Although the Supreme Court of Canada’s decision in Vavilov1 established a general framework for selecting which standard to apply on judicial review, it left open which standard of review applies to reviewing the vires of subordinate legislation, including regulations and guidelines. Vavilov therefore generated lingering uncertainty about whether pre-Vavilov principles still applied in such cases. The SCC had established in Katz Group2 that a regulation would only be struck down if irrelevant, extraneous, or completely unrelated to the enabling statute. In companion decisions, Auer v. Auer, 2024 SCC 36 (Auer); TransAlta Generation Partnership v. Alberta, 2024 SCC 37 (TransAlta), the SCC resolved this uncertainty, holding that the slightly less onerous reasonableness standard is the presumptive standard for reviewing the vires of regulations. Therefore, some regulations on the margins, which may not have been struck down in the past, may be more vulnerable moving forward.
Background
These companion cases emerged from challenges to two distinct sets of regulations. Auer involved a challenge to the Child Support Guidelines,3 which determine the amount of child support one parent must pay to the other. TransAlta involved a challenge to the 2017 Linear Guidelines,4 where TransAlta argued that Alberta’s Minister of Municipal Affairs exceeded their authority5 by enacting the Linear Guidelines that (1) violate the common law rule against administrative discrimination, which arises when regulations apply unequally to the actors engaging in the regulated activity, and (2) are inconsistent with the enabling statute.
In both cases, the Court of Appeal for Alberta upheld the regulations, but did not apply the reasonableness standard. The Court of Appeal for Alberta held that the general framework established in Vavilov did not displace the principle established in Katz Group that a regulation would only be struck down if irrelevant, extraneous, or completely unrelated to the enabling statute.6
The SCC held that Vavilov’s reasonableness review applies to regulations, while certain Katz Group principles still inform the analysis
In Auer and TransAlta, Justice Côté writing for a unanimous court dismissed both appeals and confirmed that the presumptive standard for reviewing the vires of regulations is the reasonableness standard set out in Vavilov. In so doing, the SCC held that neither the legislature nor the rule of law required a departure from this presumption. The applicability of reasonableness necessarily displaces the principle established in Katz Group that a regulation would only be struck down if irrelevant, extraneous, or completely unrelated to the enabling statute. Continuing to apply this higher threshold would undermine Vavilov’s promise of simplicity, predictability, and coherence in judicial review.
Notwithstanding the applicability of reasonableness, Justice Côté held that the remaining four principles established in Katz Group continue to inform the reasonableness review of regulations, insofar as they are consistent with the general framework established in Vavilov: (1) regulations must be consistent with the relevant specific provisions of the enabling statute, as well as the statute’s overarching purpose; (2) regulations are presumptively valid; (3) regulations and their enabling statutes should be interpreted with a broad and purposive approach to statutory interpretation; and (4) the vires review of regulations does not involve assessing policy merits or whether the regulations are necessary, wise, or effective in practice.
On the principle that regulations are presumptively valid, Justice Côté explained that challengers must demonstrate that regulations are unreasonable and that courts should analyze regulations so as to maintain their validity, where possible. The presumption of validity does not raise the burden on applicants; it simply serves as a constraint on the reasonableness review.
Finally, the SCC confirmed how to conduct a reasonableness review of regulations consistent with Vavilov. The court must ask whether the regulation at issue bears the hallmarks of reasonableness – justification, transparency, and intelligibility – and whether it is justified to relevant factual and legal constraints. While reasonableness review does not involve an examination of policy merits, reviewing courts must consider the governing statutory scheme, other relevant statutes, common law principles, and principles of statutory interpretation.
Key takeaways
- By confirming that the reasonableness standard set out in Vavilov also governs challenges to the vires of regulations, the SCC appears to have relaxed the standard against which the validity of regulations will be measured. However, challengers can expect to continue facing a high bar in practice.
- In addition to the presumptive reasonableness standard for reviewing the vires of regulations, the remaining Katz Group principles continue to inform the reasonableness review of regulations, insofar as they are consistent with Vavilov.
- The impact of these decisions on which challenges are successful in the future remains to be seen.
- The impact may vary depending on the court in which a challenge is brought. The Federal Courts7 and British Columbia8 had already applied reasonableness, so that approach will continue. As the slightly more onerous Katz Group standard applied in Alberta, New Brunswick, Northwest Territories, and Yukon, even post-Vavilov, challenges in those jurisdictions will now be adjudicated under reasonableness.9
By Borden Ladner Gervais LLP “BLG” >>
“As Canada’s law firm, BLG provides high-value advice and advocacy to address our clients’ business challenges and problems. We go beyond legal to anticipate, consult and advise in a rapidly changing digital world.
We have extensive experience acting in specialized and complex deals and disputes. Vigilant, curious and collaborative, we harness technology and innovation to offer our clients exceptional service and value.
With 800+ lawyers across Canada, we serve clients throughout North America, Europe, and Asia. Offering expertise in intellectual property, disputes and corporate transactional matters, our connectivity gives our clients the next-level service required to achieve success in complex and international matters.”
Please visit the firm link to site
