Deference or More Deference? – Reviewing Regulations after Vavilov

by Derek Wu, winner of the 2024 Paul Smith Memorial Award.

1. Introduction

Regulations have a significant role in the growth of the executive branch of government. In nearly all modern legislation, Canadian legislatures confer law-making powers onto administrative bodies who have the expertise to address the complexities and intricacies of issues that arise in modern society.¹ Through this delegation, the executive is empowered to make rules with general applicability. These include municipal bylaws, law society rules, regulations enacted by tribunals, and Orders in Council. Because administrative bodies are delegated a function that constitutionally lies within the legislative branch, they must act within the bounds of the authority granted. The judiciary polices the executive to ensure that these bounds are not passed. However, there is still much uncertainty about how courts should approach reviewing regulations.

Much of the debate around the proper way to review regulations has revolved around the tensions between the respect for the legislature’s intent and the responsibility of the judiciary to uphold the rule of law. Courts and academics have argued over where the balance is to be struck, developing and evolving principles of review to determine the degree of deference to be afforded to the executive. The most recent development was brought by the new framework for substantive review set out in Canada (Citizenship and Immigration) v Vavilov². Because Vavilov’s framework arose from an adjudicative administrative decision, and not a legislative one, there is debate on the framework’s applicability to the review of legislative decisions (including the review of regulations).

This paper will argue that the framework set out in Vavilov should apply to the review of regulations, and that the existing principles of reviewing regulations could be incorporated into a Vavilov reasonableness review. First, the case law around reviewing delegated legislation will be reviewed, and general themes and principles will be identified. Then, arguments for and against applying the Vavilov framework to review of regulations are evaluated. An interpretation of Vavilov in the context of regulations will be constructed, and an explanation on how Vavilov could apply to the review of regulations will be given. Finally, this paper will address challenges to the application of Vavilov when there is a lack of reasons.

2. The Pre-Vavilov Maze

2.1 Early Foundations of Deference to Legislative Intent and the Limits to Deference

The review of delegated legislation in Canada has largely been informed by the principle of deference to the administrative body and the principles that limit deference. The caselaw builds on these principles, with the main issues being how deferential the courts should be in reviewing delegated legislation (i.e., what the limits to deference are).

These principles can be traced back to review of municipal bylaws, especially Lord Russell’s judgment in Kruse v Johnson³. He rooted his deferential approach to reviewing a municipality’s bylaws in respecting legislative intent. The legislature delegated to municipal councils the power to exercise their own judgment to enact bylaws that “seemed proper for the good rule and government in their own localities”.⁴ The “checks and safeguards” against the unnecessary and unreasonable exercise of these powers mean that the bylaws should be ‘benevolently’ interpreted.⁵ This rationale was echoed by the Supreme Court of Canada (“SCC”) in Thorne’s Hardware v The Queen⁶ and later by Justice McLachlin (as she then was) in her dissent in Shell Canada Products v Vancouver (City)⁷.

However, Lord Russell also acknowledged that there are limits to the powers granted to municipalities. Bylaws cannot be unreasonable. If they are, they exceed the authority given to the municipalities and are ultra vires.⁸ This includes bylaws that are partial and unequal, are manifestly unjust, disclose bad faith, or involve oppressive or gratuitous interference with the rights of those subject to the bylaw.⁹ Demonstrating that the delegated legislation was not intended by the legislature eventually boils down to a question of interpreting the scope of the authority granted. Later cases expanded this determination to two aspects:

1. vires or jurisdiction – whether the enabling statute delegated that particular type of legislative power (the ends) and
2. the reasonable exercise of delegated authority – what constitutes as a reasonable exercise of the power granted (the means).¹⁰

Questions of jurisdiction were historically reviewable under the correctness standard, while questions of the reasonable exercise of delegated authority were reviewable under the standard of patent unreasonableness.¹¹ This is because statutory interpretation is a necessary step in delineating the scope of the administrative body’s jurisdiction. Administrative bodies were held to not be more competent and to not have more expertise than the courts in answering questions regarding the scope of its jurisdiction.¹² Therefore, questions of jurisdiction were a limit to the deference given to administrative bodies.

Courts have held that the exercise of granted authority must be compatible with the purpose and objects of the enabling statute.¹³ In Shell, the majority was reluctant to hold that a broad or general grant of power can imply the authorization of an exercise of power.¹⁴ Concerned with ambiguity or doubt as to whether the exercise of power was authorized, the majority held that an exercise of general grants of power must be consistent with purpose of the statute, which were municipal purposes in this case. The majority had narrowly constructed municipal purposes to not include “the imposition of a boycott based on matters external the interests of the citizens of the municipality.”¹⁵ However, since Shell, the courts have moved away from this type of narrow interpretation of statutes, and the broad and purposive approach has been embraced.¹⁶

2.2 Balancing Legislative Intent with Rule of Law

Dunsmuir abolished the standard of patent unreasonableness,¹⁷ changing the way in which questions on the reasonable exercise of authority are answered. The exercise of the grant of authority referred to in Rascal Trucking can no longer be reviewed for patent unreasonableness. After Dunsmuir, the courts grappled with whether the standards of review under Dunsmuir applied to delegated legislation. At the same time, the courts extended the principles of judicial review to types of delegated legislation beyond municipal bylaws, including law society rules and regulations.

2.2.1 The Shift to a Highly Deferential Approach

Two cases decided shortly after Dunsmuir set the stage for the two approaches which have caused much of the debate and uncertainty we currently see. Both are deferential to the administrative body, even though they take two different approaches.

The first case, Catalyst Paper Corp v North Cowichan (District)¹⁸, applied Dunsmuir’s contextual framework to substantive review. It involved a challenge to a municipality’s property tax bylaw that discriminated based on land use, taxing industrial property significantly more. The SCC reviewed the bylaw under reasonableness.¹⁹ Because the discretion granted by the enabling statute is not unfettered, the issue was what reasonableness required of the bylaw.²⁰ The SCC held that the bylaw must reflect the broad discretion granted to municipalities by provincial legislators, and the courts must respect the responsibility of elected officials to the electorate.²¹ The bylaw was therefore valid, since the enabling statute granted the municipality “broad and virtually unfettered legislative discretion” to tax property with respect to each of the classes of property.²²

The SCC essentially folded deference and the broad and purposive approach to interpretation of the enabling statute into the contextual analysis under Dunsmuir. Under Dunsmuir, the focus of reasonableness is “the existence of justification, transparency and intelligibility within the decision-making process”.²³ Therefore, the limits on deference are shaped by an administrative body’s ability to provide a justification on how their use of legislative powers is consistent with their enabling statute.

The second case, Katz Group Canada v Ontario (Health and Long-Term Care)²⁴, applied a vires review to the regulations enacted by the Executive Officer of the Ministry of Health and Long-Term Care. The regulations sought to prevent pharmacies from controlling manufacturers who sell generic drugs in their own name but do not fabricate them by banning the sale of private label drugs. The vires review focused on the consistency of the regulation with the objective and scope of the administrative decision maker’s enabling statute – this approach afforded much more deference to the administrative body. ²⁵ Regulations are presumed to be valid, and rebutting the presumption required the regulation to be “irrelevant”, “extraneous”, or “completely unrelated” to the purpose of the statute.²⁶ Regulations are also construed in a manner which reconciles it with the enabling statute, if possible.²⁷ Neither standards of review nor Dunsmuir were mentioned in the decision. The SCC held that the regulations were consistent with the enabling statute. The legislative intent of the enabling statute was to combat high drug prices, and the purpose of the regulations was to prevent another mechanism for circumventing the statute.²⁸ This review does not involve assessing the policy merits of regulations.²⁹ Later in Canadian National Railway Co v Canada (AG)³⁰, Rothstein J indicated that standards of review under Dunsmuir apply only to adjudicative actions of the Governor in Council and that the vires review, as articulated by Katz, applies to regulations.

The Katz approach is more deferential than the Catalyst Paper approach. With the delegated legislation to be presumed valid, there is less of an onus on the administrative decision maker to demonstrate consistency with the purposes and objectives of the enabling statute.

At this point, the caselaw also could have retained a distinction between the different forms of delegated legislation. That is, regulations would be reviewed under the Katz principles while municipal bylaws would be reviewed under principles articulated in Catalyst Paper. However, later cases began to merge the principles from both lines of cases and to apply this merged approach to a variety of delegated legislation.

2.2.2 Unifying Principles from Both Approaches

Green v Law Society of Manitoba³¹ applied both Catalyst Paper and Katz. Although the majority and the dissent disagreed on the application of reasonableness review to the facts, the SCC unanimously applied reasonableness review to a law society’s rules.³² The SCC extended much of the reasoning in Catalyst Paper to justify the application of the Dunsmuir framework.³³ However, citing Katz, the SCC noted that for the law society’s rules to be reasonable, they must conform to the rationale of the statutory regime.³⁴

The majority in West Fraser Mills v BC (Workers’ Compensation Appeal Tribunal)³⁵ applied the approach in Green to regulations. The Workers’ Compensation Board (“WCB”) regulations imposed a duty on owners of a forestry operation to ensure that all activities are planned and conducted in accordance with the regulation and safe work practices. The focus was on whether the regulation was a “reasonable exercise” of the administrative body’s delegated authority.³⁶ Citing Katz, the majority further explained that in determining a regulation’s reasonableness, reviewing courts must determine whether there is inconsistency with the enabling statute or the scope of the statutory mandate to the point where it is “irrelevant”, “extraneous” or “completely unrelated”.³⁷ Reviewing courts should also take the broad and purposive approach to statutory interpretation to aim to reconcile the regulation with the enabling statute.³⁸ The enabling statute was found to have given the WCB broad powers to make regulations it considered “necessary or advisable” in relation to workplace health and safety.³⁹ Therefore, the regulations were a reasonable exercise of the delegated authority.

The dissent applied correctness review.⁴⁰ They characterized the issue to be a question of true jurisdiction – whether the WCB had the authority to adopt the regulation, and not whether the WCB had exercised its authority reasonably.⁴¹ Green and Catalyst Paper were distinguished on this basis as they were concerned with the reasonable exercise of authority. The dissent’s reasons for echoes the concerns raised in earlier cases about the capacity of administrative bodies to interpret enabling statues to delineate the scope of their jurisdiction. The dissent also pointed out that Katz never explicitly said it derogated from the standards of review framework.⁴² The analysis in Katz was characterized as “effectively [engaging] in a de novo analysis of the statutory authority for the regulations”.⁴³ The dissent effectively characterized the analysis in Katz as being one of jurisdiction and as being a correctness review. Although the dissent’s interpretation of the case law detracted from the great amount of deference afforded in the review of delegated legislation, the dissent’s analysis nevertheless merges the Dunsmuir framework with the principles set out in Katz.

West Fraser was the last SCC case on reviewing delegated legislation before Vavilov. At this point, a number of observations can be made about the approach to reviewing delegated legislation. First, regardless of the approach taken, the case law after Dunsmuir solidified respect for legislative intent, giving rise to more deferential approaches. The principles of parliamentary supremacy and democracy play an important role in justifying this deference. For certain administrative bodies with elected representatives, it has been important to respect that responsibility to the electorate.⁴⁴ For all administrative bodies, it has been important to respect the broad authority granted by the enabling statute.⁴⁵

Second, the approach to reviewing delegated legislation appears to have two aspects: a component that is focused on jurisdiction, which is reviewed on correctness, and a component that is focused on the reasonable exercise of authority, which is reviewed on reasonableness.⁴⁶ As the dissent in West Fraser points out, the SCC in Katz appears to give minimal consideration of the Governor in Council’s interpretation of the statute. Once the Order in Council was held to be intra vires, the Governor in Council was afforded great deference in the means it chose to achieve the statutory objective. However, West Fraser and Green appear to afford much less deference in this respect. In both cases, the subject matter of the delegated legislation fell within the jurisdiction of the administrative body. The manner in which the administrative body chose to regulate that area of jurisdiction was challenged.

Third, in rolling Katz into the Dunsmuir framework, Green and West Fraser gives Katz a role in setting the principles of interpretation of delegated legislation. Katz does not dictate the process of the analysis but informs of the requirements for delegated legislation to be valid. The reasonableness of delegated legislation is determined by whether or not its purpose consistent with the purpose of the enabling statute. However, the process of a reviewing court in constructing the purpose of the enabling statute and the purpose of the delegated legislation appears less deferential. Very little consideration is given to the interpretation by the administrative bodies.

3. Developments After Vavilov: The Waters Remain Muddied

3.1 Vavilov’s Framework

The SCC in Vavilov attempted to clean up the disarray created by the framework on standard of review. Vavilov replaced the Dunsmuir framework as the main authority in two key aspects of judicial review: determining the standard of review and determining the requirements of reasonableness review.

Vavilov replaced Dunsmuir’s contextual approach to setting the standard of review with the presumption of reasonableness review.⁴⁷ The presumption is rebutted in two general cases: where required by legislative intent and where required by the rule of law. The legislature can rebut the presumption of reasonableness by prescribing the standard of review or by providing a statutory appeal mechanism.⁴⁸ The rule of law requires correctness review for constitutional questions, general questions of law of central importance to the legal system, and questions regarding jurisdictional boundaries between administrative bodies.⁴⁹ The correctness category of true jurisdictional questions is abolished, given the difficulties courts have with distinguishing between such questions from other questions related to an enabling statute’s interpretation.⁵⁰ The correctness categories are not exhaustive. For example, concurrent first instance jurisdiction was recently added.⁵¹

Vavilov’s framework created a more robust form of reasonableness review. Vavilov takes a reasons-first approach, focusing on the decision actually made by the decision maker. What is required by reasonableness review is highly contextual to account for the diversity of administrative decisions, although reasonableness remains a single standard of review – the degree of scrutiny will not be affected by the context.⁵² The context accounts for the administrative setting in which the reasons were given.⁵³ The decision must also be justified based on internally coherent reasoning and in light of legal and factual constraints.⁵⁴ These constraints are especially important where no reasons are required and given; this is mostly the case with delegated legislation.⁵⁵ The Vavilovian approach further supports a culture of justification, which is a key tenement to the functional approach to the rule of law.⁵⁶ This approach to the rule of law seems to have prevailed in the Canadian legal system.⁵⁷

3.2 Uncertainties Left After Vavilov

Although Vavilov clarifies the framework used in standards of review, there was no explicit direction on how to approach the review of delegated legislation. Vavilov arose out of the judicial review of an adjudicative decision, but the SCC signaled the intent for Vavilov’s framework to also apply to legislative decisions of administrative bodies.⁵⁸

In determining the applicability of Vavilov to the review of delegated legislation, the courts have taken one of two stances: Vavilov has overtaken previous caselaw on vires review, or Vavilov applies to only certain types of delegated legislation (namely, municipal bylaws and law society rules) while the vires review under Katz still applies to regulations. Coming out of this judicial debate is a plethora of academic debate and commentary.

3.2.1 Cases in Favour of Applying Vavilov

In 1120732 BC Ltd v Whistler (Resort Municipality)⁵⁹, one of the earliest cases heard after Vavilov, the British Columbia Court of Appeal (“BCCA”) applied Vavilov to the review of municipal zoning bylaws. The BCCA treated the review of the zoning bylaw as question of jurisdiction, which was no longer reviewed under correctness, but under reasonableness.⁶⁰ The approach to reasonableness was not for the court to interpret the enabling statute and determine whether the bylaw fell within the authority granted by the statute, but for the court to look at the record as a whole to discern the interpretation of the statute by the decision maker and to determine whether that interpretation was reasonable.⁶¹ If there is only one reasonable interpretation of the enabling statute, the result may be the same as using the correctness review.⁶² After surveying the caselaw on the interpretation of the enacting statute, the BCCA held that it was reasonable for the municipality to conclude that the enabling statute permitted the type of zoning bylaws adopted, so long as they were not unreasonably discriminatory.⁶³ The Saskatchewan Court of King’s Bench took a very similar approach to reviewing a water rates bylaw.⁶⁴

In Portnov v Canada (AG)⁶⁵, the Federal Court of Appeal (“FCA”) took a similar approach in reviewing a regulation enacted by the Governor in Council. The regulation extended the freezing of the assets of Ukrainian officials who were involved in corruption in Ukraine. But the FCA went further than the BCCA to explicitly interpret Vavilov to have overtaken the principles in Katz. The FCA held that rebutting the presumption of the validity of delegated legislation by showing that they were “irrelevant”, “extraneous” or “completely unrelated” to the objectives of the governing statute is too narrow by Vavilovian standards.⁶⁶ The Katz case was characterized as one falling under the category of “true questions of jurisdiction”.⁶⁷ Green and West Fraser were interpreted by the FCA to have applied reasonableness and not Katz.⁶⁸ The FCA further noted that the universality of the application of the Katz rule is inconsistent with the contextual approach to reasonableness in Vavilov.⁶⁹

In conducting the reasonableness review, the FCA started with a similar approach to the BCCA by considering contextual factors to determine whether the Governor in Council had reasonably interpreted its enabling statute.⁷⁰ The FCA then looked at the text of the regulations to determine that the Governor in Council had interpreted the enabling statute to only require the consideration of the factors listed before enacting the regulation and not the satisfaction of each of the factors.⁷¹ Contextual factors were also considered, including: the requirement by the statute that the regulations be consistent with its purpose, the impact upon the people affected by the regulations, and the fact that the challenge to the initial freezing of the assets had failed.⁷² Furthermore, the FCA was reluctant to hold that the reasons provided by the Governor in Council were insufficient (the regulations only refer to “[i]nformation received by the Government of Canada”).⁷³ Doing so would obligate the Governor in Council to provide a “complete”, “comprehensive”, and “public” explanation, which would be inappropriate, given the confidentiality and foreign affairs considerations.⁷⁴ Given evidence that was available, the FCA concluded that these circumstances justified the Governor in Council’s interpretation of the statute.

The FCA affirmed the approach in Portnov in Innovative Medicines Canada v Canada (AG)⁷⁵. The FCA further explained that there may be cases where the regulation is not “irrelevant”, “extraneous”, or “completely unrelated” to the statutory purpose, but could not reasonably be supported by established principles from statutory interpretation of the enabling statute.⁷⁶ Therefore, the Vavilov framework is a better balance between the separation of powers and accountability.

The FCA also emphasized the need to move away from focusing too much on the type of administrative decision (e.g., legislative or adjudicative) and the need to focus on the fact that “[e]ach is the end-product of a substantive administrative decision made by an administrative decision-maker”.⁷⁷ Given that administrative decisions all are just “legally binding instruments”, the general substantive review framework should apply to the review of delegated legislation.⁷⁸

However, in one of the most recent cases, Le v British Columbia (AG)⁷⁹, the BCCA was split on the how reasonableness was to be applied, but the BCCA affirmed the application of Vavilov as the guiding framework for the review of regulations. The majority’s focus was on the consistency of the regulations with the enabling statute’s purpose, a return to the considerations in Katz.⁸⁰ However, the minority’s approach was more similar to that of Whistler, Portnov, and Innovative Medicines, focusing on applicable common law principles or precedents as the legal and factual constraints.⁸¹

The line of cases supporting the application of Vavilov to the review of delegated legislation has also received much academic support. The primary argument in support of this approach is the breadth of the scope of Vavilov’s intended application including: the discussion of precedents reviewing both adjudicative and legislative decisions⁸² and the universal nature of all administrative decisions.⁸³ Other arguments stem from the redundancy or insufficiency of solely using the Katz analysis.⁸⁴

3.2.2 Cases Against Applying Vavilov

Almost all the cases that refuse to apply Vavilov to the review of delegated legislation involve regulations. In one of the early cases, Hudson’s Bay Company ULC v Ontario (AG)⁸⁵, the Ontario Superior Court of Justice (“ONSC”) did not find the SCC’s citation to Katz in Vavilov as sufficient to justify displacing the application of Katz in the review of regulations (in this case, COVID restrictions).⁸⁶ The ONSC followed this approach in later decisions.⁸⁷

However, the courts began to provide doctrinal reasons for keeping the two approaches separate in Auer v Auer⁸⁸. In this case, the challenged regulations set amounts for child support from divorced parents. The Alberta Court of Appeal (“ABCA”) applied Katz and not Vavilov on the basis that regulations are legislative in nature and can be distinguished from administrative decisions covered by Vavilov. The Governor in Council is only constrained by the enabling statute.⁸⁹ The legal and factual constraints applicable in the review of other types of administrative decisions are not relevant; the review of regulations is focused on the objective or purpose of the enabling statute. Therefore, the ABCA reasoned that the analysis in Katz is a distinct branch of administrative law. The ABCA drew a distinction between Catalyst Paper, Green, and West Fraser – bylaws, rules and regulations made by administrative tribunals are immune from parliamentary scrutiny.⁹⁰ However, some regulations, such as executive legislation, is enacted after a consultation process that involves parliamentary review.

The ABCA also saw vires and jurisdiction as distinct.⁹¹ While the use of the term “jurisdiction” is not always clear, vires is specific to the review of delegated legislation, which does not historically attract procedural protections. The ABCA noted that the legislature delegated a law-making power to the Governor in Council, and courts should respect this choice of institutional design.⁹² This will maintain the integrity of the separation of powers.⁹³

The ABCA identified multiple differences between regulations and administrative decisions. The legal and factual constraints on decision makers in Vavilov do not apply to the enactment of regulations.⁹⁴ The process of enacting regulations and making an administrative decision are very different; the former sets out the details of a public policy in statute, and the latter often has applications and hearings involved.⁹⁵ There are no “facts” involved in the passing of regulations. They are passed against a broad social and economic factual background, which very different from the “facts” in the Vavilov sense.⁹⁶ Furthermore, regulations do not apply the law;they create law.⁹⁷ Because of these differences, the ABCA concluded that the Vavilov framework is incompatible with vires review.

ABCA reaffirmed the approach in Auer in a case called TransAlta Generation Partnership v Alberta (Minister of Municipal Affairs)⁹⁸. The ABCA also clarified that while Katz is a deferential approach, it is not the same as reasonableness, as Katz requires the reviewing court to take “a posture of restraint”.⁹⁹

In AB v Northwest Territories (Minister of Education, Culture and Employment)¹⁰⁰; however, the Northwest Territories Court of Appeal (“NWTCA”) took a slightly different approach. In this case, the decision of the Governor in Council to not approve the enrollment of children in francophone schools was challenged. The NWTCA reviewed the decision based off of Vavilov’s reasonableness standard; however, distinguished the review of the decision from the review of the directive pursuant to which the decision was made.¹⁰¹ The decision was an exercise of discretion and, therefore, was within the ambit of Vavilov. However, a challenge of the directive’s validity would be done using the vires review in Katz or done constitutionally.

The stance from this line of cases has received some academic support. John Evans has identified three main arguments for Vavilov being a poor fit for the review of delegated legislation:¹⁰²

1. The reasons first approach is difficult to apply to delegated legislation.
2. Reasonableness expands the scope of vires beyond just interpreting the enabling statute.
3. A de novo review will be required to answer the questions of law related to the grant of authority and whether the delegated legislation fell within the scope of the grant. This could strain the concept that reasonableness is a single standard.

Other academics have raised concerns on applying Vavilov to the review of delegated legislation, namely that the robust view of reasonableness leads to a review that is more intrusive than necessary.¹⁰³ Administrative bodies will also be required to provide greater justifications for the decisions they make. Resources may be diverted from focusing on the “substantive business of regulating” to providing these additional justifications.

3.2.3 Current Issues

The main point of contention remains the same: how much deference is to be owed to the administrative body? The two lines of cases on the role of Vavilov in the context of reviewing delegated legislation has done little to bring clarity to the answer to this question. In Sul v St Andres (Municipality)¹⁰⁴, the Manitoba Court of Appeal took note of the division within the caselaw and refrained from deciding on a side. Academics have also noted that the ambiguities in Vavilov will lead to uncertainty of the case’s role in the context of delegated legislation.¹⁰⁵

Furthermore, the SCC cites to Katz’s principles with approval in recent cases.¹⁰⁶ The SCC upheld the need for regulations to be consistent with the enabling statute’s purpose and objectives, and the presumption of validity from which these regulations benefit. The robust conception of reasonableness is a less deferential standard than the analysis used in Katz, creating a potential conflict in how the cases are to be applied.

As a result, recent caselaw demonstrates that Vavilov left behind two main issues:

1. Does the Vavilovian framework apply to the review of regulations?
2. If so, how are regulations to be reviewed under Vavilov? What role should Katz play, if any?

The SCC has already taken note of these issues, granting leave to appeal for both Auer and TransAlta (“Auer appeal” and “TransAlta appeal”, respectively).¹⁰⁷ The SCC’s decision on these appeals will hopefully settle both issues. While both the appellant and the respondents in the Auer appeal submitted arguments in favour of using the Vavilovian framework, the parties in the TransAlta appeal were in a disagreement on the applicable principles.¹⁰⁸ These arguments will be considered more in-depth in the next section.

4. Vavilov’s Role in the Review of Delegated Legislation

Vavilov applies to delegated legislation, and reasonableness review is flexible enough to incorporate Katz as a consideration in the context of delegated legislation and to account for the different kinds of delegated legislation.

4.1 Vavilov Does Apply to the Review of Delegated Legislation

Three main considerations indicate that Vavilov applies to the review of delegated legislation: the balance between the rule of law and legislative intent, the nature of the different types of delegated legislation, and the wording and the intent of the decision in Vavilov. These considerations will be discussed in relation to the arguments raised by counsel in the Auer and TransAlta appeals.

4.1.1 Rule of Law Considerations

The first consideration is the balance between legislative intent and maintaining rule of law. The functional approach to the rule of law has largely prevailed in Canada.¹⁰⁹ In particular, there is a strong culture of justification in terms of rationality and fairness.¹¹⁰ Judicial review, therefore, should focus on the justifications of the decisions of administrative bodies. The focus on reasons in the Vavilovian framework on reasonableness review is in line with the functionalist approach to the rule of law.

The robust conception of reasonableness is a less deferential standard than the analysis used in Katz. Under the approach in Katz, if there is any plausible connection between the delegated legislation and the statutory objective, the threshold will not be met.¹¹¹ While having a connection to the statutory objective is required, it is insufficient to justify the enactment of the subordinate legislation. Regardless of how broad the objective is, the subordinate legislation will need to be able to further the objective, otherwise rules that are only tangentially related to the enabling statute’s purpose will be upheld. Such an outcome may result in ambiguity in the scope of broad grants of power, a concern of the majority in Shell. Such an outcome may also lead to arbitrary enactments of delegated legislation, undermining the rule of law.¹¹² Furthermore, a more stringent standard of justification is needed for the courts to properly safeguard the legislature’s legislative powers. Delegation transfers constitutionally sanctioned lawmaking power from one branch to another.¹¹³ The executive needs to demonstrate that the exercise of this legislative power is within the confines of the authorized scope to ensure legitimacy.

This proposition is further supported by the fact that the caselaw right before Vavilov indicates that both the means and the ends need to be justified to validate delegated legislation.¹¹⁴ While Katz does address the ends in which the delegated legislation achieves, it does not address the means. The context in which the delegated legislation was enacted can shed light on whether there were improper means or purposes. Therefore, it is through Vavilov’s framework that sufficient justification be demonstrated.

Older decisions raised the concern that administrative bodies do not have any more competency or expertise in deciding certain issues such as interpreting their scope of authority.¹¹⁵ The Vavilovian framework’s inclusion of statutory interpretation as a constraint alleviates this concern.  While reasonableness review requires deference to administrative bodies for the determination of questions of law, such as interpreting enabling statutes, the judiciary still retains its core responsibility of interpreting legislation.¹¹⁶ The executive and legislative branches’ perspectives of legality are ultimately different from that of the judiciary.¹¹⁷ The administrative decision maker’s concept of legality is therefore not substitutable with a reviewing court’s.¹¹⁸ The power to interpret enabling statues and validate delegated legislation therefore ultimately lies with the judiciary and not the administrative decision maker; the determinations of validity by the executive and by the legislatures are insufficient. This point was briefly discussed in the Appellant’s Factum in the Auer appeal. Since the validity of delegated legislation is sourced from the enabling statute, the limits imposed by the enabling statute are fundamental to determining a regulation’s lawfulness.¹¹⁹ Vavilov allows the judiciary to carry out its role in reviewing the validity of delegated legislation by enforcing these limits through reasonableness review.

Conversely, there is a concern that because the robust view of reasonableness leads to a more intrusive form of reasonableness review, administrative bodies may be unjustly burdened to provide greater justifications for the decisions they make.¹²⁰ However, Vavilov provides for the flexibility to accommodate the different forms that justification can be articulated as a result of the diversity of administrative decisions. Regardless of whether the decision is “pure law” or “high policy”, the context will constrain what will be reasonable.¹²¹ For example, the flexibility of reasonableness under Vavilov affords the administrative body the opportunity to justify the enactment through the context in which the delegated legislation was enacted. This is also respect for the institutional design of the varying forms of administrative bodies and decisions.

Another concern is that Vavilov’s intrudes too much into policy, which falls within the sphere of the legislative and executive’s power.¹²² This concern was raised in the Respondent’s Factum in the TransAlta appeal.¹²³ However, the functionalist conception of the rule of law does not require such a sharp divide. Canadian courts have often engaged in policy discussions and changing the direction of major policy issues.¹²⁴ This is not to say that the separation of powers is irrelevant, but that the boundaries between the different branches of government are not clear cut. The distinction between legality and policy, while exists in theory, is very difficult to identify in practice.¹²⁵ Therefore, courts will necessarily consider the decision’s underlying policy objectives.¹²⁶ If a court is reviewing the vires of delegated legislation, some policies may be outside the scope of the enacting administrative body’s grant of authority. By considering the entire context in which the delegated legislation was enacted, the reviewing courts are able to navigate the complexities that rise from the entanglement between legality and policy to fulfill their responsibility in reviewing administrative decisions.

4.1.2 Types of Delegated Legislation

The second consideration is the differences in the types of delegated legislation. The ABCA and NWTCA in Auer, TransAlta, and AB suggest that regulations are considered “law”. While the Courts are correct in pointing out that regulations have a legislative nature, it equates regulations to primary legislation (i.e., statutes). The ABCA describes statutes as establishing the broad parameters of public policy and regulations as fleshing out the details.¹²⁷ The fact that regulations may change the law and may not necessarily conform with prior law is irrelevant.¹²⁸ The ABCA further notes that regulations are enacted through “traditional legislative methods” and after “a consultation process culminating in parliamentary review”.¹²⁹

The ABCA overlook the fact that the enactment of regulations is very much like the enactment of other forms of delegated legislation. All are applications of an enabling statute, which is primary legislation; the power to enact the regulations was granted by primary legislation. Equating regulations to primary legislation would create a new way of enacting primary legislation that is different from the traditional parliamentary processes every statute goes through.

Furthermore, this characterization of regulations would differentiate delegated legislation based on the identity of the enactor. The key difference between how regulations and other forms of delegated legislation is enacted is the identity of the enactor – the enactor of regulations is often the Governor in Council, whose members so happen to also be members of the legislature. However, it is important to not conflate the two roles, otherwise the separation of powers between the executive and the legislators may become muddled. The legislators, when enacting the enabling statute, may very well have delegated the authority on the matter to another administrative body (such as a municipality), but for whatever reason chose to delegate this authority to the Governor in Council.

While regulations can be subject to parliamentary scrutiny, parliamentary scrutiny is different from judicial review. The legislature may have its own, and valid, perspective and conception of the proper scope and nature of the delegated authority; however, this perspective is often different from the judiciary’s perspective of statutory interpretation.¹³⁰ Parliamentary scrutiny also has limitations on being an effective check on the power delegated to the executive.¹³¹

Additionally, while regulations, like many other acts of the government, can be challenged constitutionally,¹³² this does not necessarily foreclose the possibility of regulations being judicial review. A constitutionally valid regulation or order in council can still be unreasonable given the enabling statute and its relationship with other sources of law such as other statutes, common law principles, and international law.

There is no substantive difference between regulations and other forms of delegated legislation. They are just another form of legal instruments used by administrative officials to make decisions.¹³³ Therefore, the approach to reviewing delegated legislation should be the same, regardless of its form.

4.1.3 The Interpretation of Vavilov

The final consideration is whether the SCC intended for the Vavilovian framework to be applied to the review of delegated legislation. As previously mentioned, Vavilov does not extensively discuss its implications in the context of delegated legislation.¹³⁴ However, Vavilov uses broad language, and the references to cases reviewing delegated legislation cannot go unnoticed.

The SCC’s decision begins by acknowledging the diversity of administrative decisions, noting the “countless public bodies and regulatory regimes”.¹³⁵ The SCC then uses specific issues arising from various types of administrative decisions to exemplify the different components to its framework. For example, when justifying the abolishment of the correctness category of jurisdictional questions, the SCC cites to both adjudicative decisions and legislative decisions to illustrate the difficulties with jurisdiction.¹³⁶ When the SCC discussed the legal and factual constraints of reasonableness, it explicitly indicates that delegated legislation is a case when formal reasons have not been provided.¹³⁷ The use of examples from a variety of exercises of delegated powers suggests that “administrative decisions” includes both adjudicative and legislative actions of administrative bodies. Therefore, the broad language used in Vavilov is a strong indication of the intent for the framework to include its application to delegated legislation.

A de novo review will not be required to answer questions of law related to the enabling statute.¹³⁸ These questions are akin to true questions of jurisdiction. The SCC reasoned that reasonableness review still enables courts “to fulfill their constitutional duty to ensure that administrative bodies have acted within the scope of their lawful authority”.¹³⁹

Furthermore, the SCC’s goal in Vavilov was to clarify and to simplify the law on judicial review.¹⁴⁰ This role has been upheld as fundamentally important by the SCC.¹⁴¹ This goal was also emphasized in the Appellant’s Factum in the Auer appeal. The appellants argued that the ABCA’s hyper-differential approach will reverse “the comprehensive and predictable course set by Vavilov.”¹⁴² The Vavilovian framework provides a “straightforward framework” to assess the logic of delegated legislation.¹⁴³ The Vavilovian framework is indeed the optimal starting point for the review of delegated legislation. The guiding principles of internal coherence and respect for the relevant legal and factual constraints create a simple yet flexible framework to assess the lawfulness of delegated legislation. Therefore, to apply a non-Vavilovian approach will contradict the SCC’s goal of cleaning up the law on judicial review.

4.2 Applying a Robust Reasonableness Review to Delegated Legislation

With the application of Vavilov comes the issue of what becomes of Katz. Vavilov’s framework on reasonableness review can be interpreted to coincide with Katz. An approach similar to that used in West Fraser and Green of incorporating Katz principles in the standard of review analysis can allow Katz and Vavilov to complement each other.

4.2.1 Katz Can Inform the Analysis of the Legal and Factual Context of Delegated Legislation

As discussed above, Vavilov is a good starting point for the review of delegated legislation, but the sole application of Vavilov is insufficient. While it provides a good amount of general guidance on conducting a reasonableness review, much of it applies only to adjudicative decisions. The Katz principles are able to provide the additional guidance that is necessary for the review of legislative decisions. Therefore, reconciling Katz and Vavilov is required for the Vavilovian reasonableness framework to work effectively. The Appellant Factum in the Auer appeal briefly mentions the need for reconciliation, although it does not detail how this can be done.¹⁴⁴

An analysis of the general principles in Vavilov that do apply to legislative decisions will indicate that there is a role that the principles from Katz can play. Aside from the contextual approach to determining the standard of review, Vavilov does not explicitly displace any precedents; it provides that a reviewing court should first look to Vavilov, then to past cases.¹⁴⁵ Past cases will often continue to provide insight into how reasonableness is to be applied; however, some cases that contradict principles set out in Vavilov will have less precedential value.¹⁴⁶ This is only a limit on the extent to which past cases are used, but should not be taken to mean that Vavilov intended to displace precedent altogether. Since Vavilov has not explicitly ousted vires review for delegated legislation, Katz still holds precedential value. The SCC, in recent cases, cites to Katz’s principles with approval along side Vavilov.¹⁴⁷ Vavilov provides some guidance to Katz’s role in the judicial review of delegated legislation: it cites to Katz under “other statutory or common law” constraints on the decision maker.¹⁴⁸ Therefore, Katz sets the baseline that, the regulation must be consistent with its purpose in order for it to be reasonable. However, as seen in Whistler, the constellation of case law related to other constraints are also important in assessing the reasonableness of delegated legislation. Katz is only just one necessary consideration in this context. Katz also provides guidance for reviewing courts on the interpretation of delegated legislation. Delegated legislation must be interpreted in a way that tries to reconcile the regulation with the enabling statute. This is a relevant principle for assessing the reasonableness of the decision maker’s interpretation of the subordinate legislation and enabling statute.

Therefore, contrary to the reasoning in Portnov and Innovative Medicines, the Katz framework can work together with Vavilov. Katz provides very important principles applicable to the judicial review of delegated legislation and provides the context to give reasonableness its colour.

In support of this interpretation is the way jurisdiction has folded into the reasonableness review for adjudicative decisions. The distinction between a vires review of delegated legislation and a review related to the interpretation of the enabling statute (i.e., review of the reasonable exercise of the statutory grant) is just as difficult to see as the distinction between jurisdiction and issues of interpreting the enabling statute in the review of adjudicative decisions, as illustrated in West Fraser. By the application of Vavilov, the two aspects of reviewing delegated legislation, whether the enabling statute delegated that particular type of legislative power and what constitutes as a reasonable exercise of the power granted, will be folded into reasonableness review. This eliminates the unnecessary complexity that may arise by retaining vires as a separate analysis.¹⁴⁹

Furthermore, the Respondent’s Factum for the Attorney General of Canada in the Auer appeal convincingly explains the consistencies between the Katz principles and the Vavilovian framework:¹⁵⁰

1. Katz’s requirement of consistency of the regulation with the objective and scope of the enabling statute is consistent with Vavilov’s governing statutory scheme constraint.
2. The presumption of validity reaffirms the principle that the onus of proving that a regulation is unreasonable lies with the applicant.
3. The broad and purposive approach to statutory interpretation adopted in Katz is consistent with the “modern principle” of interpretation in Vavilov.
4. Katz’s requirement that courts refrain from assessing the policy merits of regulations reflects the policy-laden nature of regulations. This nature informs the scope of the legal and factual constraints discussed in Vavilov.

Therefore, contrary to the Respondent’s contention in the TransAlta appeal, the Vavilov framework is suitable for the review of delegated legislation.¹⁵¹

4.2.2 Potential Practical and Evidentiary Challenges with Current Caselaw

Often, there will not be reasons provided for the enactment of regulations, not even a record.¹⁵² The secrecy behind the enactment of certain types of regulations may impede future reviewing courts’ ability to properly conduct a Vavilovian reasonableness review. Portnov illustrates this challenge. In the context of confidentiality, international relations, and respect for treaties/arrangements with foreign governments, the FCA held that it would be inappropriate to translate Vavilov’s requirement of a reasoned explanation into an obligation on the executive to provide a “complete, comprehensive, public explanation” for the regulations.¹⁵³ Otherwise, the reason for entrusting the administrator this legislative jurisdiction would be undermined.¹⁵⁴ Reviewing courts are only able to assess the reasonableness of the outcome of the decision using “surrounding documents and circumstances and whatever bits of reasoning or rationale… it has before it”.¹⁵⁵ However, Vavilov also provides that in such a situation, the focus should be on the outcome of the decision rather than the reasoning process.¹⁵⁶ The FCA’s analysis only focuses on the bits of evidence of the Governor in Council’s reasoning process and affords very little attention on the outcome itself. Therefore, the FCA’s approach is less deferential than the Katz approach, but more deferential than Vavilov’s requirements.

While such an approach affords sufficient deference and respect to the legislative intent of the enabling statute, it raises the question of whether the reviewing court has properly discharged its duty of supervising administrative bodies. In these types of situations, reviewing courts should recalibrate its analysis on whether the outcome of the decision was reasonable. While the reasonableness review takes on a different form, it is not less robust than if there were an abundant record.¹⁵⁷ I take this to mean that when there an abundant record of reasons is given, the analysis gives roughly equal weight to both reasons and outcome. However, when the record is looking scant, more weight is shifted to the outcome of the decision. The reviewing court should review the outcome in light of the legal and factual context submitted before it.

Additionally, a potential fear of creating these types of highly specific, contextual exceptions is that it can jeopardize the stability promised by Vavilov. The SCC in Mason v Canada (Citizenship and Immigration)¹⁵⁸ was also fearful of this concern when considering whether to create a new correctness exception. However, in this case, the exceptions would go the other way to a more deferential standard, which is not even provided by Vavilov’s framework.¹⁵⁹ This approach risks effectively bringing back the contextual approach to the standard of review, which Vavilov explicitly displaces.

5. Conclusion

The framework under Vavilov that integrates the principles established in Katz fits the review of delegated legislation. The principles in Katz provide the robust view of reasonableness with the starting point of the analysis. However, this must be supplemented by the other considerations relevant to the context of the enactment of the delegated legislation. This framework provides the necessary balance between the intent of the legislature to delegate legislative powers to the executive and the need for the judiciary to uphold the rule of law through ensuring that the executive does not exceed the powers granted. While there may be challenges when there is a lack of a record to discern reasons, Vavilov is flexible enough to ensure the robustness of the review does not change. The weight of the analysis of the reviewing court in such circumstances must shift to the outcome of the legislative decision.

Endnotes