Keeping the Katz in the bag

In a pair of decisions on Friday, the Supreme Court of Canada unanimously upheld that the presumption of a standard of review of reasonableness in the Vavilov framework does apply when the validity of subordinate legislation is being challenged.

The Court also found that the previous jurisprudence in Katz remains good law when it comes to these challenges—with one exception.

The two cases arising from Alberta had wildly different facts but boiled down to the same question in challenging whether the subordinate legislation was ultra vires or not. In Auer, a divorce case challenged the Governor-in-Council’s authority to create the guidelines for child support payments under the Divorce Act. In TransAlta, the challenge was to the provincial minister of municipal affairs’ power to develop guidelines for tax assessments due to a deal the company struck with the provincial government as part of the coal phase-out.

In both cases, the challenges had been dismissed by the Alberta Court of Appeal. Still, there was some dispute about how the previous framework from Katz interfaced with Vavilov when challenging the vires of the subordinate legislation. The Supreme Court dismissed both appeals.

“In setting out Vavilov’s comprehensive framework, our Court expressly contemplated questions of vires,” Justice Suzanne Côté wrote for the Court in Auer, the lead case.

“Specifically, this Court ceased to recognize jurisdictional questions — also referred to as ‘true questions of jurisdiction or vires’ — as a distinct category of questions attracting correctness review. In doing so, we expressly referred to cases involving challenges to the vires of subordinate legislation.”

As for the principles in Katz, four of the five remain intact. Only one, which states that the regulations “must be ‘irrelevant,’ ‘extraneous’ or ‘completely unrelated’ to the statutory purpose to be found ultra vires on the basis of inconsistency with statutory purpose,” is to no longer be considered, as it conflicted with Vavilov.

“This threshold from Katz Group is now out of step with these principles; maintaining it would perpetuate uncertainty in the law,” Côté wrote.

“Accordingly, the ‘irrelevant,’ ‘extraneous’ or ‘completely unrelated’ threshold does not provide a standalone rule for a vires review.”

University of Ottawa professor Paul Daly, co-counsel to appellant Roland Auer, says that the decisions are a “helpful clarification,” even if the application of Vavilov was unsurprising.

“It did not overrule every aspect of [Katz]. Some aspects of that decision may continue to make it difficult to challenge regulations, particularly this notion of a presumption of validity,” Daly says.

There is a suggestion that when a court is faced with a challenge to regulations, the first thing it should do is interpret them in a way that makes them reasonable and bring them within the scope of the statutory framework, he adds.

“If that continues to be the case, it makes it more difficult to convince a court that a regulation is unreasonable.”

Daly says there’s uncertainty about how the tension between a robust reasonableness review and a presumption of validity will play out in future cases.

“Both people who want to challenge regulations and people who want to defend regulations can find aspects of this decision that would support their litigation positions,” he says.

Aubin Calvert, counsel at Hunter Litigation Chambers in Vancouver, intervened in the case on behalf of the Trial Lawyers’ Association. She is also pleased with the decision and says it aligns with her client’s position.

“TLA BC was arguing that we don’t need to have special guardrails for judicial review of regulations from cabinet,” Calvert says.

“Our position was that the law provides a suitable rubric for making sure that courts don’t stray into areas of policy so that the separation of powers can be adequately protected.”

She notes that the Court affirmed the principle in Katz that it’s not for a reviewing court to question the policy wisdom of a regulation.

“It’s never been a controversial proposition that courts aren’t to look at the wisdom of the regulations. I view that as a restatement of the principles of justiciability, so the fact that the Court preserved it is not surprising,” Calvert says.

“What’s interesting in the judgment is that in the past, there has been a tendency to equate questions about the substance, the effect or the consequence of a regulation with policy.”

For that reason, she says it’s significant that Justice Côté noted the potential consequences of a regulation can be considered when deciding whether a regulation is authorized.

This contrasts with the Court of Appeal’s concern that a reasonableness review of regulations might stray into the realm of evaluating policy, which would be inappropriate from a separation of powers perspective.

Calvert says that while the two courts took a slightly different view of that question, they didn’t say the consequences must not be considered because doing so would inevitably embroil courts in policy matters.

“Instead, they said sometimes the actual or potential consequences of regulation are relevant to the question put before the court, which is whether this regulation is authorized. A litigant can impugn a regulation by saying these are not the sorts of consequences that the legislature intended to authorize the delegate to produce.”

While this may be a subtle point, Calvert says it’s important.

“There can no longer be an argument that looking at the impact of the regulation is off the table,” she says.

“But there are still going to be fights over whether a particular effects-based argument crosses that line from legitimate argument directed at the scope of the delegate’s authority or an impermissible argument of policy.”