Cabinet and the Standard of Review Analysis: Canadian National Railway Co v Canada

Since the passage of the Railway Act, 1868, the Governor in Council (“Cabinet”) has played an important administrative role in areas of the economy regulated by federal legislation. Currently, Cabinet functions as an appeal body with authority to vary or rescind decisions made by administrative tribunals established under a cluster of statutes including the Telecommunications Act, SC 1993, c 38, the Canada Oil and Gas Operations Act, RSC, 1985, c O-7 and the Canada Transportation Act, SC 1996, c 10 [CTA].

Given the Supreme Court of Canada’s (“SCC”) traditional deference to Cabinet decisions (see e.g. Attorney General of Canada v Inuit Tapirisat, [1980] 2 SCR 735 [Inuit Tapirisat]), lower courts have grappled with the issue of determining the appropriate mechanism for the review of its administrative functions. Does the standard of review analysis set out in Dunsmuir v New Brunswick, [2008] 1 SCR 190 [Dunsmuir] apply? If so, what is the applicable standard of review?

On 23 May 2014, the SCC squarely answered these questions in Canadian National Railway Co v Canada (Attorney General), [2014] 2 SCR 135 [CN Rail]. The unanimous decision applied the Dunsmuir framework and determined that reasonableness review applies when Cabinet interprets the regulatory legislation it administers. This comment will provide a brief summary of the analysis used by Justice Rothstein in coming to these conclusions.


The Canadian National Railway Company (“CN”) and Peace Rive Coal Inc. (“PRC”) entered into a confidential contract for the shipment of coal from the PRC facility in Trend, British Columbia to terminals in Price Rupert, British Columbia. The contract incorporated CN’s existing fuel surcharge, Tariff 7402. After the negotiations were concluded and the contract signed, CN introduced a new fuel surcharge, Tariff 7403, at a more beneficial rate. PRC asked CN to apply the new rate to its traffic. CN refused.

PRC applied to the Canadian Transportation Agency (“Agency”), an administrative tribunal set up under the CTA, for an order establishing a reasonable fuel surcharge under section 120.1 of the Act. The Agency dismissed the application on the basis that the contract was confidential and hence outside of its authority.

Six months later, a petition was submitted to Cabinet on PRC’s behalf by the Canadian Industrial Transportation Association requesting the Agency’s decision be rescinded. Cabinet accepted the request and rescinded the order on the grounds that a confidential contract had no bearing on the reasonableness of a fuel surcharge that applies to more than one shipper.

The Dunsmuir Framework 

Justice Rothstein’s incorporation of Cabinet decisions into the Dunsmuir framework can be divided into two steps. First, he differentiated CN Rail from the SCC’s past decisions on judicial review of Cabinet orders:

This case is not about whether a regulation made by the Governor in Council was intra vires its authority. Unlike cases involving challenges to the vires of regulations, such as Katz Group Canada Inc v Ontario (Health and Long-Term Care), [2013] 3 SCR 810 [Katz]…the Governor in Council does not act in a legislative capacity when it exercises its authority under…the CTA to deal with a decision or order of the Agency… (para 51).

In making this distinction, Justice Rothstein confines Katz to its particular facts and limits the authority Inuit Tapirisat to questions of procedural fairness.

Second, Justice Rothstein drew three conclusions from Public Mobile Inc v Canada (Attorney General), [2011] 3 FCR 344 and Catalyst Paper Corp v North Cowichan (District), [2012] 1 SCR 5 that make the application of Dunsmuir appear like a foregone conclusion. First, when Cabinet exercises its statutory authority under regulatory legislation it engages in its own substantive adjudication of the issues before it. Second, when making substantive decisions Cabinet is subject to judicial review. Third, Dunsmuir is not limited to judicial review of tribunal decisions and has been applied to a variety of administrative bodies.

According to Justice Rothstein, “the precedents instruct that the Dunsmuir framework applies to administrative decision-makers generally and not just to administrative tribunals. The Dunsmuir framework thus is applicable to adjudicative decisions of the Governor in Council” (para 54).

Standard of Review

Justice Rothstein determined that the question before Cabinet, i.e. whether a party to a confidential contract can bring a complaint under the CTA, was one of law. Applying Dunsmuir, he found that reasonableness was the appropriate standard of review. This was based on two considerations. First, existing federal economic regulatory legislation, including the CTA, shows an intention by Parliament to recognize Cabinet has particular familiarity with these matters. Second, as indicated at the outset of the comment, Cabinet has a historic experience with economic regulation.

Justice Rothstein then held that this presumption of reasonableness was not rebutted, as it did not fall within one of the established categories to which correctness review was required. Specifically, it was not a question of central importance to the legal system as a whole or a question of true jurisdiction.

Unlike the SCC’s decision in McLean v British Columbia (Securities Commission), [2013] 3 SCR 895, where the court appeared frustrated with the continued use of “fashionable” correctness review by lower courts but did not provide a clear articulation of criteria, Justice Rothstein gives a helpful analysis of why the question before Cabinet did not fall into a question of central importance to the legal system as a whole:

The question at issue centres on the interpretation…of the CTA. The question is particular to this specific regulatory regime as it involves confidential contracts as provided for under the CTA and the availability of a complaint-based mechanism that is limited to shippers that meet the statutory conditions…This question does not have precedential value outside of issues arising under this statutory scheme (para 60).

Obiter and Conclusion

A final point of interest with CN Rail is its obiter discussion of Inuit Tapirisat. Justice Rothstein makes it clear that he is uncomfortable with the holding of case, which stated that a duty of procedural fairness did not apply to Cabinet decisions. He suggests it will likely be overruled: “Estey J’s conclusion…may not represent the current view of how natural justice operates in an administrative context, the issue of procedural fairness owed by the Governor in Council is not before this Court” (para 39).

Although this procedural question remains unanswered, CN Rail is an effective decision. It convincingly incorporates Cabinet’s administrative functions into the Dunsmuir framework and lays out a checklist for lower courts when determining whether a question of law is of central importance to the legal system as a whole, all within 69 short paragraphs.

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