Issue #49: July 17, 2022
A new correctness category, regulatory review, questions of central importance
Greetings SEAR readers,
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Society of Composers, Authors and Music Publishers of Canada v Entertainment Software Association, 2022 SCC 30 (July 15, 2022)
Context: The question posed in this appeal is deceptively simple: does s.2.4(1.1) of the Copyright Act permit the Copyright Board to assess two royalties to access works online (one for downloads and one for streams)? The Board thought it did. At the Federal Court of Appeal, Stratas JA held that the Board erred by concluding that it had this power, in part because the Board erroneously relied on article 8 of the 1996 WIPO Copyright Treaty to ground its power [2-3]. In reaching this conclusion, Stratas JA also questioned whether the presumption of reasonableness set out in Vavilov would apply in this case: since the Board and the courts have concurrent jurisdiction over some parts of the Copyright Act, pre-Vavilov, the standard of review was correctness (see e.g. Rogers Communications v SOCAN, 2012 SCC 35) (what I’ll call the “Rogers Exception.”)
Issue: (1) What is the standard of review? (2) Does the Board’s decision satisfy the standard of review?
Holding: Appeal dismissed. Rowe J, for a majority of 7: (1) The standard of review is correctness, because “[r]ecognizing concurrent first instance jurisdiction between courts and administrative bodies as a sixth category of correctness review gives effect to legislative intent and promotes the rule of law” ; (2) The Board’s decision is incorrect. The WIPO Treaty is relevant at the “context” stage of the modern approach (text, context, purpose), and courts need not find “textual ambiguity” before considering the treaty . However, a treaty “cannot overwhelm clear legislative intent” because “[t]he court’s task is to interpret what the legislature…has enacted and not subordinate this to what the federal executive has agreed to internationally” . In this case, the Board’s decision was (1) inconsistent with the text and structure of the statute, which treat downloads and streams as “single protected activities” for which authors can only charge one royalty ; (2) inconsistent with a purpose of the Copyright Act, technological neutrality ; (3) incorrect when it came to the question of international law, because the international obligation "did not require the imposition of additional royalties” .
Karakatsanis J, joined by Martin J, concurred. Importantly, she argued that the recognition of a new correctness category “undermines Vavilov’s promise of certainty and predictability” . For her, Vavilov “obviously” considered the Rogers Exception, and did not adopt it as part of the standard of review framework. Even if Rogers had not been considered in Vavilov, Karakatsanis J would not recognize it as a new correctness category because: (1) the more “robust” form of reasonableness is equipped to safeguard the rule of law ; (2) the Copyright Act does not offer any clear legislative signal that correctness review was intended .
We see some of the post-Vavilov divisions forming on the Court, but the Vavilov majority (basically) remains intact, and ESA and Abrametz can be seen as an endorsement of the approach. This may be a signal that, contrary to Karakatsanis and Martin JJ, the recognition of the Rogers Exception is perfectly consistent with Vavilov. Readers of this newsletter will have seen the argument made that Vavilov must have expressly said something in order for it to fall under the principles in that case. But like the Federal Court of Appeal said—and as we have seen in Abrametz and now ESA—Vavilov was sweeping and comprehensive in its total recalibration of the standards of review. Even the concurrence in ESA recognizes this (ESA, at para 138). This means that we must start with Vavilov when evaluating previous administrative law jurisprudence (Vavilov, at para 143). Here, Vavilov opened up the door to the recognition of new correctness categories, in future cases, when those categories are consistent with the principles outlined in Vavilov (Vavilov, at para 70). The mere fact that the Rogers Exception was not expressly mentioned in Vavilov does not mean that its principles should be disregarded when faced with concurrent jurisdiction or any other future issue. With respect, the concurrence’s approach seems to read Vavilov much too narrowly and literally—the question is whether a potential development is “aligned in principle” with Vavilov (Vavilov, at para 143, my emphasis).
Vavilov noted that where there is a signal of legislative intent “as strong and compelling” as a legislated standard of review or statutory right of appeal and/or where the rule of law requires the correctness standard, a new correctness category can be recognized (Vavilov, at para 70). Viewing the matter from first principles, as Vavilov says we should, the Rogers Exception fits neatly. If a right of appeal rebuts the presumption of reasonableness because it invites the supervision of the courts, concurrent jurisdiction schemes do the exact same thing, especially when the concurrency runs over the very questions at issue in the case (as here, see ESA at paras 23, 31). A failure to recognize this category would undermine Vavilov’s laser-focus on institutional design. On the rule of law, the majority is on similarly strong ground. One of the core virtues underlying Vavilov’s conception of the rule of law is consistency (Vavilov, at para 72). This is why constitutional questions have to be answered correctly—the strength of constitutional protections should not depend on the whim of specific decision-makers. Here, a similar concern about consistency justifies the recognition of the Rogers Exception. If different standards of review were applied to the same issue depending only on whether the issue arises in a court or the Board, then inconsistency arises based only on the forum where a claim is raised. And this raises another problem: if there was a judicial decision on point in the same statutory scheme, it would ignore that scheme for the administrator to disregard the judicial decision. This all makes sense to me.
One may wonder, though, how far this goes. Does the same logic apply when any court interprets a legislative provision in an administrator’s enabling statute, even without a concurrent jurisdiction scheme? Vavilov’s answer is no, because in those cases, there is no explicit concurrency. But the same issues about inconsistency between a judicial decision already rendered and an administrative decision could exist. Vavilov permits this inconsistency on the reasonableness standard, so long as the administrator justifies its departure from the judicial precedent. I don’t see this changing any time soon, but one should note that inconsistency—undermining the rule of law—can still arise in cases without concurrency, and courts should be aware and alive to this reality.
In Dunsmuir v New Brunswick, 2008 SCC 9 at para 145, Binnie J hoped that the Court could establish presumptive rules that “get the parties away from arguing about the tests and back to arguing about the substantive merits of their case.” The hope was that predictability and certainty in standard of review will move the parties to the merits. In my view, Vavilov has moved us closer to that goal because of its comprehensiveness, its clear rules, and its guidance about applying the reasonableness standard. By my lights, less time is spent on the standard of review, and more time is spent understanding the facts and law undergirding a decision. This is to the benefit of those challenging administrative action.
Contrary to Karakatsanis J, I do not think the recognition of this correctness category will undermine this certainty. While it may ever-so slightly increase the willingness of lower courts to recognize new correctness categories, the room for doing so is limited—again, a new category would have to be a clear legislative signal (of which there are only so many), or major, potential inconsistency issues between courts and administrators on important questions. Only one outstanding issue, on this front, comes to mind: Doré.
With all due respect, an unfortunate part of ESA, to my mind, is the concurrence. Specifically, the concurrence’s comments about the FCA decision below—unrebutted by the majority—require significant clarification. First, Karakatsanis J writes that the FCA undermined Vavilov’s simplicity by suggesting that it endorsed the idea that reasonableness is contextual, or perhaps more than one standard (ESA, at paras 137-138, ESA FCA, at paras 26-36). This is a rather dubious mischaracterization. The FCA, in those paragraphs, merely pointed out that Vavilov’s contextual constraints kick in differently in different cases: for example, where the statutory grant of authority is broad, the decision-maker has more room to maneuver; decisions of great significance call for more justification. Vavilov endorses these constraints itself, and the FCA provided direct citations to paragraphs of Vavilov supporting its approach. For this reason, I find the concurrence’s charge puzzling. One senses an attempt to relitigate the consequences of Vavilov itself: Karakatsanis J, it should be recalled, was largely against the Vavilovian approach, advocating a virtually-irrebuttable rule of deference in home statute cases, pre-Vavilov. (Edmonton (City) v Edmonton East (Capilano) Shopping Centres Ltd, 2016 SCC 47 at paras 22, 33, 35). But with this much water under the bridge at this point, the attempt to re-litigate the issue in ESA falls flat for good reason.
Second, Karakatsanis J accuses the FCA of suggesting that the Supreme Court’s recent statutory interpretation cases suggest a “return to textualism” . But I can’t see how this is true, and this appears to be a mere rehash of what Karakatsanis and Abella JJ asserted in Telus Communications Inc v Wellman, 2019 SCC 19 at para 109. In ESA, the FCA applied the modern approach, and specifically the recent SCC cases that themselves suggest that abstract policy goals cannot drive the text higher than the words can bear (see ESA FCA, at paras 42-43). There are differences between this approach and “textualism,” as I write here (see also my paper here on the SCC’s recent cases and ESA if you want more detail). The charge doesn’t quite stick.
Le v British Columbia (Attorney General), 2022 BCSC 1146 (July 8, 2022)
Context: Cabinet promulgated a regulation which “caps disbursements that a successful plaintiff may recover” in motor vehicle accidents to “6% of either the total damages awarded by the court or of the amount agreed to in a settlement, subject to some specific exceptions” . The “practical impact” of the regulation is serious: it may prevent plaintiffs from advancing medical and expert evidence necessary to prove her claim. Le argued that the regulation went beyond the powers of the enabling statute, and that the disbursement can “…prevent or discourage some plaintiffs from accessing the court for a decision of their case on its merits”  which dilutes the role of the s.96 courts (see also the BCSC decision in Crowder v British Columbia (Attorney General), 2019 BCSC 1824). See Paul Daly here for more on Crowder.
Issues: (1) Is the regulation valid on administrative law grounds (vires)?; (2) Does the regulation violate s.96 of the Constitution Act, 1867?
Holding: (1) No; (2) Yes.
(1) On the validity of the regulation, the BCSC directly cited the Federal Court of Appeal’s important decision in Portnov v Canada (Attorney General), 2021 FCA 171 (see Issue #7). Portnov held—correctly, in my view—that the test for the vires of regulations set out in Katz Group Canada Inc v Ontario (Health and Long-Term Care), 2013 SCC 64 was foreclosed by Vavilov. This is because Vavilov purported to be a comprehensive approach to judicial review of all delegated action (at the very least on the substance of that action), and regulations are just one species of delegated action. Here, the Court still cites Katz, and its analysis does appear at some point to reflect the Katz standard . But to be clear, Katz is different from Vavilov. Katz was a hyper-deferential standard that applied regardless of the context. Vavilov’s reasonableness standard, quite differently, is a constrained standard that adjusts to the context. As we saw last week in Abrametz, where possible, I think Vavilov should oust these bespoke standards because its principles and approach are comprehensive and sweeping, as both opinions noted in ESA.
(2) The Court goes on to assess the constitutional argument, and I’d have to think more about the analysis (but it strikes me, on first blush, as suspect). But I do not think it was at all necessary for the Court to address this issue, even if it was argued. I know that the Court focused on the BCSC’s previous decision in Crowder, and that decision may change my conclusion. But here, the success of Le’s administrative law claim foreclosed the need to opine on the constitutional one.
Pelletier v Canada (Attorney General), 2022 FC 1002 (July 7, 2022)
Context: Pelletier seeks judicial review of a decision of the Veterans Review and Appeal Board. The Board decided that Pelletier’s injury during a mandatory Canadian Armed Forces sports activity “did not qualify for a critical injury benefit” under the Veterans Well-being Act” . The Board specifically held that the injury did not occur as a result of a single event, and in reality, the injury was in part attributable to Pelleter’s osteoarthritis of the hip and his resulting resurfacing surgery. This is an issue of causation .
Issue: (1) What is the standard of review?; (2) Is the decision reasonable?
Holding: The standard of review is reasonableness and the decision is unreasonable.
Analysis: I highlight this case for its discussion on standard of review. Relying on the Federal Court of Appeal’s pre-Vavilov decision in Cole v Canada (Attorney General), 2015 FCA 119 at paras 46-59, which held that the causation question in Board cases is reviewable on a correctness standard, Pelletier argued that the question is a legal question of central importance . Cole specifically held that because causation transcends the particular statutory scheme and did not fall within the Board’s expertise, correctness was the applicable standard.
This case, like others, is an important warning for advocates not to overextend arguments for the central questions category, and for Vavilov to be the starting point. The Court here rightly rejects the invitation to recognize this as a question of central importance because Cole must be assimilated to Vavilov. For one, assessments of expertise are no longer relevant . More importantly, whether causation is established for the purposes of this legislation does not track over to every other statute dealing with issues of causation, though the inquiries may be similar. Arguments for this category should be reserved to cases outlined in Portnov: (1) the issue transcends the statute; (2) it is constitutional or quasi-constitutional in nature (Portnov, at paras 13, 17).
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.
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