The Supreme Court of Canada recently released its judgments in Auer v. Auer, 2024 SCC 36 and TransAlta Generation Partnership v. Alberta, 2024 SCC 37. The companion cases regard the standard of review when assessing the vires of subordinate legislation. In both cases, the Court held that the reasonableness standard set out in Vavilov¹ applies while overruling part of the Katz Group Canada Inc.² principles that inform the analysis.

History of Substantive Review

Substantive review assesses the outcome from the exercise of administrative authority to ensure it is legal. Historically, by way of statutory interpretation, the courts reviewed administrative decisions on a correctness standard by characterizing them as jurisdictional questions. This was true until C.U.P.E.,³ one of the first Supreme Court of Canada cases to plant seeds for a more deferential approach.
 
In the following years, caselaw on the standard of review evolved.⁴ Collectively, these cases lead to Dunsmuir,5  which is believed to be the most cited case in Canadian history. Although Dunsmuir was a landmark decision, it left open or created a mix of categorical issues surrounding the determination of the standard of review, rendering consistent application difficult. 

Then came Vavilov, ushering in a new era for Canadian administrative law – the era of justification. Per Vavilov, analysis begins with a presumption that reasonableness is the applicable standard of review in all administrative decisions, and that reviewing courts should derogate from this presumption only where required by a clear indication of legislative intent or by the rule of law. 

Auer and TransAlta

In each case, the Court held that the vires review of subordinate legislation is subject to the Vavilov reasonableness standard, akin to other administrative decisions. In each case, the presumption of reasonableness was not rebutted. As subordinate legislation derives its validity from the statute which creates the authority, the Court specified that the identity of the decision maker enacting the subordinate legislation does not determine the standard of review. 

Affirming Vavilov, the Court outlined that in conducting a reasonableness review, a reviewing court must consider the outcome of the decision in light of its underlying rationale in order to ensure that the decision as a whole is transparent, intelligible, and justified. A reasonable decision is one that is both based on internally coherent reasoning and justified in light of the legal and factual constraints. 

In assessing the vires of subordinate legislation, the governing statutory scheme, other applicable statutory or common law, and the principles of statutory interpretation are relevant constraints. However, a reviewing court is not to undertake a de novo analysis to determine the correct interpretation of the enabling statute, but rather ensure that the delegate’s exercise of authority falls within a reasonable interpretation of the enabling statute, having regard to the relevant constraints. The Court also notes that a reasonableness review is possible in the absence of formal reasons. 

Furthermore, the Court affirmed that Katz Group continues to inform the reasonableness review regarding the vires of subordinate legislation. Specifically, that: 

1. Subordinate legislation must be consistent both with specific provisions of the enabling statute and with its overriding purpose or object;
    
2. Subordinate legislation benefits from a presumption of validity;
    
3. The challenged subordinate legislation and the enabling statute should be interpreted using a broad and purposive approach to statutory interpretation; and
    
4. A vires review does not involve assessing the policy merits of the subordinate legislation to determine whether it is necessary, wise, or effective in practice.

With this said, it is no longer required that subordinate legislation be “irrelevant,” “extraneous,” or “completely unrelated” for it to be deemed ultra vires. The Court opined that maintaining such a threshold would perpetuate uncertainty in the law, be inconsistent with the robust reasonableness review, and undermine the promise of simplicity, predictability, and coherence derived from Vavilov.

Takeaways 

Neither the process by which subordinate legislation was enacted, the delegate who enacted it, nor their proximity to the legislative branch determines the standard of review. The reasonableness standard of review applies to both “true regulations” passed by the exercise of a legislative function and to bylaws, rules, and regulations passed by administrative tribunals or municipal governments. 

The highly deferential threshold of “irrelevant,” “extraneous,” or “completely unrelated” no longer informs the reasonableness review, operating to lower the bar for challenging subordinate legislation. Note that the other principles from Katz Group remain good law, such as the presumption of validity. 

Despite Vavilov headlining the era of justification, the Court notes that a reasonableness review is possible in the absence of formal reasons. As formal reasons are not usually provided for the enactment of subordinate legislation, the reasoning process can often be deduced from various sources. This may include a regulatory impact statement at the federal level, for example, or debates, deliberations, and statements of policy that give rise to municipal bylaws. This development is worth observing, particularly as it relates to current or prospective litigants.  

Evident is the Court’s endeavour for stability and predictability with Vavilov. Rather than discarding predecessor precedents, the Court noted their continued guidance, including guidance for “true questions of jurisdiction or vires.” Recall that Vavilov ceased to recognize a distinct category for questions of jurisdiction requiring a correctness standard of review. In this regard, the Court will continue to tread with caution. 

Remaining certain is the Court’s continued emphasis to depart from disguised correctness, depicted by re-iterating that a reviewing court is not to undertake a de novo analysis to determine the correct interpretation of the enabling statute, but rather ensure that the delegate’s exercise of authority falls within a reasonable interpretation of the enabling statute.

Any further developments will need to wait until the Supreme Court of Canada takes on this complex and evolving issue.

 

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1. Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65.

2. Katz Group Canada Inc. v. Ontario (Health and Long Term Care), 2013 SCC 64.

3. C.U.P.E. v. N.B. Liquor Corporation, [1979] 2 SCR 227.

4. U.E.S., Local 298 v. Bibeault, [1988] 2 SCR 1048; Canada (Director of Investigation and Research) v. Southam Inc., [1997] 1 SCR 748; Pushpanathan v. Canada (Minister of Citizenship and Immigration), [1998] 1 SCR 982; Dr. Q. v. College of Physicians and Surgeons of British Columbia, 2003 SCC 19; Law Society of New Brunswick v. Ryan, 2003 SCC 20; Toronto (City) v. C.U.P.E., Local 79, 2003 SCC 63. 

5. Dunsmuir v. New Brunswick, 2008 SCC 9.