February 22, 2012

2011 Admin Law Case Round-up: Jurisdiction and Deference on Judicial Review

Administrative Law

Administrative law has seen some fundamental changes over the last few years. 2011 was no exception. Our review of Supreme Court of Canada cases shows that the understanding of the Supreme Court of the purpose and scope of judicial review, and thus the deference courts should show to tribunals, continues to evolve. While regulatory bodies do not need to engage with questions of deference at the ground level, they must nonetheless face these issues when decisions end up at a judicial review, and should appreciate how the courts are “trending” toward or away from deference.

The key theme in cases most recently addressed by the Supreme Court of Canada is “jurisdiction”. While courts may show deference to tribunal decisions on matters within their jurisdiction, courts typically do not show deference about decisions that address a tribunal’s ability to decide a given matter. For this reason, anyone who is challenging a decision may gain advantage by characterizing a decision as “jurisdictional” in nature. Modern courts have always been wary of arguments that brand a decision as a matter of “jurisdiction”, but most recently, the Supreme Court has reaffirmed both a narrow scope for “true” jurisdiction questions, and deference to tribunals when they interpret their “home” statutes.

This trend does not, however, eliminate the tension that will always exist between expertise and court supervision. It merely means that the tension may manifest elsewhere, such as the extent to which courts may supervise regulators according to the adequacy of reasons. While the Supreme Court stated in 2011 that inadequacy of reasons is not a “stand-alone” ground for a court to overturn a decision (see below), this decision also follows a host of decisions in 2010 and 2011 where lower courts have displayed a willingness to find decisions unreasonable based on inadequate reasons.

1. Celgene Corp. v. Canada (Attorney General), [2011] 1 S.C.R. 3

In Celgene, the Supreme Court found that deference was appropriate for a specialized tribunal interpreting its own enabling statute, even though the decision under review was “jurisdictional” in nature.

This case involved a Canadian regulatory scheme that required vendors to provide pricing information for products “sold in any market in Canada”. [1] A pharmaceutical company sold pharmaceuticals to Canadian pharmacists by means of a Special Access Program (“SAP”), allowing companies to bypass the normal compliance process mandated by Health Canada. [3] Under the SAP rules, the manufacturer mailed its products to the Canadian pharmacists from the U.S., and received payment in U.S. dollars. [6] The manufacturers argued their products were not “sold… in Canada”, according to the conventional legal meaning of the word “sold”. [10]

The Patented Medicine Prices Review Board held, and the Supreme Court agreed, that the words “sold… in Canada” were to be interpreted according to the overall purpose of the statute, [21] which was to regulate the prices of drugs ultimately sold to Canadian consumers, including the products at issue. [26] Under the company’s interpretation, the regulatory scheme would apply to drugs distributed by Canadian manufacturers for sale in European markets, which would be “incongruous with the legislative purpose” of the scheme. [31]

The trial court had reviewed the Review Board’s decision on a standard of correctness, on the basis that the question of what markets fell within the scope of the statute was one of “jurisdiction”. [12] While the Supreme Court found that the Board’s decision could be upheld under this standard, it questioned if this standard was appropriate, given that the Review board was a specialized tribunal interpreting its own enabling statute, such that it was entitled to deference under Dunsmuir v. New Brunswick, 2008 SCC 9 (“Dunsmuir”). Accordingly, reasonableness was the correct standard of review. [34]

2. Smith v. Alliance Pipeline Ltd., [2011] 1 S.C.R. 160

A dispute arose within the court as to the deference due to a tribunal that was interpreting its “home” statute, where its members did not necessarily have expertise, in Smith. This case involved an award of costs by an Arbitration Committee convened pursuant to the National Energy Board Act, R.S.C. 1970, c. N-6, s. 75.

A company entered into an expropriation agreement with a farmer. The company received an easement over the farmer’s land to construct a pipeline, but had to reclaim the land disturbed in a timely manner. The company did not comply with this obligation. [10] The farmer sought arbitration as mandated by the Act, but this process was delayed when the company brought a claim against the farmer in an Alberta court [13] The action was ultimately abandoned, but during the delay, a member of the Arbitration Committee became a judge, so that the first Arbitration Committee lost quorum. [16]

A second Arbitration Committee was convened, and found in favour of the farmer. That second committee granted the farmer an award of costs that included part of the costs of the proceedings before the first Arbitration Committee, and the balance of the costs incurred by the farmer in the court proceeding. [18]

For a majority, Justice Fish held that the Committee was applying its home statute, which will “normally” result in deference, “except where the question raised is constitutional, of central importance to the legal system, or where it demarcates the tribunal’s authority from that of another specialized tribunal”. [37] This led the majority to conclude the decision should be reviewed on a standard of reasonableness. [40] The majority concluded that Committee’s decision to compensate the farmer for the cost of defending the court action was reasonable. [72]

In a separate concurring opinion, Justice Deschamps agreed the Committee was entitled to exercise discretion in its award of costs, and that reasonableness was therefore the appropriate standard to apply in this case. [110] But the Justice took issue with the majority’s suggestion that a tribunal interpreting its home statute will normally be entitled to deference. While some tribunals are made up of permanent members with expertise in the relevant areas of law and/or science, the Arbitration Committee in this case was made up of ad hoc members who did not necessarily have specialized experience with this kind of dispute. [91] Deschamps J. took the position that the degree of deference owed should be determined in accordance with these and other relevant considerations, rather than granting deference as a matter of course where the interpretation of an enabling statute is involved. [99]

3. Canada (Canadian Human Rights Commission) v. Canada (Attorney General), [2011] S.C.J. No. 53 (“CHRC”)

This case involved an interpretation by the Canadian Human Rights Commission of its own power to award legal costs, as part of its power to order compensation.

In considering whether the question before it should be characterized as jurisdictional, the Court recognized the proposition in Dunsmuir that jurisdictional questions should be restricted to “those that require a tribunal to ‘explicitly determine whether its statutory grant of power gives it the authority to decide a particular matter’.” [18] Accordingly, it noted that, “Although Dunsmuir maintained the category of jurisdictional questions, it took the view that this category should be interpreted narrowly. Indeed, our Court has held since Dunsmuir that issues which in other days might have been considered by some to be jurisdictional, should now be dealt with under the standard of review analysis in order to determine whether a standard of correctness or of reasonableness should apply….” [24]

As for deference in relation to the expertise of the Canadian Human Rights Commission when interpreting its “home” statute, while reviewing courts have granted human rights tribunals “little deference to their interpretations of laws, even of their own enabling statutes,” [19] and have “not shown deference to human rights tribunals in respect of their decisions on legal questions,” [19] the Court found that “[t]he inquiry of what costs were incurred by the complainant as a result of a discriminatory practice is inextricably intertwined with the Tribunal’s mandate and expertise to make factual findings relating to discrimination….” [25] The court reviewed on a standard of reasonableness, as the decision was neither a question of jurisdiction, nor a question of law of central importance to the legal system as a whole and outside of the tribunal’s area of expertise. [27]

A unanimous court determined, however, that the Commission did not have statutory authority to grant costs awards, not least because the Commission itself had acknowledged as much and lobbied for change in previous years.

4. Alberta (Information and Privacy Commissioner) v. Alberta Teachers’ Association, [2011] S.C.J. No. 61

Different approaches to deference to a tribunal interpreting its “home” statute became most pronounced as a result of private information being published by the Alberta Teachers’ Association, which led to a complaint to the Information and Privacy Commissioner, and an inquiry. The Commissioner’s statute provided that an inquiry “must” be completed within 90 days of the complaint being received, unless the Commissioner notified the parties that he was extending the period. The Commissioner did not actually extend the date for 22 months, and issued an order against the Alberta Teachers’ Association 29 months after the initial complaint. The Association sought judicial review, arguing a loss of jurisdiction. The Commissioner’s order was originally quashed. The Supreme Court of Canada ordered its reinstatement, after reviewing the decision on a standard of reasonableness, but based on three separate sets of reasons which address whether the courts should presume deference when a tribunal interprets its own statute.

[4(a)] Rothstein J. (for a majority) questioned whether the category of “true questions or jurisdiction” had any place in the current standard of review analysis. Although leaving open the possibility that a true question of jurisdiction could be identified in “exceptional circumstances”, the majority held that a tribunal interpreting its home statute should be presumed to be entitled to deference. [34] “As long as the true question of jurisdiction category remains, the party seeking to invoke it must be required to demonstrate why the court should not review a tribunal’s interpretation of its home statute on the deferential standard of reasonableness.” [39] This presumption should apply even where the interpretation raises a question of law that is of general importance, holding that review on a standard of correctness should be applied only where a question is “both of central importance to the legal system as a whole and outside the adjudicator’s specialized area of expertise” (quoting from CHRC, above; Rothstein J.’s emphasis). [46] Implicit in this conclusion is the notion that any interpretation of a tribunal’s enabling statute presumptively invokes the tribunal’s expertise.

[4(b)] Cromwell J., co-author of the Court’s decision in CHRC, took issue with the idea that tribunals interpreting their home statutes should be presumed entitled to deference, as “[t]here is no indication of how, if at all, this presumption could be rebutted.” [91] While agreeing that the use of the term “jurisdiction” (or its Latin predecessor, vires) has not been helpful in assisting judges to determine what standard of review is appropriate, Cromwell J. argued that review for excess of jurisdiction is essential to the judicial review process, as courts must be able to ensure that administrative bodies are acting lawfully. [94] Cromwell J. also criticized the majority reasons as being a departure from Dunsmuir, in which it was held (at para. 31) that “judicial review is constitutionally guaranteed in Canada, particularly with regard to the definition and enforcement of jurisdictional limits”. [102]

[4(c)] The reasons of Binnie J. (Deschamps J. concurring) sought a middle ground. While agreeing with Cromwell J. that the courts should determine the limits of a tribunal’s authority, Binnie J. took issue with Cromwell J.’s proposed description of jurisdictional questions as encompassing any question of whether the tribunal had “authority… to decide” a matter, as the Court had been attempting to move away from this sort of broad definition. [80] On the other hand, Binnie J. rejected the presumption of deference proposed by Rothstein J.: “It is not enough, it seems to me, to say that the tribunal has selected one from a number of interpretations of a particular provision that the provisions can reasonably bear, no matter how fundamentally the tribunal’s legal opinion affects the rights of the parties who appear before it.” [82] The desirable middle ground was to apply deference “if the issue relates to the interpretation and application of its own statute, is within its expertise and does not raise issues of general legal importance” (emphasis added) –  this, too, being a quote from CHRC, albeit one used to make a point opposite to that of Rothstein J. [83] Accordingly, “If the issue before the reviewing court relates to the interpretation and application of a tribunal’s “home statute” and related statutes that are also within the core function and expertise of the decision maker, and the issue does not raise matters of legal importance beyond administrative aspects of the statutory scheme under review, the Court should afford a measure of deference under the standard of reasonableness. Otherwise, in my respectful opinion, the last word on questions of law should be left with the courts.” [89]

Binnie J. opined that “the ‘range of acceptable and rational solutions’ is context specific and varies with the circumstances”, [85] and that “”[r]easonableness” is a deceptively simple omnibus term which gives reviewing judges a broad discretion to choose from a variety of levels of scrutiny” [87]. In other words, he confirmed his preference for an approach that would allow for variable degrees of deference within the general category of “reasonableness.” For example, the “reasonableness” review in CHRC “was not far removed from a correctness analysis,” [85] whereas courts might apply “reasonableness” with a “much less aggressive attitude” in matters of general policy or broad discretion. (For context on this point, click here for our write-up of Catalyst Paper Corp. v. North Cowichan (District), 2010 BCCA 199.)


What does the majority decision in Alberta Teachers mean for the future of judicial review? Clearly, a move away from “true questions of jurisdiction” means greater deference for tribunals when they interpret their home statute, and possibly greater deference overall. For example, see Newfoundland and Labrador Nurses’ Union v. Newfoundland and Labrador (Treasury Board), 2011 SCC 62, where the Supreme Court found that the adequacy of an arbitrator’s reasons was not a “stand alone” basis for quashing a decision, separate from the reasonableness of the decision reached. The reasons must be read together with the outcome. In other words, so long as the decision is reasonable, and the basis for the decision is “justified, transparent, and intelligible”, a gap in the reasons does not violate procedural fairness, and does not constitute a stand-alone basis for overturning that decision:

14         Read as a whole, I do not see Dunsmuir as standing for the proposition that the “adequacy” of reasons is a stand-alone basis for quashing a decision, or as advocating that a reviewing court undertake two discrete analyses — one for the reasons and a separate one for the result (Donald J. M. Brown and John M. Evans, Judicial Review of Administrative Action in Canada (loose-leaf), at s. 12:5330 and 12:5510). It is a more organic exercise — the reasons must be read together with the outcome and serve the purpose of showing whether the result falls within a range of possible outcomes. This, it seems to me, is what the Court was saying in Dunsmuir when it told reviewing courts to look at “the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes” (para. 47).

21         It strikes me as an unhelpful elaboration on Baker to suggest that alleged deficiencies or flaws in the reasons fall under the category of a breach of the duty of procedural fairness and that they are subject to a correctness review. As Professor Philip Bryden has warned, “courts must be careful not to confuse a finding that a tribunal’s reasoning process is inadequately revealed with disagreement over the conclusions reached by the tribunal on the evidence before it” (“Standards of Review and Sufficiency of Reasons: Some Practical Considerations” (2006), 19 C.J.A.L.P. 191, at p. 217….

22         It is true that the breach of a duty of procedural fairness is an error in law. Where there are no reasons in circumstances where they are required, there is nothing to review. But where, as here, there are reasons, there is no such breach. Any challenge to the reasoning/result of the decision should therefore be made within the reasonableness analysis.

Compare this result, however, with our review of recent decisions in the realm of professional regulatory law.

Even on review on a standard of reasonableness, however, courts may sometimes find that a tribunal has overstepped the legitimate limits of its authority. In British Columbia (Workers’ Compensation Board) v. Figliola, 2011 SCC 52, the Court found that a decision of the B.C. Human Rights Tribunal to relitigate a matter already decided by the Worker’s Compensation Board was patently unreasonable (the standard required by B.C.’s Administrative Tribunals Act), in that the Tribunal was not entitled to assess the adequacy of the Board’s process in determining whether the matter had been “appropriately dealt with”. In that case, the Tribunal’s error was not acting outside of its jurisdiction, but rather in acting where another tribunal of concurrent jurisdiction had already decided the matter.

It remains to be seen how these cases will affect judicial reviews in the future. For now, however, it would seem that the Supreme Court has given administrative tribunals a strong vote of confidence in the administration of their own domains.