Lum v. Canada (Attorney General)

Lum v. Canada (Attorney General)
Court (s) Database
Federal Court Decisions
Date
2020-07-28
Neutral citation
2020 FC 797
File numbers
T-1533-19
Decision Content
Date: 20200728
Docket: T-1533-19
Citation: 2020 FC 797
Vancouver, British Columbia, July 28, 2020
PRESENT: The Honourable Madam Justice Strickland
BETWEEN:
KAN PAUL LUM AND GRUN LABS, INC.
Applicants
and
CANADA (ATTORNEY GENERAL)
Respondent
JUDGMENT AND REASONS
[1] This is the judicial review of the decision of the Director General, Controlled Substances and Cannabis Branch, Health Canada [Director General or Director] on behalf of the Minister of Health [Minister], refusing to grant security clearance to the individual Applicant, Mr. Kan Paul Lum, pursuant s 53(1) of the Cannabis Regulations, SOR/2018-144.
Background
[2] On November 10, 2016, Mr. Lum submitted a “Security Clearance Application Form” to Health Canada. This was done in connection with a subsequent “Application to Become a Licensed Producer under the Access to Cannabis for Medical Purposes Regulations (ACMPR)” filed with Health Canada on April 19, 2017 [Producer License Application]. That application was filed by Mr. Lum as the director and named responsible person in charge of the corporate cannabis producer applicant, Grun Labs, Inc. [Grun Labs].
[3] At the time of Mr. Lum’s application for security clearance, the production and sale of cannabis in Canada was governed by the Access to Cannabis for Medical Purposes Regulations, SOR/2016-230 [ACMPR], made pursuant to the Controlled Drugs and Substances Act, SC 1996, c 19. In October 2018, the ACMPR was repealed and replaced with the Cannabis Regulations made pursuant to the Cannabis Act, SC 2018, c 16. Applications for a security clearance made under the ACMPR, for which no final determination had been made, were deemed to be continued under the Cannabis Regulations, pursuant to the transitional provisions of the Cannabis Act (s 158(10)).
[4] The Cannabis Regulations require security clearance for identified persons, including the directors and officers of a corporation holding a license for cultivation, processing or sale of cannabis (Cannabis Regulations, s 50(b)(i)). Before granting a security clearance, the Minister must determine that the applicant does not pose an unacceptable risk to public health or public safety, including the risk of cannabis being diverted to an illicit market or activity (Cannabis Act, s 53(1)).
[5] On November 14, 2018, the Security Intelligence Background Section of the Royal Canadian Mounted Police [RCMP] prepared a Law Enforcement Record Check, or LERC report, which it provided to the Cannabis Legalization and Regulation Branch [CLRB] of Health Canada in support of the CLRB’s security screening requirements. The LERC report states that:
The applicant [Mr. Lum] has no criminal record, however is listed in the following occurrence(s):
1. On April 21, 2015 RCMP Federal Serious and Organized Crime British Colombia [sic] entered into an investigation regarding money laundering and drug trafficking. During this investigation, it was determined from open source verifications, that the applicant is a director of 1045158 BC LTD and provided a residential address of … Vancouver. This is the same address as provided to Health Canada in his application under the ACMPR.
2. The applicant’s co-director in this company, Subject “A” provided the registry office with a residential address that is actually a UPS Store business.
3. Subject “A” is the spouse of a known Asian Organized crime figure in the Lower Mainland of BC, Subject “B”, who has been linked to organized crime for the last 20 years. Subject “B” has been criminally convicted of Trafficking in a Narcotic, Possession for the Purpose of Trafficking, Possession of an Unregistered Restricted Weapon and Personation with Intent.
[6] On December 14, 2018, the Manager for Security Operations at Health Canada issued a Security Clearance Recommendation to the Director General recommending that Mr. Lum’s application for security clearance be denied. This recommendation referenced ss 53(2)(c) and 53(2)(b)(vii)(B) of the Cannabis Regulations and, on the basis that Mr. Lum is associated to an individual who is a member of a criminal organization convicted of drug trafficking offences, concluded that it is more likely than not that he poses an unacceptable risk to public health and public safety, including the risk of cannabis being diverted to an illicit market or activity.
[7] By letter of December 31, 2018, the Director General advised Mr. Lum of the Director’s intention to refuse Mr. Lum’s application for security clearance [notice of intention]. The notice of intention sent to Mr. Lum reiterated the three occurrences communicated to Health Canada in the LERC report. The Director General stated it was his opinion that it is more likely than not that Mr. Lum poses an unacceptable risk to public health and public safety, including the risk of cannabis being diverted to an illicit market or activity. Further, that the factors most relevant to and which were considered in making the Director General’s decision are those found in ss 53(2)(c), 53(2)(b)(vii)(A) and 53(2)(b)(vii)(B) of the Cannabis Regulations. The Director General stated that Mr. Lum is in a situation contemplated by those provisions. The Director General advised that, pursuant to s 55(1) of the Cannabis Regulations, Mr. Lum was entitled to submit written representations in response to the notice of intention to refuse to grant him a security clearance.
[8] Mr. Lum responded by email on January 29, 2019. He stated that until receiving the notice of intention he was unaware that Subject A’s spouse is/was connected to organized crime or that her spouse had been convicted of drug-related offences. Mr. Lum stated that he had always known Subject A, and by extension her spouse, to be law abiding citizens and parents of three young children. However, the information about Subject A’s spouse was very disturbing and of great concern. As a result, Mr. Lum stated he would ask Subject A to resign as a director of the company in respect of which they were co-directors. Mr. Lum stated that neither Subject A nor her spouse are in any way connected to Grun Labs, the company in respect of which he was seeking a license under the Cannabis Act, and that his only connection to them was by virtue of the co-directorship in an unrelated entity. Mr. Lum also stated that he is a graduate of the Sauder School of Business at the University of British Columbia, he has been an upstanding entrepreneur for 25 years, he is the recipient of numerous awards for business excellence, and has appeared in numerous business articles over the years. Further, that he had no intention of jeopardizing his business career or reputation by engaging in any activities which may pose a risk to public health and safety, including by diverting cannabis to an illicit market. Finally, Mr. Lum stated that he would be open to considering any additional steps that Heath Canada would suggest to further support his security clearance application.
[9] By reply email of the same date CLRB confirmed receipt of Mr. Lum’s representation and stated it would let him know should anything else be required.
[10] By a Security Clearance Recommendation to the Director General dated February 14, 2019, the manager of Security Operations recommended that, pursuant to s 20(3) of the Cannabis Regulations, Mr. Lum should be requested to provide proof that Subject A had been removed as co-director of his company. By letter of February 28, 2019, the Director General duly asked Mr. Lum to provide proof of Subject A’s resignation. In response, on or about March 25, 2019, Mr. Lum provided Subject A’s letter of resignation, the related Unanimous Shareholders’ Resolution of 1045158 B.C. LTD [numbered company], and a Notice of Articles from the BC Registry Services showing Mr. Lum as the only director of that company.
[11] On April 26, 2019, the Interdepartmental Security Advisory Forum [ISAF] for Health Canada prepared a final Security Clearance Recommendation to the Director General. ISAF was of the view that, despite Subject A being removed as co-director, there were still reasonable grounds to suspect that Mr. Lum has been associated with Subjects A and B, as acknowledged in his representation, and to suspect that Subject B is a member of a criminal organization and has been convicted of drug related offences. As a result, it was more likely than not that Mr. Lum poses an unacceptable risk to public health or public safety, including the risk of cannabis being diverted to an illegal market or activity.
[12] On May 21, 2019, Mr. Lum sent a follow-up email to his written representation to ask if the CLRB needed any further information from him. By reply email on May 22, 2019, CLRB advised that it had not yet completed the review of his file and that it would let him know once a decision had been made.
[13] By letter dated August 15, 2019, the Director General informed Mr. Lum of the Director’s final decision to refuse the application for security clearance. That refusal is the decision under judicial review.
Relevant legislative and regulatory provisions
[14] The relevant provisions of the Cannabis Act and the Cannabis Regulations are reproduced in Annex A of this decision.
Decision under review
[15] In his decision letter the Director General summarized the findings of the LERC report, as had previously been set out in the notice of intention to refuse the security clearance, Mr. Lum’s response to the notice of intention, the Director’s request for further information, and Mr. Lum’s response to that request.
[16] The Director General advised that Mr. Lum’s security clearance application had been reviewed by the ISAF, for the purposes of providing a recommendation as to whether Mr. Lum posed an unacceptable risk to public health or public safety, including the risk of cannabis being diverted to an illicit market or activity. The ISAF had recommend that the security clearance application be refused.
[17] The Director General stated that pursuant to s 53(1) of the Cannabis Regulations, before granting a security clearance it must be determined that the applicant does not pose an unacceptable risk to public health or public safety, including the risk of cannabis being diverted to an illicit market or activity. The Director General stated that he had considered the ISAF recommendation and reviewed the information in Mr. Lum’s file, including his representation and the results of the checks conducted. Based on all of the relevant information, it was the Director General’s opinion that Mr. Lum poses an unacceptable risk to public health or public safety, including the risk of cannabis being diverted to an illicit market or activity. Further, that the factors most relevant to the Director’s decision were those set out in ss 53(2)(c), 53(2)(b)(vii)(A) and 53(2)(b)(vii)(B) of the Cannabis Regulations, which the Director General summarized:
• Section 53(2)(c): whether there are reasonable grounds to suspect that Mr. Lum could be induced to commit an act — or to aid or abet any person to commit an act — that might constitute a risk to public health or public safety;
• Section 53(2)(b)(vii)(A): whether it is known, or there are reasonable grounds to suspect, that Mr. Lum is or has been associated with an individual who is known to be involved in or to contribute to — or in respect of whom there are reasonable grounds to suspect their involvement in or contribution to — activities referred to in s 53(2)(b)(i) to (iii) of the Cannabis Regulations; and,
• Section 53(2)(b)(vii)(B): whether it is known, or there are reasonable grounds to suspect, that Mr. Lum is or has been associated with an individual who is a member of an organization referred to in s 53(2)(b)(v) or (vi) of the Cannabis Regulations.
[18] The Director General stated that regardless of the fact that Subject A had resigned as co-director in Mr. Lum’s numbered company and of Mr. Lum’s representations about his limited knowledge of Subject A and Subject B, the fact remained that Mr. Lum has had an association to them. Further, given that Subject B has been linked to organized crime for the last 20 years, Mr. Lum had not alleviated the Director General’s concern that Mr. Lum is or has been associated with an individual who is a member of a criminal organization or an individual who is a member of an organization that is known to be involved in activities directed toward, or in support of acts of violence or the threat of violence. Additionally, as Subject B had been convicted of Trafficking in a Narcotic and Possession for the Purpose of Trafficking, Mr. Lum had not alleviated the Director General’s concern that Mr. Lum is or has been associated with an individual known to be involved in or to have contributed to activities relating to s 53(2)(b)(ii) of the Cannabis Regulations.
[19] Given this, it was the Director General’s view that Mr. Lum is in a situation contemplated by s 53(2)(c), s 53(2)(b)(vii)(A) and s 52(2)(b)(vii)(B) of the Cannabis Regulations.
[20] The Director General therefore refused Mr. Lum’s application for security clearance.
Issues
[21] The Applicants raise two issues in this judicial review. These can be framed as follows:
Was the decision procedurally fair?
Was the decision reasonable?
Standard of review
[22] The Applicants submit that while historically the correctness standard has been applied to issues of procedural fairness, such questions are not actually decided according to any particular standard of review. Rather, a reviewing Court must ask whether the procedure was fair having regard to all of the circumstances and must be satisfied that an applicant on judicial review knew the case to meet and was heard (Canadian Pacific Railway Company v Canada (Attorney General), 2018 FCA 69 at paras 34-56 [CPR]; Lipskaia v Canada (Attorney General), 2019 FCA 267 at para 14).
[23] The Respondent submits that the standard of review of correctness applies to questions of procedural fairness (Del Vecchio v Canada (Attorney General), 2018 FCA 168 at para 4 [Del Vecchio FCA]; Canada (Citizenship and Immigration) v Khosa, 2009 SCC 12 at para 43 [Khosa]).
[24] In my view, the standard of review for questions of procedural fairness is correctness (Khosa at para 43; Mission Institution v Khela, 2014 SCC 24 at para 79). As stated by the Federal Court of Appeal in Oleynic v Canada (Attorney General), 2020 FCA 5 at para 39, referencing its decision in CPR at para 54, judicial review for procedural fairness is “best reflected in the correctness standard”. No deference is afforded to the underlying decision maker on questions of procedural fairness (Del Vecchio FCA at para 4).
[25] The parties submit, and I agree, that the standard of review otherwise applicable in this matter is the presumptive standard of reasonableness (CPR at para 8; Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 at paras 16-17 [Vavilov]).
[26] A review for reasonableness means that:
99 A reviewing court must develop an understanding of the decision maker’s reasoning process in order to determine whether the decision as a whole is reasonable. To make this determination, the reviewing court asks whether the decision bears the hallmarks of reasonableness — justification, transparency and intelligibility — and whether it is justified in relation to the relevant factual and legal constraints that bear on the decision: Dunsmuir, at paras. 47 and 74; Catalyst, at para. 13.
(Vavilov at para 99)
Issue 1: Was the decision procedurally fair?
[27] The Applicants submit that the decision was procedurally unfair for three reasons:
The Director General pre-determined the outcome of Mr. Lum’s application;
The Director General failed to provide a meaningful opportunity for Mr. Lum to respond, contrary to Mr. Lum’s legitimate expectations; and,
The Director General failed to adequately test the reliability of the RCMP’s LERC report.
Analysis
i. Content of the duty of fairness
[28] The starting point for this analysis is to determine the content of the duty of procedural fairness that was owed to Mr. Lum.
[29] As the Applicants submit, the concept of procedural fairness is variable and its content will be determined in the specific context of each case (see Baker v Canada (Minister of Citizenship and Immigration), [1999] 2 SCR 817, 1999 CanLII 699 (SCC) at paras 21-22 [Baker]; Henri v Canada (Attorney General), 2016 FCA 38 at para 18 [Henri FCA]). Baker identified factors that may be considered when determining the content of procedural fairness in a particular circumstance. These factors are: the nature of the decision being made and the process followed in making it; the nature of the statutory scheme and the terms of the statute pursuant to which the administrative decision maker operates; the importance of the decision to the individual(s) affected; the legitimate expectations of the person challenging the decision; and, the choices of procedure made by the agency itself (Baker at paras 23-27).
[30] The Applicants submit that Mr. Lum was owed a high degree of procedural fairness as the applicable statutory scheme lacks an appeal mechanism; the decision was important to Mr. Lum who is the sole shareholder, director and officer of Grun Labs, and without a security clearance certificate, that company cannot obtain a licence to produce cannabis despite having made a significant financial investment in the project. Further, the Applicants submit that Mr. Lum had a legitimate expectation that he would be given a fair opportunity to respond to any remaining concerns that the Director General may have had after Mr. Lum provided proof that Subject A was no longer his co-director in the numbered company as well as a legitimate expectation that the Director General would test the content of the LERC report.
[31] I note that this would appear to be the first decision to consider the content of the duty of procedural fairness owed with respect to the issuance of security clearance in connection with the Cannabis Act and the Cannabis Regulations. However, there is jurisprudence in other areas, such as in the civil aviation and marine transportation fields, that has previously considered the content of the duty of procedural fairness owed in the context of refusals to issue, renew or the cancelling of security clearance.
[32] In Henri v Canada (Attorney General), 2014 FC 1141 [Henri], the applicant was an aeronautics engineer who worked in restricted areas of an international airport. Access to restricted areas was limited to individuals who held security clearances issued under the Aeronautics Act. The applicant argued that the cancelling of his security clearance had a significant impact on him and his family as it involved his ability to retain his employment and, therefore, he was owed a high level of procedural fairness. Justice LeBlanc summarized the principles emerging from the jurisprudence of this Court in the context of the cancellation of security clearances in relation to air safety. This included that the content of procedural fairness is slightly higher when an existing clearance is cancelled than when someone is refused clearance for the first time. Nevertheless, it is on the lower end of the spectrum (Henri at para 27(e), citing Pouliot v Canada (Transport), 2012 FC 347 at para 10 [Pouliot]). Further, in practical terms, this means that the procedural safeguards related to the process that may lead to the cancellation of a security clearance are limited to the right to know the alleged facts and the right to make representations about those facts (Pouliot at para 10; Rivet v Canada (Attorney General), 2007 FC 1175 at para 25 [Rivet]; DiMartino v Canada (Minister of Transport), 2005 FC 635 at para 36 [DiMartino]; Peles v Canada (Attorney General), 2013 FC 294 at para 15 [Peles]; Clue v Canada (Attorney General), 2011 FC 323 at para 17 [Clue]).
[33] On appeal, in Henri FCA the Federal Court of Appeal found that the Federal Court had not erred in determining the level and content of procedural fairness that the applicant was owed. And, while it must be recognized that where a person’s employment is dependant on maintaining a security clearance the decision is of enormous personal importance, this is just one of the factors to be considered (Henri FCA at paras 22-23). The statutory scheme also afforded the Minister a great deal of discretion and entrusted the Minister with the duty of granting or refusing or revoking security clearances to individuals. The Federal Court of Appeal held that the nature of the decision and the statutory scheme militated towards reduced levels of procedural fairness. Further:
[27] Although I frame the analysis somewhat differently, I find that the level of procedural fairness set out by the Federal Court is reflective of these factors in the context of this case. The decision is of great importance both to the individuals affected and to the public interest in safety and security. Parliament has entrusted the decision not to a court or a quasi-judicial tribunal but to the Minister's discretion. The Minister has elected to exercise this discretion with the assistance of an Advisory Body under a policy that ensures individuals are informed of claims made against them and that they have the opportunity to respond before a recommendation to the Minister, and then the Minister's decision, are rendered.
[28] Specifically, the Federal Court's determination that procedural fairness requires that an individual who may have his security clearance under the Act revoked is informed of the facts alleged and is afforded with the opportunity to respond, is consistent with the Baker factors and with the goal of ensuring a fair and open procedure.
(See also Canada (Minister of Transport, Infrastructure and Communities) v Jagjit Singh Farwaha, 2014 FCA 56 at para 118.)
[34] The cannabis regulation scheme is also concerned with public safety. The purpose of the Cannabis Act includes the protection of public health and public safety and, in particular, to provide for the licit production of cannabis to reduce illicit activities in relation to cannabis and to deter illicit activities in relation to cannabis through appropriate sanctions and enforcement measures (Cannabis Act, ss 7(c) and (d)).
[35] The Cannabis Act also provides that, subject to the regulations, the Minister may grant or refuse to grant a security clearance or suspend or cancel a security clearance. That is, the Act affords the Minister significant discretion in determining whether to issue a security clearance (Cannabis Act, s 67(1)).
[36] The Cannabis Regulations permit the Minister to, at any time, conduct checks that are necessary to determine whether an applicant for, or the holder of, a security clearance poses a risk to public health or public safety, including the risk of cannabis being diverted to an illicit market or activity. Such checks include a check of the applicant’s or holder’s criminal record and a check of the relevant files of law enforcement agencies that relate to the applicant or holder, including intelligence gathered for law enforcement purposes (Cannabis Regulations, s 52). The regulations also require that the Minister must, before granting a security clearance, determine that the applicant does not pose an unacceptable risk to public health or public safety, including the risk of cannabis being diverted to an illicit market or activity (Cannabis Regulations, s 53(1)). The regulations also set out a long list of factors that the Minister may consider when determining the level of risk posed by an applicant before granting security clearance (s 53(2)).
[37] Moreover, the Cannabis Regulations set out the process to be followed when the Minister intends to refuse to grant a security clearance. The Minister must provide the applicant with a notice that sets out the reasons for the proposed refusal and specify the time within which the applicant can submit written representations in response (Cannabis Regulations, s 55(1)).
[38] In my view, this matter is analogous to Henri. The discretionary nature of the decision, the process to be followed, and the statutory scheme all militate towards a lower level of procedural fairness (Henri FCA at para 24).
[39] Further, case law in other statutory contexts confirms that security clearance is a privilege, not a right (Henri at para 27(a); Thep-Outhainthany v Canada (Attorney General), 2013 FC 59 at para 17 [Thep-Outhainthany]; Sylvester v Canada (Attorney General), 2013 FC 904 at para 18; Quan v Canada (Attorney General), 2016 FC 1181 at para 32 [Quan]; Dorélas v Canada (Transport), 2019 FC 257 at para 35). This too suggests a low level of procedural fairness.
[40] As to the importance of the decision to the individual(s) involved, in this matter Mr. Lum has filed an affidavit sworn on September 17, 2019 in support of this application for judicial review [Lum Affidavit #1]. In that affidavit, he states that he incorporated Grun Labs in November 2016 and that he is the sole director and shareholder of that entity. In December 2016, Grun Labs purchased a property for the purpose of carrying out cannabis production at a purchase cost of approximately $2.9 million. On April 3, 2017, Mr. Lum submitted the Producer Licence Application on behalf of Grun Labs. Subsequently, Grun Labs invested an additional approximate $1.1 million in the project.
[41] I note that the Producer License Application names Mr. Lum under “Proposed Senior Person In Charge” as director and responsible person in charge. Under “Proposed Responsible Person in Charge” he is similarly named as director and senior person in charge. The Cannabis Regulations require that the directors of corporations holding a license for cultivation, processing or sale of cannabis must hold a security clearance (s 50(b)(i)). Security clearance must similarly be held by any individual who exercises, or is in a position to exercise, direct control over the corporation (s 50(b)(ii)). This latter provision presumably would include the sole shareholder and officer of a company, such as Mr. Lum with respect to Grun Labs. Section 62(7)(f) of the Cannabis Act precludes the issuance or renewal of cannabis producer license if the required security clearances are not in place.
[42] Thus, the decision under review affects Mr. Lum’s capacity to act as the director and controlling interest of Grun Labs. By association, this potentially impacts Grun Labs’ ability to become a licensed producer (Cannabis Regulations, s 50(b)(i); Cannabis Act, s 62(7)(f)). In that sense, the decision could perhaps be seen to affect an employment opportunity for Mr. Lum, one in which Grun Labs has invested significantly. That said, affecting an employment opportunity, as opposed to one’s current employment, may not be as significant in the context of the content of the duty of procedural fairness (see Makavitch v Canada (Attorney General), 2019 FC 940 at para 29; Haque v Canada (Attorney General), 2018 FC 651 at paras 62-63 [Haque]). Regardless, in my view, this factor weighs in the Applicants’ favour in terms of greater procedural fairness. As does the fact that there is no statutory appeal mechanism found in the Cannabis Act or associated Cannabis Regulations related to security clearance (Baker at para 24).
[43] The Applicants also submit that Mr. Lum had a legitimate expectation that the Minister would test the information found in the LERC report provided by the RCMP and that this expectation supports a higher level of procedural fairness.
[44] The doctrine of legitimate expectations is described by the Supreme Court of Canada in Agraira v Canada (Public Safety and Emergency Preparedness), 2013 SCC 36 [Agraira]:
[94] The particular face of procedural fairness at issue in this appeal is the doctrine of legitimate expectations. This doctrine was given a strong foundation in Canadian administrative law in Baker, in which it was held to be a factor to be applied in determining what is required by the common law duty of fairness. If a public authority has made representations about the procedure it will follow in making a particular decision, or if it has consistently adhered to certain procedural practices in the past in making such a decision, the scope of the duty of procedural fairness owed to the affected person will be broader than it otherwise would have been. Likewise, if representations with respect to a substantive result have been made to an individual, the duty owed to him by the public authority in terms of the procedures it must follow before making a contrary decision will be more onerous.
[95] The specific conditions which must be satisfied in order for the doctrine of legitimate expectations to apply are summarized succinctly in a leading authority entitled Judicial Review of Administrative Action in Canada:
The distinguishing characteristic of a legitimate expectation is that it arises from some conduct of the decision-maker, or some other relevant actor. Thus, a legitimate expectation may result from an official practice or assurance that certain procedures will be followed as part of the decision-making process, or that a positive decision can be anticipated. As well, the existence of administrative rules of procedure, or a procedure on which the agency had voluntarily embarked in a particular instance, may give rise to a legitimate expectation that such procedures will be followed. Of course, the practice or conduct said to give rise to the reasonable expectation must be clear, unambiguous and unqualified. [Emphasis added.]
(D. J. M. Brown and J. M. Evans, Judicial Review of Administrative Action in Canada (loose-leaf), at §7:1710; see also Mount Sinai Hospital Center v. Quebec (Minister of Health and Social Services), 2001 SCC 41, [2001] 2 S.C.R. 281, at para. 29; Canada (Attorney General) v. Mavi, 2011 SCC 30, [2011] 2 S.C.R. 504, at para. 68.)
[96] In Mavi, Binnie J. recently explained what is meant by “clear, unambiguous and unqualified” representations by drawing an analogy with the law of contract (at para. 69):
Generally speaking, government representations will be considered sufficiently precise for purposes of the doctrine of legitimate expectations if, had they been made in the context of a private law contract, they would be sufficiently certain to be capable of enforcement.
(See also Drabinsky v Canada (Advisory Council of the Order), 2015 FCA 5 at para 8 [Drabinsky].)
[45] In my view, Mr. Lum could not have had a legitimate expectation that the Minister would investigate the accuracy or “test” the information found in the RCMP’s LERC report. This is because there is simply no evidence that the Minister made a representation that the Minister would test the LERC report. Nor do the Applicants assert this. Rather, they suggest that the Minister should have looked behind the LERC report to ensure that in its preparation the RCMP did not exaggerate or provide unreliable evidence about Subject B’s alleged criminal activities. Further, that this should have included conducting legal research into the allegations against Subject B to uncover any relevant judicial decisions. Finally, they suggest that this legitimate expectation was heightened because Mr. Lum was not provided with the LERC report and therefore could not test its reliability himself.
[46] This submission simply does not address the requirement, necessary to found a legitimate expectation, that the Minister must have made a clear, unambiguous and unqualified representation that he would test the LERC report. Nor does the fact that the Certified Tribunal Record [CTR or record] contains a copy of the LERC report, with three affixed “sticky notes” that suggest the Director General or someone from his office had further discussions with the RCMP about the content of the LERC report, amount to any form of representation made to Mr. Lum. On this basis, the Applicants’ claim of a legitimate expectation cannot succeed, and therefore, that factor cannot support a finding that the duty of procedural fairness owed to Mr. Lum is heightened.
[47] The Applicants also assert that Mr. Lum had a legitimate expectation that he would be given a fair opportunity to respond to any lingering concerns the Minister may have had after Mr. Lum made his written representations in response to the notice of intention. As indicated above, the Cannabis Regulations require that an applicant be provided with the opportunity to respond to the notice of intention, which the Minister did in this case. There is, however, no provision requiring the Minister to follow up with an applicant or permitting an applicant to make any subsequent additional written representations. And again, the Applicants point to no representation made by the Minister in that regard.
[48] The Applicants point to a June 5, 2019 email from the Licensing and Medical Access Directorate, Controlled Substances and Cannabis Branch of Health Canada, which concerns Grun Labs’ application to become a license holder. This email indicates that Health Canada had completed a preliminary and high-level review of the license application, and based on the information assessed, Health Canada had no critical concerns with the application at that time. However, that the review was limited in scope and that it was important to note that it did not constitute an approval of the site and should not be viewed as an indication that the application is fully compliant or that a licence will be issued in the future. The email also indicates that individuals who require a security clearance must submit their security application form before a licence application can be submitted. I also note that the Producer License Application submitted by the Applicants states that a producer’s license will not be issued if all of the required individual security clearances have not been granted. This reflects s 62(7)(f) of the Cannabis Act, which states that the Minister may refuse to issue a license if a security clearance in respect of that application has been refused or cancelled.
[49] All of this is to say that, to the extent that the Applicants are suggesting that the June 5, 2019, email afforded them a legitimate expectation that they would have a further opportunity to respond to any remaining concerns of the Minister – or that they would be issued a production license – the letter is assuredly not a clear, unambiguous and unqualified representation to that effect.
[50] In conclusion, considering the Baker factors in the context of this matter, I am of the view that the content of the duty of procedural fairness owed to Mr. Lum is at the lower end of the spectrum. This is because the security clearance application is not similar to a judicial process as described in Baker at para 23. Further, the Cannabis Act and Cannabis Regulations place the duty to grant security clearances on the Minister, afford the Minister significant discretion in determining if applicants pose a risk to public safety or public health and require that the Minister give an applicant notice of the Minister’s intention to refuse a security clearance application and an opportunity to make written representations in response. Mr. Lum had no legitimate expectation that he would receive a security clearance or that he would be afforded any procedural safeguards other than those mandated by the legislative scheme. Further, while the outcome of the decision was important to Mr. Lum, as an affected individual, it was also of importance to the public interest in public safety. In the result, and despite the importance of the decision to Mr. Lum and that no appeal mechanism exists, in my view the factors weigh in favour of a low level of procedural fairness.
[51] Further, the process followed in this matter, notice of the Minister’s intention to refuse the security clearance application and an opportunity to make written representations in response, has been held to be in keeping with the content of procedural fairness owed in comparable circumstances pertaining to security clearances (Henri at para 27(e); Pouliot at para 10; Rivet at para 25; DiMartino at para 36; Peles at para 16; Clue at para 17; Haque at para 65; see also Quan at para 33). In my view, this level of procedural fairness is appropriate in this circumstance.
ii. Were the requirements of procedural fairness breached?
Applicants’ position
[52] The Applicants submit that procedural fairness was breached in three ways.
[53] First, because the Director General prejudged the outcome of Mr. Lum’s security clearance application as is evident from the fact that the wording of the notice of intention and the decision letter are identical, that the decision did not refer to all Mr. Lum’s written representations which were contrary to the Minister’s initial view as to risk, and because it was futile for Mr. Lum to provide proof of his co-director’s resignation.
[54] In the alternative, the Director General may have relied on a new concern, credibility, which was not put to Mr. Lum thereby breaching procedural fairness. Further, Mr. Lum had a legitimate expectation that that he would be informed of new concerns, or of any concerns of the Minister that remained after the submission of Mr. Lum’s written representations.
[55] And finally, because Mr. Lum was not provided with the RCMP’s LERC report he did not have the opportunity to test its reliability or comment on the relevance of Subject B’s criminal record as set out in the report. Accordingly, the Director General was required to test the LERC report and to inform himself of contrary publically available information.
Respondent’s position
[56] The Respondent submits that the Director General is presumed to act impartially and with an open mind and the Applicants’ allegations of bias do not meet the high threshold required to establish a reasonable apprehension of bias and are not consistent with the record. Specifically, the Director General would not have delayed his decision and requested further information from Mr. Lum had he prejudged the application. The fact that the Director General was ultimately not swayed by Mr. Lum’s written representations does not amount to bias.
[57] Further, while Mr. Lum emphasises one element of the decision – his business dealings with Subject A – the Director General was entitled to weigh all of the concerns, including Mr. Lum’s association with Subject B. The fact that the notice of intention and final decision letter were similar reflects the consistent nature of the Director General’s concerns. The heart of the decision directly addressed Mr. Lum’s representation that he was no longer associated with Subject A and that he was not aware of Subject B’s involvement with organized crime. Ultimately, however, the Director General found that Mr. Lum had not alleviated his concern that Mr. Lum was or had been associated with an individual known to be involved in or to have contributed to activities related to s 53(2)(b)(ii) of the Cannabis Regulations.
[58] The Respondent also submits that the Director General had no obligation to conduct independent research to “test” the content of the RCMP’s LERC report, which is presumed to be accurate. Mr. Lum was required to put his best foot forward in submitting his application and there was no obligation on the Director General to gather or seek additional evidence or to make further inquiries. Nor could the Applicants claim to have a legitimate expectation that the Director General would test the content of the LERC report. Further, as a general rule, a court on judicial review can only consider information that was put before the decision maker. Accordingly, this Court should not co