Nolan v. Kerry (Canada): Administrative law implications?

Last Thursday, the Supreme Court of Canada (“SCC”) approved leave to appeal in Kerry (Canada) Inc v DCA Pension Committee, 2007 ONCA 416, a case dealing with the scope of acceptable use for pension plan surpluses. In particular, the case considers the use of surplus funds in two scenarios: to pay for the expenses of the plan (i.e., fees for trustee, investment, accounting and actuarial services), and to pay for employer contributions to the plan. Yesterday, Chris Donovan of canvassed the substantive issues of the case in his post found here.

Today, I wish to canvass the possible administrative law implications a bit more. Last week, Yu-Sung Soh discussed the possibility that the pending SCC decision in the New Brunswick Court of Appeal case David Dunsmuir v Her Majesty the Queen in Right of the Province of New Brunswick, 2006 NBCA 27, may clarify the existing jurisprudence on how to apply the pragmatic and functional approach in determining standards of judicial review. Specifically, he discussed how applying different standards to different aspects of a given administrative decision may lead to inconsistent results, and thereby reduce predictability. After reading the Ontario Court of Appeal’s decision in this case, I would add my voice to Yu-Sung’s in hoping for some clearer direction.

The Court of Appeal decision reads like an answer to a nightmare of an administrative law exam. Having identified 6 substantive issues on the appeal and cross-appeal, Gilesse J. applies the pragmatic and functional approach to each of the 6 issues, undertaking for each one an analysis of the four contextual factors found in Pushpanathan v Canada (Minister of Citizenship and Immigration), [1998] 1 SCR 982. Further, she breaks down the 3rd issue into 3 sub-issues, and undertakes a pragmatic and functional analysis with respect to each of those sub-issues. While she admits that the breakdown of the 3rd issue may “overly complicate th[e] matter,” she nevertheless feels that such complication is justified because the sub-issues “are each of a different nature and … engage the Tribunal’s expertise and the Act in different ways” (para. 136).

And by using these words, she latches onto the guidance provided by the majority in Lévis (City) v Fraternité des policiers de Lévis Inc., [2007] 1 SCR 591, where at paragraph 19, Bastarche J. writes,

whether there is a possibility of more than a single standard of review under the pragmatic and functional approach will largely depend on whether there exist questions of different natures and whether those questions engage the decision maker’s expertise and the legislative objective in different ways.

While the Court of Appeal decision did indeed tailor their degrees of deference according to the specifics of the question asked, I am curious as to whether taking such a nuanced approach to segmentation begins to become overwhelming and confusing.

Even Bastarache J. in his Lévis decision warns that, “[t]he possibility of multiple standards should not be taken as a license to parse an administrative decision into myriad parts in order to subject it to heightened scrutiny.” This phrase would seem to be a concession to Abella J.’s dissent of the same decision, who noted that “[t]he various strands that go into a decision are more likely to be inextricably intertwined, particularly in a complex field[…],” presumably to the extent that the strands should be not be separated.

Admittedly, the criticisms of segmenting issues for different standards of review has mostly been for fear of courts separating out questions to subject them to a less deferential standard (see also Abella J.’s majority decision in Council of Canadians with Disabilities v VIA Rail Canada Inc, [2007] 1 SCR 650). But it would seem that such criticisms should also apply to cases where courts are not affording tribunal decisions enough curial scrutiny.

Here, the Court of Appeal comes to more deferential standards (reasonableness instead of the lower court’s choice of correctness) for the main issues of the ability to use surpluses for plan expenses and employer contributions. More importantly, the sub issues identified under issue 3 (whether the plan members given proper notice of the conversion option) is further broken down so that only one of the 3 sub-issues is subject to the lower court’s correctness standard for the entire issue. The other two sub-issues were subject to reasonableness standards. Gilesse J. justifies this by putting a large emphasis on the expertise of the tribunal and the fact that that the questions dealt with are of mixed law and fact. As a corollary, she downplays the statutory right of appeal, and a former decision of the SCC that recognized a standard of correctness for questions of law for issues arising from the same tribunal.

Indeed, the Court of Appeal might be exemplifying the very fears that Abella J. pointed out in her dissent in Lévis, only that here, the court separated out sub-issues to subject them to lower levels scrutiny instead of higher. One wonders whether Abella J.’s emphasis on adhering to legislative intent as expressed through a privative clause would apply to statutory rights of appeal as well.

Regardless, such a parsing of issues would likely not have made a big difference to the substantive outcome of the case because the Court of Appeal decision came to the same standard of reasonableness in almost all of the issues. Moreover, she went on to justify her conclusions on a correctness standard for many of the issues.

Given the importance of this case with regard to the substantive issues concerning pensions, it seems the SCC likely took it on to address those issues nationally. Nevertheless, maybe the SCC will find some time to comment on the proper approach to segmenting issues and applying different standards of review. Ideally, it will come soon in Dunsmuir, but if not, then the SCC will have another crack at it with this case.

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