The claimant in this case, Catalyst Paper Corporation, makes paper—as opposed to catalysts, of course—and it does so with the help of industrial mills. The particular mill of interest is situated in the pristine District of North Cowichan on the southeastern shore of Vancouver Island. It is often said that Vancouver Island has it all—and, until recently, Catalyst Paper would have most likely agreed. When Catalyst Paper first set up shop, the island was packed with trees of the paper-producing variety and, being an island, it sat nice and close to the transportation-friendly ocean. The ocean and trees haven’t changed much since then (see your local environmentalist for a different opinion), but plenty else has changed in North Cowichan over the past few decades.

The biggest change was demographic, as a flurry of new residents sought serenity in the District. In turn, residential property values shot skywards—the value of Catalyst Paper’s industrial property, however, remained relatively stable. Instead of increasing residential property taxes to levels that would accurately reflect these new residential property values, the District’s Municipal Council decided to keep residential taxes low and jack up the tax rate on industrial properties. By 2007, residential properties accounted for roughly 90% of the District’s total property value, but contributed only 40% of the total property tax revenue. Until it was repealed in 1984, a provincial regulation had provided that the ratio between residential and industrial property tax rates could not surpass 1:3. This ratio recently hit 1:20 in North Cowichan, placing it among the highest in British Columbia.

Catalyst Paper began lobbying for tax reform back in 2003. The District Council, in response, actually acknowledged the issue and agreed to gradually reduce the tax rates on major industrial properties. Unsatisfied, however, by the Council’s “gradual” commitment, Catalyst Paper turned to the courts. Herein lies the central issue facing the Supreme Court: to what extent do courts have the power to review—and, by extension, set aside—municipal taxation bylaws? On the one hand, Catalyst Paper argues that courts absolutely do have the power to set aside “unreasonable” city bylaws [see Dunsmuir]. On the other hand, the District contends that a court’s power to overturn a municipal tax bylaw is so narrow that it cannot be used to overturn something as simple a disproportionate tax burden.

McLachlin CJ agrees with Catalyst Paper in the sense that “reasonableness,” as opposed to “correctness,” constitutes the appropriate standard of judicial review, but she sides with the District as to the limited scope of such a review. In assessing the reasonableness of a municipal bylaw, McLachlin CJ writes that a court may consider both the “process” and the “content” of that bylaw.

Process: Catalyst Paper believes that the Council’s decision-making process was flawed because the city failed to provide formal reasons for its decision. In rejecting this argument, McLachlin CJ states quite clearly that Canada’s municipal councils are in no way required to provide formal reasons for its bylaws. “In any event,” she notes, “the trial judge found [that] the reasons for the bylaw at issue here were clear to everyone.” Indeed, the trial judge found that the Council did, in fact, consider and weigh a number of relevant factors in making its decision.

Content: Without question, the economic consequences of this bylaw are pointed and harsh. Though McLachlin CJ admits the severity of these consequences, she believes that the Council was entitled to consider a wide range of factors in making its decision. In particular, the Council took into account the impact that high property taxes would have on its fixed-income residents. Rather than ignoring Catalyst Paper’s complaints entirely, the Council actually set out a plan to move gradually towards a more equitable distribution of the tax burden. Ultimately, McLachlin believes that the bylaw favours residential property owners, but not unreasonably so.

A final thought for those disgruntled, socially conscious Torontonians out there rubbing their winter-cycling gloves together in anticipation of one day challenging a Ford Nation bylaw in court: this might be a good decision to read.

It should be noted that the facts and result of this case raise some poignant issues about the potential use of immigration law to achieve criminal law aims. I will not address this issue. Instead, I will restrict my focus to the topic of standard of review. Specifically at issue in Khosa is how legislated standards of review should be interpreted in light of the common law principles laid out in Dunsmuir.

Result

Binnie J., writing for the majority, states at para. 19:

Generally speaking, most if not all judicial review statutes are drafted against the background of the common law of judicial review. Even the more comprehensive among them, such as the British Columbia Administrative Tribunals Act, S.B.C. 2004, c. 45, can only sensibly be interpreted in the common law context because, for example, it provides in s. 58(2)(a) that “a finding of fact or law or an exercise of discretion by the tribunal in respect of a matter over which it has exclusive jurisdiction under a privative clause must not be interfered with unless it is patently unreasonable”. The expression “patently unreasonable” did not spring unassisted from the mind of the legislator. It was obviously intended to be understood in the context of the common law jurisprudence, although a number of indicia of patent unreasonableness are given in s. 58(3). Despite Dunsmuir, “patent unreasonableness” will live on in British Columbia, but the content of the expression, and the precise degree of deference it commands in the diverse circumstances of a large provincial administration, will necessarily continue to be calibrated according to general principles of administrative law. … [Emphasis in original]

The provision in question in this specific case was s. 18.1(4) of the Federal Courts Act, R.S.C. 1985, c. F-7, which sets out the grounds of review under which relief can be granted. Of particular interest was the extent to which each of the subsections spelled out a standard of review. S. 18.1(4) reads:

(4) The Federal Court may grant relief under subsection (3) if it is satisfied that the federal board, commission or other tribunal
(a) acted without jurisdiction, acted beyond its jurisdiction or refused to exercise its jurisdiction;
(b) failed to observe a principle of natural justice, procedural fairness or other procedure that it was required by law to observe;
(c) erred in law in making a decision or an order, whether or not the error appears on the face of the record;
(d) based its decision or order on an erroneous finding of fact that it made in a perverse or capricious manner or without regard for the material before it;
(e) acted, or failed to act, by reason of fraud or perjured evidence; or
(f) acted in any other way that was contrary to law.

At para. 28, the majority begins,

It cannot have been Parliament’s intent to create by s. 18.1 of the Federal Courts Act a single, rigid Procrustean standard of decontextualized review for all “federal board[s], commission[s] or other tribunal[s]”, an expression which is defined (in s. 2) to include generally all federal administrative decision makers. A flexible and contextual approach to s. 18.1 obviates the need for Parliament to set customized standards of review for each and every federal decision maker.

After analyzing each of the subsections, Binnie J. concluded that the subheadings are grounds of review without any implication on the standard of review to be used. At para. 50-51, he explained:

[50] … In some jurisdictions (as in British Columbia), the legislature has moved closer to a form of codification than has Parliament in the Federal Courts Act. Most jurisdictions in Canada seem to favour a legislative approach that explicitly identifies the grounds for review but not the standard of review[footnote omitted]. …

[51] As stated at the outset, a legislature has the power to specify a standard of review, as held in [R. v. ]Owen, [2003 SCC 33], if it manifests a clear intention to do so. However, where the legislative language permits, the courts (a) will not interpret grounds of review as standards of review, (b) will apply Dunsmuir principles to determine the appropriate approach to judicial review in a particular situation, and (c) will presume the existence of a discretion to grant or withhold relief based on the Dunsmuir teaching of restraint in judicial intervention in administrative matters (as well as other factors such as an applicant’s delay, failure to exhaust adequate alternate remedies, mootness, prematurity, bad faith and so forth). [emphasis in original]

The Dissent

Rothstein J. disagreed with this assessment. In his view, the standard of review analysis should return to its roots, with a privative clause being the primary indicator of legislative intent to defer to expert decision makers. Absent such clear indication from the legislature, Rothstein J. posited that the implication is that no deference is owing.

With regard to s. 18.1(4) of the Federal Courts Act, Rothstein J. found that subsection (d) is a clear and unambiguous indication that parliament intended to show great deference to the original decision on that ground of review. Bearing this in mind, Rothstein J. took issue with the majority’s finding, arguing that “there is no justification for imposing a duplicative common law analysis where the statute expressly provides for the standard of review.” (para. 119) Furthermore, Rothstein J. explained, the remaining subheadings do not provide any indication that deference should be shown, and thus a Dunsmuir standard of review analysis should not be undertaken.

The majority, responded to Rothstein J.’s position at para. 26:

Dunsmuir stands against the idea that in the absence of express statutory language or necessary implication, a reviewing court is “to apply a correctness standard as it does in the regular appellate context” (Rothstein J., at para. 117). Pezim[ v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557] has been cited and applied in numerous cases over the last 15 years. Its teaching is reflected in Dunsmuir. With respect, I would reject my colleague’s effort to roll back the Dunsmuir clock to an era where some courts asserted a level of skill and knowledge in administrative matters which further experience showed they did not possess.

The interplay between Khosa and Dunsmuir

It is interesting to note that while Deschamps J. agreed mostly with Rothstein J.’s dissenting opinion, she did not explicitly indicate agreement with Part II of his judgment. Thus, by inference, it would seem that Rothstein J. stands alone in advocating for a return to placing a primary emphasis on the privative clause in resolving the tension between the judiciary’s constitutional supervisory role and the legislature’s objective of insulating specialized decision makers from judicial overview.

For Federal Court practitioners, the majority’s decision, in cementing the reach of Dunsmuir, provides some clarity as to the applicability of that decision. However, as Rothstein J. points out, the contextual nature that attends the application of the standard of review analysis in Dunsmuir will invariably result in some uncertainty. At para. 98, Rothstein J. explained:

How a court will weigh and balance the four standard of review factors remains difficult to predict and therefore more costly to litigate. In my view, it must be recognized that the common law standard of review analysis does not provide for a panacea of rigorous and objective decision making regarding the intensity with which courts should review tribunal decisions.

Nevertheless, given the wide swath of areas of law that Dunsmuir is intended to cover, the majority seems content on leaving the principles set out there in place. This seems to be the way the tide is shifting – Charron J., who did not sign onto the majority decision in Dunsmuir, notably signed onto to the majority decision in Khosa. Time will tell whether Rothstein J.’s views on the matter move into lockstep with the rest of the court.

What’s in a name? Apparently, quite a lot. In Dunsmuir v. New Brunswick, 2008 SCC 9, a majority of the Supreme Court of Canada has reformed the Court’s approach to substantive review in administrative law by, among other things, changing the name. The old order of the ‘pragmatic and functional approach’ is deposed. It is replaced by a new order of ‘standard of review analysis’. The Queen is dead; long live the Queen. The background and relevant content of the decision are ably summarized in contributions by Julian Ho and Professor Lorne Sossin to this blog.

The role of standard of review analysis is to signal to those who are affected by government decisions – ranging from the issuance of a license to the investigation of professional misconduct to the expropriation of land – the likelihood that a court will intervene by altering or overturning those decisions. It is an esoteric area of law, but one that has wide-ranging implications for everyone whose life and livelihood is subject to regulation and who may, one day, be pushed to challenge the government in a court. In deciding to fight City Hall, as the saying goes, one naturally prefers to have an idea of whether and how a court is likely to change a decision in one’s favour.

For nearly 30 years, the Supreme Court has rightly accepted that government decision-makers should usually receive deference from courts. There are various reasons for this. One is to respect the choices of the legislature to delegate authority to specialized agencies or local democratic bodies. Another is to acknowledge the superior expertise that such decision-makers can develop in their field, relative to courts. Yet another is to accept that judicial intervention in matters of public policy may at times frustrate important regulatory activity.

The conundrum has not been to find reasons for judicial deference. It has been to sort through the different rationales that weigh for and against intervention, and to work out how they should be balanced and prioritized in a way that is understandable and reasonably predictable.

An innovation of the pragmatic and functional approach, now dethroned, was to outline a list of ‘factors’ that courts were committed to considering when asked to review substantive decisions of government. This ‘list approach’ was helpful because it allowed all to see, at least, what a court would turn its mind to when sculpting its review position in relation to a particular decision of a particular agency.

Ironically, though, by applying a single template to all cases, the old approach also created new uncertainty. Not all factors were as pertinent in all cases, and even where they were, it sometimes appeared as if the courts could spin individual factors, as they had done in much earlier periods, by twisting the legal tests in order to find ways to intervene or defer, as they preferred.

How will this change? With Dunsmuir, the list approach has been jettisoned and the Court has given a clearer indication of how particular factors may drive the standard of review, without the need to work through less significant considerations. Thus, for example, where an agency exercises authority within its specialized mandate, this will create a strong presumption for deference, and one need not argue about how the terms and context of the relevant statute, or the wider regulatory purpose, may also weigh for or against intervention. On the other hand, where the question before the court is constitutional or jurisdictional – or where it involves legal matters of central importance to the legal system and outside an agency’s expertise – a court will substitute its own view for that of the agency.

In this way, the list of factors has been displanted by more specific and stepped guidelines on how certain characteristics of a statute or an agency or a decision will call for deference, barring exceptional reasons to the contrary.

It is a subtle change, no doubt, so subtle as to make one wonder why they even bothered to change the label to ‘standard of review analysis’. Justice Binnie asks as much in his separate opinion by citing Shakespeare: ‘that which we call a rose by any other name a rose would smell as sweet’. But the change is, I would say, more than meaningless. Would a rose smell as sweet if it was named ‘the pragmatic and functional flower’? Would the oddness and impenetrability of the name not distract us from the scent?

I have no difficulty with the re-branding, even if only to mark symbolically an attempted turn toward simplicity. My difficulty with the majority’s reasons in Dunsmuir arise from other matters. The first is that aspects of the decision point to new areas of obfuscation and confusion. The second is that the decision as a whole will probably herald less deference to administrative decisions.

In the first place, the Court not only changed the methodology that is used to arrive at the standard of review. It also collapsed the two standards that were previously used to demarcate degrees of deference (reasonableness and patent unreasonableness) into a single standard of ‘reasonableness’. This seems likely to export the uncertainties that infused the pragmatic and functional approach as a whole into the second stage of substantive review, at which a court must apply the standard of review. Thus, we shall now debate, not whether specialized expertise or a privative clause should lead to deference, but rather whether ‘reasonableness’ entails more or less deference than its ancestor standards.

In this respect, Dunsmuir cuts a more direct path to the standard of review, but creates new dilemmas, and new opportunities for intervention, once the court arrives at its destination.

The major challenge for the Supreme Court arises from the underlying tension between clarity and flexibility which is, at a certain level, utterly unavoidable. The Court must direct lower courts (and everyone else) as to the degree to which judges should supply a backstop against dangers of arbitrary decisions and jurisdictional frolics by the administration, while also dissuading courts from tinkering in policy or casting an ideological veto over government.

And, in striving to leave room both for intervention and for deference in administrative law, the Court faces an immense range of institutional structures and statutory habitats for government. It is one thing to seek clarity while maintaining flexibility in the supervision of, say, a provincial ministry of the environment. It is immeasurably more complex to do so with all forms and levels of administrative decision-makers whose decisions have significant impacts for individuals.

Making ginger bread biscuits lends itself readily to a cookie cutter approach. You have hearts, snowflakes, and ginger bread people. But what cookie cutter could ever accommodate muffins, cakes, tarts, fruit loafs, and puddings?

More troubling than this quixotic quest for certainty is the Dunsmuir majority’s apparent move away from deference. There are two elements of this. First, the collapse of two deferential standards into one means that the highly deferential standard of ‘patent unreasonableness’ is no longer available as a clear check against judicial intervention. Courts will now be able to overturn a decision as ‘unreasonable’ in circumstances where before, as everyone clearly understood, the decision was properly insulated from review, other than in extraordinary circumstances.

Second, the majority’s reasons telegraph a lack respect for privative clauses. Courts do not have an overriding authority to trump the legislative will, where it speaks for the autonomy of an administrative body by clearly precluding judicial review of the body’s decisions. Stronger adherence by the Court to the straightforward principle of legislative supremacy would deliver much more clarity in substantive review than any of the reforms adopted in Dunsmuir. But it would also require judges to cede their wiggle room to intervene in cases where it is obvious, from the terms of a privative clause, that deference is warranted, but where judicial loathing for a government decision runs so deep that the court cannot help but step in.

As Binnie J. puts it, a privative clause “is more than just another ‘factor’ in the hopper of pragmatism and functionality”; barring exceptional reasons to the contrary, it existence “should presumptively foreclose judicial review on the basis of outcome on substantive grounds” (para 143). Yet the majority noticeably declines to take a clear stand for legislative supremacy, stating that “Judicial review is necessary to ensure that the privative clause is read in its appropriate statutory context and that administrative bodies do not exceed their jurisdiction” (para 52). The reference here to courts assuming the power to re-read privative clauses according to their ‘statutory context’ is alarming.

I am not suggesting that the courts will now refuse to give privative clauses their clearly intended meaning, but I expect they will tend to do so selectively, by juggling it alongside other considerations. More importantly, even where a privative clause leads courts to deference, Dunsmuir affords them greater flexibility to intervene in spite of the legislature, under the big tent of reasonableness.

How should courts approach the standard of review? I claim no special talent in unravelling the knot. But it would seem “simpler and more workable’ – as the majority frames its objective (para 45) – to say that, barring highly exceptional circumstances, the courts will defer where there is a clear legislative direction to do so or where the decision-maker has superior expertise. Also, it is of course imperative that courts not frustrate regulatory schemes by using selectivity or semantics to justify substituting their views for those of public entities whose role in society they may find distasteful or whose decisions they dislike.

There are a number of illustrations of this inappropriately interventionist stance, from different places on the political spectrum, but a good example is the Supreme Court’s decision in ATCO Gas & Pipelines Ltd. v. Alberta (Energy & Utilities Board), [2006] 1 S.C.R. 140. In that case, a majority of the Court (on reasons of Bastarache J.) donned the cape of ‘property rights’ to overturn a decision of the Alberta Energy & Utilities Board that was not only reasonable, but eminently sensible, in that it required a gas utility owner to return a portion of the proceeds of the utility’s infrastructure, upon its sale, to the utility as a whole and to its ratepayers.

The Board’s decision in ATCO clearly warranted deference. It was protected by a strong privative clause and it dealt with a matter that fell squarely within the board’s special expertise, and well outside that of the courts. But a majority of four justices could not restrain themselves, and overturned the decision in spite of the existing methodology by drawing selectively on malleable rules of statutory interpretation and, as Bastarache J. helpfully confessed, by favouring intervention ‘when property rights are at stake’ (para 86). This resort to the trump card of property rights not only defied the historic movement toward deference, however labelled, but did so in the context of a monopolized industry that will always require intensive regulation in order to guard against the obvious opportunities for owners to abuse their monopoly position.

I fear that Dunsmuir, by clipping privative clauses and by shedding patent unreasonableness, will carve out yet more space for ideological interventions like ATCO in a range of fields. It suggests an abandonment of self-discipline that is awkward and embarrassing for the interventionist court because it so clearly exposes the court’s manipulation of legal tests to suit its ideological ends. That Dunsmuir does this in the guise of clarity and simplicity is not reassuring.

If nothing else, ‘pragmatic and functional’ connoted acceptance by the courts that some issues will defy any attempt to arrive at guidelines which adequately resolve all cases. With Dunsmuir, the Court has endorsed a brand of normativism which posits that moral truth can be uncovered by statements of principles, so long as they are sufficiently clear to guide conduct. And therein lies the fantasy.

I should add that the Dunsmuir decision also reverses a longstanding principle of the application of procedural fairness to public sector labour employment settings. The focus of this brief comment, however, is the standard of review by which courts review administrative action.

Lebel and Bastarache JJ., begin their majority reasons in Dunsmuir by throwing down the following gauntlet:

This appeal calls on the Court to consider, once again, the troubling question of the approach to be taken in judicial review of decisions of administrative tribunals. The recent history of judicial review in Canada has been marked by ebbs and flows of deference, confounding tests and new words for old problems, but no solutions that provide real guidance for litigants, counsel, administrative decision-makers or judicial review judges. The time has arrived for a reassessment of the question.

With this opening, the actual facts of Dunsmuir appear almost an afterthought, more an excuse for the development of a doctrine, than the driver of the decision. This is something of an irony because in so many standard of review cases, it is the facts that seem to drive the doctrine rather than the other way around.

That said, here in a nutshell is what brought the case to the Supreme Court. Mr. Dunsmuir was a civil servant employed in the Department of Justice in New Brunswick. The Government terminated his employment, due to a number of problems, and offered him severance in lieu of notice. Mr. Dunsmuir took the position that he was entitled not just to a contractual remedy but also to fairness before being terminated (e.g. an opportunity to know the concerns of the employer and a chance to address them). A labour arbitrator was appointed to address Mr. Dunsmuir’s challenge and concluded that fairness was indeed required, and had not been provided. The reviewing judge reversed the arbitrator’s finding, finding at various points that the applicable standard of review was correctness, reasonableness simpliciter and patent unreasonableness. The notion that a single decision by a single decision-maker would require a court to parse through three different standards of review vividly illustrates the complexity that the Supreme Court then sets out to remedy. The Court of Appeal for New Brunswick dismissed the appeal from the reviewing judge, and the matter thus ended up at the Supreme Court.

Before proceeding to consider which path the Court opted for, it is important to be clear about the stakes in the standard of review debate.

The standard of review doctrine in administrative law asks when a court may overturn an administrative decision. On the one hand, this doctrine engages the rule of law. If parties cannot challenge administrative decisions before independent judges, then there is no guarantee that fundamental rights will be safeguarded. On the other hand, administrative decision-makers, especially adjudicative and regulatory tribunals, are created for the very purpose of providing an alternative to courts, and to respect the integrity of these statutory schemes, judges must show deference to the administrative decision-makers.

The standard of review thus represents the search for a constructive relationship between courts and administrative decision-makers which reflects respect for the rule of law, Parliamentary supremacy and the complex decision-making environments of the modern state.

In 1979, the Supreme Court ushered in the modern age of the standard of review in CUPE v. New Brunswick Liquor, in which the Court affirmed a new paradigm of review emphasizing deference. Dickson J. (as he then was) characterized this deferential standard as one of “patent unreasonableness,” under which the Court would only intervene in an administrative decision where that decision could not be rationally justified in light of the statutory authority of the decision-maker. Where this deferential standard did not apply, the Court applied the standard of “correctness”. In the 1988 case of Union des Employés de Service, Local 298 v. Bibeault, the Court introduced the “pragmatic and functional” approach that would come to characterize the analysis by which the proper standard of review is determined (and included both a close reading of the relevant statutory provisions, but also a look at the broader purposes of the administrative scheme, and the specific expertise of the decision-maker.) Finally, in the 1996 case of Canada (Director of Investigation and Research) v. Southam Inc, Iacobucci J., writing for the Court, introduced an intermediary standard of review, known both as “reasonableness simpliciter” and simply “reasonableness.”

The consensus on the three standards of review and the pragmatic and functional approach used to determine which was applicable was no sooner confirmed (in a unanimous judgment in 2003 in the case of Ryan v. Law Society of New Brunswick) than it began to unravel. In Toronto (City) v. CUPE, also a 2003 Supreme Court decision, Lebel J. (writing in a concurring judgment for himself and Deschamps J.) acknowledged the “growing criticism” and “serious questions” which had emerged over the standard of review jurisprudence of the Court. In particular, Lebel J. questioned whether a court could meaningfully distinguish between the “reasonableness simpliciter” and “patent unreasonableness” standards, and also questioned why this was necessary.

In Dunsmuir, Lebel and Bastarache JJ. refer to the whole enterprise of attempting to shore up the distinctiveness of the three previous standards, and the pragmatic and functional methodology, as having “proven difficult to implement.” Binnie J., writing concurring reasons in Dunsmuir, characterized the previous approach more bluntly as “distracting” and “unproductive.”

So, what has the Court developed in its stead?

First, the majority in Dunsmuir concluded that the distinction between “reasonableness” and “patent unreasonableness” was untenable and so, henceforth, there will only be two standards of review: reasonableness and correctness. While the standard of correctness is straightforward (a Court will intervene any time it concludes that an administrative decision-maker erred), the standard of reasonableness remains opaque (especially under the new scheme, under which the old standards of patent unreasonableness and reasonableness simpliciter have been collapsed into a single standard). In attempting to elaborate on this new, expansive standard of reasonableness, Lebel and Bastarache JJ. view the reasonableness analysis flowing from the “justification, transparency and intelligibility” of an administrative decision.

As for the approach to determining which standard of review is applicable, the majority has retained the substance of the pragmatic and functional approach (although it has now been repackaged as simply the “standard of review analysis”), but has noted that an exhaustive review is not always needed to determine the proper standard. Consequently, the Court has established both more flexible standards and a more flexible methodology for determining which standard applies to particular settings.

As the dust settles, what has changed? The majority is at pains to emphasize that the new scheme is not intended to pave the way for a more intrusive and less deferential approach to the review of administrative action. Lebel and Bastarache JJ. also confirm that deference continues to convey the idea of respect for the legislative choices of government.

Binnie J., in his concurring reasons, endorses the reappraisal of the judicial review system but stresses that it must extend beyond adjudicative tribunals, which are the focus of the majority, to all administrative decisions, including the decisions of those he describes memorably as “the lesser officials who reside in the bowels and recesses of government departments adjudicating pension benefits or the granting or withholding of licenses or municipal boards poring over budgets or allocating costs of local improvements.” After noting the diversity of the kinds of administrative decisions caught by the standard of review analysis, Binnie J. concludes that “‘reasonableness’ is a big tent…” As he notes, one significant change wrought by this decision is that courts will have to accommodate a range of deferential postures within the standard of reasonableness. This may simplify the analysis but render the job of the reviewing judge no less complex and potentially more opaque.

A further concurring set of reasons authored by Deschamps J. (writing for herself and Charron and Rothstein JJ.) seeks to simplify the standard of review further, by suggesting the primary criterion in the analysis should be the nature of the problem – that is, whether the decision under review was on a question of fact, mixed fact and law or law, with deference attaching to decisions on questions of fact, less deference attaching to decisions on questions of mixed fact and law and no deference attaching to decisions on questions of law.

While it is clear that the standard of review as a legal doctrine has been changed by Dunsmuir, it is not clear that any case previously decided on standard of review grounds would have resulted in a different outcome if the Dunsmuir framework were applied. This is in contrast to the aspect of Dunsmuir dealing with the applicability of procedural fairness to the decision to terminate public employees, where the Court reversed its earlier position in Knight v. Indian Head School Division, No. 19 (1990). Whereas a wide range of public sector labour cases which turned on fairness considerations will now potentially be decided differently, it is hard to point to a standard of review decision where the outcome might now be in doubt. Indeed, the majority and concurring judges in Dunsmuir apply different standards to the decision of the arbitrator but all conclude that the arbitrator’s decision cannot stand. In this sense, it would appear that not much has changed at all. Dunsmuir, I would suggest, is not about changing results, but rather about getting to the appropriate result more efficiently, more transparently and more coherently.

Dunsmuir is a step in the right direction. From the overly formalistic pragmatic and functional approach, we have now entered an era of what I would characterize as the contextual and transparent approach. The sometimes necessary but never tenable distinction between patent unreasonableness and reasonableness simpliciter has been happily abandoned. The dilemmas of complexity and inconsistency which plagued the standard of review analysis, however, likely have not been resolved. Courts will now puzzle over different degrees of deference within each standard and in what circumstances more or less exhaustive applications of the standard of review analysis might be appropriate.

Where does the standard of review analysis head from here? In “Contextual Snakes and Ladders: Iacobucci’s Legacy and the Standard of Review in Administrative Law” (2007) University of Toronto Law Journal 581, Colleen Flood and I argued that the Supreme Court should borrow a page from its successful procedural fairness jurisprudence in order to complete the “contextual turn” in the standard of review. In its approach to determining the degree of fairness applicable to a wide variety of administrative settings, the Court developed in Baker v. Canada (Minister of Citizenship and Immigration) (1999) a set of criteria (nature of the decision, nature of the statutory scheme, effect of the decision on the party, legitimate expectations of the affected party and the choice of procedure by the decision-maker) in order to place the obligation of fairness along a spectrum. For ease of reference, the Court has referred to a minimum, medium and high degree of fairness, but these clusters along the spectrum are not intended to represent fixed or rigid categories. The fairness spectrum allows reviewing courts to calibrate the degree of fairness applicable to the actual circumstances and facts of particular cases.

After reading Dunsmuir, I am more convinced than ever that a spectrum of deference approach will lead to greater transparency and a fuller embrace of the contextual analysis of deference first urged by Dickson J. (as he then was) in CUPE v. New Brunswick Liquor almost 30 years ago. The Court’s openness to revisit, revamp and reinvigorate the standard of review in Dunsmuir should be welcomed. The standard of review, however, remains a work in progress.

The decision is broken up into 3 parts: a 5-member majority co-penned by Bastarache and Lebel JJ., a concurring opinion written by Binnie J. (which reads like a comment on the majority’s opinion), and an additional 3-member concurring opinion led by Deschamps J.

For a summary of the facts and the judicial history, please see the posts we’ve made regarding this case: first at the time of the hearing back in May of last year, and second, about six weeks ago, in anticipation of this decision. Indeed, as was observed back in May during the hearing, the SCC was deeply concerned with the complexities involved with determining the proper standard of review for administrative decisions.

Starting at para. 32, the majority identifies the problem they’re trying to address:

Despite efforts to refine and clarify it, the present system has proven to be difficult to implement. The time has arrived to re-examine the Canadian approach to judicial review of administrative decisions and develop a principled framework that is more coherent and workable.
…
[43]…[The current] highly contextual “functional” test … provides great flexibility but little real on-the-ground guidance, and offers too many standards of review. What is needed is a test that offers guidance, is not formalistic or artificial, and permits review where justice requires it, but not otherwise. A simpler test is needed.

Binnie J., in his opinion, echoes this. At paras. 132-133, he writes,

…our present ‘pragmatic and functional’ approach is more complicated than is required by the subject matter.

Litigants…find the court’s attention focused not on their complaints, or the government’s response, but on lengthy and arcane discussion on something they are told is the pragmatic and functional test…. The law of judicial review should be pruned of some of its unduly subtle, unproductive, or esoteric features.

Two’s company, three’s a crowd

Having identified the problem to solve, the majority moves to prune off the review standard of patent unreasonableness, reducing the number of standards of review from three to two (leaving reasonableness and correctness). In doing so, the majority criticizes the inadequacy of the tests for distinguishing between patent unreasonableness and reasonableness, saying at paras. 41-42,

Looking to either the magnitude or the immediacy of the defect in the tribunal’s decision provides no meaningful way in practice of distinguishing between a patently unreasonable and an unreasonable decision….

[E]ven if one could conceive of a situation in which a clearly or highly irrational decision were distinguishable form a merely irrational decision, it would be unpalatable to require parties to accept an irrational decision simply because, on a deferential standard, the irrationality of the decision is not clear enough. It is also inconsistent with the rule of law to retain an irrational decision.[emphasis in original]

At para. 47, the majority gives guidance on what this new unified reasonableness standard will look like:

A court conducting a review for reasonableness inquires into the qualities that make a decision reasonable, referring both to the process of articulating the reasons and to outcomes. In judicial review, reasonableness is concerned mostly with the existence of justification, transparency and intelligibility within the decision-making process. But it is also concerned with whether the decision falls within a range of possible, acceptable outcomes which are defensible in respect of the facts and law.

They also warn that this is not a signal to courts that they can usurp power delegated to administrative bodies. At para. 48, they write:

The move towards a single reasonableness standard does not pave the way for a more intrusive review by courts and does not represent a return to pre-Southam formalism….

A rose by any other name would smell as sweet

Not content with just updating the number of standards of review, the majority chose also to provide guidance on how to arrive at the appropriate standard. After a review of the caselaw surrounding the various factors used for the ‘pragmatic and functional’ test, the majority affirms those factors, but re-brands it as the ‘standard of review analysis’. At paras. 63, they write:

Because the phrase “pragmatic and functional approach” may have misguided courts in the past, we prefer to refer simply to the “standard of review analysis” in the future.

Importantly, they also note that it is not necessary to go through all of the four factors of the test. At para. 64, they write,

The analysis must be contextual. As mentioned above, it is dependent on the application of a number of relevant factors, including: (1) the presence or absence of a privative clause; (2) the purpose of the tribunal as determined by interpretation of enabling legislation; (3) the nature of the question at issue, and; (4) the expertise of the tribunal. In many cases, it will not be necessary to consider all of the factors, as some of them may be determinative in the application of the reasonableness standard in a specific case. [emphasis mine]

What does this all mean?

As stated earlier, Binnie J.’s opinion reads like a comment on the majority decision.

First, he states that “[c]hanging the name of the old pragmatic and functional test represents a limited advance” (para. 121), citing, in a tongue-in-cheek fashion, Shakespeare’s famous line of “a rose by any other name would smell as sweet” in the process.

Second, and more lengthily, he discusses the new reasonableness standard: questioning how varying degrees of deference can be accommodated in the new standard, what concerns such a move raises, and how such a standard will look moving forward.

At para. 139, he writes:

The judicial sensitivity to different levels of respect (or deference) required in different situations is quite legitimate. “Contextualizing” a single standard of review will shift the debate (slightly) from choosing between two standards of reasonableness that each represent a different level of deference to a debate within a single standard of reasonableness to determine the appropriate level of deference. [emphasis his]

He fleshes out the argument that lower courts might see this as an invitation for subjecting administrative decisions to greater curial scrutiny. He writes at para. 141,

The danger of labelling the most “deferential” standard as “reasonableness” is that it may be taken (wrongly) as an invitation to reviewing judges not simply to identify the usual issues, such as whether irrelevant matters were taken into consideration, or relevant matters were not taken into consideration, but to reweigh the input that resulted in the administrator’s decision as if it were the judge’s view of “reasonableness” that counts. At this point, the judge’s role is to identify the outer boundaries of reasonable outcomes within which the administrative decision maker is free to choose.

In commenting on what the new reasonableness standard will look like, he writes at para. 149,

a single “reasonableness” standard will now necessarily incorporate both the degree of deference formerly reflected in the distinction between patent unreasonableness and reasonableness simpliciter, and an assessment of the range of options reasonably open to the decision maker in the circumstances, in light of the reasons given for the decision. Any reappraisal of our approach to judicial review should, I think, explicitly recognize these different dimensions to the “reasonableness” standard. [emphasis his]

The 3-judge plurality

For their part, the 3-member plurality lead by Deschamps J. took a more radical approach, and felt that the pragmatic and functional approach could be dispensed with completely. They would focus the inquiry into the nature of the question first, and determine the level of deference according to the type of question being asked (i.e., whether it was a question of law, question of fact, or question of mixed fact and law).

Conclusion

While it is admirable for the SCC to try to provide some guidance and clarity for lower courts, only time will tell whether their efforts actually have the intended effect. Indeed, as Binnie J. points out, having to take into account the degree of deference within the reasonableness standard may just figuratively “shift rush hour congestion from one road intersection to another [intersection].” (para. 139)

Seeing as how this area of law is so complex and widely-applicable, this may be inevitable. As Deschamps J. writes at para. 167,

The problem with the definitions resides in attempts by the courts to enclose the concept of reasonableness in a formula fitting all cases. No matter how this Court defines this concept, any context considered by a reviewing court will, more often than not, look more like a rainbow than a black and white situation. One cannot change this reality.

The case involves a non-unionized civil servant who was fired from his employment with the New Brunswick Department of Justice after two and one half years of service. The termination was without cause and the Province provided the employee with four and one half months pay in lieu of notice. Under the Civil Service Act, employment of non-unionized civil servants is governed by “ordinary rules of contract” and thus an employee can be terminated without cause so long as they are paid reasonable notice. However, the Public Service Labour Relations Act also provides such employees with a grievance procedure. Through this procedure, the appellant grieved his termination, which grievance was denied, and the matter was heard before an adjudicator.

At the hearing, the Province raised a preliminary objection, arguing that since the grievor’s employment could be terminated on reasonable notice without cause, the adjudicator did not have jurisdiction to examine the reasons behind the termination but could only determine the reasonable notice period. Relying on Mills, a decision by the New Brusnwick Court of Appeal, the adjudicator found that he had jurisdiction to inquire into the true reasons behind the termination, whether or not the termination was stated to be “without cause.” Further, the adjuciator found that the Province’s decision to terminate the grievor’s employment had breached the duty of procedural fairness. The adjudicator reinstated the grievor to his position, relying on a provision in the Public Service Labour Relations Act which grants adjudicators to substitute a penalty where an employee was terminated for cause.

It seems clear to me that the adjudicator’s interpretation of the relevant statutory provisions makes little sense. Since the employment relationship is governed by ordinary rules of contract, when the Province terminates a civil servant’s employment without alleging cause and pays reasonable notice, this ends the matter, just as it would in any other non-union employment situation. If adjudicators were then allowed to inquire into the true reasons behind each such termination and to reinstate employees where the adjudicator found that these unstated reasons did not justify the action, this would render the statutes useless and grant these employees the protection of a collective agreement where none exists.

Both the trial judge and the New Brunswick Court of Appeal agreed that the adjudicator had incorrectly interpreted the statutory provisions and that he had exceeded his jurisdiction by examining the reasons behind the termination and reinstating the grievor to his employment. What they did differ on was the appropriate standard of review of the adjudicator’s decision. For the issue of interpretation of statutory limits of jurisdiction, the trial judge held that the appropriate standard was that of correctness while the Court of Appeal settled upon reasonableness simpliciter.

Further, the trial judge made use of varying degrees of deference for specific issues as they arose within the decision, applying a reasonableness simpliciter for mixed questions of law and fact and patent unreasonabless for those of fact alone. While the Court of Appeal did not move its analysis beyond the interpretation issue, it also chose to apply a different standard to one particular aspect of the adjudicator’s decision: the interpretation of the Court of Appeal’s Mills decision. While it is perfectly understandable that the Court of Appeal would have greater relative expertise than the adjudicator to the proper meaning of its own decisions, it seems a bit strange that courts can pick and choose different levels of curial deference for each specific issue or case cited within a tribunal’s decision.

It will be interesting to see what the SCC has to say on the approaches to standard of review taken by the lower courts. Perhaps this case is an opportunity for the SCC to provide a workable framework that leads to clear and consistent results.

In August 2004, Mr. Dunsmuir, an employee of New Brunswick’s Department of Justice, was terminated and given four and a half months pay in lieu of notice. Despite the fact that Mr. Dunsmuir had been reprimanded on three separate occasions prior to his dismissal, his termination letter did not explicitly outline his dismissal as disciplinary and was thus, ‘without cause.’ During the grievance hearing initiated by Mr. Dunsmuir, the province argued that, based on their employment contract, it had the right to terminate Mr. Dunsmuir’s employment in this manner, and that it was not necessary for them to have just cause in their dismissal. The adjudicator, however, ruled against the province, and decided that Mr. Dunsmuir had been denied procedural fairness because he did not have the opportunity to answer for the actual reasons for which he thought his employment was terminated. He ordered that Mr. Dunsmuir be reinstated.

Upon judicial review, the Court of Queen’s Bench used a ‘correctness’ review standard and determined that the adjudicator’s jurisdiction was limited to determining the reasonableness of the notice period. Accordingly, the adjudicator was in error when he reinstated Mr. Dunsmuir. On appeal, the Court of Appeal, using the four contextual factors summarized in Pushpanathan v. Canada (Minister of Citizenship and Immigration), settled on a more deferential ‘reasonableness’ standard. Nevertheless, it was found that “once the Province elects to terminate an employment with notice, the argument that the jurisdiction of the adjudicator is limited to assessing the reasonableness of the notice period seems unassailable.” (at para. 26) The Court of Appeal showed much deference to the decision-making power of the province outlined in the employment contract, saying that

it makes no sense that an employer who possesses the legal right to terminate an employee with notice can be forced into an adjudicative hearing in which the employer is cross-examined as to the true reasons for the issuance of a notice terminating the employment. (at para. 27)

Indeed, at the SCC hearing, this very same concern was echoed by many of the justices, i.e., that if this appeal is allowed, the very right of employers to contract with their employees may be detrimentally affected, to the extent that civil service employers will be mired in adjudicative hearings from disgruntled non-unionized employees that are seeking unjustified recompense for their dismissals.

With regards to the standard of review question, the SCC justices seemed ready to accept the proposition that there is much complexity as to the determination of the appropriate standard of review. In response to Charron J.’s question of how a more simplified approach might look, counsel for Mr. Dunsmuir suggested that when there is a privity clause (as there is in this case), a great deal of deference should be accorded to the adjudicator. He suggested that deference should be accorded unless the decision was “clearly irrational,” so as to achieve the intended efficiencies for which the administrative bodies were created.

Though it is difficult to foresee the outcome based on oral arguments alone, it seems at least plausible that the SCC is concerned with the complexity in this area of administrative law. It’ll be interesting to see if the SCC will take this opportunity to elucidate or clarify the pragmatic and functional approach given in Pushpanathan, so that judicial review standards may be more consistent.