The Standard of Review in Judicial Review Proceedings

The Standard of Review in Judicial Review Proceedings
The Standard of Review in Judicial Review Proceedings
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* Thomson Reuters regards the authors as individuals with expertise in tax and litigation. Thomson Reuters has published five Practical Insight chapters on different tax controversy topics, which Counter partners have written. This content originally appeared in one of those Practical Insights chapters.*

Standard of Review versus Ground for Review

Judicial Review Practical Insight The standard of review and the ground for review are two important but distinct elements in judicial review. The ground (or grounds) for review relates to the improper action, inaction, procedure, or other element of the administrative action that the application alleges to have occurred that warrants Federal Court judicial review. For example, the decision maker made an error of law or an erroneous finding of fact, or the decision maker’s procedure for reaching the decision was unfair. Subsection 18.1(4) of the Federal Courts Act sets out the specific grounds for review that are available in the Federal Court.

 

The Two Standards of Review in Canadian Tax Law

The standard of review relates to the amount of deference the Federal Court affords the administrative decision maker. Since the Supreme Court of Canada’s decision in Dunsmuir, there have been two standards of review: correctness and reasonableness.  

As the names suggest, reasonableness is the more deferential standard of review. However, the amount of deference can vary depending on the nature of the decision. The correctness standard allows the Federal Court to substitute its judgment for that of the decision maker; under the reasonableness standard, the Federal Court must defer to the decision maker unless the decision maker’s process itself was flawed.

Determining the appropriate standard and how to apply each standard has proved difficult and has been the subject of much judicial and academic scrutiny. In 2019, the Supreme Court of Canada, in Vavilov v. The Queen,1 created a much-needed test and guidance to identify the correct standard of review. Nevertheless, the case law discussing the standard of review is complex and continues to evolve.

 

Federal Court Will Determine the Appropriate Standard of Review in All Applications

The standard of review is a question of law. In these circumstances, the reviewing court will always determine the appropriate standard of review, even if the parties agree on the appropriate standard.2 For example, in an application for judicial review to the Federal Court, each of the applicant and the respondent will submit a memorandum of fact and law.. If both parties submit the standard of review is reasonableness, the Federal Court judge is still required to make their own determination of the appropriate standard of review. In essence, the parties cannot “contract out of the appropriate standard of review”.3

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The Standards of Review since Dunsmuir

Prior to Dunsmuir in 2008, there were three standards of review: correctness, reasonableness simpliciter, and patent unreasonableness. However, the Supreme Court noted that lower courts had difficulty distinguishing between reasonableness simpliciter and patent unreasonableness, which led to courts having difficulty selecting the appropriate standard of review. Moreover, the Supreme Court found that courts improperly applied the patent unreasonableness standard.4

 

In Dunsmuir, the Supreme Court of Canada collapsed reasonableness simpliciter and patent unreasonableness into a single reasonableness standard to clarify and simplify the standard of review in judicial review. After Dunsmuir, the standards of review are reasonableness and correctness. In 2019, the Supreme Court further clarified the standard of review analysis in Vavilov. In particular, the Supreme Court adopted a revised framework that begins with a presumption of the reasonableness standard of review.

 

The Reasonableness Standard

Reasonableness is a deferential standard. In Vavilov, the Supreme Court provided the following comments when defining how to interpret the reasonableness standard:

Reasonableness review is an approach meant to ensure that courts intervene in administrative matters only where it is truly necessary to do so in order to safeguard the legality, rationality and fairness of the administrative process. It finds its starting point in the principle of judicial restraint and demonstrates a respect for the distinct role of administrative decision makers. However, it is not a “rubber-stamping” process or a means of sheltering administrative decision makers from accountability. It remains a robust form of review.5

Further, in Vavilov, the Supreme Court stated that in conducting a reasonableness review,

a court must consider the outcome of the administrative decision in light of its underlying rationale in order to ensure that the decision as a whole is transparent, intelligible and justified. What distinguishes reasonableness review from correctness review is that the court conducting a reasonableness review must focus on the decision the administrative decision maker actually made, including the justification offered for it, and not on the conclusion the court itself would have reached in the administrative decision maker’s place.6

The Supreme Court also offered the following guidance to reviewing Courts conducting a reasonableness review:

  • A reviewing Court should consider whether both the rationale for the decision and the outcome to which the rationale led was unreasonable. Specifically, “it is not enough for the outcome of a decision to be justifiable. Where reasons for a decision are required, the decision must also be justified, by way of those reasons, by the decision maker to those to whom the decision applies.”7
  • The reasonableness standard remains a single standard, and instead, the particular context of a decision constrains what will be reasonable for an administrative decision maker to decide in a given case. 8

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  • Although the exercise of public power must be justified, intelligible and transparent, "a reviewing court must bear in mind that the written reasons given by an administrative body must not be assessed against a standard of perfection.”9
  • There are two general types of fundamental flaws that would render a decision unreasonable. First, a decision that is not based on reasoning that is both rational and logical. Second, a decision that is untenable considering the relevant factual and legal constraints that bear on it.10 However, there is no need for reviewing courts to categorize failures of reasonableness as belonging to one type or the other.11
  • When an administrative decision does not provided reasons – and reasons are not required - “the analysis will then focus on the outcome rather than on the decision maker’s reasoning process”.12
The Correctness Standard

Under the correctness standard, the reviewing court considers the questions and issues that were before the decision maker and undertakes its own analysis of the questions and issues. In undertaking its analysis, the reviewing court does not show any deference to the decision maker’s process or reasons. If the reviewing court determines that the correct answer to the question is different than the decision maker’s answer, the reviewing court will substitute its judgment for that of the decision-maker.13

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How to Determine the Appropriate Standard of Review

The Revised Framework - Vavilov Presumption of Reasonableness

In Vavilov, the Supreme Court stated that “whenever a court reviews an administrative decision, it should start with the presumption that the applicable standard of review for all aspects of that decision will be reasonableness.”14

In other words, in all judicial review matters, the starting point is the deferential standard of reasonableness. However, the Supreme Court stated that a reviewing Court could rebut the presumption for two reasons.

Two Reasons to Rebut the Presumption of Reasonableness

Legislature Indicates a Different Standard for Review

The first basis in which the Supreme Court instructs a reviewing Court to rebut the reasonableness standard of review, is where a legislature has indicated that a standard of review other than reasonableness should apply.

 The Supreme Court gave two instances of where the legislature has indicated that a different standard should apply:

  • where there is legislated standard of review; and
  • where there is a statutory appeal mechanisms from an administrative decision to a court.15

Legislated Standards of Review

Where a legislature has indicated that courts are to apply the standard of correctness in reviewing certain questions, that standard must be applied.16

For example, in British Columbia, the legislature has established the applicable standard of review applicable to decisions on questions of statutory interpretation by the B.C. Human Rights Tribunal is to be correctness.17

Statutory Appeal Mechanisms

The second indication that a standard of review, other than reasonableness, should apply, is when the legislation includes the presence of a statutory appeal mechanism from an administrative decision to a court, and that court is to perform an appellate function with respect to that decision.18

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Where a legislature has stated that parties can appeal an administrative decision to a court, the blanket presumption of the reasonableness is rebutted, and the reviewing courts must apply appellate standards (i.e., correctness or palpable and overriding error) of review to the administrative decision. The appellate standards of review are determined with reference to the nature of the question (in accordance with Housen v. Nikolaisen, 2002 SCC 33).19

The Supreme Court clarified three points related to rebutting the presumption of reasonableness based on the existence of a statutory appeal mechanism: 

  • Whether an applicant has the ability to appeal as of right, or only with leave of the court, does not change that the statutory appeal mechanism will rebut the presumed reasonableness standard of review.20
  • If a legislative provisions does not provide a right of appeal, and simply address procedural or other similar aspects of judicial review in a particular context the provisions do not rebut the presumed reasonableness standard of review.21
  • In some legislation (i.e., the Income Tax Act), a party’s right to appeal may be limited by specific types of questions or If the statutory appeal mechanisms do not apply to questions or decisions subject to judicial review applications, the presumption of reasonableness will not be rebutted.22

Rule of Law

The second reason for which the Supreme Court directs a reviewing Court to deviate the presumption of the reasonableness is where the rule of law requires the court to apply the standard of correctness for certain types of legal questions, including the following:

  • Constitutional questions,
  • General questions of law of central importance to the legal system as a whole,
  • Questions regarding the jurisdictional boundaries between two or more administrative bodies.23

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The Final Conclusion on Administrative Law Standards of Review?

In their concurring decision to Vavilov, Justices Abella and Karakatsanis, emphasizes that the majority’s new standard of review framework ignores the specialized expertise of administrative decision-makers and contradicts the administrative law philosophy that has guided the Court’s jurisprudence for the last 40 years.24

 

In particular, the minority decision believes that the majority’s new framework is much less deferential towards administrative decision-makers than Dunsmuir. They believe it unjustifiably expands the circumstances in which generalist judges will be entitled to substitute their own views for those of specialized decision-makers who apply their mandates on a daily basis. It believes that the majority’s decision reverses the decades of progress that create the necessary relationship between the administrative bodies and the judiciary.25

 

The concurring decision leaves room for further clarification and discussion. However, two years later, the SCC has only cited Vavilov once – in Northern Regional Health Authority v. Horrocks – which does not do more than restate the principles.26

 

 

 

 

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Citations

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

2 Monsanto Canada Inc. v. Ontario (Superintendent of Financial Services), 2004 SCC 54; applied recently in Wilson v. Atomic Energy of Canada, 2015 FCA 17, para. 43 (reversed at S.C.C. on other grounds).

3 Celgene Corp. v. Canada (Attorney General), 2011 SCC 1, para. 33.

4 Dunsmuir v. New Brunswick, 2008 SCC 9, para. 27 [Dunsmuir], para. 37.

5 Ibid at para. 13.

6 Ibid at para 15.

7 Ibid at para. 86.

8 Ibid at para. 89.

9 Ibid at para. 91.

10 Ibid at paras. 105 to 135 contains a discussion of potential legal and factual constraints.

11 Ibid at para. 101.

12 Ibid at para. 138.

13 Ibid at para. 50.

14 Vavilov, supra note 1 at paras. 16 and 25.

15 Ibid, at para. 17.

16 Ibid, at paras. 34 and 35.

17 Ibid.

18 Ibid, at para. 36.

19 Housen v. Nikolaisen, 2002 SCC 33.

20Vaviolov, supra note 1 at para. 50.

21 Ibid, at para 51.

22 Ibid, at para 52.

23 Ibid, at para 53.

24 Ibid, at para. 198.

25 Ibid at paras. 199 to 201

26 Northern Regional Health Authority v. Horrocks, 2021 SCC 42, citing Vavilov at paras. 7 to 8 and 31.

 

 

 

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