Executive Summary: Key Legal and Evidentiary Issues

• The Superintendent forfeited Haulage’s $97,000 security bond without notice or justification, contrary to procedural fairness.

• Haulage was entitled to a fair hearing before such a discretionary and impactful enforcement action was taken.

• The court found the Superintendent’s decision unreasonable for failing to consider the specific circumstances or consequences.

• The forfeiture occurred despite the Licence Appeal Tribunal later ruling in Haulage’s favour and lifting the suspension.

• The Superintendent’s reliance on student protection did not override Haulage’s right to notice and proportional enforcement.

• The court ordered full return of the forfeited funds and awarded Haulage $28,000 in costs.

Background and regulatory action
Haulage Network Driving Academy Inc. operated a trucking school with multiple campuses in Ontario and was registered under the Ontario Career Colleges Act, 2005. The Act required Haulage to post a $97,000 security bond to protect student interests in case of closure or disruption. In May 2023, following an investigation, the Superintendent of Career Colleges issued notices to suspend and refuse to renew Haulage’s registration and then—without informing the school—declared the bond forfeit. Haulage only learned of the forfeiture weeks later through its bank, after it had already launched an appeal to the Licence Appeal Tribunal.

Appeal to the Tribunal and contradictory findings
In a seven-day hearing before the Tribunal, the Superintendent’s enforcement actions were largely overturned. The Tribunal found that although Haulage had some administrative issues, the allegations of safety violations and mismanagement were overstated and influenced by confirmation bias. It reinstated Haulage’s registration and imposed conditions for continued operation. Haulage requested the return of its forfeited funds, but the Superintendent denied the request and demanded an additional $10,000 bond. Haulage ultimately ceased operations due to the financial and reputational damage caused by the suspension and forfeiture.

Judicial review and admissibility of evidence
Haulage applied to the Divisional Court for judicial review, arguing that the forfeiture was both procedurally unfair and substantively unreasonable. A preliminary issue was raised over whether new affidavit evidence could be admitted. The court ruled that evidence about the Superintendent’s internal policies, the Tribunal proceedings, and the effects on Haulage was admissible, as it related to procedural fairness and remedial discretion.

Analysis of procedural fairness and discretion
Applying the Baker factors, the court held that Haulage was entitled to procedural fairness due to the discretionary nature of the forfeiture, its severe consequences, and the existence of a government-issued “progressive compliance model” that created legitimate expectations of measured enforcement. The Superintendent provided no notice or opportunity for Haulage to respond before issuing the forfeiture, despite having up to 12 months to act. The court emphasized that discretion must be exercised case-by-case, not automatically or rigidly.

Finding of unreasonableness
The Superintendent’s decision was also found to be unreasonable. The internal memo and correspondence with the bank offered no individualized justification for the forfeiture. The Superintendent’s position—that forfeiture is automatic once a suspension or refusal notice is issued—was contrary to the regulation’s wording, which makes forfeiture discretionary. The court held that no rational decision-maker could justify forfeiture under the circumstances, especially after the Tribunal found in Haulage’s favour.

Remedy and costs
Rather than remitting the matter, the court directly ordered the return of the $97,000. It found that remitting the issue served no purpose given the Tribunal’s binding findings, the harm suffered by Haulage, and the lack of lawful basis for the forfeiture. The court also rejected limiting the remedy to a declaration, awarding a concrete financial remedy to reflect the seriousness of the error. Haulage was awarded $28,000 in costs, reflecting both its lower expense claim and the unjustified conduct of the Superintendent.

Conclusion
This decision affirms the fundamental importance of procedural fairness in administrative decision-making. Even where consumer protection is cited, regulators must act proportionately, transparently, and in consideration of the real-world impact of their actions. The court’s ruling provided meaningful relief to Haulage, whose operations were unfairly disrupted by an enforcement approach found to be procedurally and substantively flawed.