Fairness in Regulatory Decisions: How Far Must Regulators Go?

Professional regulators are empowered to make their own process decisions. However, the type of process a regulator adopts can significantly impact its procedural obligations. This distinction affects the level of fairness owed to individuals and must be clearly understood by regulators when exercising their authority.

The difference lies in what kind of decision is being made, how it is made, and under what statutory powers. Where a regulator is applying existing rules to routine matters (e.g., issuing licenses), the process may be characterized as an “administrative” process, and an oral hearing is not required. However, when a decision impacts an individual’s rights, privileges, or reputation, especially when findings of misconduct or dishonesty are involved, the process may shift into quasi-judicial territory, requiring greater procedural safeguards, which may include an oral hearing.

This issue was addressed in detail by the Court of Appeal for Ontario in Afolabi v Law Society of Ontario, 2025 ONCA 257, which examined how the Law Society of Ontario (LSO) handled allegations of cheating on its November 2021 licensing examinations.

The LSO’s Response to Exam Integrity Concerns

In November 2021, the LSO administered approximately 1,700 licensing exams. It later discovered that a tutoring agency had obtained copies of the exams prior to administration. A data forensic firm identified anomalies in about 10% of the results, suggesting that certain candidates had accessed exam content in advance.

The LSO contacted 20 affected candidates, informed them of the allegations, and provided multiple opportunities for written responses and submissions on the consequences. Based on this process, and without holding oral hearings, the LSO took the following actions:

• Voided the candidates’ exam results, and for all but one, their registration in the licensing process

• Imposed a one-year ban on reapplying to the licensing process

• Found that the candidates had engaged in prohibited conduct by making false or misleading representations

• Required disclosure of the outcome in future licensing applications

• Informed other legal regulators across Canada of the sanctions imposed

The candidates were provided an internal review by the Executive Director, who found that the process was administrative in nature, not adjudicative, and upheld the decision (with a discretionary adjustment to the start date of the reapplication ban).

The Candidates Are Successful on Judicial Review

The candidates sought judicial review. The Ontario Divisional Court held that the LSO breached procedural fairness by not providing oral hearings before voiding the registrations. The Court concluded that the process, while described as administrative, was more properly viewed as quasi-judicial given the seriousness of the consequences and the findings of misconduct.

It held that under the legislation, a hearing was required before denying a license for lack of good character. In the Court’s view, cancelling registrations due to false or misleading representation amounted to a refusal to license based on character concerns, thus triggering those procedural protections.

The Court rejected the LSO’s arguments that no finding of intent or character was made, and it also dismissed the LSO’s argument that institutional constraints made hearings impractical, holding that administrative efficiency cannot override procedural rights. The Court further held that the substantial and wide-ranging consequences weighed in favour of a high level of procedural fairness, and that there was a legitimate expectation that the candidates would receive an oral hearing.

The LSO Appeals

The LSO appealed. The Court of Appeal for Ontario allowed the appeal, quashed the Divisional Court’s orders, and reinstated the LSO’s decision to void the exam results and registration of the affected candidates.

The Court found that the LSO acted within its authority. It confirmed that an oral hearing was not required in this context. The Court clarified that references to “good character” in communications were rooted in the regulatory framework under the bylaws, and not under the statute. Therefore, a formal good character hearing was not required. Instead, the Licensing Department was empowered to void registration where someone had engaged in prohibited action.

The Court of Appeal held that the Divisional Court mischaracterized the LSO’s statutory structure, incorrectly merging the functions of the Licensing Department (which ensures exam integrity) and the Professional Regulation Division (which investigates broader ethical concerns). As a result, the lower court imposed procedural obligations, like oral hearings, that were not legally required.

Ultimately, the Court of Appeal concluded that the LSO’s process satisfied the requirements of procedural fairness. The candidates were given notice of the allegations, full disclosure of the evidence, multiple chances to make written submissions, and access to an internal review. This process was appropriate for the nature of the decision being made. The Court of Appeal emphasized that efficiency and fairness are not mutually exclusive.

Key Takeaways for Regulators

This case reinforces that regulators must understand the nature of their decision-making processes and what level of fairness is owed. It underscores that fairness is not a one-size-fits-all concept. Regulators are entitled—and expected—to design processes that fit the nature of their decisions and the mandates of their enabling statutes. The key is not whether a hearing is held, but whether the overall process is fair, transparent, and authorized by law.

When a regulator imposes significant consequences, especially findings of misconduct, regulators must be careful to align their procedures with the applicable statutory framework and principles of procedural fairness. However, not all serious decisions require an oral hearing. An opportunity to respond in writing with full awareness of the allegations and evidence can provide the required level of fairness, even when significant conduct is being examined and substantial remedies may be ordered. What matters is that the regulator adheres to the process prescribed by legislation and that, viewed in its entirety, the process is fair in the circumstances.

Importantly, when a reviewing court assesses the procedures followed by a regulator, it must give due regard to the fact that legislation may expressly empower the regulator to determine its own procedures. Judicial review of procedural fairness must be grounded in a respectful appreciation of that statutory discretion.

Regulators with questions about this case or the level of fairness required in a process can contact Jason Kully, Tracy Zimmer, or any member of Field Law’s Professional Regulatory Group.