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Ontario Superior Court of Justice remits licensing application for reconsideration

Credit: Ken Lund,

Credit: Ken Lund,

The Ontario Superior Court of Justice, in a January 8, 2024 decision, granted an appeal of the Home Construction Regulatory Authority (Registrar) and remitted the matter back to the Licensing Tribunal for consideration by a new panel guided by this Court’s findings to determine whether the Applicant, Yarco Developments, Inc. (Applicant), should be licensed with consistent interpretation of the law relating to licensure.    In particular, the Court noted that there are “currently integrity and honesty provisions in at least 70 Ontario statutes and regulations providing for the assessment of the qualifications of persons for various professions, trades, or activities” that would be impacted by any inconsistency in the application of the law.   

Yarco Developments Inc. v. Home Construction Regulatory Authority (Registrar), 2024 ONSC 93

Applicant sought reinstatement of its license that it had possessed prior to the 2017 New Home Construction Licensing Act, 2017, S.O. 2017, c.33 (“New Licensing Act”) that required companies and individuals seeking to build and/or sell new homes be licensed in Ontario by the Registrar.  Upon review of the application, the Registrar provided the required notice to the Applicant that the application would be denied based upon the past criminal record of the company’s sole owner, officer, and director, including convictions of 22 offenses between August 2007 and August 2010 for fraud, forgery, and violations of probation and conditional orders.  The Registrar concluded that a renewal of the license would be contrary to the public interest in that the applicant could not be reasonably expected to be financially responsible in the conduct of the business, and there had not been a sufficient demonstration with regard “to the past and present conduct of the officers, directors or interested persons” that the Applicant could be reasonably expected to “carry on business in accordance with the law and integrity and honesty.”

Upon review, the Licence Appeal Tribunal held that the Applicant did in fact meet the licensing criteria, that while criminal records may be considered, such records alone are not sufficient to preclude licensure, and the evidence provided reasonable belief that the business would be carried on “in accordance with the law and with integrity and honesty” as required under s. 38(1)(b)(iii) of the New Licensing Act.  The Licence Appeal Tribunal placed the burden on the Registrar to demonstrate that granting the license would not be in the public interest and relied on a plain reading of the New Licensing Act.  The Registrar appealed the decision and argued that the Licence Appeal Tribunal was in error in the interpretation of “integrity and honesty” and requested that the denial of the application be affirmed or that a new hearing be granted with a different tribunal panel.

This Court reviewed the matter, noting that the Adjudicator erred in law in his interpretation of s. 38(b)(iii) of the New Licensing Act and failed to apply the modern approach to statutory interpretation and mistakenly concluded the “onus is on the Registrar to prove the licen[s]e should not be renewed” based on integrity and honesty criteria, on a standard inconsistent with the “reasonable grounds for belief” test.  Further, this Court highlighted that courts and tribunals routinely have considered an applicant’s conduct to determine whether any conduct of concern would be repeated and that such gatekeeping provisions require that the provisions in law be interpreted consistently in order to allow the gatekeeper the ability to deny an application on a “reasonable grounds for belief” standard and in the “enhancement of consumer protection and strengthening of the licensing regime.”

Applications must necessarily be denied when “based upon objective, compelling and credible information about the applicant’s past and present conduct of officers, directors and other interested parties, that the applicant will not conduct itself in accordance with the law and with integrity and honesty;” with the burden of proof placed on the applicant to prove the “non-existence of reasonable grounds for belief supporting a denial of licensure.”  This Court noted that flipping the interpretation of law on its head would ignore the plain meaning of the law as well as void the gatekeeper role that is necessarily held by the Registrar.

Court remitted the matter back to the Licence Tribunal for consideration to determine whether application would be approved with consistent application of the law.