Court of Appeal

Nova Scotia Court of Appeal

Citation: Jono Developments Ltd. v. North End Community Health

Association, 2014 NSCA 92

Date: 20141009

Docket: CA 415197

Registry: Halifax

Between:

Jono Developments Ltd.

Appellant

v.

The North End Community Health Association,

The Richard Preston Centre for Excellence Society,

and The Micmac Native Friendship Society and

Halifax Regional Municipality

Respondents

 

Judges:	MacDonald, C.J.N.S.; Farrar and Bryson, JJ.A.
Appeal Heard:	May 14, 2014, in Halifax, Nova Scotia
Held:	Appeal allowed per reasons for judgment of Farrar, J.A.; Bryson, J.A. concurring; MacDonald, C.J.N.S. dissenting.
Counsel:	William L. Ryan, Q.C. and Maggie Stewart, for the appellant Ronald A. Pink, Q.C., David Wallbridge and Kelly McMillan, for the respondents The North End Community Health Association, The Richard Preston Centre for Excellence Society and the Micmac Native Friendship Society Martin C. Ward, Q.C., for the respondent Halifax Regional Municipality (Watching Brief only)

 

 

Reasons for judgment:

Introduction

[1]             This appeal concerns the sale of a surplus school property, St. Patrick’s Alexandra Elementary School (the Property) by the respondent Halifax Regional Municipality (HRM) to the appellant Jono Developments Limited (Jono).

[2]             The other respondents, the North End Community Health Association, the Richard Preston Centre for Excellence Society, and the Micmac Native Friendship Society (the Community Groups), sought judicial review of HRM’s decision to sell the Property to the appellant.  They alleged that HRM breached the duty of fairness owed to them by not following HRM Procedures for the Disposal of Surplus Schools.  They also argued that HRM breached the Halifax Regional Municipality Charter, S.N.S. 2008, c. 39 (the Charter) by selling the property below market value. 

[3]             In a decision dated September 24, 2012 (2012 NSSC 330), Justice David MacAdam accepted the Community Groups’ arguments and quashed HRM’s decision that approved the sale of the Property. 

[4]             The reviewing judge subsequently awarded costs to the Community Groups  in the amount of $30,125.77 with Jono paying 25% and HRM paying 75%. 

[5]             Jono appeals, alleging the judge erred in allowing the motion for judicial review and in requiring Jono to pay a portion of the costs award.

Background

[6]             In September 2000 HRM received a staff report on Policy and Procedure for the Disposal of Surplus Schools (the Procedure).  The report outlines “a set of procedures to ensure that HRM has all of the information it requires, in a standardized format, when it is called upon to determine the future disposition of surplus school properties.” 

[7]             The Procedure was approved as a policy pursuant to the Municipal Government Act, S.N.S. 1998, c. 18 and continued under the Charter.  HRM's policy, resolution and by-law-making powers are described at ss. 58 and 59 of the Charter:

Resolutions, policies, by-laws

58(1) The Council shall make decisions in the exercise of its powers and duties by resolution, by policy or by by-law.

(2) The Council may exercise any of its powers and duties by resolution unless a policy or a by-law is required by an enactment.

(3) The Council may exercise by by-law any of the duties and powers that it may exercise by resolution or policy.

(4) The Council may exercise by policy any of the duties and powers that it may exercise by resolution.

...

59 (1) Before a policy is passed, amended or repealed the Council shall give at least seven days’ notice to all Council members.

(2) The Council may adopt different policies for different areas of the Municipality.

(3) In addition to matters specified in this Act or another Act of the Legislature, the Council may adopt policies on any matter that the Council considers conducive to the effective management of the Municipality.

[8]             HRM's powers regarding municipal property and the acquisition, sale, and lease of municipal property are set out at ss. 61(5) and 63, which provide, in part:

Powers of Municipality regarding property

61(5)    The Municipality may ...

(b) sell property at market value when the property is no longer required for the purposes of the Municipality ....

Sale or lease of municipal property

63(1) The Municipality may sell or lease property at a price less than market value to a non-profit organization that the Council considers to be carrying on an activity that is beneficial to the Municipality.

(2) A resolution to sell or lease property referred to in subsection (1) at less than market value shall be passed by at least a two thirds majority of the Council present and voting.

(3) Where the Council proposes to sell property referred to in subsection (1) valued at more than ten thousand dollars at less than market value, the Council shall first hold a public hearing respecting the sale.

[9]             The Procedure provided that when HRM received notice that a school was surplus, Building Management Services (BMS) would (i) assess the property, (ii) prepare a budget, (iii) schedule interim maintenance, and (iv) request internal (or Business Unit) proposals for future use of the property.  Commercial Real Estate Services was required to commission an appraisal to establish the property's “market value.”

[10]         If HRM decided not to retain the property for its own use, the Procedure required the following steps to be taken:

7. On receipt of that information, CGPP [Community Grants and Partnering Program] will evaluate any interest that may have been expressed by local community groups or grant applicants for the use of the school for community purposes. CGPP shall:

(a) advise all such community groups that they are required to submit a written proposal within 90 days, setting out the composition of the group, its purpose and management structure including office-bearers, the nature of the activities proposed, a financial statement, a business plan for the first five years, and a clear statement of the terms they are prepared to offer for the purchase or lease of the property; and

(b) evaluate all submissions and assess their viability. Any submission that is deemed feasible and meets HRM's fiscal goals for the accommodation of community programs shall be carried forward as a recommendation to Executive Management and Council.

8. In the event that no proposals are received from community groups or grant applications, or that any proposals which are received are not supported by CGPP, CRES shall take steps to put the property on the market, subject to Council's approval.

[11]        The September 2000 staff report raised the question of criteria for evaluating the competing interests of community groups who submit proposals pursuant to the Procedure.  It also acknowledged a distinction between sales at market value and at less than market value.  It stated:

Criteria for Evaluating Competing Interests:

            Criteria for evaluating competing interest from community groups will be developed by Community Grants and Partnering Program staff in collaboration with the Grants Committee and a sub-committee to include representation from Regional Council. This effort fits within the existing terms of reference for the Grants Committee and will not require added Municipal Clerk support.

Market Sale vs. Less Market Sale:

            Sale of a surplus building on the open market at full value must always be considered a desirable option, however the intent of the procedure is to allow staff and Council to evaluate all disposal options together and not independently of one another, in order to seek the best overall value for the Municipality.

No criteria for evaluating proposals were ever developed.

[12]        Between September 19, 2000 and January 2013 HRM disposed of eighteen surplus school properties.  In none of the eighteen school disposals did HRM follow the Procedure.  Sixteen of the schools were disposed of in a consistent manner providing for solicitation of both community and private proposals through a public process. 

[13]        The record indicates the Procedure was never considered or even discussed after it was approved.  The minutes of various HRM meetings, after the Procedure was discovered, shed some light as to the councillors’ understanding of the reasons why the policy had been disregarded.  Being mindful that their views are not all consistent, I find that of Councillor Sloane most compelling when she offered the following account of what may have happened:

Never been tested.  It’s almost like never been kissed.  Never been tested, never been used, never been even brought into the fold of our policy.  Yet it sat there for 11 years.  And Your Worship, it took me going on the internet and finding this with the most smallest (sic) of print to see that we had a former school surplus policy.  And on December 13th when I asked about it, not one person in this room knew what I was talking about.

          The Request for Proposals

[14]        In March 2008, the Halifax Regional School Board formally declared the Property to be surplus to its requirements.  In March 2009, the School Board approved the closure of the school at the end of the 2010/11 school year.  On September 1, 2011, HRM took vacant possession of the Property.

[15]        Market value was evaluated by Colliers International (Atlantic) Valuation and Advisory Services (Colliers) in a Valuation Report dated March 30, 2011.  Three scenarios for market value were presented: 

1)    Market Value of Property As Is: $1,000,000

2)    Prospective Market Value – maintain old school/ redevelop remainder: $3,000,000

3)    Prospective Market Value – demolish all buildings and redevelop: $4,300,000

[16]        The Colliers Report recommended that the Property go to the market unpriced because the “values are based on the extraordinary assumptions/limiting conditions that the property can be rezoned and that residential multi-unit dwellings will be permitted on the site and that the maximum unit yield resembles the maximum unit yield as currently permitted under the Halifax Peninsula R-3 zone.”

[17]        On June 28, 2011, HRM issued a Request for Proposals (RFP 11-039) inviting proposals for the purchase and re-development of three surplus school properties including the Property.  It was posted to HRM’s website on June 28, 2011 and was advertised in the Chronicle Herald on July 6, 9, 13 and 16, 2011.  In the RFP, the appraised value of the Property was listed at $4.3 million.  The Procedure was not referred to in the RFP.

[18]         RFP 11-039 stated: “The purpose of this RFP is to determine the level of interest in the purchase and redevelopment of these surplus school properties by both Not-For-Profit and/or For-Profit organizations.”  Further, RFP 11-039 explained the intent of the process as follows:

HRM is interested in proposals that lead to a comprehensive and integrated use of each site which may be accomplished through the restoration and re-use of the existing building or the redevelopment of the property for various commercial, institutional and other land uses, which are complementary to existing developments in the surrounding area, and which generally enhance the community.

INTENT FOR NON PROFIT GROUPS:

Legislation permits the sale of surplus municipal property at less than market value to registered non-profit organizations (i.e. a society, Canadian charity, a non-profit cooperative).  Such requests are evaluated relative to other proponents (both private and non-profit), including, but not limited to, any additional request for municipal subsidy such as real property tax assistance and deed transfer tax.  All groups who are applying for less than market value MUST be a registered non-profit group at the time of the submission of the RFP.  Proponents requesting less than market value sale shall demonstrate how their program and service delivery aligns with HRM’s jurisdictional mandate or organizational priorities. 

 

[19]        Appendix “A” of the RFP sets out the Proposal Evaluation Criteria for the Property:

 

Criteria	Max Score	Examples/ Topics
1. Understanding of Intent and Objectives	30	Intent for development/use
2.  Qualification and    Experience	25	Property ownership/ development experience
3. Proponent’s Financial           Capability	25	Previous development, asset portfolio, shareholders equity, mortgage pre-approval, experience with previous government funded programming
4. Financial Offer	20	Offer-proximity and relation to market value
Total	100

 

          Participation of Community Groups in the RFP Process

[20]        By the end of 2009, all three Community Groups were aware that St. Patrick’s Alexandra Elementary School would be closing.  Both the North End Community Health Association (NECHA) and the Micmac Native Friendship Society (Friendship Centre) had been told as early as April 2009 that HRM would eventually issue a RFP and that this would be the appropriate time to submit a proposal.

[21]        The Richard Preston Centre for Excellence Society (Preston Centre), a combination of eight pre-existing community groups, including Cornwallis Street Baptist Church, had only recently been formed at the time of the RFP. However, on February 28, 2011, Reverend Rhonda Britton wrote to the Halifax Regional School Board on behalf of Cornwallis Street Baptist Church, indicating that the Church would like to acquire the Property.  The letter was copied to Mayor Peter Kelly, but no further correspondence was exchanged with HRM until Reverend Britton became aware of the RFP on its closing date in August 2011.

[22]        Both NECHA and the Friendship Centre became aware of the RFP, participated in the July 20 pre-proposal conference site tour, and submitted proposals prior to the August 12, 2011 deadline. The Preston Centre submitted a proposal by the extended deadline of August 26, 2011.

[23]        Each of the Community Groups offered a purchase price of one dollar ($1.00). 

          Jono Participation in RFP Proposal

[24]        Jono proposed to purchase and develop the Property as a mixed use development which would include residential, affordable housing, community and commercial uses.  The Property was offered on an “as is” and “as zoned” basis.  As observed in the Colliers Report, any development project would require re-zoning and/or a development agreement.

[25]        Jono submitted two proposals.  Option “A” was an unconditional bid of $3 million, with no requirements for changes to zoning or approval of a development agreement, to be increased by increments of $75,000 over the highest bid to a maximum of $4 million.

[26]        Jono’s Option “A” was the only unconditional bid.  HRM assessed Jono’s proposal as having a net present value of $3,110,965 based on assumptions related to carrying costs, forgone tax revenues and interest rates, as outlined in the information report prepared by HRM staff.

[27]        In Option “B”, Jono offered $3.75 million, to be increased by increments of $150,000 over the highest bid to a maximum of $4.75 million but this proposal was conditional on the approval of a development agreement.  HRM staff assessed the net present value of this proposal at $3,242,956. 

[28]        After the RFP closed, a seven-person committee, including Peta-Jane Temple, the Team Lead of Grants and Contributions (Community and Recreational Services), evaluated and scored all proposals according to the criteria outlined in the RFP.  Ms. Temple, in particular, was charged with evaluating the proposals from non-profit organizations for “viability” and “program alignment of the non-profit proponents to HRM’s objectives and mandate.”  The Community Groups all received lower marks for “Financial Capability” than the private developers, as well as zero marks out of twenty for “Financial Offer.” 

[29]        HRM staff prepared a report on November 21, 2011 which described HRM's options as follows:

•                     The recommended offer of $3,000,000 by Jono Developments Ltd. is without any limiting conditions. This offer will facilitate the sale of the subject property within a reasonable period following HRM's approval for the award.

•                     An alternative offer that Jono Developments Ltd. presented was contingent on the approval of a Development Agreement with a value of $3,750,000. However, after considering the time value of money, municipal property holding costs, lost property tax revenue and a 5% contingency for the risk inherent in the process, the stronger financial return in today's dollars is the recommended unconditional offer of $3,000,000.

[30]        In other words, HRM staff determined that the risks associated with making the sale conditional on the approval of a development agreement were too great.  It recommended that HRM Regional Council accept Jono’s Option “A” unconditional bid of $3 million.

[31]        On December 13, 2011, HRM Council met and passed a resolution to authorize the Mayor and Municipal Clerk to enter into an Agreement of Purchase and Sale with Jono, as recommended in the Staff Report. 

[32]        Around this time, the Community Groups learned of the existence of the Procedure, and the fact that it had not been followed in the process leading to the sale of the Property.  The Community Groups objected to HRM’s actions.  In response, HRM Council passed a motion to rescind its decision on January 10, 2012, one day after representatives of Jono had executed an Agreement of Purchase and Sale.  HRM also requested a further report from HRM staff on the matter. 

[33]        In their Supplementary Staff Report, dated January 19, 2012, HRM staff conceded that the Municipality had failed to follow the Procedure and determined that it had been breached in the following ways:

1)      Building Management Services did not send HRM an information report that a school would be given to HRM by HRSB in six months; however, media reports, emails and correspondence (written and verbal) were sent to Executive Management Team and Area Councillors.

2)      HRM did not formally deem the Property surplus to municipal requirements; however, it was declared surplus to municipal requirements by Administration, reaffirmed in the November Budget approved by HRM, and no new programs or services were funded for this property;

3)      Community groups were only solicited through an open proposal call;

4)      HRM Staff compared community proposals against proposals of private developers;

5)    HRM Staff decided to put the Property on the open market without first seeking approval by HRM to do so.

[34]        On January 24, 2012, HRM passed a resolution to approve the Property as surplus to Municipal Requirements, to repeal the Procedure and to authorize the Mayor and Municipal Clerk to enter into an Agreement of Purchase and Sale of the Property to Jono, subject to the repeal of the Procedure. 

[35]        On January 31, 2012, HRM passed a motion to repeal the Procedure and approved the sale to Jono for $3 million.

Decision under appeal

[36]        On February 1, 2012, the Community Groups filed a Notice for Judicial Review, seeking an order quashing HRM’s decision to sell the Property to Jono.  The Community Groups also filed an emergency motion for a stay to prevent the imminent sale of the Property to Jono.  The emergency stay was granted by Duncan J. on February 1, 2012, and was extended pending the outcome of the application for judicial review by order of Wood J. dated February 16, 2012.

[37]        As noted earlier, the application for judicial review was granted on September 24, 2012 and HRM’s decision to approve the sale was quashed with costs to the Community Groups.  Jono appeals the judicial review decision and the costs award.

Issues

[38]        Jono raises three issues, broken down as follows:

          Issue #1: Did the reviewing judge err in law in finding that HRM breached a duty of fairness to the Community Groups?

(a)              Did HRM owe the Community Groups a duty of fairness?

(b)             What was the content of that duty?

(c)              Was the duty of fairness discharged?

          Issue #2: Did the reviewing judge err in law by determining that  HRM’s interpretation of “market value” was unreasonable?

          Issue #3: Did the reviewing judge err in law by ordering Jono to pay costs to the Community Groups?

[39]        I will  address  the standard of review when dealing with each issue.

Issue #1      Did the reviewing judge err in law in finding that HRM breached a duty of fairness to the Community Groups?

 

Standard of Review

[40]        This issue addresses the reviewing judge’s substantive findings on the judicial review.  The appropriate approach for a court of appeal to take when reviewing the lower court’s decision in a judicial review was addressed by the Supreme Court of Canada in Agraira v. Canada (Public Safety and Emergency Preparedness), 2013 SCC 36:

45        The first issue in this appeal concerns the standard of review applicable to the Minister's decision. But, before I discuss the appropriate standard of review, it will be helpful to consider once more the interplay between (1) the appellate standards of correctness and palpable and overriding error and (2) the administrative law standards of correctness and reasonableness. These standards should not be confused with one another in an appeal to a court of appeal from a judgment of a superior court on an application for judicial review of an administrative decision. The proper approach to this issue was set out by the Federal Court of Appeal in Telfer v. Canada (Revenue Agency), 2009 FCA 23, 386 N.R. 212 (F.C.A.), at para. 18:

Despite some earlier confusion, there is now ample authority for the proposition that, on an appeal from a decision disposing of an application for judicial review, the question for the appellate court to decide is simply whether the court below identified the appropriate standard of review and applied it correctly. The appellate court is not restricted to asking whether the first-level court committed palpable and overriding error in its application of the appropriate standard.

46        In Merck Frosst Canada Ltée c. Canada (Ministre de la Santé), 2012 SCC 3, [2012] 1 S.C.R. 23 (S.C.C.), at para. 247, Deschamps J. aptly described this process as "'step[ping] into the shoes' of the lower court" such that the "appellate court's focus is, in effect, on the administrative decision" (emphasis deleted).

47        The issue for our consideration can thus be summarized as follows: Did the application judge choose the correct standard of review and apply it properly?

[41]        The reviewing judge correctly identified the principle that no standard of review analysis governs judicial review, where the complaint is based upon a denial of natural justice or procedural fairness.  (See for example, T.G. v. Nova Scotia (Minister of Community Services), 2012 NSCA 43, leave to appeal refused, [2012] S.C.C.A. No. 237, at ¶90). 

[42]        Instead, a court will intervene if it finds an administrative process was unfair in light of all the circumstances. This broad question, which encompasses the existence of a duty, analysis of its content and whether it was breached in the circumstances, must be answered correctly by the reviewing judge (see: T.G. v. Nova Scotia (Minister of Community Services), supra, at ¶8; Communications, Energy and Paperworkers Union of Canada, Local 141 v. Bowater Mersey Paper Co. Ltd.,2010 NSCA 19, ¶28; Nova Scotia (Community Services) v. N.N.M., 2008 NSCA 69, ¶40; and Kelly v. Nova Scotia Police Commission, 2006 NSCA 27, ¶21-33.

          Existence of a duty of fairness

[43]        The reviewing judge embarked on a duty of fairness content analysis following Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817 before assessing the threshold issue of whether a duty was owed at all.  This omission by the reviewing judge is of little consequence as, for the reasons that follow, I am satisfied that HRM owed a duty of fairness to the Community Groups.

[44]        In Congrégation des témoins de Jéhovah de St-Jérôme-Lafontaine v. Lafontaine (Village), 2004 SCC 48, the Supreme Court of Canada stated:

3   A public body like a municipality is bound by a duty of procedural fairness when it makes an administrative decision affecting individual rights, privileges or interests: Cardinal v. Director of Kent Institution, [1985] 2 S.C.R. 643; Attorney General of Canada v. Inuit Tapirisat of Canada, [1980] 2 S.C.R. 735; Martineau v. Matsqui Institution Disciplinary Board, [1980] 1 S.C.R. 602; Nicholson v. Haldimand-Norfolk Regional Board of Commissioners of Police, [1979] 1 S.C.R. 311.

[45]        The first  requirement is that the decision  be ‘administrative,’  as opposed to ‘legislative’. 

[46]        Justice Oland in Potter v. Halifax Regional School Board, 2002 NSCA 88 provides a helpful explanation of the distinction:

[39]   […] I have found the following passage from S.A. De Smith's text, Judicial Review of Administrative Action, [3rd ed.], 1973 London: Stevens at p. 60 on the distinction between administrative and legislative acts helpful for my analysis:

The distinction between legislative and administrative acts is usually expressed as being a distinction between the general and the particular. A legislative act is the creation and promulgation of a general rule of conduct without reference to particular cases; an administrative act cannot be exactly defined, but it includes the adoption of a policy, the making and issue of a specific direction, and the application of a general rule to a particular case in accordance with the requirements of policy or expediency or administrative practice.

[40]   The classification of an act as legislative or administrative is not always easily done. There is a great diversity of administrative decision-making with decision-makers ranging from those primarily adjudicative in function to those that deal with purely legislative and policy matters: see Newfoundland Telephone Co. v. Newfoundland (Board of Commissioners of Public Utilities), [1992] 1 S.C.R. 623, [1992] S.C.J. No. 21 at para 27. Where a particular decision-making power falls on this continuum is a consideration in determining the application and extent of any duty of fairness.  […] I agree with Brown and Evans that those decisions closer to the "legislative and general" end of the spectrum usually have two characteristics: generality (the power is of "general application and when exercised will not be directed at a particular person") and a broad policy orientation in that the decision creates norms rather than decides on their application to particular situations: see D. Brown & J. Evans, Judicial Review of Administrative Action in Canada, looseleaf (Toronto: Canvasback Publishing, 1998) vol. 2 at para 7:2330. In my view, when the Board decides to close a specific school or specific schools, it is applying, among other things, policy and general considerations but to particular situations. Such decisions are not, in my view, so close to the legislative and general end of the spectrum as to foreclose entirely any duty to act fairly. [Emphasis added]

[47]        Similarly, the decision to sell the surplus school is a decision related to a particular situation and is not so close to the legislative end of the spectrum to preclude a duty of fairness.   

[48]        Further, it has been recognized that public interest may give rise to a duty of fairness if an applicant has (i) a genuine interest in the matter, (ii) the issue is justiciable, (iii) there is a serious issue to the tried and (iv) there is no other reasonable and effective manner for the issue to be resolved (see Donald Brown & John Evans, Judicial Review of Administrative Action in Canada, (loose-leaf (updated  May 2013) (Toronto: Canvasback, 1998) at 4-44 and 7-54). 

[49]        I agree with and adopt the following remarks of Wood J. in North End Community Health Assn. v. Halifax (Regional Municipality), 2012 NSSC 92, when granting the interim stay as accurately describing the public interest of the Community Groups:

[37]…. It is clear that there is a shortage of suitable premises in the neighbourhood served by the three applicants. Schools are not like other residential and commercial structures. They are designed and built to be public facilities and include meeting spaces, offices and recreational areas. The presence of a gymnasium is particularly attractive to the Micmac Native Friendship Centre.

[38]     In HRM schools only become available for acquisition after they are declared to be surplus by the School Board. This is likely to occur only once in a generation in most neighbourhoods.

[39]     According to the affidavit of Dr. Margaret Casey, the North End Community Health Association has been searching for a new location, without success, for the last seven years.

[50]        The circumstances of the Community Groups are such that HRM’s decision to dispose of the School affects their rights or interests sufficiently to fulfill the test articulated in Congrégation des témoins de Jéhovah, supra. 

[51]        I conclude HRM owed a duty of fairness to the Community Groups. 

          Content of the Duty of Fairness

[52]        I now turn to the content, or degree of procedural fairness that applies to the particular case.  In Kelly v. Nova Scotia Police Commission, supra, Cromwell J.A. (as he then was) wrote:

[20] Given that the focus was on the manner in which the decision was made rather than on any particular ruling or decision made by the Board, judicial review in this case ought to have proceeded in two steps. The first addresses the content of the Board's duty of fairness and the second whether the Board breached that duty. (…)

[21] The first step -- determining the content of the tribunal's duty of fairness - must pay careful attention to the context of the particular proceeding and show appropriate deference to the tribunal's discretion to set its own procedures. The second step -- assessing whether the Board lived up to its duty -- assesses whether the tribunal met the standard of fairness defined at the first step. The court is to intervene if it is of the opinion the tribunal's procedures were unfair. In that sense, the court reviews for correctness. But this review must be conducted in light of the standard established at the first step and not simply by comparing the tribunal's procedure with the court's own views about what an appropriate procedure would have been. Fairness is often in the eye of the beholder and the tribunal's perspective and the whole context of the proceeding should be taken into account. Court procedures are not necessarily the gold standard for review.

[53]        In Baker, supra, Justice L'Heureux-Dubé set out what have become the guiding principles to define the content of the duty:

21 The existence of a duty of fairness, however, does not determine what requirements will be applicable in a given set of circumstances. As I wrote in Knight v. Indian Head School Division No. 19, [1990] 1 S.C.R. 653, at p. 682, "the concept of procedural fairness is eminently variable and its content is to be decided in the specific context of each case". ...

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

She then goes on to describe five non-exhaustive factors to consider, which can be summarized as follows:

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

 

2.      the nature of the statutory scheme and the “terms of the statute pursuant to which the body operates;”

 

3.      the importance of the decision to the individual or individuals affected;

 

4.      the legitimate expectations of the person challenging the decision; and

 

5.        the choices of procedure made by the agency itself, particularly when the statute leaves to the decision-maker the ability to choose its own procedures, or when the agency has an expertise in determining what procedures are appropriate in the circumstances.

See Baker, supra, at ¶ 23-28.  In Canada (Attorney General) v. Mavi, [2011] 2 S.C.R. 504, Justice Binnie reiterated that this list  is non-exhaustive (¶42).

[54]        The reviewing judge presented the positions of the parties for each factor set out in Baker, but did not conduct his own analysis or indicate where on the spectrum he believed the duty fell.  Failure to do so led him to conclude that the duty of fairness could only be satisfied by adherence to the Procedure.  In my view both his approach and his ultimate conclusion on the scope of the duty of fairness were incorrect.  I will explain further in the course of reviewing each of the Baker factors.

          (i)      The nature of the decision and the process followed

[55]        HRM’s decision concerned how to dispose of former school property. In doing so, HRM must evaluate individual proposals against specific criteria, which to some extent resembles an adjudicative process.  It then must exercise its discretion in choosing the appropriate purchaser.  The nature of the decision falls in the middle of the spectrum between discretionary and adjudicative.  As conceded by the respondent Community Groups in this appeal, and contrary to their submissions at trial, this factor attracts only a moderate duty of fairness.

          (ii)     The nature of the statutory scheme

[56]        HRM gets its authority from the Charter.  The Charter itself is silent on the procedure HRM must follow on how to dispose of municipal property.  However, while being mindful that the Charter is generally worded so as to permit HRM to govern flexibly, the Charter authorizes HRM to enact policies to govern its decision-making.  With respect to the disposal of surplus school property, it has done so by enacting the Procedure. 

[57]        The enactment of the Procedure evidences HRM’s intention to provide the Community Groups with a significant duty of fairness.

          (iii)    Importance of the Decision to those Affected

[58]        The decision is important to the Community Groups and, as argued by them, to the broader community in the North End of Halifax.  In support of this argument, I refer back to Wood J.’s comments quoted earlier recognizing the importance of the decision to the Community Groups, to which I add his following comment in that same decision:

51 Whether HRM is required to follow its approved Disposal Procedure, and whether community groups can hold them accountable for not doing so, is an important issue for these applicants.  It is also an important issue for the broader community. …

[59]        The affidavits of Dr. Margaret Casey, Reverend Rhonda Britton, and Pamela Glode-Desrochers also outline the respondents’ particular interest in the Property.  For instance, since 2005, NECHA has been searching actively for a larger space in the North End of Halifax in order to serve its clients; the Property would respond to that need.  The Friendship Centre, for its part, is interested in the Property because its current buildings are in a poor state of repair, and also because of the presence of a gymnasium, which the Friendship Centre could use to offer a number of its youth programs.

[60]        The reviewing judge observed:

[29]      ... Issues with "broader policy implications for the entire community" as opposed to "local issue[s] affecting the lives of residents of a neighbourhood" have been held to demand a moderate level of procedural fairness: Heritage Trust of Nova Scotia v. Halifax (Regional Municipality), 2007 NSSC 28, at para. 93. …

[61]        The Community Groups submit that the present situation is similar to that of the church applying for re-zoning in Congregation des Témoins de Jehovah, supra where the Supreme Court of Canada found that a heightened duty of fairness applied.  With respect, I disagree.  The Court noted that the municipal decision in that case affected the Congregation's practice of its religion; a constitutionally protected right.  Here, this Property is sought by the Community Groups for the purpose of community programming.  The stakes are clearly distinguishable. 

[62]        I consider that this factor attracts a moderate level of fairness. 

          (iv)    Legitimate Expectations of those challenging the decision

[63]        The reviewing judge’s conclusion appears to be driven entirely by his reasoning under Baker’s fourth factor, i.e., whether the Community Groups had a legitimate expectation that the Procedure would be followed.  As a result, I will address this factor in some length.  It is useful to repeat his conclusion on this point:

38. … The intention to follow the Procedure was implicit in Council's decision to enact it. I do not believe that the applicants' lack of actual knowledge deprived them of the right to assume that Council would abide by its own enactments. They could legitimately expect Council to follow its own Procedure.

…

49         I am satisfied that Council owed a duty of procedural fairness to the applicants in the process of disposing of the property. That duty extended no further than to act in good faith and observe HRM's own Procedure, as enacted by Council.

[64]        To equate the content of the Procedure with the content of the duty of fairness without further analysis was an error, which contaminated the reviewing judge’s ultimate conclusion. Although, in some cases, a representation may define the content of the duty, the existence of legitimate expectations is just one factor to be considered in the formulation of the duty of fairness. I will explain further.

(a) History and Rationale

[65]        It is worth briefly articulating the rationale for and history of the legitimate expectations doctrine:

The principal rationale for holding an administrative agency to its procedural undertakings, rules or past practice is that individuals are entitled to expect that governmental bodies will honour the undertakings they have given, either expressly or by implication, particularly where there has been reliance on them. Secondly, when procedures have been adopted or practices established, it would amount to arbitrary conduct for an agency to fail to comply with them in some material respect, since amendments to rules should generally be prospective in operation.  [Emphasis added]

(Brown/Evans at 7-23/24, footnotes omitted.)

[66]        The legitimate expectations doctrine originated in England as a threshold mechanism for establishing entitlement to procedural fairness. In Schmidt v. Secretary of State for Home Affairs, [1969] 2 Ch. 149 (C.A.), Lord Denning held that an administrative decision-maker may be obligated to afford a person the opportunity to make representations, provided “he has some right or interest, or, I would add, some legitimate expectation, of which it would not be fair to deprive him without hearing what he has to say” (p.170). In time, the doctrine also served to define the content of the fairness duty in cases where, by representation or past practice, decision-makers had led those affected to expect specific procedural safeguards, as in Attorney-General of Hong Kong v. Ng Yuen Shiu, [1983] 2 A.C. 629 (P.C.). See also D. Wright, "Rethinking the Doctrine of Legitimate Expectations in Canadian Administrative Law" (1997), 35 Osgoode Hall L.J. 139.

[67]        The Supreme Court of Canada first addressed the doctrine in Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), [1990] 3 S.C.R. 1170, where Sopinka J. stated as follows:

73     It appears, however, that at bottom the appellant's submission is that the conduct of the Committee created a legitimate expectation of consultation. The appellant cites the decision of the House of Lords in Council of Civil Service Unions v. Minister for the Civil Service, [1984] 3 All E.R. 935. The principle is also discussed in the leading cases of Attorney General of Hong Kong v. Ng Yuen Shiu, [1983] 2 All E.R. 346 (P.C.), and R. v. Hull Prison Board of Visitors, ex parte St. Germain, [1979] 1 All E.R. 701 (C.A.). It is also referred to in the following Canadian cases: Re Multi-Malls Inc. and Minister of Transportation and Communications (1976), 14 O.R. (2d) 49; Re Canadian Occidental Petroleum Ltd. and District of North Vancouver (1983), 148 D.L.R. (3d) 255; [page1204] Gaw v. Commissioner of Corrections (1986), 2 F.T.R. 122 and Re Bruhn-Mou and College of Dental Surgeons of British Columbia (1975), 59 D.L.R. (3d) 152.

74     The principle developed in these cases is simply an extension of the rules of natural justice and procedural fairness. It affords 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. The court supplies the omission where, based on the conduct of the public official, a party has been led to believe that his or her rights would not be affected without consultation.

[68]        While the doctrine has expanded in recent years under English law, where it may operate to secure substantive relief (see R. v. North and East Devon HA Ex p. Coughlan, [2001] Q.B. 213 (C.A.)), its function in Canadian law has remained a part of the procedural fairness duty. The Supreme Court in Agraira provided the following overview of its role and application:

95  The specific conditions which must be satisfied in order for the doctrine of legitimate expectations to apply are summarized succinctly in a leading authority entitled Judicial Review of Administrative Action in Canada:

The distinguishing characteristic of a legitimate expectation is that it arises from some conduct of the decision-maker, or some other relevant actor.  Thus, a legitimate expectation may result from an official practice or assurance that certain procedures will be followed as part of the decision-making process, or that a positive decision can be anticipated.  As well, the existence of administrative rules of procedure, or a procedure on which the agency had voluntarily embarked in a particular instance, may give rise to a legitimate expectation that such procedures will be followed.  Of course, the practice or conduct said to give rise to the reasonable expectation must be clear, unambiguous and unqualified.

(D. J. M. Brown and J. M. Evans, Judicial Review of Administrative Action in Canada (loose-leaf), at §7:1710; see also Mount Sinai Hospital Center v. Quebec (Minister of Health and Social Services), 2001 SCC 41, [2001] 2 S.C.R. 281, at para. 29; Canada (Attorney General) v. Mavi, 2011 SCC 30, [2011] 2 S.C.R. 504, at para. 68.)

96  In Mavi, Binnie J. recently explained what is meant by “clear, unambiguous and unqualified” representations by drawing an analogy with the law of contract (at para. 69):

Generally speaking, government representations will be considered sufficiently precise for purposes of the doctrine of legitimate expectations if, had they been made in the context of a private law contract, they would be sufficiently certain to be capable of enforcement.

97 An important limit on the doctrine of legitimate expectations is that it cannot give rise to substantive rights (Baker, at para. 26; Reference re Canada Assistance Plan (B.C.), [1991] 2 S.C.R. 525, at p. 557).  In other words, “[w]here the conditions for its application are satisfied, the Court may [only] grant appropriate procedural remedies to respond to the ‘legitimate’ expectation” (C.U.P.E. v. Ontario (Minister of Labour), 2003 SCC 29, [2003] 1 S.C.R. 539, at para. 131. [Emphasis added]

[69]        The Supreme Court of Canada in Mount Sinai Hospital Center v. Quebec (Minister of Health and Social Services), 2001 SCC 41, states explicitly that pre-existing knowledge of a policy is not a necessary requirement to trigger legitimate expectations:

30  … 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....

[70]        This rationale was discussed further by  Evans, J.A. (concurring in the result) in Apotex Inc. v. Canada (Attorney General), [2000] F.C.J. No. 634 (C.A) :

122. When a legitimate expectation arises from an agency's past practice, or non-statutory procedural guidelines, it serves to preclude procedural arbitrariness, not the actual expectation of the individual who may have been unaware of its existence. …

[71]        The legitimate expectations doctrine exists to ensure governmental actions in dealing with the public are fair, predictable and not arbitrary. It is important to keep this rationale in mind when determining, not only whether there are legitimate expectations, but whether those expectations have been fulfilled.

 (b)    Did legitimate expectations arise in this case?

[72]        I am satisfied that the content of the Procedure gives rise to a legitimate expectation that the Community Groups would be entitled to participate in HRM’s decision to dispose of surplus school properties in a substantially similar manner to the one set out therein.  In my view, the legitimate expectations in this case count toward a more stringent duty of fairness under the Baker analysis than would otherwise be the case. 

[73]        I say this because if it were as simple as equating the representation giving rise to legitimate expectations with the broader duty of fairness, as the reviewing judge here determined – there would be no need for the fourth step in the Baker analysis.  Any deviation from the established procedure, regardless of how trivial it may be, would always result in a breach of the duty of fairness. 

[74]        The existence of legitimate expectations and whether those expectations have been fulfilled goes into the broader discussion of whether or not there has been a breach of the duty of fairness.

(c)      The Role of Legitimate Expectations

[75]        In Baker, L'Heureux-Dubé J. described the doctrine's purpose and function as follows:

26     Fourth, the legitimate expectations of the person challenging the decision may also determine what procedures the duty of fairness requires in given circumstances. Our Court has held that, in Canada, this doctrine is part of the doctrine of fairness or natural justice, and that it does not create substantive rights: Old St. Boniface, supra, at p. 1204; Reference re Canada Assistance Plan (B.C.), [1991] 2 S.C.R. 525, at p. 557. As applied in Canada, if a legitimate expectation is found to exist, this will affect the content of the duty of fairness owed to the individual or individuals affected by the decision. If the claimant has a legitimate expectation that a certain procedure will be followed, this procedure will be required by the duty of fairness: Qi v. Canada (Minister of Citizenship and Immigration) (1995), 33 Imm. L.R. (2d) 57 (F.C.T.D.); Mercier-Néron v. Canada (Minister of National Health and Welfare) (1995), 98 F.T.R. 36; Bendahmane v. Canada (Minister of Employment and Immigration), [1989] 3 F.C. 16 (C.A.). Similarly, if a claimant has a legitimate expectation that a certain result will be reached in his or her case, fairness may require more extensive procedural rights than would otherwise be accorded: D. J. Mullan, Administrative Law (3rd ed. 1996), at pp. 214-15; D. Shapiro, "Legitimate Expectation and its Application to Canadian Immigration Law" (1992), 8 J.L. & Social Pol'y 282, at p. 297; Canada (Attorney General) v. Human Rights Tribunal Panel (Canada) (1994), 76 F.T.R. 1. Nevertheless, the doctrine of legitimate expectations cannot lead to substantive rights outside the procedural domain. This doctrine, as applied in Canada, is based on the principle that the "circumstances" affecting procedural fairness take into account the promises or regular practices of administrative decision-makers, and that it will generally be unfair for them to act in contravention of representations as to procedure, or to backtrack on substantive promises without according significant procedural rights. [Emphasis added]

[76]        Although it has been found that it is possible for legitimate expectations to define the content of the fairness duty, it should be noted that the cases cited for that proposition all concerned individuals whose expectations arose from government letters or pamphlets, and so were chiefly concerned with holding decision-makers to their promises in a given situation, rather than avoiding arbitrariness on a larger scale. (See Qi v. Canada (Minister of Citizenship and Immigration), [1995] F.C.J. No. 1615; Mercier-Néron v. Canada (Minister of National Health and Welfare, [1995] F.C.J. No. 1024; and Bendahmane v. Canada (Minister of Employment and Immigration), [1989] 3 F.C. 16 (C.A.)).

[77]        Binnie J.’s statement in Mavi, supra, that "It will be a breach of the duty of fairness for the decision maker to fail in a substantial way to live up to its undertaking" (¶68) confirms that the issue is whether the process, overall, is fair.

[78]        He makes reference to Brown and Evans, which provides that:

It will be a breach of the duty of fairness for the decision-maker to fail in a substantial way to meet the procedural standards that it had promised in its assurance, intimated by its conduct, prescribed in its rules or policy. [p. 7-26][emphasis in original].

[79]        Their text further states that "when procedures have been adopted or practices established, it would amount to arbitrary conduct for an agency to fail to comply with them in some material respect" [p. 7-24] [emphasis added]

[80]        Most recently, in Agraira v. Canada (Public Safety and Emergency Preparedness), supra, the Supreme Court described the doctrine's operation as follows:

If a public authority has made representations about the procedure it will follow in making a particular decision, or if it has consistently adhered to certain procedural practices in the past in making such a decision, the scope of the duty of procedural fairness owed to the affected person will be broader than it otherwise would have been. [para. 94] [Emphasis added]

[81]        Brown and Evans cite several cases in support of their claim that a fairness breach will not result when procedural standards have been met in a "substantial way." The examples which turn on this distinction do not specifically address the legitimate expectations doctrine; however, they do recognize that fairness should be the central consideration when deciding whether to insist on strict compliance with a guideline.

[82]        In Fisher Park Residents Assn. Inc. v. Ottawa  Board of Education (1986), 33 D.L.R. (4th) 411 (Ont. H.C.J.), the Board had instituted a policy for school closures, as required by Ministerial guidelines. In this case, it was argued that the policy: 1) did not meet the requirement of the guidelines because it failed to set out a firm chronology for decision-making; and 2) had not been followed on the facts of the case because it was amended mid-stream to alter the community consultation process. In refusing to interfere with the decision, the court said as follows:

[…] the policy developed by an individual board is not to be regarded nor scrutinized in the same way as a legislative enactment would be. In my view, the amendments envision a board's policy as a means of obtaining a fair procedure for the closing of schools. Thus, the substance of what is done is crucial rather than the technicalities. It must always be borne in mind that we are dealing with an administrative or management function and not with a judicial function, nor quasi-judicial function.

Accordingly, a crucial central consideration is whether or not the plaintiffs have been treated fairly or unfairly. To this I think the plain answer is they have not been treated unfairly. […] [p. 420]

[83]        Eberle J. further went on to say that the key issue was whether or not the public had been treated unfairly, and held that it had not been, in light of the ample time provided in which to prepare briefs and make submissions to the Board. He also found significance in the fact that the Board was conducting an administrative function, rather than affecting legal rights of individuals. Although this case was decided before Baker and does not address the legitimate expectations doctrine directly, this analysis is consistent with a contextualized understanding of fairness in light of all the circumstances. However, his conclusion that "real and substantial prejudice" would have to be established in order to intervene would not seem to be in keeping with current understandings of procedural fairness or legitimate expectations.

[84]        Likewise, in Gillingham v. Corner Brook /Deer Lake /St. Barbe School District No. 3, [1998] N.J. No. 212 (S.C.T.D.), there was an alleged lack of compliance with a school closure policy. Again, although without reference to legitimate expectations, the trial judge was satisfied that the policy was "more than substantially complied with" for the following reasons:

43          […] On the evidence, Ms. Gillingham did have meaningful impact into the report prepared pursuant to step three, the report did contain information concerning the educational impact for the students involved, the 30-day response time provided for in step five of the school closure policy was given, and to say that the parents of the Cox's Cove students were not advised of the closure of the Cox's Cove School at the end of the 1997-98 school year is to be unreasonable. Some of the Applicants were at the May 25 meeting when the Board vote on the closure was taken. There was extensive media coverage and a letter on the subject was circulated by the principal of the Cox's Cove School to all the parents on or about June 16. That there was no letter from the Board to each parent I do not consider a shortcoming of any significance in the circumstances.

[85]        Although these cases do not grapple specifically with the doctrine, they illustrate the results of an approach in which fairness is the central question.

(d)     Application of Legitimate Expectations to the Duty of Fairness

[86]        The Supreme Court of Canada has discussed the doctrine of legitimate expectations in various cases. The earliest, and most helpful in the context of this question, is Old St. Boniface, supra, wherein Sopinka J. concluded the judgment with the following statement:

75     The planning and zoning process is an elaborate structure designed to enable all those affected not only to be consulted but to be heard. The appellant availed itself of this process by making representations before the Community Committee. Even if the conduct of this Committee raised expectations on the part of the appellant, I am of the opinion that this would not justify this Court in mounting onto the elaborate statutory scheme yet another process of consultation. [Emphasis added]

[87]        This comment indicates that it is not necessary to give precise effect to legitimate expectations, so long as the process at issue is fair in light of all the circumstances.

[88]        Similarly, in Attaran v. University of British Columbia, [1998] B.C.J. No. 115 (B.C.S.C. in Chambers), the British Columbia Supreme Court held that fairness would not require strict compliance with the university's internal Consultation Policy. In that case, which was mentioned in Justice MacAdam’s reasons, the decision rested on a finding that expectations had not been raised, both because the policy had not been followed consistently and the petitioners did not have knowledge of it at the relevant time. However, Holmes J. went on to say that, even assuming expectations existed, he did not find "the failure of the University to follow the detail or the chronology set out in the Consultation Policy fatal to a decision on fees being made. It would suffice if an opportunity for expression of views as generally contemplated by the Consultation Policy occurred" (¶73). He also reiterated at (para. 85) that "any legitimate expectation of consultation regarding the fee increases was adequately met by the process followed, however imperfect, confused and cumbersome it was."

[89]        Campbell v. Workers' Compensation Board, 2012 SKCA 56 was disposed of on the basis that the decision below was unreasonable. However, the Court considered allegations of unfairness on the grounds that the Board declined to hold a hearing, despite having published a policy which stated a hearing would be granted on request and having made similar representations to the parties. The Court expressed its understanding of the legitimate expectations doctrine as follows:

75    […] In Baker, the Court commented that where there is a legitimate expectation that a particular procedure will be followed, this will affect the content of the duty of fairness owed to the individuals affected by the decision, and the expected procedure will normally be required by the duty of fairness. [Emphasis added]

[90]        After discussing the strength of the legitimate expectations argument on the facts, the Court said that "[t]he factor of legitimate expectations strongly supports the appellant's position that fairness was denied in this case." (para. 76). However, they were explicit that such a conclusion did not end the analysis, and went on to say that "the most important considerations in this case lie in the importance of the issue to the appellant and the nature of the issues that the Board was called upon to decide" (¶77).

[91]        Similarly, in Mega International Commercial Bank (Canada) v. Canada (Attorney General), 2012 FC 407, the doctrine was not triggered on the facts of the case. Nevertheless, Montigny J.'s reasons are instructive:

33     Moreover, the duty of fairness is flexible and depends on an appreciation of the context of the particular statute and the rights affected. As such, several factors are relevant to determining the content of the duty of fairness, of which the legitimate expectations of the individual or corporation challenging the decision is only one among others. Of equal importance will be the nature of the decision being made and the process followed in making it, the nature of the statutory scheme and the terms of the statute pursuant to which the body operates, the importance of the decision to the individual or individuals affected, and the choices of procedure made by the agency itself […]

(e)      Were the expectations fulfilled?

[92]         As noted above, the existence of  legitimate expectations does not end the inquiry. As per the rationale described by Brown and Evans above, the concerns addressed by this doctrine are only engaged when there has been a failure to comply with the legitimate expectations in a “material respect.”

[93]        It is useful, at this point, to repeat Binnie, J.’s comments in Mavi:

68   Where a government official makes representations within the scope of his or her authority to an individual about an administrative process that the government will follow, and the representations said to give rise to the legitimate expectations are clear, unambiguous and unqualified, the government may be held to its word, provided the representations are procedural in nature and do not conflict with the decision maker’s statutory duty.  Proof of reliance is not a requisite.  See Mount Sinai Hospital Center, at paras. 29-30; Moreau-Bérubé v. New Brunswick (Judicial Council), 2002 SCC 11 (CanLII), 2002 SCC 11, [2002] 1 S.C.R. 249, at para. 78; and C.U.P.E. v. Ontario (Minister of Labour), 2003 SCC 29 (CanLII), 2003 SCC 29, [2003] 1 S.C.R. 539, at para. 131. It will be a breach of the duty of fairness for the decision maker to fail in a substantial way to live up to its undertaking:  Brown and Evans, at pp. 7-25 and 7-26.  [Emphasis added]

[94]        Thus, where legitimate expectations are engaged, a breach of the duty of fairness can be established if there is a substantial deviation from the authority’s representation, but not every contravention will give rise to a breach of the fairness duty.

[95]        Similarly, I reiterate the words of Justice L’Heureux-Dubé in Baker, supra:

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

...

26        ...  [I]t will generally be unfair for  [administrative decision makers] to act in contravention of representations as to procedure, or to backtrack on substantive promises without according significant procedural rights. [Emphasis added]

[96]        In this case, the RFP granted the Community Groups participatory rights that were substantially similar to those contemplated in the Procedure.  They had an opportunity to make proposals for the disposal of the surplus property, and those proposals were considered by HRM staff on more than just a financial basis.  

[97]        Specifically, although the Procedure stipulated that community groups who had expressed an interest in the Property were to be given 90 days to prepare a proposal, both of the respondent groups who expressed interest before release of the RFP were advised that proposals would be called for as early as 2009. They also participated in the site tour and made comprehensive submissions. The Preston Centre, which did not formally express interest prior to the RFP, was able to prepare and submit a proposal by the extended deadline.

[98]        Secondly, the Procedure provided that HRM would consider the proposals of community groups before those of private developers, but did not imply that such groups had any pre-emptive right. In fact, as noted earlier, the September 2000 Staff Report that accompanied the Procedure stated that sale “on the open market at full value must always be considered a desirable option, however, the intent of the procedure is to allow staff and Council to evaluate all disposal options together and not independently of one another”.   

[99]        Thirdly, while the Procedure mandated that community and for-profit proposals were to be considered sequentially, only those community submissions deemed feasible and which met “HRM’s fiscal goals for the accommodation of community programs” were to be carried forward as a recommendation to Executive Management and HRM.

[100]   Furthermore, the Procedure did not specify the criteria for evaluating feasibility or alignment with fiscal goals and did not guarantee that HRM would select any of the recommended submissions. 

[101]   Finally, although community submissions were not evaluated separately by the Community Grants Partnership Program as dictated by the Procedure, the Team Lead of Grants and Contributions participated in both drafting the RFP and evaluating non-profit submissions within the RFP committee.

[102]   In my view, the process as carried out did not differ substantially from the representations found in the Procedure.  

[103]   To conclude on this factor, the Procedure gave rise to legitimate expectations on the part of the parties but is not determinative of  the duty of fairness required in this case.  Legitimate expectations is just one factor to be considered in the formulation of the duty of fairness. I will now turn to the fifth factor discussed in Baker.

          (v)     Decision-maker's own choice of procedures

[104]   McLachlin C.J. in Congregation des Témoins de Jehovah, supra, (¶5) reframed the fifth Baker factor as “the nature of the deference accorded to the body,” and this factor recognizes that some decision-makers are given significant latitude in their choice of procedures, and may possess a degree of expertise in crafting them.

[105]   In this case, this factor is complicated by the fact that HRM chose two different procedures, one officially enacted, and another through its practice.  However, both policy and practice envisioned participatory rights for community groups and neither set out specific criteria by which to evaluate their submissions. Any conflict between these procedures is not so great as to undermine the fact that HRM was free to choose its own process and so should be accorded a measure of deference in that choice. This factor points to a moderate degree of fairness.

          Summary on the Content of Procedural fairness owed

[106]   The foregoing analysis suggests that a significant degree of fairness was owed to the Community Groups, which included participation in the disposal process. I agree with Jono’s submission that the duty owed to the Community Groups amounted, in the circumstances, to an opportunity to advance a proposal and to have the proposal considered by HRM on criteria other than simply the price offered for the property.  

Was there a Breach of the duty of fairness?

[107]   I turn now to an application of the above principles to the circumstances of this case to determine whether the procedures followed respected the duty of procedural fairness owed to the Community Groups. 

[108]   As established above, deviations from the Procedure in the RFP process were not substantial enough as to constitute a breach of the procedural fairness duty on the ground of legitimate expectations. I further find that the process as followed afforded sufficient procedural rights as to satisfy the duty owed to the Community Groups.

[109]   First, the RFP process was consistent and predictable, as HRM had used it to sell 16 of 18 surplus schools in the past decade.  HRM consistently represented by conduct and communications, to both the general public and  the Community Groups specifically, that the Municipality would follow the RFP process that was, in fact, used for the sale of the Property.

[110]   Further, the RFP was advertised on the HRM website and in the Chronicle Herald as HRM’s chosen process for the sale of the Property.  The Community Groups were duly notified and able to put forth meaningful offers. 

[111]   Third, the Community Groups were afforded participatory rights  substantially similar to those contemplated by the Procedure.

[112]   In conclusion, I am satisfied that the RFP process followed was sufficient to discharge the duty of procedural fairness owed to the Community Groups.  The process was consistent and predictable, the Community Groups were duly notified and made aware of the process, the RFP granted the Community Groups participatory rights in a substantial way and  their proposals were considered  on more than just a financial basis. 

[113]   I would allow this ground of appeal.

Issue #2      Did the reviewing judge err in law by determining that HRM’s   interpretation of “market value” was unreasonable?    

          Standard of Review

[114]   As I have already explained, in looking at the reviewing court’s decision, the issue for our consideration is whether the reviewing judge chose the correct standard of review and applied it properly (Agraira, supra, ¶47).

[115]   The reviewing judge held:

[81]         I am satisfied that Council was required to be correct in interpreting the scope of its power to sell the property under the HRM Charter. That is to say, the standard to be applied to Council's determination of whether it could sell the property for less than market value was correctness. However, the determination of what the market value actually was is a question to be reviewed on a standard of reasonableness.

[116]   In my view, the reviewing judge correctly identified the appropriate standard of review.  However, he failed to properly apply it.

[117]   The Community Groups argued, and the reviewing judge agreed, that HRM breached s. 61(5)(b) of the Charter by selling the Property for less than market value.

[118]   With respect, I have some difficulty in following the logic of the reviewing judge’s reasons for concluding the market value of the property was $4 million.

[119]   The reviewing judge determined that "market value" could be informed by an appraisal, but was primarily defined by the open market:

98        An appraisal is an estimate, albeit one provided by a person with knowledge and experience in valuing property. Such estimates are often accepted, including by courts, when there is no other readily available evidence of market value. However, as the phrase suggests, "market value" is the value of a property on the market. This means the "open" market, in circumstances where there are no unique or temporary factors that may serve to drive up or down the price being offered. These circumstances are, in part at least, reflected in the different appraisal figures contained in the Colliers report.

[120]   His reasoning is summarized as follows:

101      Market value being the amount that a willing buyer will pay on the open market, the question is what constitutes market value in these circumstances. Obviously, one figure meeting that definition could be the actual sale price. However, there is another figure that meets the definition as well. JONO was prepared to pay $4 million for the Property "as is" in the event that there were competing bids. Council was willing to accept $3 million. I infer that Council would have accepted $4 million. Consequently, there was a willing buyer and a willing seller at a price of $4 million. JONO's willingness to pay $4 million in the event there was a competing bid meant that it was a willing buyer at that price. By starting at $3 million, JONO was attempting to obtain the property at a price lower than it was actually willing to pay.

102      The HRM Charter provides that Council may not sell municipal property at less than market value unless the sale is to a non-profit organization. To sell the property for a price less than a willing buyer was willing to pay amounted to a sale at less than market value. In other words, the price ultimately agreed to was lower than the price the buyer had expressed a willingness to pay for the property "as is." The HRM Charter did not permit Council to sell the property at this price in these circumstances.  In these circumstances, "market value" was not the estimate, but the amount a willing buyer would pay.  [Emphasis added]

[121]   The reasoning of the reviewing judge has a fatal flaw.  There were no competing bids.  A conditional bid would require adjustment downward to account for the impact of the conditions before it can be considered as comparable evidence of what a willing buyer would pay on the open market.  Jono was not a willing buyer at $4 million. Jono's Option "A" bid was for $3 million. Jono's willingness to pay any more than that was conditional on the existence of bids higher than $3 million. In order for Jono to be a "willing buyer" at $4 million, there would have to be a competing bid of at least $3,925,000. This condition was not met and, consequently, Jono’s bid of $3 million was evidence of what a willing buyer would pay for the Property.

[122]   The reviewing judge’s finding that the "market value" was established by Jono's apparent willingness to buy at $4 million misses an important point. The willingness was conditional and the condition was never fulfilled.  It cannot be reflective of the open market.

[123]   Further, the reviewing judge’s reasons do not reveal any deference to HRM’s determination of market price.

[124]   In Nanaimo (City) v. Rascal Trucking Ltd., 2000 SCC 13, the Supreme Court of Canada set out the rationale for affording municipalities deference in administrative decision-making: 

35        In light of the conclusion that Nanaimo acted within its jurisdiction in passing the resolutions at issue, it is necessary to consider the standard upon which the courts may review those intra vires municipal decisions. Municipal councillors are elected by the constituents they represent and as such are more conversant with the exigencies of their community than are the courts. The fact that municipal councils are elected representatives of their community, and accountable to their constituents, is relevant in scrutinizing intra vires decisions. The reality that municipalities often balance complex and divergent interests in arriving at decisions in the public interest is of similar importance. In short, these considerations warrant that the intra vires decision of municipalities be reviewed upon a deferential standard.

[125]   Determining "market price" is not as simple as identifying the highest bid. The bids that were received for the Property differed not only in price offered, but also in terms of the type of development proposed and conditions of sale. In order to compare the bids, the Municipality calculated a net present value of the bids, adjusted for the estimated carrying costs, forgone taxes and risk associated with each proposal. The net present value of the four bids ranged between $2,665,108 and $3,242,956.

[126]   In addition to the net present value of the bids, it was reasonable for HRM to consider, as it did, the different development proposals, conditions of sale, and levels of experience for managing the development and/or operation the property.

[127]   In effect, the reviewing judge limited the "reasonable range" of market value to bids that were equal to or higher than the highest bid submitted in the RFP.

[128]   If HRM was unreasonable for selecting anything but the highest bid, notwithstanding the other considerations and interests engaged by the disposal of a surplus municipal property, then there is no discretion or deference given to the HRM decision. If the definition of "market value" is limited only to the highest bid, HRM would be required to choose only the highest bidder or risk breaching the Charter. The definition of "market value" must be sufficiently broad to allow HRM to choose between a range of bids based on factors that related to HRM’s jurisdiction and functions as set out in the Charter. 

[129]   HRM’s decision to sell to Jono “as is” was justified and supported by the record.

[130]   The reviewing judge appears to ignore what I consider to be the very logical conclusion put forward in the Staff Report when it recommended the sale at $3 million.  I will excerpt the relevant portions of that Staff Report:

The recommended offer of $3M by Jono Developments Limited is without limiting conditions.  This offer will facilitate the sale of the subject property within a reasonable period following Council’s approval for the award.

An alternative offer that Jono Developments Limited presented was contingent on the approval of a Development Agreement with a value of $3,750,000.00.  however, after considering the time value of money, municipal property holding costs, lost property tax revenue and a 5% contingency for the risk inherent in the process, the stronger financial return in today’s dollars is the recommended unconditional offer of $3M.

[131]   The Staff Report then goes on to value Jono’s total net present value offer at $3,110,965.00.

[132]   This is against the backdrop of the Colliers’ Report which estimated that the current market value of the property as is was $1 million.  The market value, if it was partially redeveloped, was $3 million and the prospective market value if the entire property redeveloped was $4.3 million.

[133]   In these circumstances, Jono was offering the equivalent of approximately $3.1 million for the property “as is” which Colliers had estimated to be worth $1 million.

[134]   The logic of HRM’s decision to sell to Jono at $3 million is borne out by the record.  There were no other bidders over and above $3 million.  That in and of itself serves as the best evidence of market value of the property. 

[135]   In my view, the reviewing judge’s failure to properly consider HRM’s rationale for selling to Jono at the $3 million price and his reliance on the conditional bid in determining the market price was an error. 

Issue #3      Did the reviewing judge err by ordering Jono to pay costs to the           Community Groups?

[136]   This issue has become somewhat of a moot point as I am prepared to allow the appeal and set aside the order of MacAdam, J.  As a result, I would order that any costs paid by Jono and HRM to the Community Groups be returned.

[137]   I would also order that Jono be entitled to costs in the amount of $15,000 in the proceedings below plus disbursements to be agreed upon or taxed, payable equally by the respondents.  I would not award any costs to HRM in the proceedings below. 

[138]   Finally, I would award costs of $6,000 plus disbursements as agreed upon or taxed to Jono by the Community Groups on this appeal.  I would not award any costs to HRM on this appeal. 

[139]   However, had it not been for overturning the decision of the reviewing judge, I would not have interfered with the costs decision below.

[140]   The reviewing judge has a broad discretion in awarding costs under Rule 77.  We will not interfere unless he relied on a wrong principle of law, or his decision is “so clearly wrong as to amount to a manifest injustice” (Wile v. Barkhouse, 2011  NSCA 50, ¶11).

[141]   Jono was added as an Interested Party to these proceedings as required by the Civil Procedure Rules.  Jono participated throughout the proceedings filing submissions and making representations to the court. It was in every respect a full party to the proceedings. 

[142]   Although I have some sympathy for the position put forward by Jono that costs should not have been awarded against them in any event of the cause below because it was, essentially, an innocent party protecting its rights, I am not satisfied that the reviewing judge applied a wrong legal principle in reaching his conclusion or that a manifest injustice would result.  As a result, absent allowing the appeal, I would not have interfered with the costs award below.

Conclusion

[143]   The appeal is allowed, the order of MacAdam, J. dated January 24, 2013, is set aside.  The costs paid by HRM and Jono to the Community Groups shall be repaid to HRM and Jono.  Jono shall have costs of the proceedings below in the amount of $15,000 plus disbursements to be taxed or as agreed upon.

[144]   Jono shall have its costs of this appeal in the amount of $6,000 plus disbursements payable by the Community Groups. 

[145]   There shall be no costs awarded to HRM in the proceedings below or on this appeal.

 

 

                                                          Farrar, J.A.

Concurred in:

          Bryson, J.A.

 

Dissenting Reasons for Judgment (MacDonald, C.J.N.S.):    

Background

[146]   I accept my colleague Farrar J.A.’s thorough review of the facts and issues at play in this matter. I also agree with a good portion of his legal analysis. For example, I agree that the Municipality owed the respondent Community Groups a duty of fairness in the circumstances and that the (breached) policy impacted that duty. As my colleague suggests, this is so despite the fact that the Community Groups were unaware of the policy at the time they submitted their proposals. In other words, the mere passage of the policy created a legitimate expectation that it would be honored. At the same time, I also agree that this policy breach should not automatically lead to a breach of the duty of fairness. Instead, it was one of several factors (albeit significant) to be considered in the entire circumstances of this case.

[147]   I also agree with my colleague on the secondary issues, namely, that the Municipality did not sell the land to Jono below market value (contrary to its Charter) and that it was legitimate for the reviewing judge to award costs against the developer, even though it was not part of the main dispute between the Municipality and the Community Groups.

[148]   However, I disagree with my colleague’s ultimate conclusion that the Municipality met its duty of fairness to the Community Groups. I do so for the following reasons.

[149]   First of all, I do not accept my colleague’s assertion (at ¶54) that the motions judge “did not conduct his own [Baker] analysis or indicate where on the spectrum he believed the duty fell”. In my view, the motions judge was abundantly aware of his obligation to consider the Baker factors. In fact, he enunciated them from each party’s perspective. But, for him, the Municipality’s failure to follow its policy was an overriding factor that, on its own, resulted in a breach of its duty of fairness. In other words, finding one factor to be dispositive of an issue does not equate to a failure to conduct an analysis. Instead, his analysis was simplified because of the dominance of this one factor.

[150]   That said, regardless of the judge’s approach to this issue, and as my colleague correctly observes, it ultimately falls to us to decide if the Municipality breached its duty of fairness. My colleague is convinced that the Municipality met its duty. However, as I will explain, I am convinced that it did not.

[151]   I begin with this basic premise. The policy (although honoured in the breach) at a minimum recognized that non-profit community groups, such as the respondents, serve a positive purpose within the community. This would therefore command, at the very least, a reasonable chance of success when submitting proposals. Yet, in my view, the impugned process offered these groups little, if any, hope. In fact, I need look no further than the evaluation material and corresponding summary sheet to see that their efforts appeared doomed from the get-go:

		Profit				Non Profit
Criteria	Max Score	Jono Developments Ltd.		United Gulf	Mythos	North End Health Centre	Micmac	Richard Preston Centre for Excellence
		Option A	Option B
Understanding/Alignment to HRM Vision, Objectives for site	30	25	25	15	15	25	17	10
Qualifications/Experience Capability, Delivery & Schedule	25	21	21	18	17	20	15	5
Financial Capability	25	23	23	20	20	18	12	5
Subtotal	80	69	69	53	52	63	44	20
Financial	20	19	20	19	16	0	0	0
Total	100	88	89	72	68	63	44	20

[152]   Consider the four categories, beginning with the “financial” comprising 20%. It should come as a surprise to no one that the Community Groups got zeros in this category. They are not investors. This is a clear example of how the policy breach jeopardized the Community Groups’ chances. In clear language, the policy directed that proposals from non-profit groups be assessed separately and in advance. Here, by comparing them directly using this scoring sheet, the non-profit groups started a full 20 points behind Jono, the successful for-profit competitor.

[153]   Then consider the “financial capability” for another 25%. Here again, the policy breach manifests itself with the non-profit groups scoring significantly lower. By their very mandate, non-profit groups will score lower than for-profit groups in this category. Thus, combining these two categories, we see the non-profit groups at a major disadvantage for almost half of the available points. Furthermore, there is nothing in the remaining two categories to counter this virtually insurmountable disadvantage.

[154]   As well, it is instructive to consider the scoring scheme for the two other schools included in this request for proposals. Specifically, where St. Patrick’s Alexandra had 45 combined points at play for these two categories, Gordon Bell and West Chezzetcook had only 40 and 30 respectively. So, for reasons unclear from the record, there was even less hope for non-profit groups to acquire St. Patrick’s Alexandra.

[155]   Also noteworthy is the concluding paragraph of the request for proposal’s backgrounder entitled “Added Value for Profit Organizations”:

HRM is interested in maximizing the value of expenditures as it relates to achieving additional value that would further benefit HRM and its operation, as well as its community of citizens and their tax based funding. As such, proponents are encouraged to consider, develop and propose added value concepts, programs, components and the like that would further enhance the proposed acquisition represented in this RFP.

Remember, when making your submission, these properties have been enjoyed by many HRM residents; As such, it will be important to showcase how your group will incorporate the “added value” concept.

 

This invites for-profit organizations to incorporate community enhancement initiatives into their proposals as opposed to strictly commercial offerings. Although no points were specifically designated for such initiatives, this enticement is clearly designed to give for-profit proponents a leg up over non-profit groups. This was not lost on at least one councillor on the evening of the vote:

            COUNCILLOR SLOANE: …So I’d like to know why we have a process that basically gives a proponent for profit an actual . . . actual bonus points for including not-for-profit. But if you’re not-for-profit, you don’t get any bonus points. This whole RFP thing seems to be a little odd, Your Worship, and I’m just wondering if that could be explained to me, of why we give bonuses to those that have money but we don’t give bonuses to those that are actually doing work in the community.

            MAYOR KELLY:    Could we have staff, please?

            MR. STICKINGS:   Thank you, Your Worship, through the councillor. In the process there are no bonus points issued to a private sector proponent for offering not-for-profit in this particular case. Their proposal came forward with affordable housing and a strong community consultation component. Those were not mandatory.

            COUNCILLOR SLOANE: Well, actually, in your package, your RFP package, it states on page 12, if I’m not mistaken . . . that it talks about added value and that a person can seem to be given . . . I don’t know if it’s points or just consideration, but it’s there.

            So I’m just . . . I’m concerned that here we have for-profit and a not-for-profit bidding on the same thing, going down the same road, when we know that one is being given added value, as they call it, and the other isn’t. And why are we putting not-for-profits and profits together when we have an actual way in which we do business that I just showed you on the Elmo? That shows that we’re supposed to be following a policy and a means to go forward by first looking at the community first and then going out, if no one wants it in the community.

            I’m very concerned that we’re not following our own process here.

            MAYOR KELLY:    Staff, respond, please.

            MS. TEMPLE:          Thank you, Your Worship. To Councillor Sloane, there is added to the RFP a section called “value added”, and that is to ask the for-profit sector . . . and that could also apply to non-profit groups as well. Not exclusive.

            VOICE:          (inaudible – mic off)

            MS. TEMPLE:          Some non-profit groups may be financially quite capable of putting in a competing offer.

            I would also point out in the scoring schedule the least points are awarded for the financial offer. In this case, it was 20 out of 100 points. So really, the weighting of the scoring is more to the intent of the proposal and the broader public benefit.

            COUNCILLOR SLOANE: But how can you actually weigh a non-profit to a for-profit? A for-profit can walk into a bank and say, “I need a loan because I plan on doing this, this, and this.” A non-profit actually has to raise money, maybe sell their building so that they can actually invest in something else.

            MS. TEMPLE:          Through Your . . .

            COUNCILLOR SLOANE: I don’t think they’re equal.

            MS. TEMPLE:          Through Your Worship to the councillor, every effort is made to look at the . . . not only the programing merits of the non-profit proponents, if there are any, but also their financial status. In this particular case, the RFP did ask for the submission of financial statements by the non-profit group. This was for us to assess their financial abilities. All of them had the opportunity to approach a bank or a funding agency. They could demonstrate that ability.

[156]   Furthermore, this document formed the only basis of the staff report to Council recommending Jono as the successful candidate. In short, this flawed process, in my view, left the non-profit groups with no realistic chance of success.

[157]   With this background, let me now turn to the guiding Baker factors. I will use my colleague’s approach (at ¶54 to 104) as a foundation, since I agree with much of what he offers.

The Baker Factors

The nature of the decision making process

[158]   I accept my colleague’s conclusion that this factor attracts a moderate level of fairness.

The nature of the statutory scheme

[159]   I agree that this attracts a significant level of fairness.

Importance of the decision to those affected

[160]   My colleague acknowledges, and I agree, (at ¶58-59) that this decision was important not just to the respondent Community Groups but for the broader community. He would attach a “moderate” level of fairness. I am prepared to take judicial notice that the work done by these groups is vital to the health and well-being of any vibrant community. I would attach a heightened level of fairness.

Legitimate expectations of those challenging the decision

[161]   This consideration reflects the main issue on appeal and my colleague has offered a very detailed analysis of the legal principles engaged. He concludes with this:

¶102    To conclude on this factor, the Procedure gave rise to reasonable expectations on the part of the parties but is not determinative of the duty of fairness required in this case. The reasonable expectations is just one factor to be considered in the formulation of the duty of fairness. I will now turn to the fifth factor discussed in Baker.

 

[162]   As noted, I agree that this consideration is but one factor to be considered. However, in my view, it is an important one where the respondents had a right to expect meaningful participation. I would attach a heightened degree of fairness to this category.

Decision maker’s own choice of procedures

[163]   I accept that this final factor attracts a moderate level of fairness for the reasons articulated by my colleague (at ¶103-104).

Conclusion

[164]   My colleague, following his detailed application of the Baker factors, settles on this duty owed by the Municipality to the Community Groups:

¶105    The foregoing analysis suggests that a significant degree of fairness was owed to the Community Groups, which included participation in the disposal process. I agree with Jono’s submission that the duty owed to the Community Groups amounted, in the circumstances, to an opportunity to advance a proposal and to have the proposal considered by HRM on criteria other than simply the price offered for the property.

 

[165]   Of course I agree that a “significant degree of fairness” was owed here in light of the breached policy. However, my colleague’s parameters extend only to “an ability to participate” and to be judged “on criteria other than simply the price”. In my view, that does not go far enough. Instead, as I have explained above, the groups deserved a right to meaningful participation in the process and to not have a score card stacked against them. This they were denied.

Disposition

[166]   For all these reasons, I would dismiss the appeal with costs to the respondent Community Groups.

 

MacDonald, C.J.N.S.