Quinn Truck Lines v. Snow, [1981] 2 SCR 657

Supreme Court of Canada

Quinn Truck Lines v. Snow, [1981] 2 S.C.R. 657

Date: 1981-12-17

T.E. Quinn Truck Lines Limited (Applicant) Appellant;

and

The Honourable James Snow, Minister of Transportation and Communications for the Province of Ontario (Respondent) Respondent.

1981: November 9; 1981: December 17.

Present: Laskin C.J. and Ritchie, Dickson, Beetz, Estey, McIntyre and Lamer JJ.

ON APPEAL FROM THE COURT OF APPEAL FOR ONTARIO.

Judicial review—Duty to act fairly—Board granted appellant a temporary licence but later recommended Minister refuse licence transfer from purchased company—Years later, Minister denied transfer for want of up-to-date information but refused further submissions—Temporary licences still in force—Whether Minister’s decision should be declared a nullity—The Judicial Review Procedure Act, 1971, 1971 (Ont.), c. 48, s. 2—The Public Commercial Vehicles Act, R.S.O. 1970, c. 375, ss. 6, 7.

Appellant bought a transport business holding an Ontario extra-provincial licence and applied for a transfer of that licence to itself. While the transfer application was before the Ontario Highway Transport Board, appellant applied for and was granted a temporary authority to operate the extra-provincial licence in the name of the purchased company. The temporary licence was to remain in force until the transfer application was disposed of. The Board recommended that the transfer be refused but the Minister did not act until, some years later, the Ontario Court of Appeal dismissed charges of operating without a licence, as against the appellant, on the ground that the temporary licence remained effective until the Minister made his decision. At this time, the Minister required proof of financial stability but refused to accept further submissions. This case arose from the appellant’s application for judicial review of the Minister’s refusal to grant the transfer and for the granting of a declaration that the decision was a nullity, made without or in excess of jurisdiction, in that it failed to deal fairly with the appellant.

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Held: The appeal should be allowed.

The Minister’s decision should be set aside, with the result that the temporary licence would still be in effect and would continue in effect until the Minister ruled on the application for transfer. The Minister breached his duty as a statutory authority to act fairly in relation to an applicant having an economic stake in his decision. This duty could have been met by remitting the matter to the Board for the reception of up-to-date financial material as to the applicant and for the holding of a hearing, to be followed by a report to the Minister. By requiring proof of financial stability as the situation existed when he made his decision and not at the time of the report, and by refusing to entertain further submissions, the Minister put the appellant in an impossible position. The Minister, if he had acted promptly on the report, could have properly refused the transfer and mere delay would not amount to unfairness against the appellant. Administrative problems arising from the acceptance of additional evidence were not a valid ground for refusing judicial review that otherwise should be granted.

Secretary of State for Education and Science v. Metropolitan Borough of Tameside, [1976] 3 All E.R. 665, considered.

APPEAL from a judgment of the Ontario Court of Appeal^[1], dismissing an appeal from the judgment of the Divisional Court dismissing an application for judicial review of a decision of the Honourable The Minister of Transport and Communications. Appeal allowed.

Claude Thomson, Q.C., and S.R. Rickett, for the appellant.

J. Polika, Q.C., for the respondent.

The judgment of the Court was delivered by

THE CHIEF JUSTICE—This case arises from an application by the appellant for judicial review, under s. 2 of The Judicial Review Procedure Act, 1971, 1971 (Ont.), c. 48, of the decision of the respondent Minister refusing to approve the transfer of an extra-provincial operating licence under s. 7 of The Public Commercial Vehicles Act, R.S.O. 1970, c. 375, as amended. The relief sought

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is a declaration that the Minister’s decision is a nullity because made without or in excess of jurisdiction by reason of a failure to deal fairly with the appellant in the particular circumstances of this case.

I may say, at the outset, that the circumstances are special—they are set out in what follows in these reasons—and it is this that underlies the submissions made on the appellant’s behalf to this Court. There are background facts which are not in dispute. The appellant, itself the holder of intraprovincial and extra-provincial operating licences, entered into an agreement on or about October 5, 1972 with two United States companies, one, Motek Corporation and the second, a wholly-owned subsidiary, Beaney Transport Limited, to buy the business of Beaney, which held an extra-provincial operating licence obtained from the Ontario licensing authority and also held an interstate operating licence from the licensing authority in the United States. On or about December 7, 1972, the appellant applied for a transfer of Beaney’s extra-provincial licence to itself and, at the same time, applied to the United States Interstate Commerce Commission for a transfer of Beaney’s interstate licence. This latter application was granted on January 10, 1977.

The relevant statutory provision governing the transfer of an existing Ontario licence at the material time was s. 7 of The Public Commercial Vehicles Act, as enacted by 1971 (Ont.), c. 50, s. 71(5). In its relevant parts, it was as follows:

7.—(1) No operating licence shall be transferred without the approval of the Minister, in writing, obtained on application in the prescribed form and payment of the prescribed fee.

(2) The Minister shall refer an application for approval of the transfer of an operating licence to the Board, and the Board shall hold a hearing and shall report to the Minister whether or not the public necessity and convenience served by the transportation service carried on under the licence will be prejudiced by the transfer of the licence.

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(3) The Minister, the proposed transferor and transferee and such other persons as the Board may specify are parties to the proceedings under this section.

(4) The Minister shall consider a report made by the Board to him under this section and may thereafter approve or refuse to approve the transfer and the Minister shall give reasons for his decision to the other parties to the proceedings.

The granting of an original licence was at the time governed by s. 6 as enacted by s. 71(4) of the aforementioned Act. This provision was, so far as material here, in these terms:

6.—(1) Except under clause a of subsection 1 of section 5, the Minister shall not issue an operating licence to any person unless the Board, upon the application of that person in the prescribed form has, after a hearing of the application as required by The Ontario Highway Transport Board Act, approved the issue of the licence to him on the ground that public necessity and convenience warrant the issue of the licence and will be served thereby, and has issued a certificate to that effect to the Minister.

It will be noted that there is a significant difference between the two sections. Where an original licence is sought, the Minister, as the statutory approving authority, can only act if there is a favourable recommendation by the Ontario Highway Transport Board. Where transfer of an existing licence is sought, the Minister must await a report from the Board and, although he is obliged to consider it, he may approve a transfer even if the report is adverse and, whether he approves or refuses a transfer, he is obliged to give reasons.

In the present case, while the transfer application was before the Board, the appellant applied for a temporary authority to operate the extra-provincial licence in Beaney’s name. Counsel on both sides indicated that there was some doubt whether there is any power or authority to issue temporary licences but, in the events that happened, as related below, it must be taken here that the temporary licence which was issued was properly issued and had an operation according to its terms.

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The application for a temporary licence was heard over nine days between February 12, 1973 and February 23, 1973 by Mr. E.J. Shoniker, chairman of the Board and exercising the powers of the Board. By a certificate dated March 6, 1973 a certificate was issued in the terms applied for. The chairman denied a motion by certain opponents to dismiss the application and, in granting the temporary licence, made certain observations in his reasons which I wish to reproduce from pp. 43 and 44 of the Case on Appeal, as follows:

Dealing first with the evidence of the applicant. Evidence was given by Mr. Cain, the Chairman of the Board of Beaney Transport Limited and President of Motek Corporation, the controlling corporation for Beaney Transport Limited in the United States of America. This evidence, in essence, dealt with the financial situation of Beaney Transport Limited and it was uncontested that Beaney Transport Limited due to its financial position, was unable to continue operating and had entered into a sale of the international assets to T.E. Quinn Truck Lines Limited to minimize the losses incurred therein. He also gave evidence of the approval of the Interstate Commerce Commission to the temporary operation of the Beaney authority which was granted on the 10th day of January, 1973, a copy of which is filed with this Board.

...

The Board finds that the public of Ontario requires the authority held by Beaney Transport Limited, to be operated in an efficient and effective manner in order to provide the shipping public of Ontario with a required service that has been fulfilled by the Beaney Transport Limited for some years.

The Board further finds on the evidence adduced that should this Board not grant a temporary authority to the applicant to operate the Beaney authority, the authority could become dormant and the public of Ontario be deprived of the service it so requires.

On this basis the Board finds that a temporary authority should, in this instance, be granted to benefit the public of Ontario. The Board is left only to deal with the fitness of the applicant.

It was common ground that the temporary licence was to remain in force until the transfer application was disposed of.

This latter application was considered by Mr. G.C. Marrs, vice-chairman of the Board and

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acting in its name. After a five-day hearing, which apparently began on April 2, 1973, an order was made on June 29, 1973, denying the transfer. Of course, it was not for Mr. Marrs to refuse the transfer, although he could recommend refusal; his duty under s. 7(2) of the governing statute was to report to the Minister who had the power of decision, to allow or to refuse. Unfortunately, Mr. Marrs’ reasons are not in the record (as were Mr. Shoniker’s above referred to) and it is only when we turn to the Minister’s decision refusing to approve the transfer that an indication is given of Mr. Marrs’ reasons. Much happened in the interval between the Marrs report (if I may so term it) and the Minister’s decision, which was not given until May 20, 1977, and it must be mentioned.

On or about July 26, 1973, an application was made by the appellant under s. 17 of The Ontario Highway Transport Board Act, R.S.O. 1970, c. 316, for a rehearing of the so-called decision of June 29, 1973. A rehearing was refused on August 8, 1973, in a decision by Mr. Shoniker, who sat in review of a decision made by his vice-chairman. Later that month the appellant filed a petition to the Lieutenant Governor in Council pursuant to s. 21 of The Ontario Highway Transport Board Act asking for rescission of the decisions of June 29 and August 8 or, alternatively, for a further review by the Board. By Order in Council of March 24, 1974 the petition was denied.

I do not have to determine here whether there was any right or point in petitioning the Lieutenant Governor in Council when under s. 7 of The Public Commercial Vehicles Act the decision on a transfer of licence was for the Minister. The record would support the surmise that it was generally thought that the Board was the effective authority, a surmise easily dispelled by looking at s. 7.I pass over a petition made by the appellant to the Governor in Council on or about July 31, 1974, under s. 5 of the Motor Vehicle Transport Act, R.S.C. 1970, c. M-14, for an order to exempt the

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extra-provincial licence in issue here from the Act. It is enough to say the petition was denied.

The various foregoing steps merely show how vigorously the appellant was fighting to retain the Beaney licence. The appellant carried its fight further by applying to the Board under s. 5 of The Public Commercial Vehicles Act for an extra-provincial licence in its own name in terms of the Beaney licence but this application was dismissed by the Board on January 20, 1975.

Throughout all the periods aforementioned and after obtaining the temporary licence, the appellant carried on in accordance with the terms of the Beaney operating licence. On March 27, 1974, a large number of charges were laid against the appellant for operating without a valid operating licence. A conviction on one of the charges, presumably carried through as a test case, was quashed by the Ontario Court of Appeal on February 21, 1977 on the ground that the temporary licence was still in effect since the Minister, as the proper statutory authority, had not yet made a decision on the transfer application. The Minister moved to correct his default by the decision he made on May 20, 1977, already referred to.

On May 31, 1977, the appellant’s solicitor wrote to the Minister asking for a hearing, especially in view of changed circumstances since the Board’s “report” of June 29, 1973. The Minister replied under date of July 19, 1977, stating that the matter had been finally determined. The solicitor wrote again on July 20 insisting on a hearing and on an opportunity to make submissions and asking for a reply. None was forthcoming. The application for judicial review was made on April 28, 1978, and one of the points taken strongly by counsel for the Minister was that the appellant was seeking a discretionary remedy and that the long delay after the Minister’s decision and, indeed, after the correspondence with the appellant’s solicitor, was a very relevant factor on whether relief should be granted, even apart from

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other considerations which allegedly supported the way in which the statute was applied.

I come now to consider the Minister’s reasons set out in his May 20, 1977 decision. It will be best to set them out in full in their material parts, as follows:

From the findings of Mr. Marrs on the 29th June, 1973, you were thus afforded two additional occasions to be heard, neither of which changed the initial findings on your application, hence they remain before me. The evidence entered at that hearing showed that:

(a) The transferor Beany [sic] Transport Limited had no operative equipment beneficially owned by itself although showing liabilities amounting to approximately one million dollars ($1,000,000).

(b) The financial position of the transferor together with the lack of operative equipment is reflected in the evidence that the service under the authority had, for all practical purposes, ceased in 1972.

(c) Transportation International Limited was then at the time the current holder of the shares of Beany [sic] Transport Limited but was not a party to the application and in fact it does not appear they were aware of the application.

In light of the foregoing, it is apparent that the transferor was in financial difficulty with no viable assets by way of operative equipment, an overall position resulting in the discontinuance of the service. This being the case, it is doubtful that the operation on which the transfer is sought does or did in fact exist. Granted that it does exist, it falls to the applicant for the transfer to show the financial stability necessary to assume the obligations of the agreement it seeks to enter into, and in this respect, in this particular matter, this was not shown.

For the foregoing reasons, I wish to inform you that I refuse to approve the transfer.

Two things are apparent from these reasons. The Minister takes his initial point of departure from Mr. Marrs’ report of June 29, 1973 but he also appears to view the application in the situation existing on May 20, 1977 when he says:

¼it is doubtful that the operation on which the transfer is sought does or did in fact exist. Granted that it does exist¼

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and he goes on to lay the burden on the applicant to show financial stability to assume the obligations of the agreement it seeks to enter into and concludes that this was not shown.

This aspect of the Minister’s reasons falls short of comprehension. If the appellant has the burden of showing financial stability respecting an operation existing at the time of the Minister’s reasons, it cannot discharge that burden unless given an opportunity at least to make submissions to the Minister. However, the Minister refused to entertain any further submissions, thus putting the appellant in an impossible position, in a “catch 22” position to use a more common expression.

There is another troubling matter in this case. Three and one-half months before the Marrs report, the Shoniker decision came down approving a temporary licence. There is no doubt that Beaney was in difficult financial straits when the temporary licence application was considered and finally granted on May 6, 1973. There was no suggestion, however, that Beaney had, on the Minister’s assertion in pursuance of the Marrs report, for all practical purposes gone out of service. The Shoniker report spoke of the public advantage of the continuation of the Beaney extra-provincial licence. Indeed, the Shoniker report stated that if the temporary licence was refused, the Beaney authority could become dormant (the italics are mine). I cannot reconcile this statement on a key issue with what the Minister, following Marrs, said in his reasons.

The matter is a critical one, not the least because of what was said in the majority judgment of the divisional Court and in the Court of Appeal, namely, that if there was a change of circumstances the applicant was free to make a new application for transfer. This assertion is also connected with a submission made by counsel for the Minister that the appellant was continuing to flout the law by carrying on the Beaney operation. The nature of the enterprise is such, however, that once shut down the business is at an end so far as the existing Beaney authority is concerned and there cannot be any talk of a new application for a

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transfer. Moreover, the appellant, having appealed to this Court, could be expected to run the risk of continuing under the Beaney authority despite the refusal of a stay by Wilson J.A., until this Court had come to a decision in the appeal. And it is well to offer the reminder that the exercise of discretion by the Divisional Court or by the Court of Appeal in respect of the application for judicial review under The Judicial Review Procedure Act is not a foreclosing consideration in this Court, which is in the same position as the two Ontario Courts on the issue of discretion, allowing for the deference it might pay to them. This is a case where a Court’s discretion is involved, not the discretion of some statutory body or domestic tribunal.

I turn now to the reasons of the. Divisional Court where Saunders J. dissented. The Court of Appeal, by and large, affirmed the majority reasons of the Divisional Court in a short endorsement of the record and I need say nothing more about its reasons, having dealt above with the two points it made, namely, on discretion and on the alleged right to apply anew for a transfer of the Beaney licence.

O’Leary J., speaking also for Craig J., delivered the reasons of the Divisional Court majority. He recited the background events that I have set out above and considered and rejected what he said were the main grounds for judicial review, namely, that the Minister asked himself the wrong question (a euphemism for failure to consider the situation as of May 20, 1977) and that the applicant had not been fairly treated in being precluded from bringing matters up to date. Stress was laid by O’Leary J. on administrative difficulties which would arise if additional evidence was accepted, apparently because other persons would be entitled to be heard and the Minister was entitled to consider it administratively impractical to receive further submissions. I cannot accept this intruded consideration as a ground for refusing judicial review if it should otherwise have been granted.

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Certainly, I did not understand the Minister’s counsel to defend this as a proper consideration. If administrative difficulties are at all relevant here, they would, in my view, go to the arrangements for a hearing to receive additional evidence and not to the substantive question raised by the appellant.

What was also said to be a relevant factor and a defensible position of the Minister was his right to act on the application for a transfer when he did and on the basis of the circumstances existing at the date of the Marrs report. Certainly, I agree that a change of circumstances may be alleged within a month as well as within a longer period and this does not, ordinarily, call for further hearings. As O’Leary J. said, if the Minister had acted promptly he could properly have refused the licence transfer and mere delay could not amount to unfairness against the appellant.

I have already referred to aspects of the Minister’s reasons which, in my view, put a different complexion on this case. There is no doubt, as Saunders J. pointed out in his dissent, that the Minister, as a statutory authority, was bound to act fairly in relation to an applicant having an economic stake in his decision. Saunders J. was of the opinion that in view of the long delay of the Minister (indeed, he said the Minister might never have acted if the Ontario Court of Appeal had not quashed the charge against the appellant on February 21, 1977) he should not have ignored the representations of appellant’s solicitor and came under a duty to act fairly. In my view, this duty would be met by remitting the matter to the Board for the reception of up-to-date financial material as to the applicant and for the holding of a hearing, to be followed by a report to the Minister. His decision should therefore be quashed for breach of this duty.

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Like Saunders J., I am of the view that the Minister’s decision should be set aside, with the result that the temporary licence would be still in effect and would continue in effect until the Minister ruled on the application for transfer. I come to this conclusion on the particular facts of this case and rest it on the very reasons the Minister gave for refusing a transfer, reasons which, on their face, are untenable. He himself brought the case forward to May 20, 1977, making that a relevant date as of which to assess the appellant’s financial stability, and he cannot now restore or rest on the position as it stood on June 29, 1973. This is enough to make his decision vulnerable but I also find support for vacating it in the fact that there appears to be an error on a critical point, namely, whether, despite financial difficulty, Beaney was still operating when the agreement of purchase was made and when the application for a transfer of the licence was made.

The judgment of the House of Lords in Secretary of State for Education and Science v. Metropolitan Borough of Tameside^[2] is of relevance here. Among the issues in that case, which concerned the interaction of local and ministerial authority in respect of educational administration, was whether the judgment of the Secretary of State, resulting in a direction that a certain scheme be implemented, was challengeable where, pursuant to the governing statute, he determined that he was satisfied that the local authority was acting unreasonably. It is enough to quote from Lord Wilberforce, as follows (at pp. 681-82):

The section is framed in a ‘subjective’ form—if the Secretary of State ‘is satisfied’. This form of section is quite well known, and at first sight might seem to exclude judicial review. Sections in this form may, no doubt, exclude judicial review on what is or has become a matter of pure judgment. But I do not think that they go further than that. If a judgment requires, before it can be made, the existence of some facts, then, although the evaluation of those facts is for the Secretary of State alone, the court must enquire whether those facts exist, and have been taken into account, whether the judgment

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has been made on a proper self direction as to those facts, whether the judgment has not been made on other facts which ought not to have been taken into account. If these requirements are not met, then the exercise of judgment, however bona fide it may be, becomes capable of challenge: see Secretary of State for Employment v. Associated Society of Locomotive Engineers’ and Firemen (No 2) [[1972] 2 All E.R. 949 at 967, [1972] 2 Q.B. 455 at 493], per Lord Denning MR.

There is one further point that I wish to address, one that I mentioned earlier. There was, as I then noted, a strong assertion by counsel for the Minister that the appellant’s delay in seeking judicial review was a ground for denying it. The delay was from July 29, 1977 when the appellant’s solicitor wrote his second letter to the Minister, to April 28, 1978. In that letter he asked for a reply which did not come. Considering the Minister’s own delay, I would not rule out relief in a plainly meritorious case merely because of the delay of perhaps some nine months.

The appeal is therefore allowed and the Minister’s decision is quashed. The appellant is entitled to costs throughout.

Appeal allowed with costs.

Solicitors for the appellant: Campbell, Godfrey and Lewtas, Toronto.

Solicitor for the respondent: Julian Polika, Toronto.