Issue #73: January 15, 2023
The never-ending saga of standard of review on regulations, appellate standard of review, study permit JR
Greetings SEAR readers,
Today, I highlight a piece I wrote in the Lawyer’s Daily, on the controversy over standard of review of regulations. You can read the piece with a subscription or free trial.
Mark
Canada (Attorney General) v Catalyst Pharmaceuticals, Inc, 2023 FCA 3 (January 15, 2023)
Category: Selection of standard of review (appellate standard).
Context: This is a decision of the Minister of Health, which issued a notice of compliance (NOC), granting Medunik Canada permission to enter the market with the drug Ruzurgi. Prior to this, Catalyst also filed a new drug submission for its drug, Firdapse. Firdaspe was the first drug of its kind approved with a particular ingredient, and so it was designated as an “innovative drug” under the Food and Drug Regulations. The problem in this case arose because “Section C.08.004.1 of the Food and Drug Regulations creates a regime that limits the right of a drug manufacturer to obtain an NOC for a new drug based on a comparison with an innovative drug. This is known as the data protection regime” [2]. Catalyst argued that the approval of Ruzurgi was unreasonable because this provision of the Food and Drug Regulations should have prohibited the issuance of the NOC to Medunik [6]. In its first judicial review application, Catalyst was successful. In its redetermination, Health Canada again concluded that the data protection regime did not apply to Ruzurgi, and the Federal Court again found that decision unreasonable.
Issue: The issue in this case concerns the level of deference owed to the Federal Court’s purported findings of fact and mixed fact and law. Typically, Agraira v Canada (Public Safety and Emergency Preparedness), 2013 SCC 36, largely affirmed in NRHA v Horrocks, 2021 SCC 42 (Issue #15), applies, meaning that the Court “must determine whether the court below correctly identified the standard of review on the judicial review and, if so, whether it correctly applied that standard of review” [16]. This is a re-do. Catalyst, however, argued that Agraira/Horrocks does not apply where “the Federal Court has made its own findings of fact or of mixed fact and law,” and in such cases, palpable and overriding error in the typical appellate standards should apply. The Attorney General responded that “there is a distinction between findings made by a reviewing court on issues that the decision-maker has not been able to address (like bias), and findings properly made by a decision maker” [20]. In the former case, palpable and overriding error should apply.
Holding: The Court ultimately differs from the Federal Court and allows the appeal, restoring the Minister’s decision.
Analysis: The Federal Court of Appeal here accepts the Attorney General’s distinction—it concludes that the Federal Court’s assessment of certain documents was entitled to deference on the reasonableness standard. There is a common sense reason for this, as Locke JA points out: “I do not accept that a reviewing court may reach its own conclusion on the importance of documents that were available for consideration by a decision maker without deference to the decision maker’s assessment of such importance, and then be entitled to deference on that conclusion” [49]. We can contrast this situation with one where the first instance judicial review court is making original findings: say, of admission of evidence that was not before the decision-maker. As Keith Brown and I argue in our paper on the matter, such findings should be assessed on the appellate standards because they were never in the remit of the administrative decision-maker to begin with; they do not engage the division of labour between administrator and reviewing court (explored in Association of Universities and Colleges, 2012 FCA 22). In such cases, Horrocks appears to draw out an exception (Horrocks, at para 12). Nonetheless, it is obvious that this exception should not apply in a case like this, where the assessment of documents was completed by the decision-maker itself.
International Air Transport Association v Canadian Transportation Agency, 2022 FCA 211 (December 6, 2022)
Category: Selection of standard of review (standard of review for regulations)
Context: This is a challenge to the validity of regulations adopted by the Canadian Transportation Agency. Under a new legislative provision, the Agency—after consultation with the Minister of Transport—can promulgate regulations imposing obligations on air carriers in relation to flight delays, cancellations, boarding denials, and lost or damaged baggage [2]. Under this new provision, the Minister issued a Direction related to tarmac delays. After this, the Agency adopted the relevant Regulations imposing further obligations on air carriers. The appellants, via statutory right of appeal (s.41 (1) of the Canada Transportation Act, see para 72), challenge the Regulations, including on the bases that they contravene Canada’s international obligations and have impermissible extraterritorial effects. They also, within the appeal, challenge the Direction regarding tarmac delays.
Issue: Are the Regulations legal?
Holding: The Regulations are legal, except for one provision [5, 154-155]. The Directive is also legal, as it is parasitic on the Regulations.
Analysis: I was originally not going to profile this case—it is a bit confusing. But after a conversation with a co-author, Professor Martin Olszynski, I think it is worth highlighting. We are met, yet again, by the issue of the standard of review of regulations (see Issue #71 for a summary). This one comes in interesting garb.
First, one wrinkle here is the way the case was brought: by statutory right of appeal. The language of the right of appeal in this case contemplates challenges to regulations: “An appeal lies from the Agency to the Federal Court of Appeal on a question of law or a question of jurisdiction on leave to appeal being obtained from that Court on application made within one month after the date of the decision, order, rule or regulation being appealed from…” The intervener in the case attempted to argue that the FCA did not have jurisdiction to review the Direction because it does not fall under the scope of the right of appeal—and instead, the Federal Court would have exclusive jurisdiction over the matter [22, 24]. But in this case, the validity of the Direction was tied to the validity of the regulation implementing the Direction on tarmac delays [27]. Having drawn this conclusion, and inextricably tying the Direction to the regulation, it tentatively appears to me that all issues in the case should be dealt with according to the appellate standards. Now, this appears to be an open question. A panel of the Divisional Court post-Vavilov has mixed and matched a statement that a statutory right of appeal invites the appellate standards, with the application of the Katz framework: see Covant v College of Veterinarians of Ontario, 2021 ONSC 8193 at paras 21, 25 et seq. But this, I think, undermines the categorical nature of Vavilov’s statement that the appellate standards apply when there is a stated right of appeal, regardless of the nature of the issue raised: see Law Society of Saskatchewan v Abrametz, 2022 SCC 29 at para 27. I can see why this appears counter-intuitive, especially set against the long backdrop of a hands-off approach to review of regulations post-Vavilov. But if Vavilov is categorical, it is categorical.
I wonder if this open question led the Court astray in this case. Here, the FCA acknowledges that the right of appeal invites the appellate standards [71]. However, it goes on to assess whether Katz or Vavilov applies in this case (starting at para 185). It ultimately concludes that the standard of review did not matter for the result in this case [191]. Nonetheless, in describing the debate, the Court says that the controversy is whether courts should assess the validity of the regulation through “the lens of the reasonableness standard of review or through the more exacting prism of the ultra vires doctrine…” which the court analogizes to correctness review [191, see also 186].
Seeing Katz described as “more exacting” is, in my view, misplaced. Perhaps this was an attempt by the Court to synthesize Katz with the application of the correctness standard on questions of law in a statutory right of appeal. But this is awkward because Katz is ultimately a hands-off approach, which only asks whether a regulation is “completely unrelated” to its statutory purpose. This is why its supporters, such as the Alberta Court of Appeal in Auer v Auer, 2022 ABCA 375 (Issue #68) think it best reflects the separation of powers—it ultimately grants deference to what is, purportedly, a legislative actor. Nonetheless, in this case, the Court ultimately hedges—though perhaps it betrays a preference for Katz when it highlights the problems with applying the reasonableness standard [189].
As a matter of law, though, this case is unlikely to make much of a difference in the grand scheme of this debate. It does not come down clearly on one side or another; and at any rate, the Federal Court of Appeal is bound by its decision in Portnov v Canada (Attorney General), 2021 FCA 171, where it endorsed the application of Vavilov’s reasonableness standard in challenges to regulations raised via application for judicial review—unless it can be distinguished according to Miller v Canada (Attorney General), 2002 FCA 370. If we start with Vavilov, then that framework—and its holding on appellate standards—may also apply to regulations.
Ahadi v Canada (Citizenship and Immigration), 2023 FC 25 (January 5, 2023)
Category: Application of the reasonableness standard
Context: This is a judicial review of a decision to refuse a study permit to the applicant and her 5 year old daughter. The officer was not satisifed that the applicant would leave Canada at the end of the permit period.
Issue: Is the decision reasonable?
Holding: No.
Analysis: This case was profiled on the CBC website, perhaps because of the Court’s rather strong language. The officer was not convinced that the applicant’s proposal to seek an MBA was “reasonable” because of the applicant’s employment and education history and “career path” her previous studies were in an “unrelated” field [8]. The Court lambastes this conclusion:
[15] While I am not a career counsellor, life’s experiences have not left this Court totally bereft of some knowledge about Masters’ programs in business administration. One need not take judicial notice that a Masters degree is a higher-level degree than a Bachelors degree. Again, while I am not a career counsellor, it is common knowledge that people often pursue a Master of Business Administration after having undertaken an undergraduate degree and after having obtained some work experience. When I consider the Applicant’s history of having acquired a Bachelors degree and related work experience, I find the conclusion that her proposed studies are not reasonable given her career path is unintelligible. Given the material before the Officer, more was required to justify the observation that her proposed studies were not reasonable.
The material on the application contradicted the officer’s conclusions—she included approval from her employer, and proof of a significant scholarship. While the Court appears to see no other reasonable outcome on the record [22], it does suggest that more would be required to justify a contrary conclusion given the evidence. This is probably a case that benefitted from Vavilov’s renewed focus on justification.
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.