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| Sara Blake |
The Ontario Divisional Court has confirmed, first, that the statutory standard applied by a registrar — “reasonable grounds for belief” that the proposed licensed business will not be conducted with honesty and integrity — is a lower standard than the balance of probabilities and, second, that the applicant has the onus to demonstrate that the registrar’s opinion is not based on objective information: Home Construction Regulatory Authority (Registrar) v. Yarco Developments Inc., [2024] O.J. No. 78.
An application for a homebuilder’s licence made by Yarco Developments was rejected by the registrar under the New Home Construction Licensing Act. The owner of Yarco had been convicted of significant financial crimes, including fraud over $5,000, possession of instruments for falsifying credit cards, using documents in someone else’s name, possession of and unauthorized use of credit card data, possession of a credit card forgery device and using counterfeit money. The convictions were disclosed in the application for a licence. The crimes had been committed more than a decade previously. The individual had served his sentences but had not obtained a pardon. There was no information to suggest misconduct since the convictions.
Yarco appealed to the licence appeal tribunal that granted the licence. The registrar appealed to the Divisional Court, which ruled that the tribunal erred in its interpretation of the statute.
The tribunal erred by focusing on the specific provision listing the licensing criteria without regard to its statutory context and purposes. Most importantly the tribunal failed to consider the statutory purpose of consumer protection. A homebuilder’s licence is required because a home is typically a person’s most expensive and significant purchase. For this reason, the tribunal erred in ruling that Yarco was entitled to the licence unless the registrar proved on a balance of probabilities that the business would not be conducted with honesty and integrity.
First, the court reminded us that there is no entitlement to a licence — it is a privilege.
Second, the court noted this “honesty and integrity” criterion is common in licensing statutes concerning professions, trades and business activities. The cases interpreting this criterion in other licensing contexts have ruled that the registrar’s “reasonable grounds for belief” is a lower standard of proof than the balance of probabilities. The registrar’s opinion need only be supported by objective, compelling and credible information about the past and present conduct of the applicant and its associates.
Third, as to the onus of proof, the tribunal erred in ruling that what mattered was Yarco’s reasonable grounds to believe that it would conduct its business with honesty and integrity despite its owner’s criminal history. Under the statute, what matters is the registrar’s opinion, not the applicant’s. And the onus is on the applicant to prove the non-existence of objective grounds for the registrar’s belief. If objective grounds exist, the registrar’s opinion prevails because of the statutory significance of the registrar's gatekeeping mandate.
The court quashed the tribunal's decision and referred the case back for a new hearing before a different adjudicator.
The standard of review was not an issue because the statute grants a right of appeal from the tribunal to the Divisional Court on all questions of law, fact and mixed law and fact.
I am surprised that this tribunal got it wrong. It is the licence appeal tribunal. It hears appeals under more than 25 licensing statutes. This honesty and integrity criterion is in most of them. Every tribunal adjudicator, on appointment, should receive basic training on how to interpret the common statutory provisions that must be applied to the cases that it hears. I offer a one-hour introductory seminar on how to do statutory interpretation.
Sara Blake is the author of Administrative Law in Canada, 7th edition, LexisNexis Canada. Her practice is restricted to clients who exercise statutory and regulatory powers.
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