Regulations and Reasonableness Review
When I originally drafted my paper on “Unresolved Issues after Vavilov“, I left out the standard of review of regulations. Frankly, having discussed the matter in a couple of webinars in the first half of 2020, I thought the matter was settled. The decision of the Divisional Court upholding Ontario’s lockdown regulations in Hudson’s Bay Company ULC v. Ontario (Attorney General), 2020 ONSC 8046 suggests, however, that some doubts persist. Analysis is therefore required.
The reason for doubt is as follows. On the one hand, the question of whether a particular regulation is intra vires its parent statute might be said to require a final, definitive answer from the courts, engaging Vavilov’s rule-of-law justification for correctness review. Just as the constitutionality of a statutory or regulatory provision should not depend on the identity of the tribunal (or of the tribunal member presiding) so too the vires of a regulation should be the same across the board. And there are settled principles concerning judicial review of regulations. In Hudson’s Bay, the Divisional Court stated that “[t]he test for challenging a regulation as ultra vires is well settled” (at para. 37) and went on to enumerate the general principles set out by the Supreme Court in Katz Group Canada Inc. v. Ontario (Health and Long-Term Care), 2013 SCC 64,  3. S.C.R. 810.
On the other hand, reasonableness is the presumptive standard of review when it comes to the merits of administrative action. The most obvious justification for correctness review of regulations — that they relate to jurisdiction — was eliminated by Vavilov. There is, consequently, no equivalence between the vires of regulations and the constitutionality of statutory or regulatory provisions: constitutional questions represent a (narrow) category of cases in which correctness review is appropriate; but the category into which regulations might previously have fitted was expressly abolished by the Supreme Court. This point has been recognized by courts around the country: 1120732 B.C. Ltd. v. Whistler (Resort Municipality), 2020 BCCA 101, at para. 39; G.S.R. Capital Group Inc. v The City of White Rock, 2020 BCSC 489, at para. 71; Innovative Medicines Canada v. Canada (Attorney General), 2020 FC 725, at paras. 65-73; TransAlta Generation Partnership v Regina, 2021 ABQB 37, at para. 46).
Indeed, as Loparco J observed in Morris v Law Society of Alberta (Trust Safety Committee), 2020 ABQB 137, at para. 40, the Supreme Court spoke explicitly to the issue of jurisdiction or vires in Vavilov:
[T]he Supreme Court concluded that the question of whether or not a delegated decision-maker should “be free to determine the scope of its own authority [can] be addressed adequately by applying the framework for conducting reasonableness review.” The Court specifically endorsed the use of reasonableness review standard in cases “where the legislature has delegated broad authority to an administrative decision maker that allows the latter to make regulations in pursuit of the objects of its enabling statute”: Ibid at para 66, citing Green v Law Society of Manitoba, 2017 SCC 20,  1 SCR 360; West Fraser Mills Ltd v British Columbia (Workers’ Compensation Appeal Tribunal), 2018 SCC 22,  1 SCR 635.See similarly Portnov v. Canada (Attorney General), 2019 FC 1648, at para. 23.
Notably, Loparco J applied the reasonableness standard even though the rule at issue touched upon matters relating to solicitor-client privilege (which are subject to correctness review), reasoning that the relevant issue was whether the Law Society had the authority to enact the rule (at para. 45).
I would also observe that key precedents concerning judicial review of regulations were incorporated into the Supreme Court’s framework for reasonableness review, forming part of the legal and factual constraints on the decision-maker whose decision is challenged on judicial review: see e.g. para. 108 on the governing statutory scheme and para. 111 on other statutory or common law limitations.
Reasons are, of course, central to reasonableness review as articulated in Vavilov. Often, however, reasons for regulations will be absent. Nonetheless, it is possible to judicially review the reasonableness of regulations in the absence of reasons. After all, the Supreme Court made it clear in Vavilov (at paras. 136-138) that judicial review could be conducted in the absence of reasons.
Accordingly, in 1120732 B.C. Ltd. v. Whistler (Resort Municipality), 2020 BCCA 101, at para. 88 Tysoe JA held that the enactment of a municipal by-law was reasonable on the basis there were “at least three ways in which the Municipality’s council could have reasonably concluded” it had the necessary statutory authority. Of course, this is jarring to read given the stark contrast it creates with the post-Vavilov jurisprudence emphasizing the importance of responsiveness and justification. Moreover, the application of reasonableness review in a context where municipalities already benefit from a broad and purposive approach to the interpretation of their jurisdiction has the potential to give these bodies a significant degree of regulatory authority, exercisable without detailed reasons (see also O’Shea/Oceanmount Community Association v Town of Gibsons, 2020 BCSC 698, at para. 156, commenting that “significant deference” was due to the municipality on the compatibility of a by-law with an official community plan; TransAlta Generation Partnership v Regina, 2021 ABQB 37, at paras. 53-58).
But the extent of the deference from which the promulgators of regulations will benefit under Vavilov is unclear (see Alexandra Flynn and Nick Falzon). Consider, for example the relatively intensive review undertaken in Minster Enterprises Ltd. v City of Richmond, 2020 BCSC 455, especially at paras. 114-118, where Crerar J rejected the suggestion that the City’s policies could expand the meaning of a bylaw relating to building construction; and in Canadian Natural Resources Limited v Elizabeth Métis Settlement, 2020 ABQB 210. Perhaps the best way to understand these contrasting decisions is that, in some instances, the governing statutory scheme (see Vavilov at paras. 108-110) will give municipalities (and other makers of regulations) a large margin of appreciation but in others municipalities will be more tightly constrained by prescriptive statutory language (see also Champag inc. c. Municipalité de Saint-Roch-de-Richelieu, 2020 QCCA 613, at para. 30, not a case about the authority to promulgate a bylaw but nonetheless an example of a municipality’s discretion being constrained by statutory language; and see generally Innovative Medicines Canada v. Canada (Attorney General), 2020 FC 725, at paras. 65-73).
Finally, it will not invariably be the case that reasons or reasoning are entirely absent in cases involving municipal by-laws; if so, the judicial review will look quite conventional (see e.g. G.S.R. Capital Group Inc. v The City of White Rock, 2020 BCSC 489, at paras. 107-114 and 139).
Ultimately, given that the Supreme Court’s goal was to create a “coherent and unified approach to judicial review” (at para. 88), it is difficult to avoid the conclusion that Vavilovian reasonableness review applies when regulations are challenged.
Lastly, concerns that the promulgators of regulations will receive too much deference under Vavilov should not be overblown. The approach to judicial review of regulations in Katz is extremely deferential. Hudson’s Bay is an example. Rejecting the argument of counsel for the applicant that Vavilov requires more intrusive review (at para. 39), the Divisional Court drew on the general principles set out in Katz to state that the “wisdom or efficacy” of regulations was not something that fell for consideration on judicial review (at para. 71). The challenge to the lockdown regulations thus failed. At the municipal level, the Supreme Court’s decision in Catalyst Paper Corp. v. North Cowichan (District), 2012 SCC 2,  1 SCR 5 involves a similarly deferential approach to judicial review of bylaws. It is difficult to see, therefore, how regulations would be reviewed more deferentially after Vavilov than they were before.
Prior decisions on judicial review of regulations provide valuable guidance on the application of the reasonableness standard. As Jeffrey J. observed in the course of an extremely persuasive analysis in Terrigno v Calgary (City), 2021 ABQB 41, at para. 62, past jurisprudence has not been “ousted”. Rather, it helps to shape the relative tightness or looseness of the factual and legal constraints on the decision-maker. Indeed, both Catalyst and Katz were expressly referenced by the Supreme Court as shaping the factual and legal constraints in a given case, Catalyst as to the governing statutory scheme (at para. 108) and Katz as to applicable common law principles (at para. 111). The irresistible inference is that the teachings found in those cases are to form part of the application of the reasonableness standard rather than to apply as standalone principles.
Moreover, this approach allows for the factual and legal constraints to be tightened in appropriate cases. Rather than applying the hyperdeferential approach of Katz and Catalyst in all cases, the courts can look to other contextual considerations to constrain (or liberate) decision-makers: the available evidence, arguments submitted prior to the adoption of the regulation, past regulatory practice, and the harsh consequences of a regulation on a particular group might be relevant in charting the scope of a decision-maker’s freedom of action in any given case. This is a much more flexible approach to judicial review of regulations, which meshes well with the articulation of contextual reasonableness review in Vavilov.
See also the excellent analysis in John Mark Keyes, “Judicial Review of Delegated Legislation: The Long and Winding Road to Vavilov” (and I cannot help but point out that John Mark appeared as counsel for the applicant in Terrigno).
This content has been updated on January 29, 2021 at 14:52.