The Mount Sinai Hospital Center was originally established as a long-term treatment facility dealing primarily with patients suffering from tuberculosis. During the 1950s, the Center began to introduce new programs and services and developed a general respiratory expertise in a setting with both long-term and short-term care facilities. This change in services was known to the government which throughout funded all of the Center's activities. In 1984, negotiations between the Center and the Ministry of Health and Social Services to move the Center to Montreal began. At that time, the Center was operating under its original permit for 107 long-term care beds even though it had for 10 years been providing 57 long-term care beds and 50 intermediary or short-term care beds. The Center wanted its permit altered to reflect the reality of the services it offered. The Minister promised the Center that it would formally alter the permit once the Center moved to Montreal. The promise to issue the correct permit was reaffirmed on various occasions. Once the Center had moved to Montreal, in January 1991, it made a formal request to the Minister for a regularization of the permit. Without giving the Center an opportunity to make submissions on the issue, in October 1991, the Minister informed the Center that it would not receive the promised permit and would have to operate under the old unaltered permit. This was despite the fact that the services being offered still included short-term services funded by the government. The Center brought an action in mandamus before the Superior Court, requesting that the court order the Minister to issue the promised permit.
Relying on the legitimate expectation created by the Minister's conduct, the Superior Court allowed the mandamus application in part and ordered that the Minister hear the Center's submissions before deciding whether the alteration of the permit was in the public interest. The Court of Appeal allowed the Center's appeal and ordered the Minister to issue the promised permit, applying the doctrine of public law promissory estoppel.
- Should the promised permit be issued to the hospital?
The majority decided the case based on the Minister's failure to extend even minimal procedural fairness to the Center, which should thus result in the setting aside of his decision to refuse the application for a modified permit; the Center had no notice that the Minister was about to reverse his position, or the reasons for reversal, and no opportunity to present argument as to why the Minister's earlier and long-standing view that the public interest favoured a modified Center should prevail. However, in a concurring decision, Justice Binnie, with McLachlin CJ concurring, dealt with the issues of estoppel and legitimate expectations in this case. The respondents had argued for an expansion of legitimate expectations from that of Reference re Canada Assistance Plan to include substantive outcomes. Binnie held that availability and content of procedural fairness are generally driven by the nature of the applicant's interest and the nature of the power exercised by the public authority in relation to that interest. The doctrine of legitimate expectations, on the other hand, looks to the conduct of the public authority in the exercise of that power including established practices, conduct or representations that can be characterized as clear, unambiguous and unqualified. The expectations must not conflict with the public authority's statutory remit. He acknowledged that in some cases it is difficult to distinguish the procedural from the substantive, but upheld the distinction on the basis of the underlying principle that broad public policy is preeminently for the Minister to determine, not the courts. He did clarify that a person seeking review on the basis of legitimate expectations may show, but does not necessarily have to show, detrimental reliance on the expectations. On the facts of this case, the doctrine of legitimate expectations does not add to the relief otherwise available under the ordinary rules of procedural fairness, and thus the requested expansion was not warranted.
However, Binnie stated that estoppel may be available to give substantive relief against a public authority, including a Minister, in narrow circumstances. The requirements of estoppel go well beyond the requirements of the doctrine of legitimate expectations. All the elements of private law promissory estoppel are present in this case. However, public law promissory estoppel requires an additional appreciation of the legislative intent embodied in the power whose exercise is sought to be estopped. Circumstances that might otherwise create an estoppel may have to yield to an overriding public interest expressed in the legislative text. The wording of the particular statutory power in question and the status of who wields it is important. In the case at bar, the statute mandated the Minister to act in the public interest in very broad terms, and if the public interest as he defines it is opposed to the award of the modified permit, then a court should not estop the Minister from doing what he considers his duty. Binnie thus concludes that on the facts, estoppel was not available as applied by the Quebec Court of Appeal.
- Expansion of the legitimate expectations doctrine into substantive outcomes is not warranted in the public context, as it would supercede the principle that public policy is for the executive branch to decide, not the courts.
- A party seeking review on the basis of legitimate expectations does not have to show detrimental reliance on the expectations in order to succeed.
- Public law estoppel contains all the elements of private law estoppel, but with an additional appreciation of the legislative intent of the statute governing the body whose exercise of power is sought to be estopped.