Executive Summary: Key Legal and Evidentiary Issues

• Determined whether a hospital board’s internal decision could be subject to judicial review.

• Examined the public-private nature of non-profit hospitals under Ontario law.

• Weighed the statutory and funding ties between the hospital and the provincial government.

• Considered whether operational decisions involving service allocation constitute exercises of state power.

• Clarified that public impact alone does not establish a public law character for judicial review.

• Concluded the hospital board’s decision lacked sufficient public character to attract judicial oversight.

Background and procedural context

The Corporation of the Municipality of West Grey filed an application for judicial review challenging the decision by South Bruce Grey Health Centre (SBGHC) to relocate ten inpatient beds from its Durham hospital site to its Walkerton and Kincardine locations. The decision was made due to escalating staffing shortages, including a 48% nurse vacancy rate at the Durham site, and followed nearly 100 emergency department closures within a year. The transfer took effect on June 3, 2024.

West Grey argued that the hospital’s decision, while operational on its face, was grounded in a broader statutory and funding framework that rendered it public in nature. They claimed the move violated public law norms, given the hospital’s integration with Ontario’s health system through legislation like the Public Hospitals Act and the Connecting Care Act, and through its accountability agreement with Ontario Health. West Grey alleged the decision would diminish local healthcare access and potentially lead to the Durham hospital’s closure.

Arguments and legal positions

SBGHC brought a motion to dismiss the judicial review application, asserting that its decision was a private, internal management issue that fell outside the scope of judicial review. It emphasized its governance structure as a private not-for-profit corporation and its statutory autonomy in operational decisions. The hospital highlighted that no legal approval from the Ministry of Health or Ontario Health was required to reallocate beds and that such decisions were left to the discretion of its board of directors.

The Attorney General of Ontario intervened in support of the hospital, reinforcing that decisions by hospital boards regarding internal resource allocation do not involve the exercise of state authority. The Ministry emphasized that while hospitals are regulated and funded by the government, they operate independently and are not Crown agents.

Judicial analysis and application of legal principles

The Divisional Court considered whether the hospital board’s decision constituted an exercise of state authority and whether it was of a sufficiently public character to attract judicial review. Citing the Supreme Court of Canada’s decision in Highwood Congregation v. Wall, the court reaffirmed that judicial review only applies where both criteria are satisfied.

The court also relied on the Ontario Court of Appeal’s decision in Khorsand v. Toronto Police Services Board and used interpretive guidance from Air Canada v. Toronto Port Authority to evaluate the nature of the decision. It concluded that SBGHC’s choice to relocate inpatient beds was operational, not regulatory or legislative. The hospital’s accountability under statutory frameworks and reporting obligations did not transform its internal decisions into public ones. The court also noted that public interest or community impact does not, on its own, create grounds for judicial review.

Outcome and conclusion

The court granted SBGHC’s motion and dismissed the application for judicial review. It found that the hospital’s decision, while impactful to the community, was not of a sufficiently public nature and did not involve the exercise of state power. Accordingly, the Divisional Court lacked jurisdiction under the Judicial Review Procedure Act. Costs in the amount of $50,000 were awarded to SBGHC on a partial indemnity scale, with no costs ordered for or against the Attorney General. The decision reinforces the principle that operational choices by non-profit hospital boards are generally insulated from judicial oversight absent statutory compulsion or state control.