In Canada (Minister of Citizenship and Immigration) v. Vavilov, Bell Canada v. Canada (Attorney General), and National Football League v. Canada (appealed), the Supreme Court of Canada overhauled the legal framework that courts had previously applied in the judicial review of administrative decisions.
The Supreme Court acknowledged that the previous precedent set in Dunsmuir had not fulfilled its purpose of providing simplicity and predictability for the judicial review process, noting that the contextual analysis was unwieldy, unclear, and unduly complex. Prior to the trilogy, the Court noted that the standard of review analysis required the reviewing court to consider a number of factors in order to determine the standard of review, ranging from the presence or absence of a privative clause, the purpose of the tribunal, the expertise of the tribunal, and the nature of the question under review. The test was complicated and multi-factorial, which resulted in significant litigation over the proper standard of review rather than the actual merits of the case.
Selecting the Standard of Review
As set out in the trilogy, the starting point is now the presumption of reasonableness, with two categories of decisions in which that presumption can be rebutted.
First, the presumption of reasonableness is rebutted if the legislature indicates that a different standard of review is to apply to the case by explicitly prescribing the applicable standard of review or by providing a statutory right of appeal.
Second, the presumption of reasonableness is rebutted if the rule of law requires that the correctness standard is to apply. This can occur if the administrative decision raises a constitutional question, a general question of law of central importance to the legal system as a whole, or a question related to the jurisdictional boundaries between two or more administrative bodies.
Notably, the Court did not foreclose the possibility that another category of decisions for which the presumption of reasonableness would be rebutted could be recognized. However, the Court made it clear that any new category warranting derogation from the presumption of the reasonableness standard on the basis of legislative intent would require a signal of legislative intent as strong and compelling as those identified above.
Applying the Standards of Review
The trilogy decisions did not change the analysis for the standard of correctness, but did lay out what the Court described as a new and “robust form of reasonableness review”.
With respect to the reasonableness analysis, the Court signaled that it would not be sufficient for only the outcome of a decision to be justifiable. Where reasons for a decision are required, the decision itself must also be justified, by way of those reasons. An otherwise reasonable outcome will not stand if it was reached on an improper basis.
The Court also recognized that in some circumstances the administrative decision maker does not need to provide reasons. In such cases, the reviewing court still must try to examine the reasoning process underlying the decision, which includes examining the record and larger context on which that decision is based. Only in the cases in which no reasons are provided, and neither the record nor the larger context sheds any light on the basis for the decision, should the reviewing court then focus on the outcome rather than the decision maker’s reasoning process.
The Court also identified two common flaws that may render a decision unreasonable.
First, a decision may be found to be unreasonable for a failure to show internally coherent reasoning that is both rational and logical. This may result from a failure to consider certain factors of an analysis which causes there to be gaps in the chain of logic. The reviewing court should be able to trace the decision maker’s logic without encountering fatal flaws in the overarching reasoning. The conclusions must follow from the analysis undertaken. Notably, a review of this nature is not a “treasure hunt for errors”.
Second, the reasonableness standard may not be met where a decision is in some respect untenable in light of the relevant factual and legal constraints that bear on it. This may result from a misunderstanding of the function of an Act or regulatory scheme or the improper application of common law principles. The court is to undergo a contextual analysis taking into account factors including: the governing statutory scheme; other relevant statutory or common law; the principles of statutory construction; the evidence before the decision maker; the submissions of the parties; the past practices of the administrative body; and the potential impact of the decision on the individual to whom it pertains. The Court noted that these factors do not constitute an exhaustive list.
Accident Benefits & LAT Context
Affecting insurance law most significantly is the Supreme Court of Canada’s revised approach to statutory appeal rights. Questions of law will now automatically be reviewed for correctness, where the legislation provides for a right of appeal.
Appellate review of a decisions from the Canadian Radio-television and Telecommunications Commission (CRTC) and the Immigration and Refugee Board (IRB) were considered in Bell Canada, National Football League, and Vavilov. The Licence Appeal Tribunal (LAT) is exactly like CRTC and the IRB. The LAT is one of five tribunals that comprises the Safety, Licensing Appeals and Standards Tribunals Ontario – created to resolve and decide matters arising from over 30 provincial statutes.
Section 280 of the Insurance Act, as well as section 55 of the Statutory Accident Benefits Schedule, direct all accident benefits disputes to be dealt with by the LAT. Section 11 of the Licence Appeal Tribunal Act, 1999, governs all appeal rights. Section 11 specifically states that parties may appeal to the Divisional Court on a question of law only.
Thus, based on Bell Canada, National Football League, and Vavilov, appellate courts no longer need to show deference to the LAT on questions of law, including statutory interpretation. The standard of review on appeals from the LAT will be correctness. This seemingly reverses common treatment of the Supreme Court of Canada case of Teal Cedar Products Ltd. v. British Columbia – a case that was widely interpreted to hold that deference is given to a specialized arbitrator’s findings on appeal to promote efficiency and finality in tribunals. Until now, the standard of review of reasonableness was widely applied in any appellate review of reconsiderations from the LAT.
Priority and Loss Transfer Context
Section 45 of the Arbitration Act, 1991, governs the right of appeal for private arbitrations in Ontario. The Arbitration Act, 1991, is applicable to private arbitrations between insurers under the Insurance Act, in the context of loss transfer and priority disputes. Without an arbitration agreement, only appeals on a question of law are permitted – and only with leave of the Court. In that case, deference is owed to the decision under review, where the arbitrator is presumed to have specialized expertise having been chosen by the parties.
Bell Canada, National Football League, and Vavilov, is a reminder that arbitration agreements must be employed in the arbitration process if the parties want the ability to appeal on errors of law or mixed fact and law, without having to seek leave.
In Bell Canada, National Football League, and Vavilov, the Supreme Court of Canada placed importance on statutory appeal rights giving rise to a standard of review of correctness. It should follow, then, that arbitration agreements between sophisticated insurers outlining a desired standard of review of correctness on appeal should be given similar credence. Prior to the Supreme Court’s guidance in Bell Canada, National Football League, and Vavilov, the Ontario Court of Appeal dealt with this issue in the 2018 decision of The Dominion of Canada General Insurance Company v. Unifund Assurance Company. The Court of Appeal found in that case that the Court was not bound by the parties’ own agreement as to the standard of review in a priority context.
This article was the combined efforts of authors Meredith Harper, Spencer Wong, Fraser Chorley, and Dakota Forster. If you have questions about these decisions or the impact of these decisions on a file, please contact Meredith, Spencer, or Fraser.