IN THE SUPREME COURT OF BRITISH COLUMBIA

Citation:

Northland Properties Corporation v. British Columbia (Liquor Control and Licensing Branch),

 

2011 BCSC 160

Date: 20110208

Docket: S107658

Registry: Vancouver

In the Matter of Section 21 of the Liquor Control and Licensing Act,
R.S.B.C. 1996, Chapter 267

Between:

Northland Properties Corporation

Petitioner

And

General Manager Under The Liquor Control and Licensing Act

Respondent

Before: The Honourable Mr. Justice Sewell

Reasons for Judgment

Counsel for Petitioner:

A. Gay

Counsel for Respondent:

R. Butler

Place and Date of Hearing:

Vancouver, B.C.
January 4 & 5, 2011

Place and Date of Judgment:

Vancouver, B.C.
February 8, 2011


 

I.  Introduction

[1]             In British Columbia the sale and distribution of alcoholic beverages are highly regulated pursuant to the Liquor Control and Licensing Act, R.S.B.C. 1996, c. 267 [Act] and the Liquor Control and Licensing Regulation, B.C. Reg. 244/2002 [Regulation]. This proceeding is concerned with a licence for a Licensee Retail Store (“LRS”). This is a private liquor store that sells its products for consumption off the premises. The Act and the Regulation require, among other things, that the approval of the general manager appointed pursuant to the Act (the “General Manager”) be obtained before any LRS can transfer its place of business to another location.

[2]             The dispute before me is over the nature and extent of the discretion given to the General Manager to approve such transfers and over whether the General Manager made any reviewable error in refusing the petitioner’s application to transfer its LRS from one location to another.

II.  Background

[3]             The petitioner is a subtenant of premises located at 103 – 1180 Sunset Drive in Kelowna, British Columbia (the “Current Location”) at which it is authorized to operate an LRS.

[4]             The LRS has been in the Current Location since 2004, operating pursuant to a licence (the “Licence”) issued by the Liquor Control and Licensing Branch (the “Branch”).

[5]             The petitioner has contracted with Pacific Liquor Merchants Corp. (“PLMC”) to be a ‘third party operator’ to use the Licence and run the LRS, thus controlling its day-to-day operations.  PLMC pays the petitioner a fee to operate under the Licence.

[6]             Peacock Insurance & Financial Group (Kamloops) Inc. (the “Landlord”) is the  landlord of the Current Location.

[7]             PLMC is the tenant of the premises at the Current Location. PLMC sublets the premises to the petitioner.

[8]             On February 4, 2010, the petitioner, through PLMC, applied to the General Manager to relocate the LRS to new premises (the “Application”). The proposed new location is at 520 Clement Avenue in Kelowna (the “Proposed Location”), about 200 meters from the Current Location.

[9]             The Application was dealt with by the General Manager’s authorized delegate (the “Delegate”). On August 4, 2010, the Delegate denied the Application because the Proposed Location was within .5 kilometres of an existing LRS contrary to s. 14(5) of the Regulation, as it read at the time the Application was submitted, and because she was not satisfied that the petitioner had established the grounds necessary for her to exercise her discretion to approve the relocation despite this non-compliance.  The Delegate considered the Application on the basis that she would exercise her discretion in favour of the Application only if the petitioner could demonstrate that it had lost its ability to operate in the Current Location by reason of matters beyond its control and if it could establish that there were no suitable alternative locations outside the .5 kilometre radius around the existing LRS. The Delegate decided that the petitioner had not established either ground, and that it was therefore inappropriate to exercise her discretion in favour of the Application.

[10]         On September 20, 2010 the petitioner applied to the Delegate for reconsideration of the Application. The petitioner provided the Delegate with affidavits from the Landlord confirming that the Landlord had given notice that the lease of the Current Location to PLMC had expired and was on a month-to-month basis and that the Landlord required the leased premises for other purposes and had given notice to PLMC that the month-to-month tenancy would terminate on December 31, 2010.

[11]         On October 13, 2010 the Delegate denied the application for reconsideration.

[12]         The petitioner applied through counsel for a second reconsideration on different grounds on October 28, 2010, but on November 16, 2010 that application was also denied.

[13]         The LRS is still in operation in the Current Location pursuant to an extension granted by the Landlord to the end of February 2011.

III.  Discussion

[14]         The specific statutory and regulatory provisions in issue on this application are s. 16(3) and s. 21(3) of the Act and s. 14 of the Regulation.

[15]         Section 16(3) of the Act is as follows:

16(3)    A licence must not be issued, renewed, transferred or amended if, in the general manager's opinion, it would be contrary to the public interest.

[16]         Section 21(3) of the Act is as follows:

21(3)    A licence is not transferable from one establishment to another or from one area in an establishment to another without the written consent of the general manager.

[17]         The submissions before me focused on ss. 14(5)(a) and 14(6) of the Regulation. However I think it relevant to consider s. 14 in its entirety to give proper context to the issues. The current version of s. 14 of the Regulation is as follows:

14(1)    Subject to this section, a licence may be issued, renewed or transferred in respect of a licensee retail store, and the following terms and conditions apply to a licensee retail store licence:

(a)  all types of liquor may be sold, subject to limitation by the general manager in the licence;

(b)  subject to limitation by the general manager in the licence, the hours of liquor service must start no earlier than 9 a.m. and end no later than 11 p.m.;

(c)  minors accompanied by a parent or guardian are allowed in the establishment;

(d)  packaged snacks, liquor related items and other items authorized by the general manager may be sold;

(e)  Repealed. [B.C. Reg. 81/2003.]

(f)   despite section 46, entertainment and games are not allowed;

(g)  consumption of liquor within a licensee retail store is not allowed except as authorized by the general manager.

(2)   A licence must not be issued under subsection (1) unless an application for the licence was received by the general manager on or before 4:30 p.m. on November 29, 2002.

(2.1) For the purposes of this section, a reference in subsection (2) to "an application for the licence" includes an application for the licence as that application was amended or transferred by an application made before, on or after November 29, 2002.

(3)   A licence in respect of a licensee retail store must not be issued, renewed or transferred unless

(a)   the licensee retail store is located in

(i)   a permanent, free-standing building that does not contain another business, or

(ii)  a building in which there are other businesses, but the licensee retail store has its own entrance and exit separate from any other business and a solid floor-to-ceiling wall between the licensee retail store and any other business, and

(b)   in the opinion of the general manager, the licensee retail store does not appear to be associated with another business.

(3.1)   Despite subsection (3), a licence in respect of a licensed establishment that does not comply with that subsection may be renewed or transferred

(a)   if the location of the licensed establishment was approved by the general manager on a previous occasion in accordance with the law that was in force at the time of the approval, or

(b)   if the establishment is associated with another business and the association was permitted by the law that was in force at the time the general manager approved the licence.

(4)   Repealed. [B.C. Reg. 289/2009, s. 1 (d).]

(5)   Subject to subsection (6), an application to transfer a licence in respect of a licensee retail store to a new establishment must not be approved unless

(a)   the proposed new establishment is at least 1.0 km from

(i)    the site of any existing licensee retail store, and

(ii)    the site of any establishment to which an application referred to in subsection (2) relates, and

(b)   the proposed new establishment is

(i)    located within the jurisdiction of the same local government or first nation as the site of the existing licensee retail store, or

(ii)    within 5 km of the site of the existing licensee retail store.

(6)   The general manager may approve an application that does not comply with subsection (5) (a).

[am. B.C. Regs. 81/2003; 406/2003, s. 2; 379/2004, s. 1; 20/2007; 289/2009, s. 1; 42/2010; 43/2010.]

[18]         In considering the Application, the Delegate proceeded on the basis that Regulation 43/2010, which had the effect of amending s. 14(5)(a) of the Regulation by substituting one kilometre for .5 kilometres, did not apply to the Application because the Application had been submitted before that regulation took effect. She therefore proceeded on the basis that, for the purposes of assessing the Application, the required separation under the Regulation continued to be .5 kilometres.

[19]         The Delegate swore an affidavit that was filed on this application. No objection was made to the admissibility of the affidavit. At paragraph 37 of her affidavit the Delegate states that the General Manager has directed delegates to apply the criteria for exceptions to the .5 kilometre rule in a manner that is consistent with the Act, Regulation and the Branch’s Licensing Policy Manual. The current version of the Licensing Policy Manual was attached as an exhibit to the Delegate’s affidavit. Paragraph 4.4.5 of the Licensing Policy Manual, portions of which I have set out at para. 58 of these reasons, states that the conditions under which the General Manager (or a delegate) may approve relocation of an LRS to a location within .5 kilometres (now one kilometre) of an existing LRS include, but are not limited to, situations where a store loses its location due to circumstances beyond its control and the only reasonable location is within .5 kilometres and where it would not be contrary to the public interest to allow the relocation.

[20]         In their very able arguments counsel identified three critical issues. The first issue is whether the Delegate acted fairly in the manner in which she proceeded to consider the Application. The second issue is whether the Delegate committed a reviewable error in her determination of the nature and extent of her discretion under s. 14(6) of the Regulation. The third issue is whether the Delegate committed a reviewable error in the manner in which she exercised her discretion under s. 14(6) of the Regulation.

[21]         I will deal with these issues by firstly considering the issue of fairness, then by considering the question of the Delegate’s interpretation of the scope of her jurisdiction under s. 14(6) of the Regulation and finally by addressing the question of whether she made any reviewable error in exercising that jurisdiction.

IV.  Fairness

[22]         The decision of the Delegate is amenable to review pursuant to the Judicial Review Procedure Act, R.S.B.C. 1996, c. 241 [JRPA]. Her decision was an exercise of statutory power as defined in s. 1 of the JRPA. In exercising that power of decision there is no doubt that she was required to act fairly. See Baker v. Canada (Minister of Citizenship and Immigration), [1999] 2 S.C.R. 817, [1999] S.C.J. No. 39 [Baker cited to S.C.R.].

[23]         The petitioner alleges that the Delegate breached her duty of procedural fairness because she relied and acted upon the information contained in a document called an Issues Note dated July 21, 2010, prepared by a senior licensing analyst in the Branch, without giving the petitioner an adequate opportunity to respond to and make submissions concerning that information.

[24]         A comparison of the Delegate’s August 4, 2010 decision and the Issues Note makes it quite clear that she relied to a large extent on the information contained in the Issues Note in arriving at her decision. In this regard, I consider it relevant that the Issues Note does more than provide background information with respect to the Application. The Issues Note in fact makes a recommendation to the Delegate that the Application not proceed. The Issues Note is signed by the Delegate, indicating that she approved the recommendation made in it.

[25]         The petitioner’s complaint is that it was provided neither with the Issues Note nor with the information it contained prior to the commencement of these proceedings. The petitioner says it was not given an adequate opportunity to respond to the facts and recommendations set out in the Issues Note and that it was therefore denied a fair opportunity to make submissions to the Delegate.

[26]         Counsel for the Attorney General points out that the Delegate did reconsider the Application and that in its application for reconsideration the petitioner did address some of the elements of the Issues Note. In particular, Mr. Butler points out that the petitioner did respond to the comments contained in the Issues Note with respect to intertwined ownership of PLMC, the petitioner, and the Landlord.

[27]         The petitioner, however, points out that there were other portions of the Issues Note upon which the Delegate relied in the reconsideration decision that were not addressed in her first decision and on which the petitioner therefore was not given the opportunity to comment or make submissions. In particular the petitioner points to the reference in the Issues Note to previous decisions of the General Manager with respect to applications for relocation. More importantly from my point of view, the petitioner also points out that the portions of the Issues Note which inform the General Manager of negotiations by PLMC with respect to the Proposed Location do not appear in the August 4, 2010 decision, but are relied upon in the October 13, 2010 decision.

[28]         The petitioner argues, and I agree, that the petitioner was not given an adequate opportunity to address those considerations in the application for reconsideration. It is true that the petitioner, through its counsel, did make a further submission to the General Manager on October 28, 2010. That submission, however, must be considered in light of the clear statements contained in the October 13, 2010 decision that the Delegate considered herself unable to reconsider the reconsideration request based on the two issues, that is, loss of lease and no alternative locations. I therefore do not think that the petitioner acted unreasonably in restricting its final submission to matters outside of the definitive issues considered by the Delegate in the October 13, 2010 decision.

[29]         In the Issues Note the senior licensing analyst makes the following statement:

Argument number one claims that the LRS lost valid interest through no fault of their own. Supporting documents submitted by the licensee shows a motivation to relocate the LRS to a more desirable location. It does not seem likely that the LRS truly lost valid interest through no fault of their own.

·        Current property owner, Brent Peacock, has a vested interest in the LRS

·        Offer to lease new property was signed by the TPO on June 26, 2009

·        Offer to lease was signed by future property owner on September 2009

·        Notice of intention to terminate lease agreement is dated February 1, 2010

·        Relocation application signed by TPO received at LCLB February 4, 2010

·        Request for discretion policy dated and submitted on February 4, 2010

[30]         This chronology is included in the Issues Note to support the senior licensing analyst’s conclusion that it did not seem likely that the LRS truly lost a valid interest through no fault of its own. However in her August 4, 2010 decision the Delegate makes no reference to this chronology and purports to base her decision with respect to the loss of valid interest issue solely on the interlocking ownership structure of the Landlord, petitioner, operator and adjoining restaurant.

[31]         In her October 13, 2010 decision the Delegate clearly relies on the chronology when she states:

there was a clear interest in relocating the LRS to the more commercially attractive and larger location, with PLMC taking the lead role in the relocation effort. Even prior to the notification of lease termination, PLMC had signed an offer to lease for 520 Clement Avenue. They were also in negotiations with the City to encourage their support to relocate the LRS to that property.

[32]         In my view the petitioner was not given a fair opportunity to respond to these considerations and facts. I think that any objective person reading the October 13, 2010 decision of the Delegate would reasonably have concluded that it was pointless to make further submissions to the Delegate with respect to the loss of lease issue. The Delegate made it clear in her October 13, 2010 decision that she had considered and decided this issue. The subsequent submission made on behalf of the petitioner related to quite a different point and on the face of that submission expressly stated that they did not intend to “rehash” that decision.

[33]         In Baker, Madam Justice L’Heureux-Dubé stated at paras. 21-22 the following:

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”.  All of the circumstances must be considered in order to determine the content of the duty of procedural fairness: Knight, at pp. 682-83; Cardinal, supra, at p. 654; Old St. Boniface Residents Assn. Inc. v. Winnipeg (City), [1990] 3 S.C.R. 1170, per Sopinka J.

22    Although the duty of fairness is flexible and variable, and depends on an appreciation of the context of the particular statute and the rights affected, it is helpful to review the criteria that should be used in determining what procedural rights the duty of fairness requires in a given set of circumstances. 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.

[34]         Madam Justice L'Heureux-Dubé went on to enumerate a number of non-exhaustive factors that a court should address in determining the content and extent of a duty of fairness in a particular situation. The factors outlined may be paraphrased as follows:

(a)  the nature of the decision being made and the process followed in making it;

(b)  the nature of the statutory scheme and the terms of the statute pursuant to which the administrative body operates;

(c)  the importance of the decision to the individual or individuals affected;

(d)  the legitimate expectations of the persons challenging the decision; and

(e)  the choices of procedure made by the agency itself particularly when the statute leaves the decision-maker the ability to chose its own processes.

[35]         The Attorney General argues that the matters under consideration in this case should not require a high degree of procedural fairness. He submits that the decision did not impose any penalty on the petitioner and was purely administrative in nature. Finally the Attorney General submits that the petitioner was given a meaningful opportunity to bring evidence and make submissions on the crucial question being considered by the Delegate when it applied for reconsideration.

[36]         In a sense the disagreement of the parties over the extent and content of the duty of fairness reflects their disagreement over the underlying facts of the Application. The petitioner submits that the consequence of the Delegate’s decision may well be to put the LRS out of business because it will have no place to carry on that business. The Attorney General proceeds on the basis that the real issue is whether the petitioner should be denied the opportunity to move to a more attractive and lucrative location.

[37]         I think that in analyzing this issue I should at least take into consideration the possibility that the decision may have the effect of putting the LRS out of business. That was the essential submission made by the petitioner to the Delegate and was what the Delegate considered to be the critical issue before her. I therefore think that the petitioner ought to have been given an adequate opportunity to respond to the analysis and conclusion of that question contained in the Issues Note.

[38]         My concern in this regard is heightened because the Delegate’s decision in this matter was based on inferences that she drew from those circumstances. These inferences were drawn notwithstanding the uncontradicted evidence of the Landlord that the Landlord was terminating the lease of the Current Location for reasons beyond the control of the petitioner or its third party operator. I do not think that the Delegate acted fairly in drawing the inferences in question without giving the petitioner adequate notice of the facts upon which the Delegate relied in drawing those inferences and an opportunity to respond to them.

[39]         Having concluded that the petitioner was not given an adequate opportunity to present evidence with respect to the circumstances surrounding PLMC’s decision to take steps to find an alternative location in 2009, I conclude that I should quash the Delegate’s decision to deny the Application and remit it to the General Manager for reconsideration.

[40]         On such reconsideration the petitioner ought to be given full opportunity to present evidence and make submissions with respect to the circumstances under which PLMC pursued alternative locations in 2009 and 2010.

V.  Did the Delegate make a reviewable error in deciding she should exercise her discretion on limited grounds?

[41]         It is apparent that the Delegate proceeded on the basis that she had a circumscribed and limited discretion under s. 14(6) of the Regulation. In the Delegate’s view s. 14(5)(a) of the Regulation was of central importance in exercising her discretion to grant approval of a relocation. The Delegate’s view was that the .5 kilometres separation set out s. 14(5)(a) of the Regulation was a legislative expression of the public interest. Therefore the Delegate was of the view that the petitioner was required to provide compelling reasons why the relocation application should be allowed because such application was prima facie contrary to the public interest.

[42]         Section 16(3) of the Act, as indicated above, provides as follows:

16(3)    A licence must not be issued, renewed, transferred or amended if, in the general manager's opinion, it would be contrary to the public interest.

[43]         The petitioner submits that the Delegate committed a reviewable error in deciding that her discretion was limited as described in paragraph 41 above.  The petitioner makes a general submission that the discretion granted by s. 14(6) of the Regulation is not expressly limited. The petitioner also argues that the Delegate made an error by failing to take into account relevant circumstances and, in particular, circumstances relevant to the underlying objective of the restrictions contained in s. 14(5)(a) of the Regulation.

[44]         The petitioner submits that the underlying purpose of s. 14(5)(a) of the Regulation is to control the distribution of LRS and to ensure that there is sufficient separation between them. The petitioner argues that its Application was in no way inconsistent with that underlying rational or purpose because in fact the Application was to move the location of its LRS farther away from the existing LRS location.

[45]         In summary, the petitioner submits that the Delegate erred by starting from the proposition that the Application was prima facie contrary to the public interest because it did not comply with the separation requirements of s. 14(5)(a) of the Regulation and then requiring the petitioner to provide compelling reasons why the relocation should be allowed notwithstanding its failure to comply. The petitioner submits that by adopting this process of analysis the Delegate precluded herself from considering all relevant circumstances, and in particular from considering the specific circumstances of the Application to determine whether the Application was contrary to the public interest.

(a)      Standard of Review

[46]         As this is a judicial review the first question I must address on this issue is the applicable standard of review to be applied to the Delegate’s decision. As the Administrative Tribunals Act, S.B.C., 2004, c. 45, has no application to decisions of the General Manager pursuant to the Act, this issue must be decided by reference to the common law as set out in the Supreme Court of Canada’s decisions in Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 [Dunsmuir], and Canada (Citizenship and Immigration) v. Khosa, 2009 SCC 12, [2009] 1 S.C.R. 339 [Khosa].

[47]         In this case there are of course two critical steps in the General Manager’s reasoning process. The first is a determination of the basis on which she should exercise discretion pursuant to s. 14(6) of the Regulation. The second is her application of the test formulated by her to the question of whether the petitioner has established that it lost its present location through no fault of its own.  In this portion of these reasons, I deal only with the first issue.

[48]         The parties disagree on the appropriate standard of review on this issue.  Both parties rely on Dunsmuir.  The Attorney General submits that Dunsmuir mandates a reasonableness standard of review.  The petitioner submits that Dunsmuir principles mandate a standard of review of correctness with respect to the proper legal interpretation of the Act and Regulation. It relies on the direction of the Court in Dunsmuir to first ascertain whether previous authority has already determined the degree of deference to be accorded to the particular category of decision before the reviewing court.

[49]         The petitioner submits that the standard of review has been established by previous authority and relies in this regard on 532871 B.C. Ltd. (c.o.b. The Urban Well) v. British Columbia (General Manager, Liquor Control and Licensing Branch), [2005] B.C.J. No. 1821 at paras. 43-49 (C.A.) [Urban Well].

[50]         Urban Well held that decisions of the General Manager on questions of law, such as the proper interpretation of the Regulation, are subject to review on a standard of correctness.   At paragraph 44 of Urban Well, Saunders J.A. concluded that the appropriate standard of review of decisions of the General Manager interpreting the Regulation is correctness.

[51]         The petitioner submits that the question of the applicability of Urban Well post Dunsmuir was expressly dealt with by Myers J. of this court in Liquor Stores Limited Partnership v. British Columbia (General Manager, Liquor Control and Licensing Branch), 2008 BCSC 1264 at paras. 26-27, [2008] B.C.J. No. 1779, [Liquor Stores Limited Partnership].

[52]         In Liquor Stores Limited Partnership, Myers J. held that Urban Well had previously decided that decisions of the General Manager with respect to questions of law are subject to a review on the standard of correctness.  Mr. Justice Myers noted that Urban Well predates Dunsmuir.  Nevertheless Urban Well followed and applied the approach set out in an earlier decision of the Supreme Court of Canada, Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 S.C.R. 982 at para. 27 [Pushpanathan] in concluding that correctness was the appropriate standard of review.  Myers J. concluded that the general approach taken in Pushpanathan is essentially similar to that taken by the Court in Dunsmuir, and therefore Urban Well continued to be authoritative on this issue.

[53]         Counsel for the Attorney General referred me to two decisions of this court, 693753 B.C. Ltd. v. British Columbia (Liquor Control and Licensing Branch), 2008 BCSC 1037, [2008] B.C.J. No. 1467, and Bastion Inn Ltd. v. British Columbia (Liquor Control and Licensing Branch), 2008 BCSC 976, [2008] B.C.J. No. 1392, which held that with respect to decisions of the General Manager which involved the General Manager forming an opinion, the appropriate standard of review was reasonableness.  These cases however deal with reviews of an exercise of discretion, whereas the issue I am now addressing is one of statutory interpretation.  These decisions were also considered by Myers J. in Liquor Stores Limited Partnership.  Nevertheless Myers J. considered correctness to be the appropriate standard of review.

[54]         The principles set out in Re Hansard Spruce Mills, [1954] 4 D.L.R. 590, [1954] B.C.J. No. 136 (S.C.) and applied in, inter alia, Zuria v. Mission Institution (Warden), 2010 BCSC 970, also mandate that I follow Mr. Justice Myers’ conclusion in Liquor Stores Limited Partnership that Urban Well remains authoritative and review this issue on a standard of correctness.

[55]         I therefore consider that the standard of review of decisions of the General Manager on questions of interpretation of the Act and Regulation has been determined by previous authority to be correctness. In this case the previous authority of course includes a decision of the British Columbia Court of Appeal, which is binding on me.

(b)      Was the General Manager’s interpretation of her jurisdiction under s. 14(6) of the Regulation correct?

[56]         The Delegate interpreted s. 14(6) of the Regulation as granting only a limited discretion to approve a relocation of an LRS to a new location within .5 kilometres of an existing LRS.

[57]         The respondent Attorney General submits that the Delegate reasonably and correctly interpreted s. 14(5)(a) of the Regulation as being an expression of the public interest in preventing relocation of licensee liquor stores in too close proximity to one another. He submits that she reasonably and correctly interpreted s. 16(3) of the Act as limiting the discretion of the General Manager under s. 14(6) of the Regulation to approve otherwise. The Attorney General argues that the Delegate reasonably and correctly interpreted the discretion granted by s. 14(6) of the Regulation to apply only to exceptional circumstances in which relocation would not be contrary to the public interest articulated in s. 14(5)(a) of the Regulation.

[58]         Section 4.4.5 of the Branch Liquor Licensing Policy Manual provides, in part, as follows:

4.4.5. Relocation of a licensee retail store

Applications to relocate a LRS will not be approved by the general manager if the proposed site is within 1 km of an existing LRS or the site of an LRS application in progress. Applications to relocate made prior to February 15, 2010 are not subject to this policy. Licensees with relocation applications currently in progress who decide to seek a different location for their LRS will be required to apply for a new LRS location or revert to the location of their original LRS application. If they choose to apply for a new location, the relocation application will be subject to the distance criterion of 1 km.

Notwithstanding the above, the conditions under which the general manager may approve the relocation of an LRS to a location within 1 km of another LRS include but are not limited to the following circumstances:

• Where a store loses their leased location due to circumstances beyond their control and the only reasonable location is within 1 km of another store, and where it would not be contrary to the public interest to allow the relocation; or

• Where there is a re-development on the same site as the LRS or LRS application and the licensee needs to move on that site as a result; or

• Where there is a large natural or artificial barrier between the stores, e.g: a river or divided highway; or

• Where someone entered into a lease or an offer to purchase for a new site prior to the regulation coming into effect, and has an on-going financial commitment as a result of that transaction.

LRS licensees that wish to relocate to a new location can make application by submitting the Licensee Retail Store (LRS) - Application for Transfer of Location (LCLBO92) form.

[59]         The Attorney General agrees that the Branch Policy Manual establishes essentially a default position with respect to applications to relocate.  However he submits that the Branch Policy Manual recognizes that the General Manager has a general discretion to approve transfers and that the circumstances referred to in the Branch Policy Manual are expressly stated to be non-exclusive.

[60]         It seems clear that in considering the Application the Delegate proceeded on the basis that she had only a circumscribed and limited discretion to exercise pursuant to s. 14(6) of the Regulation. My reading of the three sets of reasons of the Delegate persuades me that she concluded that the petitioner had to establish, as a precondition to the exercise of her discretion under s.14(6), that it had lost the ability to continue in business at its present location due to circumstances beyond its control and that there were no suitable locations more than .5 kilometres from an existing LRS. When considering the Application, the Delegate therefore considered the arguments made by the petitioner with respect to other considerations, such as support of local government and the fact that the Proposed Location was farther away from the existing LRS than the Current Location, to be irrelevant. Accordingly, she refused to consider them in determining the Application.

[61]         Applying a review standard of correctness to this analysis, I conclude that the Delegate erred in her construction of s. 14 of the Regulation in the context of the Act and Regulation as a whole. As indicated above, the basis of the Delegate’s reasoning in this case was that the territorial limitation contained in s. 14(5)(a) of the Regulation was an expression of the public interest and that the Delegate could not grant relief from that declaration of the public interest unless there were extraordinary and special circumstances amounting in effect to termination of the applicant’s business unless the discretion was exercised.

[62]         However, with respect, I am of the view that the Delegate’s conclusion in this regard ignores the opening words of s. 14(5) of the Regulation and in particular the phrase “subject to subsection (6)”. It thus seems to me quite clear that within the limited circumstance of an application to transfer a licence the legislature recognized that there may well be circumstances in which the overall policies and objectives of the Act and Regulation may not be in any way materially affected by transfer of the licence to a new location within the proscribed perimeter. I emphasize that s. 14(5)(a) of the Regulation deals only with transfers of existing LRS licences.

[63]         I am also of the view that the Delegate’s construction of s. 14(6) of the Regulation is difficult to justify based on the wording of the Regulation itself. On the face of it, the Regulation does not restrict the grounds upon which the General Manager could exercise discretion. It seems to me that in exercising discretion pursuant to s. 14(6) of the Regulation the General Manager ought to be able to consider all relevant circumstances including the impact of the relocation on the concentration of LRS in the relevant area.

[64]         In Urban Well, the Court of Appeal considered a somewhat similar issue to the one I am facing.  In that case the General Manger appeared to interpret a section of the Regulation as essentially establishing a default position with respect to the imposition of penalties for non compliance with the terms of a licence.  At paragraph 62-63, speaking for the majority, Saunders J.A. stated as follows:

62     In my view, read correctly, the General Manager has discretion whether to impose any suspension for a contravention; that is, she has the opportunity to decline to assess a suspension for a particular contravention. I consider that the permissive language of s. 20 of the Act and s. 52 of the Regulation permit such a result, and that in the interest of fairness and the avoidance of abuse, the permissive language in both of those sections should be read so as to maintain the discretion of the General Manager to decline to impose a penalty.

63    The General Manager appears to have recognized, in her decision, this flexibility, but then referred in the passages underlined above in para. 57, to the absence of mitigating circumstances, seemingly adopting a default position that assumes imposition of a suspension. This approach seriously erodes the full exercise of discretion open to the General Manager who is, I consider, bound to ask as her first question in imposing a penalty, whether the circumstances, both individually on the contravention and with other suspensions that may issue, justify a suspension for the particular infraction. The first question in the exercise of her discretion is whether a suspension or fine should be imposed, not whether such a penalty should not be imposed.

[65]         It seems to be that the Delegate adopted essentially the same approach observed in Urban Well to her interpretation of s. 14(6) of its Regulation.  She appears to have proceeded on the basis that other conditions under which she could approve a transfer would come into play only after she was satisfied that the petitioner had lost its present location due to circumstances beyond its control.  In so doing it seems to me she failed to direct her mind to any “other circumstances” that might have led her to approve the transfer.  In effect, the Delegate considered that the critical question before her was whether the petitioner had established a compelling case why the Application should not be refused rather than whether it should be permitted.

[66]         In so doing I think that the Delegate erred in law in her construction of s. 14(6) of the Regulation and would quash the decision on this ground.

[67]         The decision is remitted to the General Manager for reconsideration in accordance with these reasons.  In such reconsideration the General Manager is of course entitled to consider the circumstances under which the petitioner is applying to transfer the LRS, but should consider those circumstances in the context of all other circumstances bearing on the question of whether the Application should be allowed.

(c)      Did the Delegate commit any reviewable error in her consideration of the merits of the petitioner’s application?

[68]         The Delegate refused to approve the transfer of the LRS because she was not satisfied that the petitioner had lost its present location due to circumstances beyond its control, nor was she satisfied that the petitioner had established that there were no suitable alternative locations which did not offend the .5 kilometre radius rule.

[69]         In considering this issue, I must again address the appropriate standard of review to be applied. In my respectful view, the issue before the Delegate with respect to the two questions she considered, that is, whether the loss of lease was beyond the power of the petitioner and whether there were alternative sites available which did not violate the .5 kilometre radius rule, were questions of mixed law and fact. In this regard they differ from the question of the construction of s. 14(6) of the Regulation, which was a question of law alone.

[70]         In Khosa Mr. Justice Binnie, speaking for the majority, said the following at paras. 52-54:

52    Dunsmuir states that "[c]ourts, while exercising their constitutional functions of judicial review, must be sensitive not only to the need to uphold the rule of law, but also to the necessity of avoiding undue interference with the discharge of administrative functions in respect of the matters delegated to administrative bodies by Parliament and legislatures" (para. 27).

53    The process of judicial review involves two steps. First, Dunsmuir says that "[a]n exhaustive review is not required in every case to determine the proper standard of review" (para. 57). As between correctness and reasonableness, the "existing jurisprudence may be helpful" (para. 57). And so it is in this case. Dunsmuir renders moot the dispute in the lower courts between patent unreasonableness and reasonableness. No authority was cited to us that suggests a "correctness" standard of review is appropriate for IAD decisions under s. 67(1)(c) of the IRPA. Accordingly, "existing jurisprudence" points to adoption of a "reasonableness" standard.

54    This conclusion is reinforced by the second step of the analysis when jurisprudential categories are not conclusive. Factors then to be considered include: (1) the presence or absence of a privative clause; (2) the purpose of the IAD as determined by its enabling legislation; (3) the nature of the question at issue before the IAD; and (4) the expertise of the IAD in dealing with immigration policy (Dunsmuir, at para. 64). Those factors have to be considered as a whole, bearing in mind that not all factors will necessarily be relevant for every single case. A contextualized approach is required. Factors should not be taken as items on a check list of criteria that need to be individually analysed, categorized and balanced in each case to determine whether deference is appropriate or not. What is required is an overall evaluation. Nevertheless, having regard to the argument made before us, I propose to comment on the different factors identified in Dunsmuir, all of which in my view point to a reasonableness standard.

[71]         In Liquor Stores Limited Partnership, at para. 45, Myers J. quotes from the judgment of Madam Justice Deschamps in Dunsmuir at para. 164 as follows:

45    In Dunsmuir, Deschamps J., writing for Charron and Rothstein JJ. stated:

The category of questions of mixed fact and law should be limited to cases in which the determination of a legal issue is inextricably intertwined with the determination of facts. Often, an administrative body will first identify the rule and then apply it. Identifying the contours and the content of a legal rule are questions of law. Applying the rule, however, is a question of mixed fact and law. When considering a question of mixed fact and law, a reviewing court should show an adjudicator the same deference as an appeal court would show a lower court.                                                             Dunsmuir, para. 164

[72]         In my view the decisions of the Delegate with respect to these two issues are clearly decisions of mixed law and fact. Dunsmuir directs that the standard of review be reasonableness.

[73]         In Dunsmuir the Supreme Court of Canada gave extensive guidance with respect to the proper application of a review based on reasonableness. At para. 59 of Khosa, Mr. Justice Binnie makes reference to Dunsmuir and states as follows:

59    Reasonableness is a single standard that takes its colour from the context. One of the objectives of Dunsmuir was to liberate judicial review courts from what came to be seen as undue complexity and formalism. Where the reasonableness standard applies, it requires deference. Reviewing courts cannot substitute their own appreciation of the appropriate solution, but must rather determine if the outcome falls within “a range of possible, acceptable outcomes which are defensible in respect of the facts and law” (Dunsmuir, at para. 47). There might be more than one reasonable outcome. However, as long as the process and the outcome fit comfortably with the principles of justification, transparency and intelligibility, it is not open to a reviewing court to substitute its own view of a preferable outcome.

[74]         I have however concluded that it would be inappropriate for me to review the conclusions reached by the Delegate with respect to what she regarded as threshold questions necessary for her to exercise discretion in favour of the petitioner. I say this because I have already decided that the petitioner has been denied an adequate opportunity to fully address those issues. In addition, as I have decided that the Delegate incorrectly interpreted the nature of the discretion granted to her under s. 14(6) of the Regulation, any comments that I might make with respect to her decision on the two threshold questions would be inappropriate.

[75]         I do however think it is appropriate to comment that the Delegate should be aware of the danger of drawing inferences based on speculation. Had it been necessary for me to review the Delegate’s decision on these two issues, I would have had to address that question as part of the review.

VI.  Disposition

[76]         For these reasons set out above, I conclude that the petitioner was denied an opportunity to fully present its position to the Delegate and that the Delegate erred in law in her interpretation of s. 14(6) of the Regulation by refusing to consider all circumstances relevant to the exercise of that discretion.

[77]         In the result I quash the decision of the Delegate and remit the matter to the General Manager for reconsideration consistent with these reasons.

“The Honourable Mr. Justice Sewell”