In two cases, the SCC said its 2019 Vavilov decision is the default standard of review
The reasonableness standard that the Supreme Court of Canada established in its 2019 Vavilov decision is the presumptive standard of review when evaluating whether government regulations are lawful, the SCC ruled Friday.
The court added that some of the principles from its 2013 Katz Group decision, which are more deferential than Vavilov to the authority of regulations, still apply to such evaluations. But in a departure from Katz, the court said government regulations no longer need to be “irrelevant,” “extraneous,” or “completely unrelated” to the statutes that enabled them for courts to determine that they are invalid.
According to Andrew Bernstein, a partner at Torys LLP, the SCC’s stance on Friday brings clarity to how courts will evaluate challenges to regulations. “Since Vavilov, the question has persisted: are we still using [Katz’s] hyper deferential standard?” Bernstein says.
Over the past 11 years, it has been “very difficult” to persuade a court to overturn regulations, Bernstein says.
“It’s not a small thing for the SCC to reverse itself in a short period of time like this,” he says, adding that now, “that central principle [of deference] is gone. What we’ve got left instead is Vavilov reasonableness, which is a standard we all understand.”
The SCC’s ruling was delivered via two unanimous decisions on Friday, both authored by Justice Suzanne Côté.
The first case, Auer v. Auer, concerns a family law dispute between a divorced couple with a child. Roland Auer challenged child support guidelines established by the Governor in Council, which outline the amount of child support that must be paid in the event of a divorce. Arguing he should not have to pay a greater share of child-related costs than his ex-spouse, Auer alleged that the GIC did not have the authority under the Canada Divorce Act to set such guidelines.
The Court of King’s Bench dismissed Auer’s application for judicial review, ruling that the Governor of Council did have the authority under the Divorce Act to make the child support guidelines.
Under the SCC’s decision in Canada (Minister of Citizenship and Immigration) v. Vavilov, courts assessing whether there is authority to make subordinate legislation like guidelines or regulations should use a standard of reasonableness by default. The high court defined a reasonable decision as one that makes sense given the law and facts. However, that decision does not have to be the only correct answer.
The Court of King’s Bench agreed the Vavilov standard should be the default when evaluating challenges to subordinate legislation, and that the review should also be informed by the principles outlined the SCC’s decision in Katz Group Canada Inc. v. Ontario (Health and Long-Term Care), which calls for more deference to subordinate legislation.
The Alberta Court of Appeal unanimously dismissed Auer’s appeal but was divided on which standard of review applied.
The SCC also dismissed Auer’s challenge, concluding that the Vavilov reasonableness standard “presumptively applies when reviewing the vires of subordinate legislation.” The court added that some of the principles from Katz continue to inform such reviews, including the rule that “subordinate legislation benefits from a presumption of validity.”
However, departing from Katz, the SCC found that “for subordinate legislation to be found ultra vires on the basis that it is inconsistent with the purpose of the enabling statute, it no longer needs to be ‘irrelevant,’ ‘extraneous’ or ‘completely unrelated’ to that statutory purpose.
“Continuing to maintain this threshold from Katz Group would be inconsistent with the robust reasonableness review detailed in Vavilov and would undermine Vavilov’s promise of simplicity, predictability and coherence,” the court said.
The SCC noted that under Vavilov, the court said there were exceptional scenarios where the legislature has indicated the reasonableness standard does not apply, and another standard applies instead. In Auer’s case, however, such an exception does not apply.
The court also clarified that the applicable standard of review does not depend on “the identity of the decision maker,” since “regulations ‘derive their validity from the statute which creates the power, and not from the executive body by which they are made.’”
Under the reasonableness standard, the GIC’s child support guidelines fall “squarely within the scope of the authority delegated to the GIC under the Divorce Act,” the court said.
In a statement on Friday, Laura Warner, a partner at Jensen Shawa Solomon Duguid Hawkes LLP who represented Roland Auer, said the SCC’s decision “affirmed and hopefully clarified some key principles.
“This important clarification should calm the debate surrounding the standard of review, and allow Canadians to focus instead on how it applies to the merits of any particular regulations under review,” Warner said.
Warner raised concerns, however, that the court’s “attempt to integrate Katz with Vavilov will likely give rise to ongoing questions.” While some aspects of that integration are not controversial, Warner argued the court’s affirmation of the Katz principle that regulations benefit from a presumption of validity may be problematic.
One aspect of that presumption, which calls for “an interpretive approach that reconciles the subordinate legislation with its enabling statute,” could either cause confusion or “higher deference for certain types of delegated decisions or decision makers.”
“If the latter, then it is inconsistent with Vavilov’s insistence that reasonableness is a single standard and the SCC’s affirmation in Auer that the identity of the decision maker is not a reason for special deference,” Warner said.
The Department of Justice said in a statement, “Children need financial support from their parents – and they have a legal right to it. Both parents have a duty to support their children. When parents separate or divorce, they are encouraged to try to agree on the amount of child support, where possible.”
The DOJ added, “While the Government of Canada does not take any position on the private family law dispute of the parties in the case, it is our position – and the court agreed – that the federal guidelines are valid regulations.”
Counsel for Aysel Auer, Roland’s ex-spouse, declined to comment.
The second case, TransAlta Generation Partnership v. Alberta, involves the owner of coal-fired electric power generation facilities, which agreed with the Alberta government to cease coal-fired emissions before the end of 2030. In exchange, the government agreed to give payments to the company for 14 years to compensate for losses resulting from the move.
In 2017, Alberta’s Minister of Municipal Affairs set guidelines for assessing the value of so-called linear property. The new guidelines effectively deprived TransAlta’s coal-fired facilities from claiming a more favourable tax position because their lifespan decreased as a result of TransAlta’s agreement with the government.
TransAlta challenged the guidelines, arguing that the minister had exceeded his authority under Alberta’s Municipal Government Act because the guidelines were discriminatory and inconsistent with the statute. The Court of King’s Bench and the Alberta Court of Appeal both dismissed TransAlta’s arguments.
The SCC largely agreed with the lower courts. As in Auer, the SCC held that the reasonableness standard set in Vavilov presumptively applies when assessing the authority of regulations and that “no exception to the presumption of reasonableness review applies in this case.” The court also affirmed that most of the principles from Katz still apply to such reviews.
However, the SCC disagreed with the lower courts’ finding that the minister’s guidelines did not engage in administrative discrimination against TransAlta. The guidelines “discriminate against TransAlta and other parties to off-coal agreements by singling them out as being ineligible to claim additional depreciation on the basis of the off-coal agreements and to have the assessor consider that claim,” the court said.
The court nonetheless dismissed TransAlta’s appeal, stating that the Municipal Government Act, “by necessary implication, grants the minister the authority to discriminate in the manner that he did.”
Counsel for TransAlta declined to comment. Counsel for the government did not respond to a request for comment.
