PROVINCE OF PRINCE EDWARD ISLAND IN THE SUPREME COURT - TRIAL DIVISION

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1 Date: Docket: GSC Registry: Charlottetown PROVINCE OF PRINCE EDWARD ISLAND IN THE SUPREME COURT - TRIAL DIVISION BETWEEN: ADMINISTRATOR OF THE PRIVATE TRAINING SCHOOLS ACT, R.S.P.E.I. 1988, CAP. P-20.1 Applicant AND: THE APPEAL BOARD ESTABLISHED PURSUANT TO SECTION 9 OF THE PRIVATE TRAINING SCHOOLS ACT, CONSISTING OF FRANK LEDWELL (CHAIRPERSON), JOHN MACDOUGALL AND RON RICE Respondents Before: The Honourable Justice David H. Jenkins Denise N. Doiron - Solicitor for the Applicant John L. MacDougall, Q.C. - Solicitor for Maureen Morrison and John Ray Ellen School of Esthetics Place and Date of Hearing - June 29, 1998 Charlottetown, Prince Edward Island Place and Date of Judgment - July 7, 1998 Charlottetown, Prince Edward Island

2 Date: Docket: GSC Registry: Charlottetown ADMINISTRATOR OF THE PRIVATE TRAINING SCHOOLS ACT, R.S.P.E.I. 1988, CAP. P-20.1 Applicant and THE APPEAL BOARD ESTABLISHED PURSUANT TO SECTION 9 OF THE PRIVATE TRAINING SCHOOLS ACT, CONSISTING OF FRANK LEDWELL (CHAIRPERSON), JOHN MACDOUGALL AND RON RICE Respondents Supreme Court of Prince Edward Island - Trial Division Before: Jenkins J. Heard: June 29, 1998 Judgment: July 7, 1998 (8 pages) JUDICIAL REVIEW: natural justice - tripartite tribunal - jurisdictional error. The Court nullified the decision of a tripartite appeal board which had permitted a member to remain who was a lawyer acting as both counsel for the appellant and as her representative on the board in the same proceeding. CASES CONSIDERED: Bethany Care Centre and United Nurses of Alberta, Local No. 91 (1983), 50 A.R. 250 (C.A.), leave to appeal to S.C.C. refused (1984) 15 D.L.R. (4th) 54; Re Foothills General Hospital and U.N.A., Local 115 et al. (1986), 27 D.L.R. 4th 665 (Alta. C.A.); Simmons v. Government of Manitoba (1981), 13 Man. R. (2d) 55 (C.A.); Szilard v. Szasz, [1955] 1 D.L.R. 370; Re Gypsumville District Teachers and Gypsumville School (1979), 103 D.L.R. (3d) 671 (Man. C.A.), affirmed (1980), 121 D.L.R. (3d) 509 (S.C.C.); Re Flin Flon Division Ass n No. 46 and Flin Flon School Division No. 46 (1964), 47 D.L.R. (2d) 87 (Man. Q.B.). STATUTES CONSIDERED: Private Training Schools Act, R.S.P.E.I. 1988, Cap. P- 20.1; Judicial Review Act, R.S.P.E.I. 1988, Cap. J-3, ss. 8, 1(g); Prince Edward Island Rules of Civil Procedure, Rules 38.10(2) and

3 - ii - TEXTS CONSIDERED: Adams, Canadian Labour Law (2nd ed.); The Canadian Bar Association, Code of Professional Conduct; Brown and Beatty, Canadian Labour Arbitration, (3rd Ed.). Denise N. Doiron - Solicitor for the Applicant John L. MacDougall, Q.C. - Solicitor for Maureen Morrison and John Ray Ellen School of Esthetics Place and Date of Hearing - June 29, 1998 Charlottetown, Prince Edward Island Place and Date of Judgment - July 7, 1998 Charlottetown, Prince Edward Island

4 Jenkins J.: [1] The applicant seeks judicial review to stipulate that a person cannot act as both legal counsel for a party and as a member of an appeal tribunal established to hear that party s appeal of the cancellation of her license to carry on business. I have concluded that in the circumstances, where a tripartite appeal tribunal is constituted to carry out a quasijudicial function, the rule of natural justice nemo judex in causa sua debet esse applies. A person cannot sit in judgment of his own cause, or both prosecute and adjudge that cause. Accordingly, an appropriate remedy will be granted on judicial review. Background [2] Subject to the direction of the Minister of Education, the Applicant Administrator administers private training schools in this jurisdiction, and is responsible for administration of the Private Training Schools Act, S.P.E.I. 1988, Cap. P On December 2, 1997, the Administrator cancelled the certificate of registration to operate Maureen Morrison s school of aesthetics, for failure to comply with the legislation governing private training schools. In the notice of cancellation, the Administrator advised Morrison of her statutory right of appeal, and of the process for initiating an appeal, which involved giving notice of intention to appeal to Athe Chairperson of the Appeal Board, Mr. Frank J. Ledwell@ within the prescribed time. [3] Morrison appealed. Around December 19, 1997, Morrison retained solicitor John L. MacDougall, Q.C. to appeal the Administrator s decision. On December 23, 1997, MacDougall delivered a notice of appeal on behalf of Morrison to Frank J. Ledwell, the Chairperson of the Board. In accordance with Regulation 9(2) made under the Act, which stipulates that the party appealing shall include in the notice of appeal the name of her nominee to the Board, MacDougall advised that Morrison named him as her nominee to the Board. [4] The Administrator named Ronald Rice, another employee in the Department of Education, as his nominee to the Board. The Minister thereupon proceeded as directed by Regulation 9(3) and appointed as members of the Appeal Board to hear the appeal filed by Morrison: MacDougall, Athe operator s nominee@; Rice, Athe Administrator s nominee@; and Ledwell, AChairperson@. [5] The Administrator promptly objected to the composition of the Board. In particular, he objected to MacDougall sitting Aas a member of the tribunal hearing the very appeal on which he had acted as counsel for the appellant@. At that time, the Administrator was unaware whether MacDougall was still acting as counsel for Morrison. The Administrator objected to the Board proceeding until Morrison submitted the name of a nominee who would not be similarly disqualified. [6] The Appeal Board was convened and heard the Administrator s objection. Within

5 Page: 2 this hearing, MacDougall sat as a member of the Board. In his words, he was representing her on the Board. He acknowledged he was also, regarding Morrison, Aher lawyer, representing her@. MacDougall stated, AShe nominated me as her lawyer to be her representative on the Board@. The Administrator submitted that the composition of the Board, which was to be an adjudicative and impartial body, was flawed and against the principles of natural justice because MacDougall, as counsel and a member of the Board, was acting essentially as both advocate and judge. After hearing the Administrator s submissions, the Appeal Board deliberated privately, and subsequently decided, first, that it was properly constituted and appointed, and second, that it would withhold proceeding further pending the outcome of the Administrator s expressed intention to seek judicial review of the Board s principal decision. Application for Judicial Review [7] The Administrator brought an application for judicial review on March 19, 1998 for orders in the nature of certiorari to quash the Board s decision that it was properly constituted and prohibition from proceeding further with the appeal until MacDougall is removed from the Board and replaced with an acceptable operator s nominee. The grounds cited by the Administrator submit jurisdictional error based on the Board proceeding contrary to the rules of natural justice, which preclude a person from acting as prosecutor and judge in the same proceeding. On April 6, 1998, MacDougall, acting as solicitor for Morrison, filed a Notice of Appearance which states that Morrison intended to respond to the application for judicial review. The essence of Morrison s response is that her appeal should not have to fail for lack of a nominee; and that the governing legislation contemplates each party having a representative and there being a neutral and independent chair, who acts as umpire. Counsel for Morrison poses the question, if her lawyer is not a proper nominee for membership on the Appeal Board, then who is? [8] On March 29, 1998, Frank J. Ledwell wrote to the Deputy Minister of Education and resigned as Chairperson of the Appeal Board, due to the negative nature and extent of the allegations which had been advanced on behalf of the Administrator regarding the composition and conduct of the Board. Procedure [9] In the hearing, I noted two irregularities regarding the procedure followed in this application. First, the record was not filed by the Appeal Board. All or most of the record did come before the Court through a series of documents filed by counsel for the Administrator; however, according to her, this is incomplete. In that regard, s. 8 of the Judicial Review Act, R.S.P.E.I. 1988, Cap. J-3 stipulates that the A...tribunal to which the application for judicial review relates, shall file with the prothonotary within ten days of the service of the application on the tribunal a true copy of a record of any hearing in respect of the decision that is the subject of the application@. Filing by the tribunal is a

6 Page: 3 mandatory provision, to be fulfilled Aunless a judge otherwise orders@. As the Court has noted in previous decisions, absence of the record can pose a problem, as the record is the primary evidence on which the Court bases its review of a tribunal s decision. In the present case, it is perhaps understandable why the Appeal Board did not file the record. Upon the Chair resigning, which he did shortly after this application was brought, he was without further authority. For this application, in view of the jurisdictional nature of the alleged error (i.e. a breach of the rules of natural justice, rather than an error of law) assurance of completeness of the record is not a critical issue. [10] This case points out the utility of a tribunal filing a certificate that the record is complete. I make no further observation regarding completeness of the record because s. 1(g) of the Judicial Review Act refers at clauses (iv) and (v) to Aevidence@, while counsel for the Administrator cautions that the missing component is a tape recording of the Board s private deliberations. [11] The second irregularity regarding procedure is that Morrison s solicitor, having filed a Notice of Appearance under Rule 38.08, did not comply with Rules and 38.10(2) of the Rules of Civil Procedure which require a responding party to file an Application Record and factum. The absence of these submissions, coupled with the absence of Morrison or her counsel in the hearing, makes more difficult the task of the Court of considering fully both sides of the arguments and conducting a fair and effective judicial review. Judicial Review [12] The decision of the Appeal Board that it is properly composed, and particularly the status of MacDougall as a member of the Board, is subject to judicial review. With reference to the Judicial Review Act, s. 1, clearly the Board is a statutory tribunal, and Morrison, the person who brought the application, is a person adversely affected by the Administrator s decision to cancel her license issued by the Administrator under the Private Training Schools Act. The subject of the application is to impugn the Board s exercise of authority under that Act. [13] Indeed, the Administrator could well have sought review, either additionally or instead, of the decision of the Minister in this proceeding. As noted above in paragraph 4, the Acting Minister, in carrying out the Minister s function, acted under and pursuant to the governing legislation, as stipulated, to appoint the Appeal Board. As such, the Minister was a tribunal whose act was subject to review under the Judicial Review Act. In the circumstances though, it is sufficient for the Administrator to have applied for review of the Appeal Board s decision to sustain its composition. [14] I am doubtful regarding the present existence of the Board. I believe the better view is that it is defunct and no longer exists. Counsel for the Administrator submits that

7 Page: 4 since a majority of the Board can decide an appeal, the Board continues to exist notwithstanding that the position of chairperson is vacant. While that interpretation appears tenable, in my opinion it is neither the preferred view nor a true reflection of the intention of the Legislature. Following accepted principles of statutory construction, it is my opinion that the Legislature intended to create a tripartite board, being composed of three parts, including a nominee representing each of the two interested parties, the operator and the Administrator, and the third, the chairperson, being a neutral or public representative. [15] The Act is silent regarding composition of the Appeal Board, except that s. 14(q) authorizes the enactment of regulations respecting composition. The enabling legislation confers no corporate status or like continuing existence on an appeal board. Regulation 9(3) stipulates the Board composition of three members, and directs the Minister to appoint those members. Regulations 9(4) and (5) direct the procedure, and confer some authority on the Board to determine its own procedure. Regulation 8 provides that a decision of the majority governs on issues of procedure and related matters. Regulations 6 and 8 confer special functions on the chairperson. Only the chairperson can give the required notice of hearing to the parties, and in the absence of a majority decision on procedural matters the decision of the chairperson governs. Regulation 7 emphasizes the intended tripartite operation of a board. It stipulates that notwithstanding any other provision in the regulations, in the case of the absence of any member of an appeal board due to illness or other reasonable cause, the other two members shall not proceed until the absent member has returned or been replaced. [16] In my opinion, the Legislature intended a board to have a chairperson as an integral component of its function and its existence. It follows, for a board comprised under this particular legislation, that upon the resignation of the chairperson, the board ceased to exist. [17] On this interpretation, this application for judicial review would be moot. There is no board, and therefore no consequences for any judicial order to nullify its decision regarding its composition. Morrison filed her Notice of Appearance in this proceeding only after Ledwell had resigned as Chairperson of the Board. In any event, I am going to render a decision on the main issue in the application for judicial review, since it appears useful to the parties and persons interested in the administrative appeal; and perhaps helpful as a matter of administrative law policy, to decide with reasons this application for judicial review. Decision [18] An Order of the Court will be granted to nullify, or quash, the Appeal Board s decision that it is properly composed. John L. MacDougall, Q.C., as Morrison s solicitor, is acting as her counsel on the appeal. He cannot simultaneously sit as a member of the

8 Page: 5 Appeal Board. As counsel for a party, MacDougall has an interest in the outcome of the appeal. MacDougall s interest in Aexecuting@ the appeal goes beyond, and is distinguishable from, the sympathy, or even interest, of an operator s nominee as contemplated by the legislation under which the Appeal Board is constituted; and it goes beyond permissible interests in like tripartite tribunals constituted in administrative law, most noteworthy in the labour law field, for adjudication of rights issues. Under the Act, the Board has an adjudicative function; as such, it is quasi-judicial. Members must act judicially, and be reasonably seen to be acting judicially. The requirements of natural justice apply. Some moderation is in order to give effect to the tripartite nature of the tribunal, which is clearly stipulated by the legislation. However, in the absence of express legislative language, which does not exist here, and no examples of which were brought to my attention, a solicitor for one of the parties, particularly a solicitor who is acting as counsel on the very proceeding upon which he would adjudge, sitting as a nominee of a party on the appeal board, is beyond any permissible boundary, and constitutes a manifest breach of the rule of natural justice embodied in the maxim: nemo judex in causa sua debet esse. Such a breach of the rules of natural justice causes the Board to lose jurisdiction. [19] The test for determination of the degree of allowable bias when parties appoint representatives to sit on a board was discussed in Bethany Care Centre and United Nurses of Alberta, Local No. 91 (1983), 50 A.R. 250 (C.A.), leave to appeal to S.C.C. refused (1984) 15 D.L.R. (4th) 54. In that case, a local union had appointed an employee of its parent union as its nominee, and the Alberta legislation disqualified particular interested persons from sitting. The Court held that partiality alone is not a valid ground for objection. It requires the determination of whether a person can be both partial, in order to fulfill the role of the appellant s representative on the Board, and independent, which is required in order to function as an adjudicator on a tribunal, at the same time. Bias does not have to be proven; a reasonable apprehension upon objective observation needs to be seen. If, from the facts, it is reasonable to think that the adjudicator does not possess the independence required because it is believed that that person will advance the interests of his client, then the test from Bethany Care has been met. The Alberta Court of Appeal in Bethany Care stated (at p. 56): On principle, arbitrators determining the rights of parties are exercising a quasi-judicial function: General Truck Drivers Union, Local 938 et al. v. Hoar Transport Co. Ltd. (1969), 4 D.L.R. (3d) 449 at p. 450, [1969] S.C.R. 634, 69 C.L.L.C. para. 14, 180. Again, on principle, persons exercising quasijudicial functions will be disqualified if there exists a reasonable apprehension of bias: Szilard v. Szasz, [1955] 1 D.L.R. 370 at p. 371, [1955] S.C.R. 3 at p. 4, where Rand J. speaks of a need for Afree, independent and impartial Rand J. goes on to say [at p. 373 D.L.R., p. 7 S.C.R.] that each party to an arbitration Ais entitled to a sustained confidence in the independence of mind of those who are to sit in judgment on him and his This test was followed in Re Foothills General Hospital and U.N.A., Local 115 et al.

9 Page: 6 (1986), 27 D.L.R. 4th 665 (Alta. C.A.). [20] The discussion in Adams, Canadian Labour Law (2nd ed.) At pp , regarding the test and rationale for relationships and interests, and the degree of permissible partisanship within tripartite tribunals is a useful reference regarding this issue. Disqualification for direct interest, on the facts of the present case, occurs with deliberate recognition of, and does not ignore, the tripartite nature of the tribunal. [21] This situation raises a question regarding conflict of interest for counsel. When acting as an advocate a lawyer must, while treating a tribunal with courtesy and respect, represent his client resolutely, honourably and within the limits of the law: The Canadian Bar Association, Code of Professional Conduct, Ch. VIII, p. 27. The Code also addresses impartiality and conflict of interest at Ch. V. The Rule focuses on the requirement not to represent both sides of a dispute, but its direction that a lawyer should not act or continue to act where there is or is likely to be a conflicting interest is applicable here. The CBA Code Rule defines conflicting interest as A...one which would be likely to affect adversely the judgment of the lawyer on behalf of his loyalty to a client or prospective client or which the lawyer might be prompted to prefer to the interests of a client or prospective client.@ The matter before the Appeal Board is in the nature of a Arights@ adjudication. In these circumstances, one person cannot pursue the cause of a party with requisite resolution, and retain the minimum degree of impartiality, and independence, even as the nominee of a party, that would allow him to act judicially in his participation on the Appeal Board, or to be reasonably seen as such. [22] As long as a lawyer is providing representation to a party as her solicitor, the solicitor is not able to act as an independent arbitrator on a tribunal that is set up to hear a dispute involving his client. In Simmons v. Government of Manitoba (1981), 13 Man. R. (2d) 55 (C.A.), also applying the authority of Szilard v. Szasz, supra, the Manitoba Court of Appeal held that because an adjudicator in that case was providing services under an employment contract he was not able to act as an independent arbitrator in a dispute in which his employer was a party. [23] This proceeding does not involve a situation of a person being disqualified for having previously rendered legal services to a person who is a party. The Court does not have to address that situation here. Rather, it is because the lawyer is involved in both capacities in this particular case. Counsel was involved prior to his appointment to the tribunal and continues to act as solicitor to Morrison. In these circumstances, an apprehension of bias arises. [24] The role of the Appeal Board under the Private Training Schools Act is distinguishable from the role of an interest arbitration tribunal constituted in labour law collective bargaining for the purpose of determining at the end of the negotiation process the terms of a collective agreement. Re Gypsumville District Teachers and Gypsumville

10 Page: 7 School (1979), 103 D.L.R. (3d) 672 (Man. C.A.), affirmed (1980), 121 D.L.R. (3d) 509 (S.C.C.), dealt with the issue of permitted bias in the field of Ainterest@ arbitration. The distinction regarding interest and rights boards, as pointed out clearly by Huband J.A. in Simmons v. Manitoba, supra, at p. 66, is that in cases of interest arbitration there is a built-in bias contemplated by the statute so that the boards may not be viewed as being quasi-judicial in character; whereas in cases of rights arbitration, where the grievance process is a judicial one, tribunal members must not be seen to be so biased that they are not able to think independently in their determination. [25] Brown and Beatty, Canadian Labour Arbitration, (3rd Ed.), p. 1-26, cites this statement from Re Flin Flon Division Ass n No. 46 and Flin Flon School Division No. 46 (1964), 47 D.L.R. (2d) 87 (Man. Q.B.): Unless parties have agreed, with full knowledge of the position, to accept the decision of a person whose position with regard to them or to the matters referred to him is otherwise, they are entitled to expect from an arbitrator complete impartiality and indifference, both as between themselves and with regard to the matters left to the arbitrator to decide, and they are entitled to expect from him a faithful, honest and disinterested decision...any personal interest which will tend to bias an arbitrator s mind, which was unknown to either of the parties at the time when the dispute concerned was agreed to be referred, will unfit a person to act as arbitrator. In grievance, or rights, arbitration, where commonly each party nominates a representative to the board, the requirement of impartiality gives rise to unique considerations, many of which Brown & Beatty mention at pp [26] As discussed within the hearing, I would add, obiter, regarding the Administrator s nominee on the Appeal Board that the foregoing analysis suggests considerable doubt about the qualification of a nominee who is both a fellow employee of the Administrator, and a public servant who reports to the Minister responsible for administration of the Act, whatever may be his actual independence of mind or stellar credentials for the role. [27] Relief in the nature of certiorari being granted; it is unnecessary to address further the Applicant s request for the alternative relief of prohibition. [28] The Applicant Administrator has declined to seek costs on this application against the operator Morrison. There will be no order for costs. [29] Ordered accordingly.

11 Page: 8 July 7, 1998 Justice David H. Jenkins