Legitimate Expectations and Procedural Fairness: Only a Part of the Analysis?

Canadian courts are to take five factors into account in determining the content of procedural fairness in any given case. One of these factors is whether the applicant had any legitimate expectation about the procedure to be followed.

I have always found this unusual. Surely once an applicant establishes that a legitimate expectation has been breached, that is the end of the matter: the procedure could not possibly have been fair (subject to the possibility that a departure from the expected procedure was justifiable for some independent reason). But in Jono Developments Ltd. v. North End Community Health Association, 2014 NSCA 92, the Nova Scotia Court of Appeal suggested that a legitimate expectation is only one part of the fairness analysis and may be outweighed by other factors. However, I do not think the Court’s analysis is convincing in general or in respect of the instant case.

At issue was a municipal policy relating to the sale of obsolete school buildings. In particular, several not-for-profit groups wished to make an offer for a building. They claimed they were disadvantaged relative to commercial bidders because their bids were assessed according to identical criteria. They argued that this breached a legitimate expectation, fostered by a municipal policy, that their bids would be assessed separately.

Farrar J.A. accepted that the municipality was subject to a duty of fairness in disposing of the building and that the content of the municipality’s policy gave rise to a legitimate expectation on the part of the not-for-profit groups. But, he suggested, “[a]lthough, 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” (at para. 64). He held that the process was fair because it was “substantially similar” to the one contemplated by the policy (at para. 96). His conclusion after considering all the fairness factors was as follows:

[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.

Analytically, this is unconvincing. To say that the process was “substantially similar” to the one promised is simply to say that the legitimate expectation was satisfied on the facts. Holding a public authority not just to the letter, but to every syllable, of an undertaking is unrealistic: Farrar J.A. cites several cases that recognize this proposition.  But it does not follow — in respect of this case or in general — that a legitimate expectation can coherently be treated as merely one factor among several relevant factors in calibrating the content of procedural fairness. Tellingly, one of the cases Farrar J.A. cites in support of his proposition involved a situation in which other factors made the applicant’s case stronger, the polar opposite of this case.

Farrar J.A. upheld the process as fair:

[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.

But I think MacDonald C.J.N.S. might have had the better of the argument in dissent:

[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:

[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.

Is there any Canadian case in which a legitimate expectation has been defeated because the other procedural fairness factors disfavoured the applicant? That is, not because the process was “substantially similar” or because there was a good reason for refusing to fulfill the promise, but because the nature of the decision, the nature of the statutory scheme, the importance of the applicant’s interest and/or deference to the decision-maker outweighed any legitimate expectation. I would be very interested to see suggestions from readers.

I blogged about the first-instance decision in this case two years ago: see here. The first-instance judge had also found the disposal decision substantively unreasonable, but the Court of Appeal (rightly in my opinion) took a different view.

This content has been updated on October 21, 2014 at 11:31.