, governing the issue and renewal of permits, it is the Act respecting health services and social services, R.S.Q., c. S-5 which applies to this request.

[76] The relevant provisions of the Act respecting health services and social services, R.S.Q., c. S-5 (the “former law”), are:

136. No person may operate an establishment unless he holds a permanent permit or a temporary permit issued for such purpose by the Minister.

137. The permanent permit indicates the category of the establishment and its class, kind and capacity, if any.

138. Every person applying for a permit must send his application to the Minister in accordance with the regulations.

The Minister shall issue a permanent permit or a temporary permit if he considers that it is in the public interest.

139. A permanent permit is granted for a period of two years ending on 31 March.

A temporary permit is granted for a period of less than two years.

139.1 A permanent permit is renewed for two years if its holder fulfills the conditions prescribed by regulation.

However, the Minister may, after consultation with the regional council concerned, change the category, the class, the kind or capacity indicated on the permit if he considers that the public interest warrants it.

Before changing the category, class or kind indicated on the permit, the Minister must give the establishment concerned the opportunity to make representations to him.

The decision of the Minister is final and without appeal; it is not considered a refusal of renewal for the purposes of subdivision 2 of this division.

The holder of a permit that has been modified must take the necessary steps to comply with the new permit within six months of receiving it.

[77] Certain features of the Act respecting health services and social services, R.S.Q., c. S-4.2 (the “new law”), also bear mentioning:

81. The mission of a hospital centre is to offer diagnostic services and general and specialized medical care. . . .

82. The mission of a residential and long-term care centre is to offer, on a temporary or permanent basis, alternative environment, lodging, assistance, support and supervision services as well as rehabilitation, psychosocial and nursing care and pharmaceutical and medical services to adults who, by reason of loss of functional or psychosocial autonomy can no longer live in their natural environment, despite the support of their families and friends.

83. A board of directors shall be established to administer all the institutions having their head offices in the territory of a regional county municipality and operating a residential and long-term care centre, or both a residential and long-term care centre and a general and specialized hospital centre with less than 50 beds.

84. A board of directors shall be established to administer . . .

. . . an institution which operates both a residential and long-term care centre and a general and specialized hospital centre with 50 beds or more.

III. Judicial History

A. Quebec Superior Court, J.E. 92-1815

[78] In a decision rendered on November 9, 1992, Marcelin J. of the Superior Court of Quebec made at least five important findings of fact. First, she found that the Center had carried out mixed services of long-term and short-term care for a significant period of time while located in Sainte-Agathe. Second, she found that the Minister was aware that the Center operated not only as a long-term health care centre, but that it also provided other short-term care services. The government was funding these services and indicated its acquiescence despite the mismatch between the activities and the permit. Third, the discussions between the parties regarding the Center’s relocation had always focussed on the question of allowing the Center to operate both long-term and short-term care beds. Fourth, the Center had received promises from government authorities to the effect that its permit would be amended upon its relocation to Montreal. And, fifth, she concluded that it was because of representations made by different persons who held office as Minister that the Center agreed to wait until it established itself in Montreal before formally requesting a modification of its permit.

[79] Marcelin J. allowed the mandamus application in part. She found that the Ministry’s promises and conduct created a “legitimate expectation” on the part of the Center that it would be given a permit that reflects the true nature of its operations once the move to Montreal was made. However, given that the doctrine of legitimate expectations is confined to natural justice and fairness (audi alteram partem) and procedural remedies but does not provide substantive rights, Marcelin J. did not order the Minister to issue the correct permit. The remedy was limited to an order for the Minister to hear the Center’s submissions on the issue before making his decision whether or not the alteration of the permit was in the public interest.

[80] Hence, Marcelin J. held that the October 3, 1991 letter was not a valid exercise of the Minister’s discretion for two reasons. First, it did not respect the requirement in s. 139.1 that the Minister give the concerned institution the opportunity to make representations when contemplating the modification of a permit. Secondly, Marcelin J. pointed out that the refusal in the letter was premised on weak and insubstantial reasons – the purported financial claim could not be relied on when the Center had never asked for more money to operate long-term and short-term care services.

[81] Noting that the Center had been operating without a permit since March 31, 1991, Marcelin J. ordered a renewal of the former permit (within 30 days of the judgment), and she ordered the Minister to consult with the Center on its decision with respect to the modified permit (within 90 days of the judgment). Marcelin J. said that [translation] “the Center is entitled to receive a decision of the Minister which must not be an abuse of discretion and must be based on relevant grounds without hidden purposes [and not] for an ulterior motive”.

[82] With respect to the status of the unified board of directors, Marcelin J. was of the view that a determination of whether the election was valid was premature given the fact that the Minister had not yet given the Center a classification that would determine this issue, either by way of a renewal of the former permit or a valid decision with respect to the modification. Such a determination would have to wait for a valid exercise of the Minister’s discretion.

[83] The Center appealed the decision.

B. Quebec Court of Appeal, 1998 CanLII 12493 (QC CA), [1998] R.J.Q. 2707

[84] Speaking for all three members of the bench, Robert J.A. allowed the appeal, ordering the Minister to issue the permit it promised and cancelling the election of the unified board of directors in light of the Center’s right to elect its own board.

[85] First, Robert J.A. held that the court below made no error, still less a palpable and overriding error, in its appreciation of the evidence. Marcelin J.’s findings of fact were upheld, i.e., that the Center had been operating both long-term and short-term care beds for many years, this was known by the government, the government promised the Center to regularize the permit once the move to Montreal was made, and it was on the basis of those promises that the Center agreed to wait until the move to make the formal request for the permit regularization. Robert J.A. revisited various pieces of evidence and confirmed these findings in various ways.

[86] Robert J.A. secondly confirmed Marcelin J.’s ruling that the doctrine of legitimate expectations is confined to a procedural remedy, at least as the law now stands in Canada. He reviewed the situation in various jurisdictions, noting that in the United Kingdom the doctrine has become a source of substantive as well as procedural rights, though not in Australia. Robert J.A. held that public law promissory estoppel was an alternate route that should be used in this case in order to confer a substantive remedy – the promised permit.

[87] Lastly, Robert J.A. held that it was not necessary to deal with the Center’s claim that this was not a s. 139.1 situation engaging ministerial discretion but in effect a situation in which the Minister was bound to issue the permit under s. 138. The idea here was that, given government knowledge and approval, the Center in fact possessed the permit to operate the long-term and short-term care facility – it had in effect “acquired” the permit and it was only the wording of the permit that did not correspond to that reality. While saying that it was not necessary to deal with this issue for the purposes of the appeal, Robert J.A. noted that there might be problems with this approach because of the legal requirements related to “acquired rights”.

[88] It was therefore on the basis of public law promissory estoppel that Robert J.A. ordered the Minister to issue the promised permit for April 1, 1991 to March 31, 1993 and the cancellation of the election of the unified board of directors.

[89] The Minister appeals to this Court.

IV. Analysis

[90] Although I agree with the Court of Appeal that the Minister is bound to issue the Center the promised permit, I do not think that the proper basis for this order is the application of public law promissory estoppel. It is my view that the best way to dispose of this appeal is to recognize that the facts of this case created a situation not accurately characterized as a renewal of an existing permit under s. 139.1 of the former law. This is a situation falling under s. 138 of that law under which the Minister was bound by a prior exercise of his discretion to issue the permit for both long-term and short-term care operations once the Center relocated to Montreal.

A. Which Section of the Former Law Governs the Present Situation?

[91] Section 139.1 of the former law states:

A permanent permit is renewed for two years if its holder fulfills the conditions prescribed by regulation.

The regulation in question is the Permits for Establishments (Issue and Renewal) Regulation, O.C. 1373-84, (1984) 116 G.O. II, 2370. The conditions prescribed by this regulation include the requirements that the person making the demand for delivery or renewal be a Canadian citizen or permanent resident, domiciled in Quebec, solvent, not having received a sentence under the Criminal Code which has not been satisfied, and has forwarded to the Minister the required information. In other words, if this were the full content of s. 139.1, a renewal situation would not be one in which the Minister’s discretion is engaged. If the conditions set out in the regulation are satisfied, the permit is renewed.

[92] Yet, s. 139.1 goes on to say:

However, the Minister may, after consultation with the regional council concerned, change the category, the class, the kind or capacity indicated on the permit if he considers that the public interest warrants it.

Before changing the category, class or kind indicated on the permit, the Minister must give the establishment concerned the opportunity to make representations to him.

The decision of the Minister is final and without appeal; it is not considered a refusal of renewal for the purposes of subdivision 2 of this division.

These parts of s. 139.1 import a significant degree of discretion with respect to the Minister’s power to modify the permit in a renewal situation (a change may be made “if he considers that the public interest warrants it”) as well as adding finality to its exercise (the decision is “final and without appeal”). This is also the section that includes the Minister’s obligation to give the affected institution the opportunity to make representations on its behalf. It is important to note at the outset that the purpose of s. 139.1 is to give the Minister a discretion that is confined to situations of permit renewal on the condition that the institution change its activities according to the new requirements that the Minister imposes reflecting his or her view of the public interest.

[93] The relevant question is: was the Center’s January 31, 1991 request a request for renewal of their permit subject to s. 139.1? My view is that it was not. First, I note that various documents reflect the parties’ understanding that this was a request for changing the Center’s permit rather than renewing it. For instance, on the application form submitted to the Minister on January 31, 1991, the Center has ticked the box “modification” rather than [translation] “renewal”. Correlatively, the Ministry refers to the situation as one of “modification” rather than renewal (September 14, 1990 letter). Second, the facts, as they were found by the court of first instance and strongly concurred with by the Court of Appeal, indicate that the parties did not see the formal request that was to be made once the Center moved to Montreal as a renewal of the former permit, a permit that had not reflected the reality of the services the Center provided and the government funded since at least 1974. The understanding between the parties was that the permit would be finally altered to reflect the true vocation of the Center: a hospital that offered both long-term and short-term care and services. Both courts below referred to this as a “regularization” of the permit situation and I agree with this characterization. While this is accurately captured under the notion of changing the permit, it is not, in my view, accurate to refer to this as renewing that old inaccurate permit. Nor is it reasonable to conclude that the Minister was exercising his discretion to renew the Center’s permit with a requirement that the institution change its activities in conformity with his determination of what was now in the public interest. The evidence is that the Minister was satisfied that the Center would continue to provide the same services and would receive the same level of funding.

[94] Indeed, while it is true that s. 139.1 refers to change of the category, class, kind or capacity indicated on the permit, not only is this confined to the context of a renewal application, it is also reserved for a situation in which the Minister is considering alterations that would be in the public interest at his or her own initiative. In other words, the institution makes the renewal request that it must make every two years (even with a permanent permit) and the Minister can decide that a change that is in the public interest must be made. As long as the affected institution is given the opportunity to make representations and the decision is made in good faith, this decision is final and without appeal. However, the entire mechanism of s. 139.1 does not apply to a situation where the change is raised by the party rather than the Minister. It does not, therefore, apply in the present situation.

[95] In my view, then, it was a mistake for Marcelin J. to have focussed on the “natural justice” concerns raised by the s. 139.1 obligation to hear from the Center. If this was a situation of renewal, she would have been right to say that the October 3, 1991 letter could not have been a valid exercise of discretion because of the failure to observe this requirement. However, it was not a situation of renewal, and, in my opinion, s. 139.1 is simply not engaged. It is unnecessary then to embark on the inquiry of whether the legitimate expectation created by the course of dealings between the parties can result in a substantive remedy beyond the procedural protection provided by the right to be heard, i.e., the issuance of the permit, either within an expanded doctrine of legitimate expectations or under public law promissory estoppel.

[96] I believe it is s. 138 rather than s. 139.1 that governs the present situation. This section reads:

Every person applying for a permit must send his application to the Minister in accordance with the regulations.

The Minister shall issue a permanent permit or a temporary permit if he considers that it is in the public interest.

It is clear that this is the provision governing requests for new permits, i.e., all those applying for a permit must make a request to the Minister that conforms to the regulations, and the Minister will give the permit if he or she decides that it is in the public interest. It is true that the Center’s January 31, 1991 request for the promised “regularized” permit does not seem to be a request for a new permit but, as indicated by such evidence as the Center’s choice of “modification” in the application form, a request for a change to or alteration of the existing permit. Is this a situation in which s. 138 applies? I note in this respect the following annotation from the Collection Lois et Règlements JUDICO, Services de santé et services sociaux (7th ed. 1990-91), at p. 133:

[translation] An establishment holding a permit which is applying for a modification or a change to the permit must make that application within the framework of section 138.

Hence, the Center’s January 31, 1991 request would seem to be firmly housed within s. 138.

[97] I do not agree with the Center’s submissions that it in fact (and law) possessed the modified permit and that it was merely a matter of the wording of the permit that was at issue when it made the regularization request on January 31, 1991. In my view, being entitled to the permit is different than actually holding it. I agree here with Robert J.A. when he says that there are significant problems with saying that the Center “acquired” the permit by offering the short-term care services which admittedly were not only tolerated but actively funded by the government.

[98] I note, in this respect, s. 140 of the former law which reads:

Every permit holder must carry on his activities within the limits fixed in his permit and keep the books and accounts prescribed by the regulations.

And s. 444 of the new law similarly reads:

The activities of a permit holder must be carried on within the scope of his permit.

While I do not wish to be taken as ruling on this matter directly, as neither party presented much in the way of material for or against the application of the doctrine of droit acquis to the present situation, it seems at the very least relevant, as Robert J.A. noted, that the Center was operating all of those years outside the boundaries of its permit. There may well be an issue of illegality that operates as a bar to the Center “acquiring” the permit in this way. I note in passing the correlative provision to s. 140, s. 141, a provision that would have been operating until the new law came into force, which reads:

141. Every permit holder must, at the times fixed by regulation or, failing such, at the request of the Minister, furnish to the Minister, in such form as the latter may prescribe,

(1) a detailed report of his activities containing the information prescribed by regulation;

(2) financial statements certified by the auditor of the establishment, in the case of a public establishment or a private establishment contemplated in sections 176 and 177.

This provision, it seems to me, is there to ensure that the Minister is kept apprised of an institution’s activities. If that institution is operating outside the bounds of its permit and the Minister knows that as a result of these documents being provided to it, a characterization of the legality or illegality of the institution’s operations must surely be influenced by this factor.

[99] I acknowledge that there is often an important difference between a legal act and that which documents or records it, e.g., in the absence of a writing requirement, a writing attests to the existence of a contract that exists quite independently from that writing and while assisting in matters of proof is not essential to the very existence of the contract. However, I would hesitate to characterize a permit in the same way. I think an activity can be authorized without an implied or acquired permit per se. In other words, there may be permission in the sense of what is authorized but not in the sense of a permit as an object. In any event, I would prefer here to say that the activities were authorized (i.e., permitted) but that the permit itself did not yet exist. The Center was therefore acting under its long-term care permit with the government’s acquiescence with respect to any issue related to the legality or illegality of that activity. It was not acting under an acquired or implied modified permit. It brought the request for modification at the time the parties agreed to, once the move to Montreal was made. It did this because it did not yet have that permit. While that request may well have been a request for something the Center saw itself as entitled to, it was not a purely empty or formal request for that which it already possessed. Indeed, under this characterization, it would have been a s. 139.1 renewal request.

[100] The government’s behaviour, while not rising to the level of issuing an acquired or implied permit, did, in my opinion, result in an exercise of the Minister’s discretion. When s. 138 says that “[t]he Minister shall issue a permanent permit or a temporary permit if he considers that it is in the public interest”, this imputes to the Minister an exercise of discretion with respect to whether or not granting a particular temporary or permanent permit will be in the public interest. However, this discretion was exercised when the Minister promised the Center that it would receive the modified permit, encouraged the move to Montreal, endorsed the financing campaign focussed on the role of the Center as a long-term and short-term care hospital, and continued to fund the short-term care services despite the mismatch between those services and the Center’s permit. When the Minister made those decisions and engaged in that behaviour with the Center, the Minister decided, for the purposes of s. 138, that it was in the public interest to give the Center a permanent permit for the operation of a long-term and short-term care institution. The actual granting of the permit was simply deferred until the move to Montreal was made. The fact that this course of dealings consisted of various elements and occurred over a long period of time is, in my view, no bar to looking at the overall situation and concluding that a decision with respect to the public interest was made and discretion on this issue was exercised. The Minister was therefore bound when the Center made the January 31, 1991 request to issue the promised permit. I believe that the fact that the Minister did not require any change in the activities of the Center is confirmation of the reasonableness of this conclusion. The specific conduct of the Minister in this case indicates that his discretion was exhausted. This does not mean that in a different set of circumstances the Minister could not, based on overriding policy concerns, in exceptional circumstances, reverse a prior discretionary decision.

B. When Was the Discretion Exercised?

[101] Given the veritable flurry of documents submitted attesting to the promise to regularize the Center’s permit once the move to Montreal was made, it is difficult to pinpoint precisely when the Minister’s discretion under s. 138 was exercised. It would therefore be helpful to begin with the earliest pieces of evidence in the record and follow the acts and documents that can be said to have solidified the promise made to the Center by the Minister and its representatives.

[102] The Minister relies in his submissions on a document dated August 1984 entitled Programme fonctionnel et technique prepared by the Minister of Social Affairs. In this report, the Minister emphasizes the Center’s role as a provider of intermediate pulmonary or respiratory care; see, e.g., pp. 7 and 9. The report signals, in a somewhat understated tone, the Minister’s approbation of the Center’s relocation from Sainte-Agathe to Montreal (p. 10). When the Center’s vocation is first referred to in that document, the following wording is used (at p. 11):

[translation] The vocation of Mount Sinai Hospital in Côte Saint-Luc is 107 long-term care beds: 50 intermediate pulmonary care beds and 57 physical care beds.

And again later (at p. 16):

[translation] . . . 50 intermediate pulmonary care beds and 57 physical care beds.

It is significant that this document seems to stabilize the 50/57 split language in the course of dealings between the parties. This had been mentioned in an earlier May 8, 1984 letter appended to the report. However, the other letter appended there, an even earlier correspondence dated June 27, 1983, did not use this language. These prior letters had made references to future negotiation over the precise allocation of beds, assessments based on the needs of the community, etc., but, in my opinion, this August 1984 document entrenches the 50/57 language between the parties.

[103] I cannot accept that the Minister looked at the 50/57 vocation in terms of an overall long-term care context given the “intermediary” nature of the authorized beds. As both courts below found, intermediary beds are considered, for the purposes of long-term or short-term care classification, short-term care beds. Moreover, it is unclear why, if the Ministry truly saw the intermediary beds it authorized as long-term care beds, it would even engage with the Center on the issue of the modification of its operating permit. If the Ministry really saw the intermediary beds this way, no modification to the permit would be required because the Center would be doing precisely what the permit indicated – running long-term care services. However, not only did the Ministry discuss with the Center the possibility of altering its permit, knowing that such an alteration was a central feature of the Center’s fund-raising campaign, it in fact promised to do so once the move to Montreal was made.

[104] Perhaps the most significant piece of evidence here is the November 21, 1989 letter written to the Center by the Conseil de la santé et des services sociaux de la région de Montréal métropolitain (C.S.S.S.R.M.M.). This letter sets out the relocation plan and acknowledges that in the 50/57 split, the 50 beds are to be short-term care beds. Here the commitment is expressed in the following way:

[translation] . . . fifty-seven (57) places to be reserved for long-term clientele and a maximum of fifty (50) places for intermediate short-term care.

After this date, the Minister can certainly no longer claim to have been viewing the 50/57 allocation in terms of the long-term care context. The intermediate care beds are placed with the short-term care beds and the reason for the alteration of the permit is made clear. That this was a promise to make the required modification to the permit once the move to Montreal was made is evidenced by the Minister’s response to the Center’s request for its 1989-1991 permit. In a September 14, 1990 letter about this, the then Assistant Deputy Minister wrote:

[translation] As soon as your services are relocated on Côte Saint-Luc in Montreal, we shall take the steps to modify your permit.

However, once the move to Montreal was made, in January 1991, and the Center brought its request for the modified permit for 1991-1993, in a letter dated October 3, 1991, the Minister refused, stating that reclassifying the 50 beds as short-term care beds would result in the hospital having to deal with more complex clinical problems using additional financial resources that the government could not provide and the Center would have to keep operating under the old permit.

[105] It is difficult to determine precisely when the Minister abandoned the preference that the Center continue operating under its long-term care permit. It is possible that this was always the preference and the refusal to modify the Center’s permit was motivated by that preference. However, this is not what was indicated to the Center in the Ministry’s dealings with it. As my colleague Binnie J. points out, “if the successive Ministers had gone through the same cogitations and deliberations as they did between 1984 and 1991, but kept their thoughts to themselves, I think it unlikely the respondents would succeed in obtaining the order they seek” (para. 4). I agree with him that what is important here is the course of conduct between the parties and the evidence that documents this relationship. The 1989 letter acknowledges that the beds are to be short-term care beds and the permit must be correspondingly altered. The 1990 letter documents the promise. Over the course of those dealings, the various occupants of the office of the Minister and Ministry officials knew that the hospital’s vocation as a long-term and short-term care provider was an important element of the Center’s fund-raising campaign; 50 intermediary care beds were allocated -- beds that are considered short-term care beds and were eventually acknowledged as such. These officials had knowledge of and funded all of the Center’s short-term care services, promoted the move to Montreal, and promised an alteration of the permit once the move was made. Most of these elements were in place even in 1984, but they were solidified over the years in which the relocation plans were taking shape and being encouraged, culminating in what is, in my opinion, the significant triggering event here, namely the move to Montreal in January 1991. Hence, I see the Minister’s discretion under s. 138 as having been exercised at that date.

[106] The parties referred in their submissions to a number of decisions that have considered the level of deference to be attributed to a Minister’s exercise of discretion, including this Court’s recent decision in Baker v. Canada (Minister of Citizenship and Immigration), 1999 CanLII 699 (SCC), [1999] 2 S.C.R. 817. The level of deference given to such decisions is high. However, this is not a situation in which the exercise of the Minister’s discretion is under review as it was in Baker. Here the Minister has exercised his discretion prior to the decision that is objected to. More specifically, the discretion has been exercised by January 1991 when the move to Montreal is made, and the decision that is objected to here is the October 3, 1991 refusal to issue the modified permit. Hence, what is at issue is the reversal of that exercise of discretion. In other words, the Minister’s discretion has been “spent” or “exhausted” by the time the refusal is made.

[107] However, the question remains as to whether the October 3, 1991 letter was a valid reversal of the exercise of that discretion. More specifically, we must ask whether, under some general discretionary power, the Minister was entitled to reverse that original exercise of discretion at that time, in that way.

C. Was the Original Exercise of Discretion Validly Reversed?

[108] In my opinion, the October 3, 1991 refusal cannot be taken as a valid reversal of the Minister’s prior exercise of his discretion for at least two reasons.

[109] First, the issue of additional resources and funding had never been raised before by ministerial officials to the Center’s executives. There was never in fact any request for additional services or money by the Center. Moreover, there was no indication that the Center would have to change any of its activities in order to satisfy the requirements of the permit it asked for, thereby requiring more funding. The budget reports submitted from 1974 to 1991 have always included short-term care services, e.g., an operating room, laboratories and radiology services. The Center’s October 24, 1991 letter responding to the Minister’s refusal pointed out that the Center has always responded to the needs of the patients within its budget and that it had no intention of asking for adjustments to its budget for care and services resulting from the reclassification. I would also point out that the idea that the move to Montreal would not result in any reduction or increase in programs or lead to an increased budget has always been at the center of the negotiations between the parties; see the Minister’s report, supra, at p. 11. The Minister cannot now invoke a vague and ungrounded funding concern as a reason for reversing a prior exercise of discretion in these circumstances.

[110] Secondly, the Minister’s behaviour since that October 3, 1991 refusal of the permit modification is inconsistent with finding that the exercise of discretion has in fact been genuinely reversed. I refer here to the Minister’s December 3, 1991 letter written to the president of the board of directors of another Montreal hospital, Centre hospitalier des convalescents de Montréal. In this letter, the Minister explains that the palliative care program formerly run by this hospital will be transferred to the Center. As various elements of the evidence indicate (e.g., the affidavit of Howard Blatt) and the Minister himself admits in this letter when he says that the use of these beds [translation] “is limited to a few weeks”, palliative care beds are by definition short-term care beds. Indeed, I note in this respect that in the November 21, 1989 letter referred to above, the Center is actually told by the C.S.S.S.R.M.M. that the palliative care patients cannot be given long-term care beds and they must be considered to be short-term care bed occupants. In the December 3, 1991 letter, the Minister writes [translation] “the replacement of these beds has been carried out by Mount Sinai Hospital”. This confirmation that the Center will be running short-term care beds comes after the Minister’s refusal to alter the Center’s permit. In my view, it indicates that the Minister’s behaviour is inconsistent with a reversal of his discretion to modify the Center’s permit. It is, in effect, acting as if the original exercise of the discretion is what is in operation, i.e., the Center has short-term care beds that can be used for palliative care patients. The only logical inference to be drawn is that this situation is the one that the Minister believes to be in the public interest.

[111] Given the groundlessness of the Minister’s refusal to alter the permit as promised and his subsequent behaviour inconsistent with the supposed reversal of the original exercise of his discretion, I cannot view that October 3, 1991 letter as a valid reversal of the discretion exercised when the Minister promised to the Center a modification of its permit to reflect reality once the move to Montreal was made.

[112] In the case of Comeau’s Sea Foods Ltd. v. Canada (Minister of Fisheries and Oceans), 1997 CanLII 399 (SCC), [1997] 1 S.C.R. 12, this Court recognized the ongoing nature of a Minister’s discretionary power, holding that the Fisheries Act’s conferral of “absolute discretion” to the Minister to issue or authorize to be issued a fishing licence included the power to revoke that authorization prior to the actual issuance of the licence. There Major J. stated, at para. 43:

The power to issue the licence, once exercised in any single instance, is expended and may only be revised or revoked under the specific statutory conditions in s. 9. However, the power to authorize is a continuing power. . . . I do not think that the authorization to issue the licence conferred upon the appellant an irrevocable legal right to a licence. Until the licence is issued, there is no licence and therefore no permission to do what is otherwise prohibited, namely fish for lobster in the offshore. Unless and until the licence is actually issued, the Minister in furtherance of government policy may reevaluate or reconsider his initial decision to authorize the licence. Until the Minister actually issued the licence, he possessed a continuing power to reconsider his earlier decision to authorize and or issue the licence . . .

This case and its holding, in my mind, is readily distinguishable from the case at bar.

[113] The Fisheries Act, R.S.C. 1985, c. F-14, used a two-stage process of authorizing and issuing licences. In Comeau’s Sea Foods, the Ministry had telexed to the applicant a copy of the decision to authorize the licences. However, on the facts of that case, the applicant did not request that the actual licences be issued and the evidence was that they would have been had the request been made prior to a change in Department policy after which, given political pressures surrounding lobster fishing, specific clearance from the Assistant Deputy Minister was required. As Major J. put it at para. 50: “In most instances the issuance of the licence would be expected to follow its authorization in short order. Nonetheless, the time between the two does permit the Minister to assess his authorization in light of government policy or a change in circumstances.” In this case, there was a legitimate change in government policy that led the Minister to reconsider issuance of the licences, thereby exercising his discretion within the period of time given to him under the statute to do so.

[114] In the present case, the former law is not set up this way. As Major J. recognized in Comeau’s Sea Foods, whether the power can be exercised once or more than once is a matter of interpretation (supra, at para. 44, citing C.W.C. v. Canada (Attorney General), 1988 CanLII 9454 (FC), [1989] 1 F.C. 643 (T.D.), at p. 652). The legislation here does not use the authorizing/issuing steps. Section 138 governs the granting of permits or modifications to existing permits and s. 139.1 governs the renewal of permits. Hence, the Minister is not provided, as the Minister was provided under the Fisheries Act, with a period of time in which to change his or her mind. Moreover, even if such a power were to be imputed to the Minister on the basis of general discretionary powers, the refusal in this case was not a valid exercise of the Minister’s discretion. The policy concern invoked in the October 3, 1991 refusal was not a fair or appropriate one given a situation in which the Minister continued to fund the short-term care services the Center provided and considered it in his dealings with the rest of the world as a provider of both long-term and short-term care services. A policy concern invoked in such circumstances must be legitimate. At the very least, it must correspond to the reality of the situation. The Minister cannot promise the Center to issue the modified permit when the move to Montreal is made, refuse to issue that permit, and then continue to treat the Center as if the permit had in fact been issued. Having decided that it was in the public interest for the Center to operate as a long-term and short-term care facility and having continued to see things this way even after the move, the Minister must issue the 1991-1993 permit.

D. What Are the Minister’s Subsequent Obligations?

[115] As I have said above, the Minister must issue the 1991-1993 modified permit, recognizing the Center’s vocation as a provider of both long-term and short-term care. This will bring the Center under s. 126 of the new law into the category of “an institution which operates both a residential and long-term care centre and a general and specialized hospital centre with 50 beds or more”. As such, it is entitled to its own board of directors. The election of the prior unified board must, therefore, be cancelled.

[116] If the Minister wants to change the category, class, kind or capacity of the permit (e.g., have the Center operate as a residential and long-term care centre only), this must in fact be reflected in the Center’s authorized activities and the government’s funding of those activities. If the Minister decides to take this course of action, the Minister must:

a. consult with the Center and give it an opportunity to make representations as s. 442.1 of the new law requires;

b. make sure that its consideration of what “the public interest warrants” under s. 442.1 of the new law is based on valid and legitimate policy concerns that are fairly invoked and based on the reality of the situation.

In other words, the government cannot invoke a vague funding concern as a reason for making the change to a long-term care permit and then continue to treat the Center as a mixed-care operation. Any change in the Center’s permit status, and subsequent effect on its ability to have its own board of directors, must be justified by way of an actual change in government policy based on a decision that those short-term care services no longer serve their particular purpose or the public interest.

[117] It is my view that where the Minister has failed to act in accordance with a prior exercise of discretion, the criteria for the issuance of an order of mandamus are met; see Apotex Inc. v. Canada (Attorney General), 1993 CanLII 3004 (FCA), [1994] 1 F.C. 742 (C.A.), aff’d 1994 CanLII 47 (SCC), [1994] 3 S.C.R. 1100. Although art. 100 of the Code of Civil Procedure, R.S.Q., c. C-25, provides that extraordinary remedies are not generally available against the Crown, this rule does not apply in circumstances where the Minister acts outside the limits of his competence, as in this case; see D. Ferland and B. Emery, Précis de procédure civile du Québec (3rd ed. 1997), vol. 1, at pp. 162-63; P. A. Gendreau et al., L’injonction (1998), at pp. 194-95; Morin v. Driscoll College Inc., [1979] R.P. 198 (C.A.); Procureur général de la province de Québec v. Laurendeau, 1985 CanLII 2963 (QC CA), [1985] R.D.J. 513 (C.A.); Charles Bentley Nursing Home Inc. v. Ministre des Affaires sociales, [1978] C.S. 30.

V. Disposition

[118] For these reasons, I would dismiss the appeal with costs and order the Minister to deliver the required permit pursuant to art. 844 of the Code of Civil Procedure.

Appeal dismissed with costs.

Solicitors for the appellant: Bernard, Roy & Associés, Montréal.

Solicitors for the respondents Mount Sinai Hospital Center and Elliot L. Bier et al.: Adessky, Poulin, Montréal.