Québec v. Proprio Direct Inc.: Administrative Law in the Post-Dunsmuir Era

The Supreme Court’s decision last March in Dunsmuir v. New Brunswick, 2008 SCC 9 was widely recognized as a watershed event in Supreme Court jurisprudence. Indeed, even for those not steeped in administrative law, Dunsmuir appreciably changed the optics of judicial review; the court not only eschewed the much maligned ‘patent unreasonableness’ standard of review, but also purported to replace ‘pragmatic and functional analysis’ with a simplified ‘standard of review analysis.’ (Whether or not the latter constituted anything more than a change in name has been a point of contention among legal commentators). For more nuanced commentary on Dunsmuir, see posts by Professors Lorne Sossin and Gus Van Harten’s).

As with any decision, the full impact of Dunsmuir will only become evident when appellate courts have had the opportunity to apply it to future jurisprudence. With this in mind, the Supreme Court`s recent decision in Québec v. Proprio Direct Inc. 2008 SCC 32 — involving the judicial review of a decision by the Discipline Committee of the Association of Real Estate Brokers and Agents of Quebec — warrants close inspection.

Facts and Procedural History

Prorprio Direct, a Quebec-based real estate broker was in the habit of charging non‑refundable “membership fees” for exclusive brokerage contracts, above and beyond any commission charged for the sale of a property. As a result, two vendors who had contracted with Proprio but whose houses had not sold, were assessed membership fees of $1,262.97 and $1,724.22 respectively. The vendors complained to the Association des courtiers et agents immobiliers du Québec, (en anglais, the Association of Real Estate Brokers and Agents of Quebec), alleging that Proprio’s practice of charging a membership fee irrespective of the sale of a property violated the Real Estate Brokerage Act, (REBA) R.S.Q., c. C‑73.1. The Discipline Committee sided with the vendors, finding that real estate brokers were not entitled to any remuneration in the absence of a sale. The above argument was also successful in the Court of Québec. However, the Québec Court of Appeal overturned the decision, acknowledging that the REBA was a law of public order for consumer protection, but the provisions relating to compensation at the time of sale were not mandatory. The matter then proceeded to the Supreme Court.

Competing Accounts of Deference in the Supreme Court

A divided Supreme Court allowed the appeal by the vendors, finding that the Discipline Committee was entitled to reach the conclusion that Proprio’s non-refundable membership fees were not permitted by the REBA. Not surprisingly, one of the major points of disagreement between the majority and dissent was on the appropriate standard of review.

Writing for the majority, Abella J. began with an assessment of the mandate of the Association of Real Estate Brokers and Agents of Quebec), as outlined in s. 66 of REBA, which is worth reproducing here:

66. The primary role of the Association is to ensure the protection of the public by the enforcement of rules of professional ethics and the professional inspection of its members, and in particular by seeing to it that its members pursue their activities in accordance with the Act and the regulations. . . .

Bearing in mind this emphasis on consumer protection, Abella J. argued for a standard of review of reasonableness. She contrasted past decisions of the Quebéc court of Appeal with its finding in the present case. Specifically, Abella J. pointed to Pigeon v. Daigneault, [2003] R.J.Q. 1090 and Pigeon v. Proprio Direct inc., J.E. 2003-1780, SOQUIJ AZ-50192600, both of which stressed the need for deference in disciplinary decisions involving professional ethics, and accordingly identified reasonableness as the appropriate standard of review. Unlike the two above cases, Abella J. explained, the Québec Court of Appeal’s decision in the present case represented a significant “departure from that deferential approach.”

However, the earlier decisions by the Québec Court of Appeal conformed more closely to Dunsmuir, as Abella J. explained:

In my view, with respect, the standard of review applied in the earlier cases by Dalphond and Chamberland JJ.A. is to be preferred and is in greater compliance with Dunsmuir v. New Brunswick, [2008] 1 S.C.R. 190, 2008 SCC 9 (at paras. 54 and 55). In particular, the presence or absence of a privative clause, while relevant, is not determinative (Dunsmuir, at para. 52).

Having identified reasonableness as the appropriate standard of review, Abella J. relied on a who’s who of cannonical administrative law decisions to frame the legal issue thus before the Supreme Court:

[21] What is at issue here is the interpretation by the discipline committee, a body of experts, of its home statute (Dunsmuir, at para. 54. See also Moreau‑Bérubé v. New Brunswick (Judicial Council), [2002] 1 S.C.R. 249, 2002 SCC 11; Dr. Q v. College of Physicians and Surgeons of British Columbia, [2003] 1 S.C.R. 226, 2003 SCC 19; Law Society of New Brunswick v. Ryan, [2003] 1 S.C.R. 247, 2003 SCC 20; Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982, at para. 32). The legislature assigned authority to the Association, through the experience and expertise of its discipline committee, to apply — and necessarily interpret — the statutory mandate of protecting the public and determining what falls beyond the ethical continuum for members of the Association. The question whether Proprio Direct breached those standards by charging a stand-alone, non-refundable fee falls squarely within this specialized expertise and the Association’s statutory responsibilities.

In Abella J.’s view, there was “nothing unreasonable in the discipline committee’s conclusion that the provisions requiring a sale before a broker or agent is entitled to compensation, are mandatory.” The REBA, she explained with specific reference to s. 85 of the Act “unequivocally ties compensation to sale.”

Moreover, drawing again on the consumer protection-related purpose of the REBA, Abella J. charged the Québec Court of Appeal with improperly viewing the Act “through the lens of freedom of contract and competition, rather than through the vision of REBA as protective consumer legislation.”

“It would contradict the consumer protection goals at the heart of the REBA” Abella J. asserted, “if the consistent use of the words “must”, “shall” and “mandatory” to describe the requisite content of Exclusive Brokerage Contracts could be amended cavalierly by private agreement.” The very purpose of the REBA, in other words, was to delimit freedom of contract with respect to provisions which call for mandatory compensation regardless of whether or not a sale takes place.

In a dissenting opinion, Deschamps J. (with Rothstein J. concurring), took issue with the majority’s deferential approach. In Deschamp J.’s view, the question before the discipline committee was one of law and as such is subject to a standard of correctness.

From the discipline committee’s decision, Deschamps J. discerned two legal issues, neither of which warranted any deference:

[67] Furthermore, the issue in this case entails more than a simple statutory interpretation that will affect only the parties. It can be viewed from two different perspectives. The first is a narrower one: Does the Association have the authority to determine the mandatory particulars of an exclusive brokerage contract? The second is broader: Can the Association impose a single model of practice on Quebec’s real estate brokers? Regardless of which perspective is adopted, the issue is an important one. It is likely to affect the future of the brokerage profession in Quebec. In summary, I see nothing to warrant showing any deference whatsoever to the Discipline Committee’s decision.

Deschamps J. furthermore, found that the manner in which the Discipline Committee made its decision suggested that it was addressing a question of law, rather than one of fact. Its conclusion, she explained, “was based exclusively on the collection of membership fees, which it considered to be illegal.” Although a reasonableness standard might attach to an assessment of “whether it might be to the sellers’ advantage to receive, in exchange for refundable or non‑refundable membership fees, services other than the full range of services usually offered by brokers,” the Discipline Committee’s decision to frame its discussion around a matter of law, precluded a characterization as a “finding of fact to which an appellate court should show deference.”

Accordingly, the dissent took issue with the majority’s use of a reasonableness standard of review, opting instead for correctness (despite not actually using the term ‘correctness’).

The Impact of Dunsmuir

Although Dunsmuir received only scant reference by the majority, and none from the dissenting opinion in Proprio, one has to wonder if the dissenters would have found reasonableness more palatable had it not subsumed patent unreasonableness. Indeed, one effect of Dunsmuir may be an ever so slight move away from assigning greater deference to administrative bodies. By removing patent unreasonableness from the lexicon of administrative law and effectively creating a binary between ‘deference’ and ‘no deference,’ Dunsmuir has made it easier for courts to assert jurisdiction over administrative decisions. Although a majority of the court in Proprio, nevertheless, adopted reasonableness as the appropriate standard of review, perhaps in future decisions, this shifting of the goalposts toward correctness will be determinative.

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