Ready to reverse a rule or regulation? Reasonableness reigns!

Parties subject to subordinate legislation, such as rules, regulations or bylaws, sometimes challenge them on the basis that they go beyond the authority of their enabling statute (i.e., are ultra vires). A little over a decade ago, the Supreme Court made these challenges dramatically more difficult. In a decision called Katz Group Canada Inc. v. Ontario, 2013 SCC 64, a unanimous Supreme Court held that subordinate legislation is only ultra vires if they are “irrelevant,” “extraneous” or “completely unrelated” to their enabling statute.

In Auer v. Auer, 2024 SCC 36, the Supreme Court of Canada reversed Katz Group and confirmed that, after Vavilov 2019 SCC 65, the correct standard for subordinate legislation is reasonableness. In other words, subordinate legislation is entitled to no more and no less deference than any other administrative decision. This settled a debate that was occurring in different Courts of Appeal across the country, some of whom were applying Vavilov and others still applying Katz.

What you need to know

• The standard of review for subordinate legislation is presumptively reasonableness. The reasonableness standard presumptively applies to a challenge to the vires of subordinate legislation (i.e., a challenge to whether the subordinate legislation is consistent with its enabling statute).
• No additional deference for subordinate legislation. It is not necessary to show that subordinate legislation is “irrelevant”, “extraneous” or “completely unrelated” to the purpose of the enabling statute. Reasonableness review asks only whether the subordinate legislation is reasonable in light of the scope of the delegate’s statutory authority.
• Same approach for all types of subordinate legislation. There are many different types of subordinate legislation, such as rules, regulations and bylaws. The Court confirmed that reasonableness review applies equally to all types, regardless of who enacted it.
• Subordinate legislation benefits from the presumption of validity. The burden is on the challenger to demonstrate the invalidity of the subordinate legislation. Where possible, subordinate legislation should be interpreted in a manner that is consistent with its enabling statute.

Background

In Canada, the amount of child support payable following a divorce is governed by the Federal Child Support Guidelines, which are regulations enacted by the Governor in Council under the Divorce Act. Mr. and Mrs. Auer divorced, and Mr. Auer challenged the Guidelines on the basis that they fell outside the scope of the Governor in Council’s authority under the Divorce Act (i.e., were ultra vires).

The key issue in the courts below was the applicable standard of review. The Alberta Court of Queen’s Bench held that the standard of reasonableness review applied, but that this should be informed by the principles from Katz Group. A majority of the Alberta Court of Appeal concluded that Katz’s extreme deference continued to be the appropriate framework for “true regulations”, as opposed to other types of subordinate legislation like municipal bylaws, since true regulations are the result of a legislative function. The Supreme Court granted leave to appeal.

SCC: reasonableness applies, not Katz’s deferential approach

The unanimous Supreme Court rejected the Court of Appeal’s framework for reviewing the vires of subordinate legislation. It held that the starting point for determining the standard of review for subordinate legislation is Vavilov, and therefore reasonableness.

In reconciling Vavilov and Katz, the Court stated that many of the principles outlined in Katz continue to inform the reasonableness review of subordinate legislation. In particular:

1. subordinate legislation must be consistent with both the specific provisions of the enabling statute and with its overriding purpose or object;
2. subordinate legislation benefits from a presumption of validity;
3. the challenged subordinate legislation and the enabling statute should be interpreted using a broad and purposive approach to statutory interpretation; and
4. a vires review does not involve assessing the policy merits of the subordinate legislation to determine whether it is necessary, wise or effective in practice.

However, the Court rejected Katz’s extremely deferential standard of review as no longer governing in light of Vavilov. Thus, when challenging regulations for vires, it is no longer necessary to show that they are “irrelevant,” “extraneous” or “completely unrelated” to the purpose of the enabling statute.

The Court also rejected the Alberta Court of Appeal’s reasoning that “true regulations” should be subjected to higher deference because they are the result of a more “legislative” process. The Supreme Court held that this framework relies on the identity of the decision-maker (a concept that Vavilov largely rejected). The reasonableness standard applies “regardless of the delegate who enacted it, their proximity to the legislative branch or the process by which the subordinate legislation was enacted”.

Thus, in applying the reasonableness standard, a reviewing court should focus on the subordinate legislation itself and ask whether it is reasonably within the grant of statutory authority. This is “fundamentally an exercise of statutory interpretation to ensure that the delegate has acted within the scope of their lawful authority under the enabling statute”. Constraints that are particularly relevant to this analysis are the governing statutory scheme, other applicable statutory or common law, and the principles of statutory interpretation. The Court noted as well that, where possible, subordinate legislation should be interpreted as being consistent with its enabling statute.

Implications

Auer represents the latest Supreme Court decision addressing one of the questions left unanswered by Vavilov (which Torys has been monitoring in previous publications¹). The Court has continued to re-affirm and apply Vavilov, insisting on bringing “simplicity, predictability and coherence to the analysis for determining the appropriate standard of review”. While the simplicity (and accountability) promised by Vavilov won the day, the Court was reluctant to completely distance itself from all the principles of Katz. This raises a few questions. Will Katz’s “presumption of validity” distinguish challenges to subordinate legislation from other administrative law challenges? The burden in a judicial review is always on the challenger, so it is unclear what impact this “presumption of validity” will have in practice. Plus, it is unclear whether lower courts will take up an apparent invitation to construe subordinate legislation narrowly, where possible, to render itvalid.

While Katz’s extreme deference seems largely dead, it remains to be seen whether (notwithstanding the court’s protests that it was only eliminating one of its principles) Katz leaves any real imprint on vires review, or whether courts will apply reasonableness review to subordinate legislation in the same way as they consider other administrative action.