Administrative Policies Must be Reasonable

Administrative agencies are generally entitled to develop policies. Doing so assists agencies in discharging their statutory mandates in a coherent and consistent manner. Those who come into contact with agencies also benefit: it ought to be easier to predict the application of a general rule than the exercise of discretion.
From the Court of Appeal of Saskatchewan comes a reminder that the power to develop policies is not unlimited. In particular, policies must be consistent with the statutory provisions they purport to implement.
The sad story in Campbell v Workers’ Compensation Board involved a young engineering student who was engaged as a sailing instructor during the summer. A horrible accident saw him lose a hand. He sought to sue a variety of individuals and entities. These individuals and entities responded that, pursuant to the province’s Workers’Compensation Act, the injury was suffered as a result of a workplace accident and the student’s only recourse was to the Workers’ Compensation Board. The student disagreed, arguing that he was not employed under a “contract of service” and, in the alternative, that the profession of sailing instructor was not subject to the Act.
The alternative argument was based on regulations passed by the Lieutenant Governor in Council in the exercise of a power to enact regulations excluding certain professions from the scope of the Act. Pursuant to the Workers’Compensation Act Exclusion Regulations, “sports professionals, sports instructors, players and coaches” are excluded. A simple argument was presented by the student: I was a sports instructor, which is a profession to which the Act does not apply, and thus I can pursue my claims against the individuals and entities I consider to be responsible for my injury.
However, a large roadblock to this argument had been mounted by the Workers’ Compensation Board, in the form of a policy entitled “To establish guidelines for the coverage of Sports Professionals, Sports Instructors, Players and Coaches”. In relevant part, the policy provided as follows:
1.         All sports players are considered exempt under the Act.
2.         Coaches and instructors of professional sports organizations are considered exempt under the Act.
3.         All other coaches or sports instructors who derive earnings from coaching or instructing are required to register subject to the requirements of the act.  However, coaches or instructors are not covered for injuries sustained while participating as a player/competitor in a sporting event.
Given that the student was not working for a professional body, the Board concluded, he was not part of an excluded profession. An application to the Board for compensation was his only recourse.
The Court of Appeal, reversing the first instance judge, held in favour of the student. In determining whether the policy was permissible, the Court applied a standard of review of reasonableness. Although there was some attraction to characterizing the issue as one of jurisdiction (given that the Board was determining the scope of its powers under the Act), the Court was not persuaded that it ought to apply a standard of correctness: “[to] the extent to which the Board’s interpretation of the regulation appears to step over the line separating legitimate interpretation and imposition of independent policy, this would, in my view, speak to the reasonableness of the Board’s interpretation, rather than to an error of jurisdiction” (para. 56).
Nonetheless, the Board’s interpretation, as expressed in its policy, was unreasonable, for essentially two reasons. First, the introduction of a categorical exclusion of instructors and coaches working for professional organizations ran counter to the plain language of the regulation. Second, by excluding a sector from the scope of the Act, the Board had effectively usurped the role of the Lieutenant Governor in Council. As Smith J.A. explained:
[65]  Thus, in my respectful view, if the Board’s policy statement was intended as an interpretation of s. 3(y) of the Exclusion Regulations it is not an interpretation that can be reasonably supported by the wording of the regulation and the principles of statutory interpretation. To limit the exclusion of “sports instructors and coaches” provided by the regulation to those sports instructors and coaches employed by an organization established with the intent of making a profit from the playing of a sport is a significant departure from the plain grammatical meaning of the exclusion as enacted. In so limiting the interpretation of the exclusion, the Board has in effect substituted its own policy for that of the Lieutenant Governor in Council. In fact, the Board’s confusion of its role as interpreter of the regulation with that of policy maker is evident in its conclusions. All sports players are deemed to be exempt from the Act, whether or not they play for a “professional sports organization” within the limited definition of the policy. Coaches and sports instructors not employed by such an organization are not exempt from the Act unless they are injured while participating as a player/competitor in a sporting event. These fine distinctions and refinements are ultimately far removed from the relatively straight-forward meaning of the regulation.
This conclusion recalls that of the Supreme Court of the United States in National Labor Relations Board v Kentucky River Community Care, where an individual decision (rather than a policy) had the effect of introducing a categorical exclusion which went beyond the scope of the empowering legislation.
One aspect of Smith J.A.’s conclusion is troubling. In applying the standard of review of reasonableness, the Court relied heavily on principles of statutory interpretation. This temptation ought to be avoided. First, as a matter of doctrine, these principles aid a court in determining the correct interpretation of a statutory provision. They do not assist in a determination of reasonableness. To use the principles of statutory interpretation to determine reasonableness risks usurping deference and imposing a standard of correctness. Second, as a matter of policy, to impose the principles of statutory interpretation on administrative decision-makers risks judicializing the administrative process. If administrative decision-makers are to be held to a judicial standard, the advantages of speed and efficiency they enjoy may be eroded. Rather than concentrating on the application of its expertise and flexible procedures to achieve its statutory mandate, the Board and those who appear before it may be bogged down in an expensive morass of legal argument. Ultimately, if the legislature had intended for the courts to determine the correct meaning of the regulations or the Act pursuant to the principles of statutory interpretation, it could have vested the power of decision in them, rather than the Board.
In the Court’s defence, applying a standard of review of reasonableness to an interpretation of statutory provisions (in legislation or a regulation) is a tricky business. A court finds itself saying ‘So far, and no further’ is reasonable. It is inevitable that the principles of statutory interpretation will be relevant to determining whether statutory language has been stretched beyond breaking point. What is impermissible is for a court to use the principles of statutory interpretation as a starting point and then measuring the decision-maker’s conclusion against them. To be fair to the Court of Appeal, the passage quoted above focuses on the stretching of the language and objects of the Act, a stretching for which the Board was apparently unable to offer a cogent rationale. If an explanation could not be offered for a departure from the language and objects of the Act, the Court was right in holding the policy to be unreasonable. 
The Court also concluded that the student’s right to procedural fairness was breached, by virtue of the Board’s refusal to hold an oral hearing. There were facts in dispute between the student and the employer. Before reaching conclusions adverse to the student on the factual dispute, the Board should have heard him out. All the more so because it had earlier made a commitment to holding an oral hearing if certain issues needed to be expanded upon by the parties. Given the legitimate expectation of an oral hearing and the nature of the factual determination, an oral hearing should have been held. Failing to do so was a breach of procedural fairness.

This content has been updated on June 11, 2014 at 09:48.