A necessary component of effective professional regulation is appreciating that courts will scrutinize one’s actions. Regulators need to know on what basis a court will review its decisions. This will enable the regulator to make appropriate choices and to explain them appropriately.

Last month, in Dunsmuir v. New Brunswick, 2008 SCC 9, the Supreme Court of Canada released a major decision expressly reconsidering the approach the courts should take on judicial review. The Court acknowledged that the issue of judicial review (which, in this context, includes appeals) has been a troubling one. In fact the Court has made major modifications to its approach to the issue every decade since at least the 1960’s.

Mr. Dunsmuir was employed by the Department of Justice for the Province of New Brunswick. His was both an employee and an “at pleasure” office holder. (At this point it is interesting to note that most public appointees to professional regulators are office holders, not employees.) After some difficulties in his position, Mr. Dunsmuir’s employment was terminated and he was given payment in lieu of notice. No reasons were given for the termination and he was not given a chance to defend himself.

He grieved the decision. The issue before the arbitrator and the courts was whether Mr. Dunsmuir could only challenge the amount of his severance package or whether he could also challenge the termination itself (and the lack of procedural fairness he was offered).

Many regulators will be interested in that issue because there have been occasions where a public appointee has not fulfilled his or her duties (e.g., missing numerous meetings) or has acted inappropriately. The Court found that Mr. Dunsmuir was more of an employee than a public office holder. As such, no procedural fairness was due to him. The implication is that if Mr. Dunsmuir had been primarily a public office holder, the government would have had to offer him procedural fairness (e.g., notice of its concerns and an opportunity to respond) before terminating his position. This potential duty of procedural fairness is likely one of the reasons why government is so reluctant to remove its public appointees, even in circumstances that call for it.

However, the issue that is of more practical significance is the discussion of judicial review. For the last decade or so the courts have been operating under a system where there were three levels of defence:

1. correctness: where decisions deserve no deference;
2. simple reasonableness: where decisions deserve some deference if the result was within an acceptable range and the regulator articulated reasons that withstood a “somewhat probing examination”;
3. patent unreasonableness: where great deference was shown to decisions.

The Court concluded that this three-option approach was unworkable. Much too much time was spent at every court hearing first determining the appropriate standard of review before any consideration of the merits of the matter. The distinction between simple reasonableness and patent unreasonableness was imprecise, at best. The Court held that only the first two options should be available.

In addition, the Court held that for most cases not much time and effort were needed to analyze the test for judicial review. In many cases the courts could simply rely on past precedents. Further, some basic guidelines would easily explain the appropriate test. The Court stated:

Where the question is one of fact, discretion or policy, deference will usually apply automatically …. We believe that the same standard must apply to the review of questions where the legal and factual issues are intertwined with and cannot be readily separated.…

The Court also stated:

A question of law that is of “central importance to the legal system ... and outside the ... specialized area of expertise” of the administrative decision maker will always attract a correctness standard…. [C]orrectness review has been found to apply to constitutional questions regarding the division of powers between Parliament and the provinces in the Constitution Act, 1867…. Administrative bodies must also be correct in their determinations of true questions of jurisdiction or vires.

However, it is unlikely that this decision is the last word on the matter. One Justice concluded that a more radical reappraisal of the principles of judicial review was warranted. He also raised the prospect that the “reasonableness” standard was a floating one where the degree of deference varied with the context of the case. The Court had previously roundly rejected the concept of a variable standard.

Interestingly, three Justices essentially agreed with the general approach discussed by the majority, and reached the same ultimate decision. However, those justices viewed the issue at hand in the Dunsmuir case as being governed by the correctness standard, not the reasonableness standard thought to apply by the majority.

The implications for regulators include the following:

More issues for professional regulators will be governed by the reasonableness standard. This means that if regulators articulate reasons for their decision they are less likely to be reversed on judicial review.

1. The Court has indicated that tribunals will ordinarily be given deference in their interpretation of their own enabling statute.
2. It may be that judicial reviews will be somewhat cheaper as the Court has signalled that this issue should consume fewer resources than previously required.

The Dunsmuir case can be found at: www.canlii.org/en/ca/scc/doc/2008/2008scc9/2008scc9.html.

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