Canada: A Supreme Cabinet Of Appeal For Economic Tribunals?

The Supreme Court of Canada has released a much anticipated administrative law decision interpreting the scope of Cabinet's powers to overrule tribunals. In Canadian National Railway Co. v. Canada (Attorney General), the Supreme Court clarified that reasonableness review applies to Ministerial decisions made pursuant to a "cluster" of economic regulatory statutes, including the Canada Transportation Act, S.C. 1996, c. 10. These economic statutes empower the Governor in Council to vary or rescind decisions of the tribunals administering the legislation, requiring reviewing courts to employ deference even on issues of law.

Background

Peace River Coal Inc. ("Peace River") and the Canadian National Railway Company ("CN") entered into a confidential contract which incorporated a fuel surcharge provision with a certain strike price. After the parties entered into this agreement, CN issued a new fuel surcharge provision with a higher strike price. Peace River asked CN to implement the new fuel surcharge in the agreement, but CN refused.

Peace River then applied to the Canadian Transportation Agency (the "Agency") pursuant to section 120.1 of the Canada Transportation Act  ("CTA") for an order establishing a reasonable fuel surcharge to apply to PRC's traffic. The Agency held that it did not have the jurisdiction to proceed because the contract between the parties was confidential and outside its authority. Peace River did not seek judicial review of this decision to the Federal Court of Appeal.

The Canadian Industrial Transportation Association, a trade association, subsequently filed a petition under section 40 of the CTA requesting that the Governor in Council ("GIC") vary the Agency's decision and direct that the confidential contract does not preclude the Agency from assessing the reasonableness of the fuel surcharge at issue. Accordingly, the GIC rescinded the Agency's decision, and issued an Order in Council stating that the confidential contract has no bearing on the reasonableness of the surcharge contained in a tariff that applies to more than one shipper. While the existence and terms of a confidential contract are relevant to whether Peace River can benefit from an order made by the Agency under section 120.1 of the CTA, the contract is not a bar to the determination.

CN sought judicial review of the GIC's decision at the Federal Court, arguing in part that cabinet has no authority to rescind Agency decisions on questions of law. On judicial review, Hughes, J. found that the issue before the GIC was one of pure jurisdiction, applied the correctness standard and set aside the Order. Upon appeal to the Federal Court of Appeal, Dawson J.A., for the Court, found that the issue before the GIC was predominantly fact-based and carried a policy component. The judge applied a reasonableness standard to set aside the judgment of the Federal Court and dismiss CN's application for judicial review of the GIC's Order.

The Decision

A Question of Law

On behalf of the Supreme Court, Rothstein J. established that the issue before the GIC, being whether a party to a confidential contract can bring a complaint under section 120.1 before the Agency, is one of law. This is in essence a question of statutory interpretation of section 120.1 of the CTA. Although there may be policy considerations central to the exercise, this does not change the question of law into a question of fact.

Rothstein J. then held that the GIC has the authority to answer a question of law such as this one pursuant to section 40 of the CTA:

CN argued that section 40 of the CTA does not confer authority on the GIC to determine matters of law or jurisdiction, which questions must instead be appealed to the Federal Court of Appeal pursuant to section 41 of the CTA. In rejecting this argument, Rothstein J. noted that section 40 contains no express limitation on the GIC's authority to consider questions of law, or otherwise. Unlike section 41 which only allows a question of law or a question of jurisdiction to be appealed to the Federal Court of Appeal, section 40 allows the GIC to vary or rescind any decision of the Agency at any time with no limiting language. Rothstein J. held that Parliament is express when it intends to circumscribe an avenue of review.

Rothstein J. also examined the legislative history of section 40, finding it ambiguous on this point. He cautioned against the limited reliability and weight of Hansard evidence. In this case, the Hansard merely confirmed that Parliament intended to prevent questions of fact from being appealed to the Federal Court of Appeal, as is legislated in section 41. This evidence alone did not support the argument that the Court should read a parallel implied restriction to questions of fact and policy into the otherwise broadly worded section 40.

Reasonableness Standard of Review

Moving to standard of review of the substantive decision, Rothstein J. clarified that the Dunsmuir framework applies to reviewing adjudicative decisions of the GIC. Through judicial review of the GIC's Order, the Court is exercising a supervisory function over a public authority exercising delegated statutory powers. Rothstein J. reiterated that Dunsmuir is in no way limited to judicial review of tribunal decisions, but arises in relation to "various administrative bodies" and "administrative decision makers" (Dunsmuir at paras 27, 28, 49).

Applying Dunsmuir, Rothstein J. held that reasonableness is the appropriate standard of review. The GIC benefited from a presumption of deferential review on questions of law because of two reasons. First, the long history of GIC's involvement in transportation law and policy indicates that this is an area closely connected to the GIC's review function. Second, the authority accorded to the GIC under the CTA to vary or rescind decisions is evidence that Parliament intended to recognize a particular familiarity with this field of economic regulation in a cluster of statutes:

Rothstein J. held that the presumption of reasonableness is not rebutted as statutory interpretation does not fall in an established category to which correctness review applies. There is no issue of constitutionality or competing jurisdiction between tribunals. The question is not of central importance to the legal system as a whole, as it is particular to the CTA regulatory regime with no outside precedential value. Moreover, it is not a question of true jurisdiction or vires. On this point, Rothstein, J. explained:

Applying the reasonableness standard, Rothstein J. held that the GIC's decision that a confidential contract is not a bar to bringing a complaint under section 120.1 of the CTA in certain circumstances is reasonable. This is consistent with the CTA, which does not limit the Agency's authority to review the reasonableness of a charge applicable to more than one shipper incorporated into a confidential contract. This is also consistent with the provision's purpose and Parliament's intention to provide a measure of protection for shippers.

Wider Impact

This decision helps to clarify that reasonableness review applies where government actors exercise an authority to vary or rescind decisions of administrative tribunals on questions of law pursuant to economic regulatory statutes. This is expected to have an impact upon review of ministerial decision making under federal and provincial economic regulatory legislation. It continues the tradition of deferential review towards cabinet decisions (for example, set out in Inuit Tapirisat and Thorne's Hardware ). Moreover, the decision clarified the content of true questions of jurisdiction or vires, providing a much welcome description of a unicorn-like category of legal questions that has been elusive until date.

Case Information

Canadian National Railway Co. v. Canada (Attorney General), 2014 SCC 40

Docket: 35145

Date of Decision: May 23, 2014

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