Opening Up Government: Portnov v. Canada (Attorney General), 2021 FCA 171

In Canada, it has historically been very difficult to shed light on the decision-making processes of the highest levels of government. Cabinet decision-making is protected by conventions of confidentiality, public-interest immunity and, at the federal level, the regime under the Canada Evidence Act. Even when constitutional principles, such as judicial independence, are in play, disclosure of cabinet-level documents is not guaranteed. In principle, judicial review of cabinet decision-making is possible (inasmuch as a cabinet decision alters one’s legal rights and obligations). But when the decisions are locked in a black box, it is difficult to apply the principles of reasonableness and procedural fairness.

There is no equivalent in Canadian law to the ‘duty of candour’ developed by the courts of England and Wales. There, once permission has been granted to bring a judicial review claim (on demonstration of an arguable ground of judicial review with a reasonable prospect of success), the respondent is obliged to place its cards ‘face up on the table’. A stunning recent example is provided by the Case of Prorogations, where the government released for judicial scrutiny correspondence from within the Prime Minister’s Office about whether to advise the Queen to prorogue Parliament. Canada has no equivalent doctrine.

At least, not yet. The Federal Court of Appeal, twice now in recent months, has sought to prise open the black box of cabinet decision-making, assembling doctrinal scaffolding to permit judicial oversight of high-level governmental decision-making. Note also that this construction effort relies on raw materials provided by decisions of the same court, especially relating to the discharge by the Crown of its duty to consult and accommodate Canada’s First Nations.

Portnov v. Canada (Attorney General), 2021 FCA 171 is the most recent of these decisions. P sought judicial review of a regulation freezing certain of his assets, made under s. 4 of the Freezing Assets of Corrupt Foreign Officials Act, S.C. 2011, c. 10. The regulation was first made by the federal cabinet (the Governor-in-Council) in 2014 and targeted 18 individuals, including P. The life of the regulation was extended in 2019 under s. 6 and although two individuals were removed, P was not. He thus sought to quash the 2019 regulations and the extension order.

P was ultimately unsuccessful. But the way in which Stratas JA disposed of the appeal will have significant consequences for future cases in which review is sought of cabinet decisions.

The Attorney General argued that the courts should apply what I have described as a “hyperdeferential” approach to judicial review of regulations. Per Katz Group Canada Inc. v. Ontario (Health and Long‑Term Care)2013 SCC 64, [2013] 3 S.C.R. 810, regulations are presumptively valid and may only be quashed where “irrelevant”, “extraneous” or “completely unrelated” to the objectives of the governing statute.

Stratas JA accepted that regulations are presumptively valid and, indeed, that they should be interpreted so as they accord with their authorizing provision, but he rejected the hyperdeferential approach to the review of the substance of regulations. For him, Katz has been “overtaken” by developments in the law, especially the Supreme Court’s rearticulation of administrative law in Vavilov (at para. 20).

First, the hyperdeferential approach had its origins in a much earlier era, where judicial review of legislative decisions was available only on the basis of “some rare and significant error” of a jurisdictional nature (at para. 21). But we do not draw such sharp distinctions between legislative and non-legislative decisions any more:

In substance, regulations, like administrative decisions and orders, are nothing more than binding legal instruments that administrative officials decide to make—in other words, they are the product of administrative decision-making. This suggests that the proper framework for reviewing regulations must be the one we use to review the substance of administrative decision-making (at para. 23)

Second, the Supreme Court set out a “sweeping and comprehensive” framework for judicial review in Vavilov (at para. 25). There is no “special rule for regulations” (at para. 26), as the Supreme Court has instructed Canadian courts “to conduct reasonableness review of all administrative decision-making unless one of three exceptions leading to correctness review applies” (at para. 27). None of these exceptions was present here (see para. 17).

Accordingly, Vavilov supplies the analytical framework for judicial review of regulations made by the federal cabinet.

P argued that the federal cabinet had failed to comply with the statutory preconditions for making and extending the regulations: his view was that the preconditions had to be satisfied for an extension of the regulations in 2019 as they had to be to make the regulations in the first place in 2014 (at para. 30). The question, therefore, was whether the cabinet had interpreted the statute reasonably.

Stratas JA held that “reasoned explanations” could be found in the text of the relevant legal instruments (the statute and regulations) and the Regulatory Impact Analysis (at para. 34). The cabinet’s view that regulations could be extended where doing so is necessary and consistent with the statute was reasonable:

The Governor in Council referred to “[i]nformation received by the Government of Canada [that] supports an extension of the Regulations”, the need for “additional time for Ukraine to complete its criminal investigations and make actionable mutual legal assistance requests to Canada”, the need to “ensure that misappropriated assets held by officials of the former government are frozen” so “foreign persons may be held accountable”, and the objective of furthering the “accountability, rule of law, and democracy in Ukraine”: Regulatory Impact Analysis Statement, (2019) C. Gaz. II, Vol. 153, No. 6 at p. 865. Implicit in this is a finding, quite sustainable, that section 6 aims to advance these purposes.

Requiring all of the preconditions under section 4 of the Act to be met before regulations can be extended would frustrate these purposes. Take, for example, the precondition that “there is internal turmoil, or an uncertain political situation, in the foreign state” (para. 4(2)(b)). While there is turmoil and uncertainty in the foreign state, the foreign state may be unable to take measures to repatriate wrongly misappropriated property. Only when stability and certainty return to the foreign state can it finally take the measures necessary to repatriate misappropriated property. Mr. Portnov’s interpretation of section 6 would prevent that from happening, thereby putting misappropriated property beyond the reach of the foreign state and frustrating the purposes of the Act.

The text of section 6 also supports the Governor in Council’s interpretation. Section 6 gives the Governor in Council discretion to extend a regulation for any period specified and further gives the Governor in Council the power to extend it more than once. If Parliament intended that a new request from the foreign state be required for each extension, it would have expressly included that requirement as it has done under legislative regimes with analogous sunset provisions…

Further, if the preconditions in section 4 are read into section 6, then section 6 is rendered unnecessary. If extending a regulation requires the same steps as making the regulation in the first place, each extension becomes a fresh regulation, and there is no need for the sort of independent statutory power we see in section 6 to extend it (at paras. 36-37, 39-40).

And the extension, as applied to P, was reasonable, having regard to the deference due to the “factually suffused determination” drawing on cabinet’s expertise in foreign affairs (at para. 44) and the fact that P had unsuccessfully challenged the reasonableness of the 2014 regulations (at para. 45) but also to the requirement, given the effect of the asset freezing on P, that cabinet have “some defensible reason” to maintain the restrictions (at para. 44):

In the circumstances of this case, the express explanations given for the decision to extend the 2014 Regulations (summarized at paragraph 36 above), viewed in light of the legislation and the record, are adequate and do not suffer from any fatal, overriding flaws. They provide sufficient intelligibility, justification and transparency—particularly on the statutory interpretation issue that Mr. Portnov made the main focus of his judicial review. The standards in Vavilov have been met (at para. 55).

The record in this case was somewhat thin (which was not in P’s favour). Stratas JA suggested that P might have sought to bulk it up:

In his notice of application in the Federal Court and his notice of appeal in this Court, Mr. Portnov could have pleaded grounds that might have supported a plausible claim for disclosure of information. He did not do so. As well, Mr. Portnov requested information under Rule 317 and the Attorney General objected to disclosing it under Rule 318, but Mr. Portnov did not challenge the objection. Even if Mr. Portnov were ultimately unsuccessful in challenging the Attorney General’s objection—for example, because of some valid assertion of a privilege—as a tactical matter the Governor in Council might still have had to disclose more information: see Canadian Council for Refugees at paras. 111-112. Finally, there were other ways by which Mr. Portnov or others on his behalf could have accessed information relied upon by the Governor in Council in making its decision and could have filed it in the judicial review proceedings without undermining important interests in confidentiality: see Canadian Council for Refugees at paras. 98-122 (at paras. 50-51).

Although, then, P was unsuccessful, the basic contours of judicial review of regulations can be found in the decision of the Federal Court of Appeal: courts will review the reasons provided against the context provided by the statutory and regulatory text (as well as any supporting documentation, such as a Regulatory Impact Assessment), the effects on individuals and information disclosed (or not) under Rule 317.

Portnov must be read with the decision in Canada (Citizenship and Immigration) v. Canadian Council for Refugees, 2021 FCA 72 (which I noted here, but those comments now bear repeating). As a matter of general principle, “Courts are alert to attempts by public authorities and administrators to immunize their decision-making by withholding documents and information necessary for judicial review or by failing to give explanations and rationales for decision-making” (at para. 106).

Given this general principle, claims of privilege over documents which the applicant seeks to include in the record are carefully scrutinized (at para. 109). And where claims of privilege are successful, it is possible for the reviewing court to draw an adverse inference from the respondent’s reluctance to put information before the court (at para. 111) or to strike the decision down as unreasonable for want of reasoning (at para. 112).

Faced with this general principle and the potential for it to be robustly applied, a sensible respondent might take the following course of action:

Public authorities and administrative decision-makers can sometimes prepare and disclose a summary of how they went about their task, what they took into account and why they acted the way they did, providing enough information to allow for an effective and meaningful judicial review. In law, the provision of such a summary in these circumstances does not waive privilege. For example, in Coldwater First Nation v. Canada (Attorney General)2020 FCA 34, 444 D.L.R. (4th) 298, a certificate under section 39 of the Canada Evidence Act—the most drastic privilege on the books—was issued to render secret the Governor in Council’s deliberations and the sensitive documents and information it relied upon. But the Governor in Council provided a summary of its decision-making in the preambles to its Order in Council approving an infrastructure project. This was sufficient in the circumstances to make the judicial review effective, meaningful and fair (at para. 114).

And if a respondent does not take this sensible course? The Federal Courts (and, to the extent their procedural rules allow for it, any other superior court of record) have flexible mechanisms at their disposal:

[O]n motion by either side to the judicial review, the Court, using its powers under the Federal Courts Rules, its plenary powers, or both, can appoint the equivalent of an amicus who can receive unredacted or largely unredacted copies of privileged material and make submissions in the absence of the applicants on the challengers’ behalf in a closed hearing. This is analogous to the use of a special advocate acting for the challengers in a national security judicial review: Charkaoui v. Canada (Citizenship and Immigration)2008 SCC 38, [2008] 2 S.C.R. 326.

Sometimes measures short of that suffice. Ex parte hearings may be necessary and useful in some circumstances. In some cases, counsel for the applicants on judicial review can be permitted to receive confidential information on their undertaking to keep it confidential or a more restrictive undertaking not even to divulge it to their clients.

The measures to which a court can resort are limited only by its creativity and the obligation to afford procedural fairness to the highest extent possible. Many variations of the measures discussed above can be imagined: see, e.g., the creative order made for access to highly confidential Cabinet materials in the Charter challenge in Health Services and Support-Facilities Subsector Bargaining Association v. British Columbia2002 BCSC 1509, 8 B.C.L.R. (4th) 281, particularly Schedule 1 thereto…(at paras. 118-120).

There are, therefore, varied ways of prising open the black box of cabinet decision-making, even where regulations are at issue.

In summary, then, Portnov establishes that judicial review of regulations made by cabinet is not hyperdeferential, sets out the contextual factors which will bear on a judicial assessment of the reasonableness of regulations, notes the importance of reasoned explanations even for high-level, policy suffused government decisions and re-emphasizes the tools at the disposal of courts and commentators to prise open the black box of cabinet decision-making (and, for that matter, other secretive processes too: see also herehere and here).

It is also worth mentioning another recent Federal Court of Appeal decision in this regard, Lukács v. Canada (Transportation Agency), 2021 FCA 141. L sought to challenge the penalty imposed by the Agency in respect of an incident in which air passengers were left sweltering in an airplane on the tarmac in the middle of summer. The airline brought a motion seeking to dismiss L’s claim for want of standing. The Federal Court granted the motion, but the Federal Court of Appeal, mindful no doubt of the possibility that L could make an application under Rule 317, allowed L’s appeal on the basis that it was too early to make a determination on standing:

In this case, the evidentiary record remains unsettled. Dr. Lukács has sought further material from the Agency in connection with the underlying application for judicial review. The Agency objected to providing some of the material sought and has brought a motion seeking to confirm that its production of material is complete. Dr. Lukács contests the Agency’s motion, which remains outstanding. If Dr. Lukács receives the material he seeks, it may impact the arguments that he raises on the merits of the application for judicial review and on the standing issue. This is not a case where the Court has “sufficient material before it” as contemplated in Finlay (at paras. 37-38).

It will be interesting to see whether courts and counsel seek to breathe similar vitality into the judicial review procedure rules elsewhere in Canada. Perhaps a common law duty of candour, Canada-style, is not far off.

This content has been updated on October 25, 2021 at 19:24.