Happy Canada Day weekend!
**dicta recording to follow**
Dow Chemical Canada ULC v Canada, 2024 SCC 23 (June 28, 2024)
Category: General administrative law principles//statutory interpretation
Context: This is a case about the relative jurisdictions of the Federal Court and the Tax Court over tax matters. At issue is s.247(10) of the Income Tax Act, which confers a discretion on the Minister of National Revenue to make a downward transfer pricing adjustment. In relation to Dow, the Minister reviewed a loan agreement and transactions between Dow and a non-arms-length, non-resident lender. Applying section 247(2) of the ITA, the Minister was empowered to adjust the amounts in certain transactions to reflect what would have been agreed to had the persons had been dealing with one another at arm’s length. The result of s.247(2) was a significant increase in Dow’s income for a particular year. Dow applied under s.247(10) for a downward adjustment of its income to reflect amounts in interest paid by Dow to the non-arms length company [18].
Issue: The issue is whether a challenge to the Minister’s exercise of discretion under s.247(10) should proceed in the Federal Court—because it is a typical judicial review application of a federal “decision-maker”—or whether it should proceed to Tax Court, parasitic on its statutory appeal jurisdiction over assessments.
Holding: For a majority, Kasirer J concludes that “[c]hallenges to discretionary decisions under s.247(10) must instead be reviewed by the Federal Court, which is the only court that has the jurisdiction to apply the appropriate standard of review and access the appropriate range of administrative law remedies” [40].
Côté J, joined by Karakatsanis J and Rowe J, dissented, concluding that the challenge to the Minister’s discretion under s.247(10) should proceed to the Tax Court.
Issue and Analysis: Though this is not strictly a case of judicial review, Kasirer J for the majority uses Vavilov in big and small ways to reach the conclusion that the Federal Court’s jurisdiction is preserved over challenges to discretion under s.247(10). It is worth highlighting this case as proof-positive of Vavilov’s centrifugal force, not only as a set of rules to govern administrative law, but as a set of principles that gives due weight to Parliament’s “institutional design choices”: the scheme it sets up, and the ways that it contemplates judicial involvement. Let me count the ways:
Narrowly, Kasirer J notes that accepting Dow’s theory of the case would violate the specific rules set up by Vavilov. Dow’s argument that review should occur in the Tax Court would mean that the Tax Court would have to, essentially, review the discretionary Minister’s decision under reasonableness review [80]. However, the jurisdiction of the Tax Court is statutorily nourished by a right of appeal over assessments; piling-on reasonableness review into this set-up would essentially ignore Vavilov’s holding on the right of appeal and the de novo review it attracts—as Kasirer J says, “[i]n effect, Dow has asked this Court to extend, by judicial fiat, the jurisdiction of the Tax Court by providing it with original jurisdiction to undertake judicial review of the Minister’s decision under s.247(10)” [82]. This would ignore the specific choice made by Parliament to enact a right of appeal, which links to a particular standard of review [83].
More broadly, this case fleshes out what it means for Parliament to make “institutional design choices” about administrative schemes, a set of choices discussed but not elaborated upon in Vavilov. Paying close attention to the institutional design choices made by Parliament is a key part of the interpretation of statutory text, which itself discloses how and why a legislature made specific choices as to administrative structure. In this case, Kasirer J gives great weight to the fact that Parliament created a divided jurisdiction over tax matters between the Federal Court and the Tax Court. Parliament made a specific “choice to leave judicial review of discretionary administrative acts to the Federal Court…” [5]. Saying that the discretionary relief contemplated by s.247(10) can be piggy-backed onto an assessment appeal would eat away at the division of labour evinced by the text of the relevant statutes, which explicitly grants “some jurisdiction over taxation matters to the Federal Court, some to the Tax Court, and even some original jurisdicrion in taxation matters to the Federal Court of Appeal” [4].
Kasirer J offers some important guidance about purposive arguments in statutory interpretation, and how they should be carefully approached in order to preserve Parliament’s actual institutional design choices. Consider two such arguments. First, Dow argued that one-stop shopping in the Tax Court would advance access to justice [116]. But Kasirer J rightly rejects these arguments: “…access to justice cannot displace settled understandings of Parliament’s intended division of jurisdiction between the Tax Court and the Federal Court that have meaningful purpose” [13, my emphasis]. He goes on to state that Dow’s plea to expand the jurisdiction of the Tax Court beyond what is provided for in legislation for the purpose of enhancing access to justice is ultimately unconvincing” [119, my emphasis]. These passages are a recognition that the only purpose that matters is the one discernible from statutory text. And this same insight is powerfully re-stated when assessing Dow’s argument on assessments. Dow argued that, by “necessary implication” the Tax Court should be able to deal with discretionary decisions like the one contemplated in s.247(10). Federal Court jurisdiction is preserved unless, under s.18.5 Federal Courts Act, there is a positive legislative expression—an express right of appeal—nourishing the Tax Court. The “necessary implication” argument, resting seemingly on an abstract desire for access to justice, would quite literally read out the word “express” in s.18.5. Kasirer J rightly, and refreshingly, notes that purpose cannot justify a departure from the express language of the provision [101].
Alfredson (Re), 2024 ONCA 504 (June 24, 2024)
**Thanks to a SEAR reader for sending this case**
Category: Reasonableness review.
Context: [1] The appellant was found not criminally responsible (“NCR”) on March 24, 2011 of one count each of aggravated assault and possession of a weapon for a purpose dangerous to the public peace. On September 14, 2023, following the appellant’s annual hearing, the Ontario Review Board (the “Board”) found that the appellant continued to pose a significant threat to the safety of the public. The Board continued the disposition from the previous year, a detention order at the Forensic Service of the Centre for Addiction and Mental Health (the “Hospital”), with privileges up to residing in a residence in the community approved by the person in charge of the Hospital.
Holding: [10] We agree with the appellant that the Board erred in its characterization of the evidence in places in its reasons. However, we conclude that the issue was one of mischaracterization, rather than misunderstanding the evidence in the record. When the reasons are read as a whole, the Board correctly recounted in detail the relevant evidence elsewhere in its reasons. The Board’s risk assessment and disposition were reasonable on the record before it.
Analysis: The distinction between “mischaracterization” and “misunderstanding” is as thin as cigarette paper. Another way to think of the case, somewhat implied in the reasons of the Court, is from the perspective of materiality. In other words, the Board’s errors, while errors, did not impact the overall reasonableness of the decision. For example, when the Board stated that Alfredson had a “history of medication non-adherence,” this was strictly incorrect: rather, this was a reference to a doctor’s evidence that “if the appellant was granted a discharge, he would likely return to substance abuse and become non-compliant with his antipsychotic medication” [11]. But when we measure this up against the rest of the Board’s reasons, these factual errors did not “impact the reasonableness of its risk assessement and disposition” [21].
So, instead of drawing lines between “mischaracterization” and “misunderstanding,” one of which is legally relevant to the reasonableness of the Board’s decision, we can simply say the errors were not material.
Stratford (City) v Stratford Professional Fire Fighters Ass’n Local 534, 2024 ONSC 3693 (June 27, 2024)
Category: Selection of the standard of review
Context: This is an application for judicial review of a Supplemental Arbitration Award. For our purposes, the question is whether the arbitrator was barred from issuing his Supplemental Award because he was functus officio. Functus officio provides that a final decision of a court or tribunal cannot be revisited absent a statutory authorization, a slip error, or where there has been an error expressing the “manifest intention” of the court or tribunal: see Chandler v Alberta Association of Architects, [1989] 2 SCR 848. The arbitrator decided that the doctrine of functus officio did not apply and that he had jurisdiction to clarify the initial award.
Issue: What is the standard of review for the arbitrator’s decision on functus officio?
Holding and Analysis: The Court concludes that the standard of reasonableness applies to an administrative tribunal’s application of the doctrine of functis officio [51], and that the arbitrator’s application of the doctrine was reasonable [59].
The City argued that the way functus officio limited the arbitrator’s jurisdiction after an award was issued attracted correctness review because it was a general question of central importance to the legal system [48]. The Court does not reject wholesale the idea that the scope of the doctrine of functus officio could fall to correctness review. Rather, the issue in this case is the application of functus officio— “…there is no dispute between the parties as to the legal principles encompassing the doctrine of functus officio” [50]. In this way, the Court’s reasoning in this case mirrors the way Charter rights are dealt with after York Region District School Board v Elementary Teachers’ Federation of Ontario, 2024 SCC 22: there could be a distinction between the scope of general legal questions—whether they arise on the facts, and how they are analyzed—and applying them to specific facts. Here, since the question was one of application, reasonableness review applies.
Disclaimer: Nothing in the SEAR is legal advice. The SEAR is not designed to be comprehensive. It is designed to collect some cases that I believe are interesting to practitioners and students, and to provide my quick thoughts. Not all of the cases presented are fully analyzed ie) I’ve selected the most relevant issues in some of the cases. Please complement the SEAR with your own research and study. Any mistakes are my own