S6 EP1 | Reasonableness rules: Why you should care about the SCC’s decisions in Auer and TransAlta
January 07, 2025
How much deference do the courts owe regulators? Should courts review regulations differently than other forms of administrative action? In a landmark pair of rulings released late last year, the Supreme Court of Canada clarified the standard of review for challenging regulations in Canada. The SCC’s new guidance in Auer and TransAlta is already impacting businesses in industries and sectors across the country. In this episode of Disputed, Ted and Erin take a deep dive into the SCC’s twin decisions in order to uncover the key takeaways for regulators and regulated businesses in this new legal landscape.
To help guide them through the nuances of Auer and TransAlta, and the cases leading up to them, Ted and Erin are joined by Jean-Simon Schoenholz and Christopher Guerreiro of our firm’s Public Strategy Group – two lawyers with considerable experience litigating these questions. Jean-Simon is a partner based in Ottawa whose practice focuses on public law, appellate advocacy and commercial litigation. Chris is Of Counsel with the firm, based in Toronto. His practice focuses on high-stakes litigation with an emphasis on cases involving intellectual property, administrative law, life sciences and high-technology industries.
This episode is accredited 0 82 substantive hours in Ontario and 0.82 substantive hours in British Columbia.
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Transcript
[00:00:15] Ted Hello and welcome back to Disputed. I'm your host, Ted Brook.
[00:00:19] Erin And I'm Erin Brown. Today we are delving into the world of administrative law.
[00:00:23] Ted Yes. We will be discussing two Supreme Court of Canada decisions today, Auer and TransAlta. They were released in November of last year, and clarified the legal framework for how Canadian courts review regulations or subordinate legislation, as our guests might refer to them as. Erin and I are very excited for this conversation today.
[00:00:43] Erin To talk about this new development, we're joined by Jean-Simon Schoenholz and Christopher Guerreiro. Jean-Simon is a partner in our Ottawa office. His practice focuses on public and administrative law and appellate advocacy. He regularly appears before the federal courts and the Supreme Court of Canada, often to challenge government and agency decisions. And actually, we've worked on some in the trade space together. Chris Meanwhile, practices dispute resolution and litigation with an emphasis on high stakes cases involving intellectual property, administrative law and other issues affecting regulated industries such as life sciences and tech. Chris, Jean-Simon, welcome. Good to have you both today.
[00:01:22] Ted Yeah, great to have you both. I'm going to open up with a question either if you can answer it, why should our listeners be interested in these two decisions that came out in November last year? It's the Supreme Court of Canada, sure, but like all those decisions from the Supreme Court are important. Why should listeners be caring about these two?
[00:01:40] Jean Simon Well, fundamentally, our society relies on a lot of regulations to run, and as our clients know, a lot of those regulations affect them. The predominant approach now to regulating how business functions and how our life functions is too complex to be in kind of broad the legislation. And so now legislation is typically kind of a broad framework, but that then gets filled out by much more detailed regulations. So many of our clients are significantly impacted by those. Chris?
[00:02:13] Chris Well, that's exactly right. And the reason why these decisions in particular are so significant is because they tell us how the courts are going to approach situations where there's a dispute about whether or not regulations are authorized. And there's a lot of interest in this because it goes not only to issues of democratic accountability. And that's a big topic right now in Canada and elsewhere in the world, but also to very practical business issues around what businesses can be compelled to do, what businesses can be prevented from doing, the advantages that businesses may or may not be able to access under regulatory schemes and the recourse that they can have through the court system to challenge decisions that they find problematic.
[00:02:56] Jean Simon The other aspect I would note is, you know, this is maybe one of the few instances, you talk about all the Supreme Court decisions are important. This is actually one where the Supreme Court decides to change its approach, which is kind of rare. Often it changes its approach kind of slowly without necessarily saying what it's doing. But here it's actually telling us we're changing course.
[00:03:17] Erin And so what was that course change? Just very, very high level teaser for everyone listening.
[00:03:22] Jean Simon Well, the previous approach to challenging regulations was a very, very high threshold, which is kind of colloquially referred to as hyper deference. And the Supreme Court decides to move away from that here.
[00:03:36] Erin Okay. So we're going to unpack some pretty complicated concepts and cases. So before we get into the details of these decisions, let's just sort of set the stage. So we're talking about challenging regulations, which is different than challenging an act. So just kind of set the stage for us on that distinction and what these cases are really getting at.
[00:03:59] Chris Sure. So you can envision sort of a hierarchy of authority. Right up at the top in Canada, we've got a constitution and all law needs to be consistent with the Constitution. Beneath the Constitution, we have legislation passed by parliament at the federal level and by legislatures in the provinces and territories. And then beneath that, we have what's known as subordinate or delegated legislation, that includes regulations, decisions by governors and council, decisions by boards and tribunals in some cases that take the form of regulations or orders. There's really incredible diversity of decision making that happens at that next level down below legislation. And what we're concerned with here is the approach to reviewing whether or not all of that delegated decision making, if it takes the form of a regulation or rule, is consistent with the enabling legislation or not. And I'm using the word consistent advisedly here, because that's one that we will, to borrow your phrase, have to unpack.
[00:05:04] Jean Simon In a way, you know, a lot of the times when we challenge a government decision, it's something that looks like a court decision, right? It's a tribunal. Human rights tribunal decision or competition Tribunal decision. And then on the other end of the spectrum, you have a constitutional challenge to a law, right, under the charter or federalism issue. And this is in between. So it's really interesting to see how the court deals with decisions that are in between a law and a administrative decision.
[00:05:33] Erin I suspect that impacts a lot of day to day aspects for the, you know, operations for companies. Right. A lot a lot turns on this kind of level of the regulation, right?
[00:05:43] Jean Simon Absolutely. You know, Chris can probably talk about kind of the life sciences space. But I mean, Erin, as we've dealt with, you know, when it comes to food and health and safety around food and CBSA regulations and the transportation industry, there's, you know, these are all highly regulated spaces. And so the validity of those regulations is really important for our clients.
[00:06:05] Erin Yeah. And really kind of practical from a day to day standpoint.
[00:06:08] Ted So when we're talking about regulations, we're talking about those legal rules, right, that are under a statute. Someone is introducing them. And the question I take it that was addressed in Auer and TransAlta relates to how strict should a court be when they're evaluating those regulations that are that are introduced by the authorities who have been delegated that power by the statute? Is that fair?
[00:06:36] Jean Simon That's fair.
[00:06:36] Ted And so just just to give us a sense, who are the authorities making these these regulations, the subordinated legislation? Right. Like what is the cast of characters that would that are we encountering?
[00:06:47] Chris The range is incredibly broad. One of the most common sources of delegated legislation is governors and council, which is a fancy way of saying cabinet. So these are decisions that are made by the core members of legislatures throughout the country, often implementing government policy under enabling legislation that may or may not have been passed by that government. It doesn't particularly matter. But a lot of formal regulation making happens at that level. We also have a large number of administrative boards and tribunals in Canada that deal with everything from economic regulation to child and family matters, as we see in one of the cases. It's an incredibly wide range, as I say, and many of them are empowered to make things that look like rules or regulations with greater and lesser degrees of formality.
[00:07:35] Ted And so in that second group, unelected but often specialized individuals who who are making rules or regulations for a particular industry or particular type of legal framework.
[00:07:47] Chris Exactly. And one of the questions that comes up in the series of cases recently dealing with this is how much should it matter whether or not these people are elected, how close they are to the executive, how close they are to the legislators themselves. And the answer, as it turns out, is it doesn't matter at all. That is where we land.
[00:08:06] Ted Interesting. So but before we get to that landing point, JS, is there anything else that we should keep in mind about regulations, how they're implemented, how they function before we kind of get get into the case law?
[00:08:16] Jean Simon Well, just that the broad scope, I mean, to to reiterate. And it's not only governor and council, but the individual ministers often have regulation making power. As Chris said, various tribunals and boards often have power to adopt guidelines and bylaws that will be binding on the parties and then even trickling down to the local kind of municipal level. You know, the authority to adopt bylaws, in effect works in much the same way. And that was, again, to go back to Chris' point, part of the debate here. Are we going to treat regulations that have been adopted by the Governing Council the same way as municipal bylaws? And are they going to be reviewed in the same way or or is the approach different?
[00:09:00] Erin Okay. So we have we sort of set the stage of what regulations are. So now let's move into the two cases. I understand that Auer and TransAlta reflect a change in approach by the Supreme Court of Canada when it comes to regulation. So can you explain where we were before? So how did courts previously approach regulatory challenges?
[00:09:22] Jean Simon So the approach was from a decision of 2013 from the Supreme Court called Katz. Katz The Musical. Exactly. Katz with a Z. Katz with the Z. And what the Supreme Court said in Katz is it kind of set out a number of principles that were specific to challenges to these kind of decisions. The most significant of them being we're only going to intervene, we're only going to strike down these regulations where it's established that they're irrelevant, extraneous or completely unrelated to the objectives that parliament or the legislature has set out in the statute.
[00:10:04] Erin I think I understand why you were calling this the hyper deferential standard, the hyper deferential.
[00:10:10] Ted So JS, like, if you have a telecommunications statute and then the minister using it to implement regulations to the rail railways or something, right? It's like it had to be completely different.
[00:10:20] Erin Totally out of left field.
[00:10:22] Jean Simon These super extreme cases and the not only is that the high bar, but it also means that how is the court going to review these is while it's going to look as it's well, it's close enough, like it's you know, it's in the ballpark. It's in the same subject matter. We're good.
[00:10:37] Ted What was the philosophy behind so much difference, Chris?
[00:10:39] Chris The philosophy was that at its core, we were going to defer to the expertise of people who had been entrusted by legislators to make important technical decisions, usually at a very operational level. And there was a feeling that courts didn't have a monopoly on interpreting the law when the law strayed into this very technical space. Courts were not necessarily better situated than these people, whomever they were the decision makers, to weigh in on these very technical, detailed operational issues, and that courts especially should be wary if the consequence of wading in would be to pronounce on or interfere with a policy setting function that unquestionably resides with those decision makers. Because we do have a rule and this rule persists that the courts are not to get involved in the policy dimensions of regulation making. They're supposed to be focused on legality. So those ideas were expressed in many different forms by a lot of different people, but they all come back to a core concept that courts need to stay in their lane and recognize that there are others who are better situated in policy intensive and and often, as I said, very technical areas to to take the lead in interpreting legislation and apply it.
[00:12:03] Erin Was it also a hyper deferential standard with respect to an individual decision made under a standard as opposed to under an act or legislation of some sort as opposed to a regulation?
[00:12:13] Ted I think this is actually could tie to Vavilov, JS.
[00:12:16] Jean Simon Yes, exactly. Exactly. So in 2019, the Supreme Court in Vavilov set out the approach to the review of administrative decisions more broadly, so including the type of decisions that I referred to earlier of, you know, an administrative tribunal of some kind.
[00:12:33] Erin Or a government decision make CBSA or.
[00:12:36] Jean Simon CBSA. Exactly.
[00:12:38] Erin Or, you know, we've talked a lot about the federal level, but, you know, at the provincial level.
[00:12:43] Jean Simon Provincial level as well. Yeah. And the standard there is deferential. So and what we mean by that is simply, like, we're going to pay attention to what the decision maker did and the court's not just going to jump in and say, well, this is what I think is right. They're going to say, well, you know, have they reached in the standard is reasonable this. Right. So have they reached a reasonable decision in light of the law and the facts and the rationale for why in Katz we went a step further, I think.
[00:13:15] Erin From from deferential to hyper deferential.
[00:13:18] Jean Simon Exactly. Is is because we're recognizing well, there's here there's a high degree of policy content involved in the decision. And so the court is not well placed to assess that piece of it, so to speak.
[00:13:33] Erin So there's the idea is that there's more policy in the regulation than in the individual decision made under the.
[00:13:40] Jean Simon Exactly.
[00:13:41] Ted But just to clarify, when we talk about Katz, we're talking about 2013. So before this Vavilov case, which, you know, set the standard for how courts are going to review administrative decisions under statutes, right? So I feel like this is now leading to the lead up of TransAlta and Auer. But before we get there, because I get asked this a lot by clients, reasonableness, like what does it mean? Like what are what are the hallmarks of what makes something reasonable in the world of of a vavilov approach to thinking about this standard of review?
[00:14:14] Chris So that's a really good question, and it's the one that Vavilov seeks to answer. I'm going to take one step back to get you to that answer, though, and say that Katz case we were talking about arose at a time when because we were very interested in the identity of the decision maker, we were very interested in whether the decision looked more like a decision a court makes sort of adjudicative or more like a policy setting executive decision. We actually had a lot of different standards of review, and at one point it wasn't even just the hyper deferential standard and reasonableness. We had another kind of standard of review that was a more extreme form of reasonableness. There were many, many nuances. And in 2019, in Vavilova, the Supreme Court swoops in and says, we're going to stop doing all of that. This is too complicated. It's leading to incoherence in the law. We need something that is simple, straightforward, and that applies to all administrative decision making. So we're operating against that backdrop where it used to really matter who made the decision. And Vavilov says it doesn't matter at all anymore. Vavilov says, we're just going to look for two fundamental kinds of flaws in decision making to determine whether or not the decision is reasonable. And the first one is whether there's a failure of rationality internal to the reasoning process. So the court is going to look for in the reasoning process a chain that it can follow, to understand, yeah, okay. I get how you got there from where you started.
[00:15:47] Ted You're thinking it's rational. Right?
[00:15:47] Chris Exactly. And the second one is to look at whether the decision is untenable in light of the factual and legal constraints that bear on it. And that is at least as big as it sounds as a concept. What the court is going to do is consider all of the different factors that the administrative decision maker should have been looking at to inform the decision, and that will include things like the enabling statute. It'll include things like prior decision making of the administrative decision maker because we value consistency. It will include evidence that maybe was presented to the extent that evidence is relevant to the decision. But ultimately, what the court's concerned about is ensuring that in addition to having a reasoning process that makes sense, the decision maker throughout that reasoning process and in the outcome has stayed within these these so-called constraints.
[00:16:40] Ted And so, JS, anything else you'd add on reasonableness before we kind of move move forward?
[00:16:47] Jean Simon Yeah. I'll give you my dartboard analogy, which is the one I share with my admin law students when I teach them in law. When we do a normal appeal, for example, and that the Court of Appeal has to decide if the lower court was correct on a question of law, the correctness standard, that's you got to hit the dartboard, you got to hit the bullseye. Reasonableness is you've got to get somewhere on the board, I'd say. If if the administrative decision makers, somewhere on the board within the range of options can't be making holes in the in the drywall. But if you're on the dartboard, the court's not going to jump in and interfere with your decision.
[00:17:26] Chris Sorry, I'll add one more point on that, which is there are situations where there's only one option available to the decision maker. It's not to suggest that the dartboard is enormous or that it's very small. It really varies from case to case depending on the constraints. And sometimes the constraints are so unavoidable that the decision maker really only has one option available. Now, that's not usually the case when we're talking about delegated decision making in the in the sort of regulation and related spaces. Those are typically quite discretionary decisions. And what we're focused on is whether or not the discretion was exercised within the boundaries of the authority granted by Parliament.
[00:18:06] Erin Okay. So to summarize where we are. So we had Katz which applied a hyper deferential standard to challenging regulations. Then we had like a really complicated, overlapping kind of depends, like lawyers, favorite things, right? Like it depends what, what standard of multiple different standards would apply in respect of individual decision making. Pre Vavilov. And then along comes Vavilov, get rid of all of that with respect to individual decision making and go to a reasonable standard. But does Vavilov cover regulations?
[00:18:38] Jean Simon That is the question. That is the question the court deals with Auer and TransAlta.
[00:18:43] Ted And so but, you know, that's like, you know, five years after Vavilov. So so fill us in sort of what happened after Vavilov with respect to regulations. But before we get this clarification in TransAlta and Auer that we're going to talk about.
[00:18:59] Jean Simon So we have a bit of a back and forth between various courts of appeal and what the right approach is when it comes to challenging regulations. So I'll speak to a bit of the court that wanted to preserve Katz and said, yeah, we should keep this hyper deferential approach is notably the Alberta Court of Appeal, which is where both Transalta and Auer came from. That's where they came up. And what the Alberta Court of Appeal basically said is, you know, we recognize these decisions are unique, particularly when it's the governor and council that's making regulations that's so close to the legislative power that the courts really shouldn't be getting involved there, right. We, you know, division of powers, we need to maintain that. And so the courts shouldn't be jumping in. And we think the Katz and the hyper deferential standard still remains.
[00:19:51] Ted But like so did the Supreme Court does not refer to Katz in Vavilov where they truly looking at the tea leaves here, was the Alberta Court of Appeals saying we don't agree with the Supreme Court. Sort of like how is this position evolving?
[00:20:05] Jean Simon So Katz is not directly addressed as to whether it's still good law in Vavilov. It was an open question. Chris can describe that some of the other courts, notably the Federal Court of Appeal, took a different approach.
[00:20:18] Erin So, Chris, this is getting juicy, what the Federal Court of Appeal do.
[00:20:24] Chris I mean, it was juicy. It was it was as close to drama as you get in the world of administrative law, especially at the appellate level.
[00:20:32] Ted And for for our listeners. Chris, what's the hierarchy between Alberta and Federal Court of Appeal, especially for US listeners?
[00:20:39] Chris So our federal courts sit at the same level as our provincial courts within their respective areas of jurisdiction, and they all feed up into our Supreme Court. So the Federal Court of Appeal sits at the same level as the Alberta Court of Appeal. The two of them were having a bit of a disagreement. They don't bind each other. And we found that they were actually in dialog with each other through their decisions over a number of years about what to do with Vavilov. Because as JS said, in Alberta, the Court of Appeal had gone the direction that Katz survived, and there were puns in there. I'm not going to use.
[00:21:14] Erin Cats have nine lives, right?
[00:21:16] Chris Every publications on these decisions. On the other hand, we had the Federal Court of Appeal first in a decision called Portnov, and then again in a case that I was involved with called, Innovative Medicines Canada. And there were others as well, saying Vavilov is actually very clear. Vavilov is a reset for all of admin law. Vavilov is a new approach to reasonableness review, and a declaration that reasonableness review applies everywhere. It's a flexible concept, flexible enough that it can be used not only for tribunal decisions and sort of very judicial looking stuff, but also for all of this regulation making stuff. And the court says those same tools, looking at internal rationality and coherence of the decision, looking at the constraints, especially focusing on enabling legislation, is a constraint because that is the main one when you're determining whether or not, the delegated authority was exercised in accordance with the law. All of those concepts work perfectly well, and we don't need Katz any longer.
[00:22:20] Ted We don't need other legal theories or standards when we have the Vavilov approach to review of administrative decisions generally, whether it's a decision of a tribunal or a decision to to write a rule or regulation under an act.
[00:22:33] Chris Exactly. And so the Court of Appeal, the Federal Court of Appeal, took the view Vavilov was very much intending to get rid of all of the many different standards that we talked about, bring coherence to the law by having a single standard. And there was no reason to preserve this one little island of hyper deferential review. It would have been the only remaining area with its own unique standard of review, and there was just no doctrinal reason to do it in the view of the appeal.
[00:23:01] Erin A hyper deferential island in a sea of reasonableness.
[00:23:05] Chris Yeah. I like that.
[00:23:07] Ted Chris is making a compelling point, and that's probably because the Supreme Court ultimately comes down on that side. But JS, what what would you say?
[00:23:14] Erin Don't give it a way, Ted.
[00:23:16] Ted Spoiler spoiler for anyone who who hasn't read.
[00:23:20] Erin Or probably listen to our introduction of this episode.
[00:23:23] Ted But just like give us the counterpoint. Right. Why was it important to preserve Katz as an island outside of the Vavilov framework?
[00:23:32] Jean Simon I mean, I think it comes back down to division of powers, right? And the executive, which which is would comprise the ministers and the governor and council making these many of these regulations. They shouldn't be under close scrutiny from the courts. Right? They they should be allowed to do their job and adopt whatever regulations that broadly fit within the purposes of the act that that grants to the power to do so. And they shouldn't constantly be second guessed by the courts and doing so.
[00:24:05] Ted The legislature sort of, you know, was elected, they passed a law and in that law that delegated the authority to someone. So let them implement that and that, you know, will of the people sort of approach.
[00:24:16] Erin Okay, So let's freeze in time for a minute. So we have Katz and we have Vavilov, but we don't yet have Auer and TransAlta. Why does this actually practically matter to our clients, to a GC who's thinking about a regulation that impacts something operationally day to day to them? What would be the practical difference at that moment in time between our hyper differential island or sea of reasonableness?
[00:24:41] Jean Simon It matters because the first question, you know, when you're when you're doing your government relations work and and you see that it's not going your way and that, you know, the government is going to adopt a regulation or something that is unhelpful to your business. When you're considering your legal options, the first question is like, what are my chances of success? And quite frankly, under Katz and under the approach endorsed by the Alberta Court of Appeal, the answer was pretty slim, pretty slim indeed.
[00:25:10] Ted When, when what you mean success, you mean success at actually knocking out.
[00:25:13] Jean Simon Success in challenging.
[00:25:14] Ted Challenging the regulation.
[00:25:16] Jean Simon Yeah. And we have, you know, some examples and, you know, there's some that came up in the pandemic during this in-between time. And the court just kind of goes, yeah, like, you know, if we apply Katz, like, there's nothing much for us to look at here. There's not much scrutiny for us to give to these to these decisions.
[00:25:34] Ted We may disagree with what the government is doing with their rule or supporting that piece of legislation, but it's not really our place. Right.
[00:25:42] Jean Simon Exactly.
[00:25:43] Erin To use your analogy from earlier, instead of having to actually hit the dartboard, you just have to hit the wall that the dart board is on somewhere and sort of be in the general direction that the dart was being thrown, but not to not too close to them.
[00:25:56] Ted And did that would Vavilov really change that? I mean, Chris, you're still talking about reasonableness. There's still lots of room on the dartboard, but it does, it was there still a difference.
[00:26:05] Chris It's a massive difference because under the Katz hyper deferential standard, you were really looking for the type of mistakes that don't get made all that often. It's really rare that you're going to have something as extreme as accidentally regulating occupational health and safety in the context of a statute about, I don't know, pharmaceuticals. And that would be very improper. The court would definitely have intervened under Katz in that situation. The court would also intervene if the government had acted or whomever the decision maker was for an ulterior or improper purpose. But that is like really, really difficult to prove for evidentiary reasons as well as for practical ones. So under Vavilov, although we're still interested in being deferential within the scope of what's reasonable, we take a very serious look at this constellation of constraints. And again, chief among them is always the enabling statute in these challenges. So the court is going to look at whatever act gave our decision maker authority. The court is going to read it to understand what it allows and how the decision maker interpreted it to authorize them. And that is going to establish the size and the shape of our dartboard.
[00:27:24] Erin Yes, I keep thinking about the line in the case that you and I worked on together, which was it was not a case challenging regulations, but under kind of the general Vavilov reasonableness where the where the federal court said, the administrative decision maker does not have a hall pass, they don't have a hall pass to do whatever they want, right. Like. So it's that idea of even if they're sort of in the right direction of the of the wall, they need to get on to the dartboard. They need to have a coherent, you know, they need to have looked at all of the relevant information. They need to have carried that rationality and that logic to their decision and actually brought, you know, reasonableness to bear on their decision.
[00:28:02] Jean Simon And what we've seen in Vavilov, you know, is that the court does demand more scrutiny, closer scrutiny of administrative decisions writ large, that the word it's it's kind of silly to say, but like the word robust is used in Vavilov and now in Auer and TransAlta, but truly is reflective of kind of the new post Vavilov. Like approach to this, the courts have a duty to ensure, yes, that the decision is reasonable, but the scrutiny involved in that is it's a robust standard that the court kind of takes seriously.
[00:28:37] Ted I want to get to TransAlta and Auer now. Right? We've been talking about it for a little bit. What were the facts that gave rise to these cases that ultimately made their way to the Alberta Court of Appeal and then both ended up at the Supreme Court at about the same time. So maybe I don't know, Chris, you want to tell us about one of them and JS, you can tell us about the other?
[00:28:58] Chris Sure. So I'll talk a bit TransAlta, the gist of which is that the government in Alberta entered into agreements with respect to coal power plants and the agreements provided that they were going to be retired somewhat earlier than they otherwise might have been and that the Alberta government would pay, you know, reasonably large amounts of money to the people with whom they were making these agreements to compensate them for the fact that their assets were going to be less valuable than they otherwise would be. So against that backdrop, a decision is made within the guidelines, and they're binding guidelines that are used to assess property taxes. And the decision is those who entered into these agreements will not be able to claim the depreciation associated with the earlier obsolescence of their properties. And TransAlta challenged this, saying you've discriminated unlawfully under this regulation by singling me out and saying I can't claim this depreciation even though I'm experiencing it, and there's a loss associated with that. But the argument was that this discrimination wasn't authorized under the enabling statute. You that permitted these depreciation guidelines to be promulgated. So it goes up to the court on the question of whether or not they could discriminate in this way or not.
[00:30:22] Ted Whether that regulation saying, you're not going to get those tax benefits for this new stranded asset, whether it's a, you know, production plant or facility that you have sort of agreed to to phase out. And and the question is, can we discriminate in this regulation? A similar thing in Auer or was it was it different altogether, JS?
[00:30:45] Jean Simon It's a different completely different context. And none of us are family lawyers, but this is in the family context. So it's that the case is Auer v. Auer. So we have a husband and wife. And under the Divorce Act, Federal Divorce Act, there's child support guidelines with respect to how child support is supposed to be determined in those cases. And Mr. Auer complaint or his challenge to those guidelines was that he alleged that they ended up such that the parent that was required to pay child support ended up contributing more than the parent who is receiving child support in a way that was not authorized by the Divorce Act. So completely different circumstances. And it highlights what we were talking about earlier, which is that these really affect people and corporations across the board on all kinds of different issues.
[00:31:36] Erin Okay, So the moment of truth. Drumroll. Where does the SCC land on us?
[00:31:41] Chris So the Supreme Court says Vavilov governs, we don't need Katz anymore, with respect to this island of hyper deference. It says, there's no rationale to preserve that. It's not necessary in order to ensure that the rule of law is observed. We think we can do this all under the Vavilov framework, and that's in fact what we intended when we rendered that decision. Now, that's not to suggest that Katz is completely thrown away.
[00:32:10] Ted I had a feeling. I'm feeling at. Yeah, Yeah.
[00:32:14] Erin The plot thickens.
[00:32:16] Jean Simon I think the most problematic piece of Katz, which is that irrelevant, extraneous, completely unrelated language that the court explicitly says we're not doing that anymore. That's that hyper deferential standard is gone. What we do keep, however, is the court saying. But that doesn't mean we're going to start questioning policy. Right. Which I think is, you know, maintaining that division of powers, maintain that respect for the democratic will and all that. We're not going to inquire into policy questions, but we can certainly, as courts, consider the reasonableness as to whether that the regulation in question, does it fall within the authority contemplated by the regulation?
[00:32:56] Ted Okay. So so there are were there were aspects of Katz. There were there were parts of the reasons from Katz that we're actually going to keep because they made sense even within the Vavilov world.
[00:33:06] Chris And the most important one is and most controversial as well, I should say, is a presumption that regulations are valid.
[00:33:15] Ted What does, what does it mean?
[00:33:16] Chris So it's got two parts. And the first is not really news. It's that there's a burden on the person challenging to substantiate their challenge. So you don't walk into the court say, I've got a problem with this regulation and says, cool, okay, I'm on your side. Tell me more.
[00:33:32] Ted Government has to prove that it's valid. So I think that this is discriminatory or if you think that it's unfair, you're the one who needs to show it, not the government.
[00:33:41] Chris Yeah. So the idea that the person challenging an instrument has the burden is not unique to this setting, and it doesn't really tell us much to say it's there. It is important, obviously, to know if you're mounting a challenge. The second piece is a little bit trickier, and the second piece is this. The court will approach the interpretation of a regulation and an enabling statute in a way that seeks to reconcile the two, that seeks to avoid a clash between the two. So the court is not going to adopt the most extreme interpretation of the regulation on the one side, the most extreme interpretation of the legislation on the other side, and then say, well, I think that there are some problems with the Venn circles here. They don't quite overlap. And I think I have to strike this down or prune it back a bit on that basis. The court's going to try and reconcile the two as much as possible before it steps in and says, you've overstepped.
[00:34:36] Ted I want to just kind of pull out and look at this this question broadly, the concept of Chevron deference in the US as it has been a hot topic in recent years, and judicial oversight of administrative decisions and in the US really important. How does TransAlta and Auer compare to what is the current law in the US and and maybe what some of our clients would be more familiar with?
[00:35:05] Jean Simon So broadly speaking, very broadly and then we can zoom in. Broadly speaking, both courts have kind of moved in the same direction, which is to say we're going to more carefully scrutinize decisions that are made by these administrative bodies. And so that's the trend in both countries. The difference is that in the US, they've gone one step further in on questions of the interpretation of the statute, courts are going to have the final say. So that's the correctness approach that's hitting the bull's eye. In Canada, we've not that's not where we're at. We're at Vavilov of reasonableness. But now we've moved everything to Vavilov reasonableness, which I said has to be robust, a robust examination.
[00:35:53] Ted So so both countries becoming maybe more stringent in in the review. But Canada is starting from such a more deferential beginning point that that that move still still keeps the sort of Supreme Court's current word on reviewing regulations much, I don't know, more government friendly approach, Chris. Like is that, is that fair to say? You're tilting your head. You're you're disagreeing with me. So I want I want you to correct me here. Yeah.
[00:36:22] Chris I'm not sure you can say it's more government friendly because it like the review process under Vavilov is quite searching. The court's not going to weigh policy decision making. It's not going to look at whether or not a regulation is a good idea, whether or not it's a particularly effective way of doing what the government wants to do. But the reasonableness framework gives the court an enormous amount of power to look at the chain of reasoning that led to a decision, and to call out irregularities, irrationalities and other things. And that's a fundamentally different paradigm from the correctness paradigm that's being used in the US to review decisions on questions of law, including the interpretation of statutes. Because they're what the courts doing is sort of a clean slate, fresh start. We call it, de novo review, in sort of legal terms. The court doesn't really worry too much about what the administrative decision maker thought on the way to its decision. It just interprets the instruments on its own using the usual judicial toolkit, and then compares them using using its conclusions. So we do have that correctness standard of review in Canada as well, only where it's specified by statute and in a couple of other circumstances, including sort of cases with constitutional dimensions and things that aren't relevant for today's purposes. But by and large, we're on this reasonableness paradigm that to bring it back, true. It doesn't let the court do a fresh start and impose its own view. But it does let the court call out irrational decision making in a way that wouldn't necessarily be the case in a pure correctness paradigm. So there they are quite different and could lead to quite different results depending on the facts of a given case.
[00:38:12] Erin Okay. So before we sort of come back to the key takeaways here, we've talked about this whole, you know, last ten, last decade or so of case law from Katz to Vavilov, Auer and TransAlta. What's next? What's the next frontier? If you had to get out your crystal ball, what do you see as sort of the next steps in the case law or how things may develop or issues that may be challenged next?
[00:38:38] Jean Simon So our in trends out to address that, the broad question of how do you challenge regulations and what's the standard. But there's still a lot that's going to need to be kind of filled in there. And we have a couple hints at that in the reasons in TransAlta and Auer. One of them is that's interesting is Supreme Court talks about how normally the court's going to look at the consequences of the regulation because that kind of goes to policy rates, which is a no go zone. But it says one of the questions we can ask and how consequences may become relevant is actually we can ask ourselves, was the regulator allowed to regulate in a way that would produce these consequences? Right. And so kind of adjacent to the policy question, but relating directly to does the regulator have authority to do what it did? And so I think that's going to be an interesting question to see. How do the courts actually approach that? How do they actually what kind of evidence do they admit on questions of impacts? And so that'll be one of the interesting issues to follow.
[00:39:44] Chris Yeah, I agree completely. In questions of evidence more broadly are going to be interesting in this space because there's not just the downstream effect question that JS has highlighted. There's also the upstream reasoning process question. And in a sort of quasi-judicial administrative decision making, you usually get a decision that comes along with detailed reasons explaining how the outcome was reached. So that's straightforward enough. You can read that and understand it or not understand it as the case may be, but you don't always get reasons at all with regulation making.
[00:40:18] Ted You were barely get the reasons, right? It's just this is the regulation. Here you go. Look, here's the announcement. So, so how do you actually know where the dartboard is? Like, how do you know what they've decided is rational or logical?
[00:40:30] Chris And that's sort of the question. And sometimes you'll get what's known as a regulatory impact analysis statement. It's a document that's published alongside with regulations. When they promulgated in sort of the most official way, they go into a thing called the Canada Gazette or Business that are published by the provinces. And and there's a process around that. So you'll have some summary of what they were intended to do and maybe the process by which the decision was reached in there. But not with the same level of methodical reasoning that you would get in a more judicial type decision. What you don't typically get is anything behind the scenes often the documents that you would want to see as evidence of a reasoning process are going to be cabinet privileged or subject to other forms of confidentiality that prevent them from being disclosed. There are some interesting questions around where exceptions should or should not exist on that. But I think a central problem now that Vavilov, and Transalta and Auer have directed us to focus on the reasoning process is what we have, we have to know what that was. So the court said even if there are no reasons, we can make some inferences from context and figure that out. But as litigators who represent clients regularly in this space and generally whose clients aren't happy about the reasoning process, that's why we've been hired. We're really interested in getting access to that information because we now think the Supreme Court is saying this is important, this is relevant. We need to know how these decisions were reached, because that's going to form part of our analysis.
[00:42:02] Jean Simon I totally agree. And there's another kind of further piece of this that's related, which is another area I think we're going next, which is what evidence can you lead to challenge your regulation? The general rule when it comes to a normal, so to say, administrative decision is only what was before the decision maker can be put before the court. So I have a complaint for the Human Rights Tribunal. Whatever. I file there, I file there. And then if I challenge that decision to the court, well, the same file gets transferred to the court, right?
[00:42:34] Ted You don't get to bring in evidence to the court, that wasn't before the tribunal.
[00:42:38] Jean Simon Exactly. Because if if I could, then I would be we'd be doing something other than judicial review. Right? We'd be doing a whole new kind of challenge. The question when it comes to regulations is more tricky, because nobody's making submissions to the minister or the governor in council about the regulations and there's no formal hearing process. And so in a way, the minister or the Government Council is considering nothing but also considering kind of everything, right?
[00:43:09] Erin So like could you almost like file an expert report of kind of the state of whatever was in the industry and say, well, they have this specific expert report in front of them, but this expert report is just telling you court what they should have known was already the situation in the industry.
[00:43:25] Jean Simon Exactly. So I think as we probably see more of these challenges coming in light of the decisions and in Auer and TransAlta, we're likely going to see more or development around the procedure and the evidence and strategy that's available to us to challenge those types of decisions.
[00:43:46] Ted So how were the appeals in TransAlta and Auer actually decided applying the Vavilov framework to the regulations?
[00:43:54] Chris So in TransAlta, the court decided that the regulation was reasonable, and the court does that by looking at the payments that were already made to TransAlta at the time of the agreement we talked about. You remember it was an agreement to do with power plants and when they would be retired. And so there were payments at that time. And the court then looked at the measure in the regulation, denying the ability to claim depreciation in respect to those agreements, and essentially concluded that the matter had already been addressed upfront with the agreements. And because there was a concept within the enabling statute that the depreciation rules should be equitable. The court thought it was equitable not to allow the depreciation to be taken into consideration.
[00:44:41] Erin Okay. And JS, what about Auer.
[00:44:43] Jean Simon Same results as Mr. Auer is stuck with the child support guidelines. And for much the same reasons that the Court finds while the the statute that grants under the Divorce Act that the powers to enact these guidelines very broad with respect to this power. And I think that highlights you know, this is a significant change, but it will remain challenging to challenge these these types of decisions because often the wording in the statute is very, very broad and gives whoever the governor and council, the minister, broad powers. But that's not the case for all regulation making powers. And some are more constrained and some are more specific about steps you need to take or the types of regulations you can make. So it does really depend. But here, broad power, they're fine.
[00:45:30] Erin Okay. So you've already started to I think your answer was kind of already alluding to this, JS. But what are the takeaways? You have one minute to sort of summarize the takeaways to these two cases and sort of the development of the law. What's the takeaway?
[00:45:43] Chris So I would say the takeaway is, for businesses operating in a highly regulated space, you need a strategy that deals with both the contents of the policy and the way that it's going to be implemented. The contents of the policy is going to remain something that you work on through GR PR and related functions, through consultations to the extent that those are available, consultation submissions are going to be massively important, in part because they can help to create a record in the event that there's a judicial challenge. But companies should also be aware that to the extent that the policy conversation doesn't go the way they want it to, there is a legal angle and it's a strong legal angle. Following Vavilov and following these two recent case TransAlta and Auer, to look at genuinely problematic regulations that are an overreach that go beyond what the legislators intended for our regulators to do. So it won't be applicable in every case, but it's something that is very much worth exploring with counsel because with careful attention to the enabling legislation in the context, there may be real issues, there may be real issues that could arise as simply is because the government did something expedient.
[00:46:57] Ted JS, what do you think?
[00:46:57] Jean Simon Yeah, I mean, I think my takeaway is very, very similar, but maybe I would boil it down to, you know, your previous understanding of your options when it comes to regulation, maybe a bit different now. Right. Certainly, GR work is going to be very important up front, but there's more of an option now to explore if you get to the end of the road. And it's not the result that you want. And certainly on our end as external counsel, where as my recommendation previously would have probably always been, this is not going to work. We can try, but it's going to be extremely challenging. It's going to be different now. There's going to be more cases where this may make more sense.
[00:47:35] Ted Great. Well, thank you both for this educational conversation. I've learned a lot, and we really enjoyed having you on.
[00:47:42] Erin Yeah. Thanks, guys.
[00:47:43] Jean Simon Thank you both.
[00:47:44] Chris Thanks.
[00:47:49] Ted So, Erin, what did you think of that episode?
[00:47:52] Erin So I actually thought it was really interesting. And that's, you know, I think a couple of lawyers sitting around talking about like nitty gritty developments in the case law. I thought it was actually, you know, thought was actually more interesting then as if you might think it could be.
[00:48:04] Ted I like it. It was like back to our roots. We got to go into like a deep technical legal issue for for an episode. It was just fun.
[00:48:12] Erin Yeah, we haven't done that in a while, but it's one that really, you know, you realize when you think about it, how many, like, regulations touch every single aspect of our day to day life, both our day to day lives as individuals and also the lives or the businesses of corporations, right? Our clients deal with regulations. And, you know, as JS said, everything from transport to import export laws to I can't even name all of the different things there would be.
[00:48:36] Ted Like health care, insurance.
[00:48:39] Erin I suspect securities. So, you know, really important, I think a fundamental shift in the law, and we may see a lot more cases coming up in us, given that this, you know, standard I think, JS advices has, you know, he would be much more inclined now to tell a client that it's worth bringing a challenge forward given this new standard. So we may see more in this space.
[00:49:02] Ted Yeah. Exciting. Awesome. For everyone listening, I hope you enjoyed and check us out wherever you get your podcasts. Bye.
[00:00:19] Erin And I'm Erin Brown. Today we are delving into the world of administrative law.
[00:00:23] Ted Yes. We will be discussing two Supreme Court of Canada decisions today, Auer and TransAlta. They were released in November of last year, and clarified the legal framework for how Canadian courts review regulations or subordinate legislation, as our guests might refer to them as. Erin and I are very excited for this conversation today.
[00:00:43] Erin To talk about this new development, we're joined by Jean-Simon Schoenholz and Christopher Guerreiro. Jean-Simon is a partner in our Ottawa office. His practice focuses on public and administrative law and appellate advocacy. He regularly appears before the federal courts and the Supreme Court of Canada, often to challenge government and agency decisions. And actually, we've worked on some in the trade space together. Chris Meanwhile, practices dispute resolution and litigation with an emphasis on high stakes cases involving intellectual property, administrative law and other issues affecting regulated industries such as life sciences and tech. Chris, Jean-Simon, welcome. Good to have you both today.
[00:01:22] Ted Yeah, great to have you both. I'm going to open up with a question either if you can answer it, why should our listeners be interested in these two decisions that came out in November last year? It's the Supreme Court of Canada, sure, but like all those decisions from the Supreme Court are important. Why should listeners be caring about these two?
[00:01:40] Jean Simon Well, fundamentally, our society relies on a lot of regulations to run, and as our clients know, a lot of those regulations affect them. The predominant approach now to regulating how business functions and how our life functions is too complex to be in kind of broad the legislation. And so now legislation is typically kind of a broad framework, but that then gets filled out by much more detailed regulations. So many of our clients are significantly impacted by those. Chris?
[00:02:13] Chris Well, that's exactly right. And the reason why these decisions in particular are so significant is because they tell us how the courts are going to approach situations where there's a dispute about whether or not regulations are authorized. And there's a lot of interest in this because it goes not only to issues of democratic accountability. And that's a big topic right now in Canada and elsewhere in the world, but also to very practical business issues around what businesses can be compelled to do, what businesses can be prevented from doing, the advantages that businesses may or may not be able to access under regulatory schemes and the recourse that they can have through the court system to challenge decisions that they find problematic.
[00:02:56] Jean Simon The other aspect I would note is, you know, this is maybe one of the few instances, you talk about all the Supreme Court decisions are important. This is actually one where the Supreme Court decides to change its approach, which is kind of rare. Often it changes its approach kind of slowly without necessarily saying what it's doing. But here it's actually telling us we're changing course.
[00:03:17] Erin And so what was that course change? Just very, very high level teaser for everyone listening.
[00:03:22] Jean Simon Well, the previous approach to challenging regulations was a very, very high threshold, which is kind of colloquially referred to as hyper deference. And the Supreme Court decides to move away from that here.
[00:03:36] Erin Okay. So we're going to unpack some pretty complicated concepts and cases. So before we get into the details of these decisions, let's just sort of set the stage. So we're talking about challenging regulations, which is different than challenging an act. So just kind of set the stage for us on that distinction and what these cases are really getting at.
[00:03:59] Chris Sure. So you can envision sort of a hierarchy of authority. Right up at the top in Canada, we've got a constitution and all law needs to be consistent with the Constitution. Beneath the Constitution, we have legislation passed by parliament at the federal level and by legislatures in the provinces and territories. And then beneath that, we have what's known as subordinate or delegated legislation, that includes regulations, decisions by governors and council, decisions by boards and tribunals in some cases that take the form of regulations or orders. There's really incredible diversity of decision making that happens at that next level down below legislation. And what we're concerned with here is the approach to reviewing whether or not all of that delegated decision making, if it takes the form of a regulation or rule, is consistent with the enabling legislation or not. And I'm using the word consistent advisedly here, because that's one that we will, to borrow your phrase, have to unpack.
[00:05:04] Jean Simon In a way, you know, a lot of the times when we challenge a government decision, it's something that looks like a court decision, right? It's a tribunal. Human rights tribunal decision or competition Tribunal decision. And then on the other end of the spectrum, you have a constitutional challenge to a law, right, under the charter or federalism issue. And this is in between. So it's really interesting to see how the court deals with decisions that are in between a law and a administrative decision.
[00:05:33] Erin I suspect that impacts a lot of day to day aspects for the, you know, operations for companies. Right. A lot a lot turns on this kind of level of the regulation, right?
[00:05:43] Jean Simon Absolutely. You know, Chris can probably talk about kind of the life sciences space. But I mean, Erin, as we've dealt with, you know, when it comes to food and health and safety around food and CBSA regulations and the transportation industry, there's, you know, these are all highly regulated spaces. And so the validity of those regulations is really important for our clients.
[00:06:05] Erin Yeah. And really kind of practical from a day to day standpoint.
[00:06:08] Ted So when we're talking about regulations, we're talking about those legal rules, right, that are under a statute. Someone is introducing them. And the question I take it that was addressed in Auer and TransAlta relates to how strict should a court be when they're evaluating those regulations that are that are introduced by the authorities who have been delegated that power by the statute? Is that fair?
[00:06:36] Jean Simon That's fair.
[00:06:36] Ted And so just just to give us a sense, who are the authorities making these these regulations, the subordinated legislation? Right. Like what is the cast of characters that would that are we encountering?
[00:06:47] Chris The range is incredibly broad. One of the most common sources of delegated legislation is governors and council, which is a fancy way of saying cabinet. So these are decisions that are made by the core members of legislatures throughout the country, often implementing government policy under enabling legislation that may or may not have been passed by that government. It doesn't particularly matter. But a lot of formal regulation making happens at that level. We also have a large number of administrative boards and tribunals in Canada that deal with everything from economic regulation to child and family matters, as we see in one of the cases. It's an incredibly wide range, as I say, and many of them are empowered to make things that look like rules or regulations with greater and lesser degrees of formality.
[00:07:35] Ted And so in that second group, unelected but often specialized individuals who who are making rules or regulations for a particular industry or particular type of legal framework.
[00:07:47] Chris Exactly. And one of the questions that comes up in the series of cases recently dealing with this is how much should it matter whether or not these people are elected, how close they are to the executive, how close they are to the legislators themselves. And the answer, as it turns out, is it doesn't matter at all. That is where we land.
[00:08:06] Ted Interesting. So but before we get to that landing point, JS, is there anything else that we should keep in mind about regulations, how they're implemented, how they function before we kind of get get into the case law?
[00:08:16] Jean Simon Well, just that the broad scope, I mean, to to reiterate. And it's not only governor and council, but the individual ministers often have regulation making power. As Chris said, various tribunals and boards often have power to adopt guidelines and bylaws that will be binding on the parties and then even trickling down to the local kind of municipal level. You know, the authority to adopt bylaws, in effect works in much the same way. And that was, again, to go back to Chris' point, part of the debate here. Are we going to treat regulations that have been adopted by the Governing Council the same way as municipal bylaws? And are they going to be reviewed in the same way or or is the approach different?
[00:09:00] Erin Okay. So we have we sort of set the stage of what regulations are. So now let's move into the two cases. I understand that Auer and TransAlta reflect a change in approach by the Supreme Court of Canada when it comes to regulation. So can you explain where we were before? So how did courts previously approach regulatory challenges?
[00:09:22] Jean Simon So the approach was from a decision of 2013 from the Supreme Court called Katz. Katz The Musical. Exactly. Katz with a Z. Katz with the Z. And what the Supreme Court said in Katz is it kind of set out a number of principles that were specific to challenges to these kind of decisions. The most significant of them being we're only going to intervene, we're only going to strike down these regulations where it's established that they're irrelevant, extraneous or completely unrelated to the objectives that parliament or the legislature has set out in the statute.
[00:10:04] Erin I think I understand why you were calling this the hyper deferential standard, the hyper deferential.
[00:10:10] Ted So JS, like, if you have a telecommunications statute and then the minister using it to implement regulations to the rail railways or something, right? It's like it had to be completely different.
[00:10:20] Erin Totally out of left field.
[00:10:22] Jean Simon These super extreme cases and the not only is that the high bar, but it also means that how is the court going to review these is while it's going to look as it's well, it's close enough, like it's you know, it's in the ballpark. It's in the same subject matter. We're good.
[00:10:37] Ted What was the philosophy behind so much difference, Chris?
[00:10:39] Chris The philosophy was that at its core, we were going to defer to the expertise of people who had been entrusted by legislators to make important technical decisions, usually at a very operational level. And there was a feeling that courts didn't have a monopoly on interpreting the law when the law strayed into this very technical space. Courts were not necessarily better situated than these people, whomever they were the decision makers, to weigh in on these very technical, detailed operational issues, and that courts especially should be wary if the consequence of wading in would be to pronounce on or interfere with a policy setting function that unquestionably resides with those decision makers. Because we do have a rule and this rule persists that the courts are not to get involved in the policy dimensions of regulation making. They're supposed to be focused on legality. So those ideas were expressed in many different forms by a lot of different people, but they all come back to a core concept that courts need to stay in their lane and recognize that there are others who are better situated in policy intensive and and often, as I said, very technical areas to to take the lead in interpreting legislation and apply it.
[00:12:03] Erin Was it also a hyper deferential standard with respect to an individual decision made under a standard as opposed to under an act or legislation of some sort as opposed to a regulation?
[00:12:13] Ted I think this is actually could tie to Vavilov, JS.
[00:12:16] Jean Simon Yes, exactly. Exactly. So in 2019, the Supreme Court in Vavilov set out the approach to the review of administrative decisions more broadly, so including the type of decisions that I referred to earlier of, you know, an administrative tribunal of some kind.
[00:12:33] Erin Or a government decision make CBSA or.
[00:12:36] Jean Simon CBSA. Exactly.
[00:12:38] Erin Or, you know, we've talked a lot about the federal level, but, you know, at the provincial level.
[00:12:43] Jean Simon Provincial level as well. Yeah. And the standard there is deferential. So and what we mean by that is simply, like, we're going to pay attention to what the decision maker did and the court's not just going to jump in and say, well, this is what I think is right. They're going to say, well, you know, have they reached in the standard is reasonable this. Right. So have they reached a reasonable decision in light of the law and the facts and the rationale for why in Katz we went a step further, I think.
[00:13:15] Erin From from deferential to hyper deferential.
[00:13:18] Jean Simon Exactly. Is is because we're recognizing well, there's here there's a high degree of policy content involved in the decision. And so the court is not well placed to assess that piece of it, so to speak.
[00:13:33] Erin So there's the idea is that there's more policy in the regulation than in the individual decision made under the.
[00:13:40] Jean Simon Exactly.
[00:13:41] Ted But just to clarify, when we talk about Katz, we're talking about 2013. So before this Vavilov case, which, you know, set the standard for how courts are going to review administrative decisions under statutes, right? So I feel like this is now leading to the lead up of TransAlta and Auer. But before we get there, because I get asked this a lot by clients, reasonableness, like what does it mean? Like what are what are the hallmarks of what makes something reasonable in the world of of a vavilov approach to thinking about this standard of review?
[00:14:14] Chris So that's a really good question, and it's the one that Vavilov seeks to answer. I'm going to take one step back to get you to that answer, though, and say that Katz case we were talking about arose at a time when because we were very interested in the identity of the decision maker, we were very interested in whether the decision looked more like a decision a court makes sort of adjudicative or more like a policy setting executive decision. We actually had a lot of different standards of review, and at one point it wasn't even just the hyper deferential standard and reasonableness. We had another kind of standard of review that was a more extreme form of reasonableness. There were many, many nuances. And in 2019, in Vavilova, the Supreme Court swoops in and says, we're going to stop doing all of that. This is too complicated. It's leading to incoherence in the law. We need something that is simple, straightforward, and that applies to all administrative decision making. So we're operating against that backdrop where it used to really matter who made the decision. And Vavilov says it doesn't matter at all anymore. Vavilov says, we're just going to look for two fundamental kinds of flaws in decision making to determine whether or not the decision is reasonable. And the first one is whether there's a failure of rationality internal to the reasoning process. So the court is going to look for in the reasoning process a chain that it can follow, to understand, yeah, okay. I get how you got there from where you started.
[00:15:47] Ted You're thinking it's rational. Right?
[00:15:47] Chris Exactly. And the second one is to look at whether the decision is untenable in light of the factual and legal constraints that bear on it. And that is at least as big as it sounds as a concept. What the court is going to do is consider all of the different factors that the administrative decision maker should have been looking at to inform the decision, and that will include things like the enabling statute. It'll include things like prior decision making of the administrative decision maker because we value consistency. It will include evidence that maybe was presented to the extent that evidence is relevant to the decision. But ultimately, what the court's concerned about is ensuring that in addition to having a reasoning process that makes sense, the decision maker throughout that reasoning process and in the outcome has stayed within these these so-called constraints.
[00:16:40] Ted And so, JS, anything else you'd add on reasonableness before we kind of move move forward?
[00:16:47] Jean Simon Yeah. I'll give you my dartboard analogy, which is the one I share with my admin law students when I teach them in law. When we do a normal appeal, for example, and that the Court of Appeal has to decide if the lower court was correct on a question of law, the correctness standard, that's you got to hit the dartboard, you got to hit the bullseye. Reasonableness is you've got to get somewhere on the board, I'd say. If if the administrative decision makers, somewhere on the board within the range of options can't be making holes in the in the drywall. But if you're on the dartboard, the court's not going to jump in and interfere with your decision.
[00:17:26] Chris Sorry, I'll add one more point on that, which is there are situations where there's only one option available to the decision maker. It's not to suggest that the dartboard is enormous or that it's very small. It really varies from case to case depending on the constraints. And sometimes the constraints are so unavoidable that the decision maker really only has one option available. Now, that's not usually the case when we're talking about delegated decision making in the in the sort of regulation and related spaces. Those are typically quite discretionary decisions. And what we're focused on is whether or not the discretion was exercised within the boundaries of the authority granted by Parliament.
[00:18:06] Erin Okay. So to summarize where we are. So we had Katz which applied a hyper deferential standard to challenging regulations. Then we had like a really complicated, overlapping kind of depends, like lawyers, favorite things, right? Like it depends what, what standard of multiple different standards would apply in respect of individual decision making. Pre Vavilov. And then along comes Vavilov, get rid of all of that with respect to individual decision making and go to a reasonable standard. But does Vavilov cover regulations?
[00:18:38] Jean Simon That is the question. That is the question the court deals with Auer and TransAlta.
[00:18:43] Ted And so but, you know, that's like, you know, five years after Vavilov. So so fill us in sort of what happened after Vavilov with respect to regulations. But before we get this clarification in TransAlta and Auer that we're going to talk about.
[00:18:59] Jean Simon So we have a bit of a back and forth between various courts of appeal and what the right approach is when it comes to challenging regulations. So I'll speak to a bit of the court that wanted to preserve Katz and said, yeah, we should keep this hyper deferential approach is notably the Alberta Court of Appeal, which is where both Transalta and Auer came from. That's where they came up. And what the Alberta Court of Appeal basically said is, you know, we recognize these decisions are unique, particularly when it's the governor and council that's making regulations that's so close to the legislative power that the courts really shouldn't be getting involved there, right. We, you know, division of powers, we need to maintain that. And so the courts shouldn't be jumping in. And we think the Katz and the hyper deferential standard still remains.
[00:19:51] Ted But like so did the Supreme Court does not refer to Katz in Vavilov where they truly looking at the tea leaves here, was the Alberta Court of Appeals saying we don't agree with the Supreme Court. Sort of like how is this position evolving?
[00:20:05] Jean Simon So Katz is not directly addressed as to whether it's still good law in Vavilov. It was an open question. Chris can describe that some of the other courts, notably the Federal Court of Appeal, took a different approach.
[00:20:18] Erin So, Chris, this is getting juicy, what the Federal Court of Appeal do.
[00:20:24] Chris I mean, it was juicy. It was it was as close to drama as you get in the world of administrative law, especially at the appellate level.
[00:20:32] Ted And for for our listeners. Chris, what's the hierarchy between Alberta and Federal Court of Appeal, especially for US listeners?
[00:20:39] Chris So our federal courts sit at the same level as our provincial courts within their respective areas of jurisdiction, and they all feed up into our Supreme Court. So the Federal Court of Appeal sits at the same level as the Alberta Court of Appeal. The two of them were having a bit of a disagreement. They don't bind each other. And we found that they were actually in dialog with each other through their decisions over a number of years about what to do with Vavilov. Because as JS said, in Alberta, the Court of Appeal had gone the direction that Katz survived, and there were puns in there. I'm not going to use.
[00:21:14] Erin Cats have nine lives, right?
[00:21:16] Chris Every publications on these decisions. On the other hand, we had the Federal Court of Appeal first in a decision called Portnov, and then again in a case that I was involved with called, Innovative Medicines Canada. And there were others as well, saying Vavilov is actually very clear. Vavilov is a reset for all of admin law. Vavilov is a new approach to reasonableness review, and a declaration that reasonableness review applies everywhere. It's a flexible concept, flexible enough that it can be used not only for tribunal decisions and sort of very judicial looking stuff, but also for all of this regulation making stuff. And the court says those same tools, looking at internal rationality and coherence of the decision, looking at the constraints, especially focusing on enabling legislation, is a constraint because that is the main one when you're determining whether or not, the delegated authority was exercised in accordance with the law. All of those concepts work perfectly well, and we don't need Katz any longer.
[00:22:20] Ted We don't need other legal theories or standards when we have the Vavilov approach to review of administrative decisions generally, whether it's a decision of a tribunal or a decision to to write a rule or regulation under an act.
[00:22:33] Chris Exactly. And so the Court of Appeal, the Federal Court of Appeal, took the view Vavilov was very much intending to get rid of all of the many different standards that we talked about, bring coherence to the law by having a single standard. And there was no reason to preserve this one little island of hyper deferential review. It would have been the only remaining area with its own unique standard of review, and there was just no doctrinal reason to do it in the view of the appeal.
[00:23:01] Erin A hyper deferential island in a sea of reasonableness.
[00:23:05] Chris Yeah. I like that.
[00:23:07] Ted Chris is making a compelling point, and that's probably because the Supreme Court ultimately comes down on that side. But JS, what what would you say?
[00:23:14] Erin Don't give it a way, Ted.
[00:23:16] Ted Spoiler spoiler for anyone who who hasn't read.
[00:23:20] Erin Or probably listen to our introduction of this episode.
[00:23:23] Ted But just like give us the counterpoint. Right. Why was it important to preserve Katz as an island outside of the Vavilov framework?
[00:23:32] Jean Simon I mean, I think it comes back down to division of powers, right? And the executive, which which is would comprise the ministers and the governor and council making these many of these regulations. They shouldn't be under close scrutiny from the courts. Right? They they should be allowed to do their job and adopt whatever regulations that broadly fit within the purposes of the act that that grants to the power to do so. And they shouldn't constantly be second guessed by the courts and doing so.
[00:24:05] Ted The legislature sort of, you know, was elected, they passed a law and in that law that delegated the authority to someone. So let them implement that and that, you know, will of the people sort of approach.
[00:24:16] Erin Okay, So let's freeze in time for a minute. So we have Katz and we have Vavilov, but we don't yet have Auer and TransAlta. Why does this actually practically matter to our clients, to a GC who's thinking about a regulation that impacts something operationally day to day to them? What would be the practical difference at that moment in time between our hyper differential island or sea of reasonableness?
[00:24:41] Jean Simon It matters because the first question, you know, when you're when you're doing your government relations work and and you see that it's not going your way and that, you know, the government is going to adopt a regulation or something that is unhelpful to your business. When you're considering your legal options, the first question is like, what are my chances of success? And quite frankly, under Katz and under the approach endorsed by the Alberta Court of Appeal, the answer was pretty slim, pretty slim indeed.
[00:25:10] Ted When, when what you mean success, you mean success at actually knocking out.
[00:25:13] Jean Simon Success in challenging.
[00:25:14] Ted Challenging the regulation.
[00:25:16] Jean Simon Yeah. And we have, you know, some examples and, you know, there's some that came up in the pandemic during this in-between time. And the court just kind of goes, yeah, like, you know, if we apply Katz, like, there's nothing much for us to look at here. There's not much scrutiny for us to give to these to these decisions.
[00:25:34] Ted We may disagree with what the government is doing with their rule or supporting that piece of legislation, but it's not really our place. Right.
[00:25:42] Jean Simon Exactly.
[00:25:43] Erin To use your analogy from earlier, instead of having to actually hit the dartboard, you just have to hit the wall that the dart board is on somewhere and sort of be in the general direction that the dart was being thrown, but not to not too close to them.
[00:25:56] Ted And did that would Vavilov really change that? I mean, Chris, you're still talking about reasonableness. There's still lots of room on the dartboard, but it does, it was there still a difference.
[00:26:05] Chris It's a massive difference because under the Katz hyper deferential standard, you were really looking for the type of mistakes that don't get made all that often. It's really rare that you're going to have something as extreme as accidentally regulating occupational health and safety in the context of a statute about, I don't know, pharmaceuticals. And that would be very improper. The court would definitely have intervened under Katz in that situation. The court would also intervene if the government had acted or whomever the decision maker was for an ulterior or improper purpose. But that is like really, really difficult to prove for evidentiary reasons as well as for practical ones. So under Vavilov, although we're still interested in being deferential within the scope of what's reasonable, we take a very serious look at this constellation of constraints. And again, chief among them is always the enabling statute in these challenges. So the court is going to look at whatever act gave our decision maker authority. The court is going to read it to understand what it allows and how the decision maker interpreted it to authorize them. And that is going to establish the size and the shape of our dartboard.
[00:27:24] Erin Yes, I keep thinking about the line in the case that you and I worked on together, which was it was not a case challenging regulations, but under kind of the general Vavilov reasonableness where the where the federal court said, the administrative decision maker does not have a hall pass, they don't have a hall pass to do whatever they want, right. Like. So it's that idea of even if they're sort of in the right direction of the of the wall, they need to get on to the dartboard. They need to have a coherent, you know, they need to have looked at all of the relevant information. They need to have carried that rationality and that logic to their decision and actually brought, you know, reasonableness to bear on their decision.
[00:28:02] Jean Simon And what we've seen in Vavilov, you know, is that the court does demand more scrutiny, closer scrutiny of administrative decisions writ large, that the word it's it's kind of silly to say, but like the word robust is used in Vavilov and now in Auer and TransAlta, but truly is reflective of kind of the new post Vavilov. Like approach to this, the courts have a duty to ensure, yes, that the decision is reasonable, but the scrutiny involved in that is it's a robust standard that the court kind of takes seriously.
[00:28:37] Ted I want to get to TransAlta and Auer now. Right? We've been talking about it for a little bit. What were the facts that gave rise to these cases that ultimately made their way to the Alberta Court of Appeal and then both ended up at the Supreme Court at about the same time. So maybe I don't know, Chris, you want to tell us about one of them and JS, you can tell us about the other?
[00:28:58] Chris Sure. So I'll talk a bit TransAlta, the gist of which is that the government in Alberta entered into agreements with respect to coal power plants and the agreements provided that they were going to be retired somewhat earlier than they otherwise might have been and that the Alberta government would pay, you know, reasonably large amounts of money to the people with whom they were making these agreements to compensate them for the fact that their assets were going to be less valuable than they otherwise would be. So against that backdrop, a decision is made within the guidelines, and they're binding guidelines that are used to assess property taxes. And the decision is those who entered into these agreements will not be able to claim the depreciation associated with the earlier obsolescence of their properties. And TransAlta challenged this, saying you've discriminated unlawfully under this regulation by singling me out and saying I can't claim this depreciation even though I'm experiencing it, and there's a loss associated with that. But the argument was that this discrimination wasn't authorized under the enabling statute. You that permitted these depreciation guidelines to be promulgated. So it goes up to the court on the question of whether or not they could discriminate in this way or not.
[00:30:22] Ted Whether that regulation saying, you're not going to get those tax benefits for this new stranded asset, whether it's a, you know, production plant or facility that you have sort of agreed to to phase out. And and the question is, can we discriminate in this regulation? A similar thing in Auer or was it was it different altogether, JS?
[00:30:45] Jean Simon It's a different completely different context. And none of us are family lawyers, but this is in the family context. So it's that the case is Auer v. Auer. So we have a husband and wife. And under the Divorce Act, Federal Divorce Act, there's child support guidelines with respect to how child support is supposed to be determined in those cases. And Mr. Auer complaint or his challenge to those guidelines was that he alleged that they ended up such that the parent that was required to pay child support ended up contributing more than the parent who is receiving child support in a way that was not authorized by the Divorce Act. So completely different circumstances. And it highlights what we were talking about earlier, which is that these really affect people and corporations across the board on all kinds of different issues.
[00:31:36] Erin Okay, So the moment of truth. Drumroll. Where does the SCC land on us?
[00:31:41] Chris So the Supreme Court says Vavilov governs, we don't need Katz anymore, with respect to this island of hyper deference. It says, there's no rationale to preserve that. It's not necessary in order to ensure that the rule of law is observed. We think we can do this all under the Vavilov framework, and that's in fact what we intended when we rendered that decision. Now, that's not to suggest that Katz is completely thrown away.
[00:32:10] Ted I had a feeling. I'm feeling at. Yeah, Yeah.
[00:32:14] Erin The plot thickens.
[00:32:16] Jean Simon I think the most problematic piece of Katz, which is that irrelevant, extraneous, completely unrelated language that the court explicitly says we're not doing that anymore. That's that hyper deferential standard is gone. What we do keep, however, is the court saying. But that doesn't mean we're going to start questioning policy. Right. Which I think is, you know, maintaining that division of powers, maintain that respect for the democratic will and all that. We're not going to inquire into policy questions, but we can certainly, as courts, consider the reasonableness as to whether that the regulation in question, does it fall within the authority contemplated by the regulation?
[00:32:56] Ted Okay. So so there are were there were aspects of Katz. There were there were parts of the reasons from Katz that we're actually going to keep because they made sense even within the Vavilov world.
[00:33:06] Chris And the most important one is and most controversial as well, I should say, is a presumption that regulations are valid.
[00:33:15] Ted What does, what does it mean?
[00:33:16] Chris So it's got two parts. And the first is not really news. It's that there's a burden on the person challenging to substantiate their challenge. So you don't walk into the court say, I've got a problem with this regulation and says, cool, okay, I'm on your side. Tell me more.
[00:33:32] Ted Government has to prove that it's valid. So I think that this is discriminatory or if you think that it's unfair, you're the one who needs to show it, not the government.
[00:33:41] Chris Yeah. So the idea that the person challenging an instrument has the burden is not unique to this setting, and it doesn't really tell us much to say it's there. It is important, obviously, to know if you're mounting a challenge. The second piece is a little bit trickier, and the second piece is this. The court will approach the interpretation of a regulation and an enabling statute in a way that seeks to reconcile the two, that seeks to avoid a clash between the two. So the court is not going to adopt the most extreme interpretation of the regulation on the one side, the most extreme interpretation of the legislation on the other side, and then say, well, I think that there are some problems with the Venn circles here. They don't quite overlap. And I think I have to strike this down or prune it back a bit on that basis. The court's going to try and reconcile the two as much as possible before it steps in and says, you've overstepped.
[00:34:36] Ted I want to just kind of pull out and look at this this question broadly, the concept of Chevron deference in the US as it has been a hot topic in recent years, and judicial oversight of administrative decisions and in the US really important. How does TransAlta and Auer compare to what is the current law in the US and and maybe what some of our clients would be more familiar with?
[00:35:05] Jean Simon So broadly speaking, very broadly and then we can zoom in. Broadly speaking, both courts have kind of moved in the same direction, which is to say we're going to more carefully scrutinize decisions that are made by these administrative bodies. And so that's the trend in both countries. The difference is that in the US, they've gone one step further in on questions of the interpretation of the statute, courts are going to have the final say. So that's the correctness approach that's hitting the bull's eye. In Canada, we've not that's not where we're at. We're at Vavilov of reasonableness. But now we've moved everything to Vavilov reasonableness, which I said has to be robust, a robust examination.
[00:35:53] Ted So so both countries becoming maybe more stringent in in the review. But Canada is starting from such a more deferential beginning point that that that move still still keeps the sort of Supreme Court's current word on reviewing regulations much, I don't know, more government friendly approach, Chris. Like is that, is that fair to say? You're tilting your head. You're you're disagreeing with me. So I want I want you to correct me here. Yeah.
[00:36:22] Chris I'm not sure you can say it's more government friendly because it like the review process under Vavilov is quite searching. The court's not going to weigh policy decision making. It's not going to look at whether or not a regulation is a good idea, whether or not it's a particularly effective way of doing what the government wants to do. But the reasonableness framework gives the court an enormous amount of power to look at the chain of reasoning that led to a decision, and to call out irregularities, irrationalities and other things. And that's a fundamentally different paradigm from the correctness paradigm that's being used in the US to review decisions on questions of law, including the interpretation of statutes. Because they're what the courts doing is sort of a clean slate, fresh start. We call it, de novo review, in sort of legal terms. The court doesn't really worry too much about what the administrative decision maker thought on the way to its decision. It just interprets the instruments on its own using the usual judicial toolkit, and then compares them using using its conclusions. So we do have that correctness standard of review in Canada as well, only where it's specified by statute and in a couple of other circumstances, including sort of cases with constitutional dimensions and things that aren't relevant for today's purposes. But by and large, we're on this reasonableness paradigm that to bring it back, true. It doesn't let the court do a fresh start and impose its own view. But it does let the court call out irrational decision making in a way that wouldn't necessarily be the case in a pure correctness paradigm. So there they are quite different and could lead to quite different results depending on the facts of a given case.
[00:38:12] Erin Okay. So before we sort of come back to the key takeaways here, we've talked about this whole, you know, last ten, last decade or so of case law from Katz to Vavilov, Auer and TransAlta. What's next? What's the next frontier? If you had to get out your crystal ball, what do you see as sort of the next steps in the case law or how things may develop or issues that may be challenged next?
[00:38:38] Jean Simon So our in trends out to address that, the broad question of how do you challenge regulations and what's the standard. But there's still a lot that's going to need to be kind of filled in there. And we have a couple hints at that in the reasons in TransAlta and Auer. One of them is that's interesting is Supreme Court talks about how normally the court's going to look at the consequences of the regulation because that kind of goes to policy rates, which is a no go zone. But it says one of the questions we can ask and how consequences may become relevant is actually we can ask ourselves, was the regulator allowed to regulate in a way that would produce these consequences? Right. And so kind of adjacent to the policy question, but relating directly to does the regulator have authority to do what it did? And so I think that's going to be an interesting question to see. How do the courts actually approach that? How do they actually what kind of evidence do they admit on questions of impacts? And so that'll be one of the interesting issues to follow.
[00:39:44] Chris Yeah, I agree completely. In questions of evidence more broadly are going to be interesting in this space because there's not just the downstream effect question that JS has highlighted. There's also the upstream reasoning process question. And in a sort of quasi-judicial administrative decision making, you usually get a decision that comes along with detailed reasons explaining how the outcome was reached. So that's straightforward enough. You can read that and understand it or not understand it as the case may be, but you don't always get reasons at all with regulation making.
[00:40:18] Ted You were barely get the reasons, right? It's just this is the regulation. Here you go. Look, here's the announcement. So, so how do you actually know where the dartboard is? Like, how do you know what they've decided is rational or logical?
[00:40:30] Chris And that's sort of the question. And sometimes you'll get what's known as a regulatory impact analysis statement. It's a document that's published alongside with regulations. When they promulgated in sort of the most official way, they go into a thing called the Canada Gazette or Business that are published by the provinces. And and there's a process around that. So you'll have some summary of what they were intended to do and maybe the process by which the decision was reached in there. But not with the same level of methodical reasoning that you would get in a more judicial type decision. What you don't typically get is anything behind the scenes often the documents that you would want to see as evidence of a reasoning process are going to be cabinet privileged or subject to other forms of confidentiality that prevent them from being disclosed. There are some interesting questions around where exceptions should or should not exist on that. But I think a central problem now that Vavilov, and Transalta and Auer have directed us to focus on the reasoning process is what we have, we have to know what that was. So the court said even if there are no reasons, we can make some inferences from context and figure that out. But as litigators who represent clients regularly in this space and generally whose clients aren't happy about the reasoning process, that's why we've been hired. We're really interested in getting access to that information because we now think the Supreme Court is saying this is important, this is relevant. We need to know how these decisions were reached, because that's going to form part of our analysis.
[00:42:02] Jean Simon I totally agree. And there's another kind of further piece of this that's related, which is another area I think we're going next, which is what evidence can you lead to challenge your regulation? The general rule when it comes to a normal, so to say, administrative decision is only what was before the decision maker can be put before the court. So I have a complaint for the Human Rights Tribunal. Whatever. I file there, I file there. And then if I challenge that decision to the court, well, the same file gets transferred to the court, right?
[00:42:34] Ted You don't get to bring in evidence to the court, that wasn't before the tribunal.
[00:42:38] Jean Simon Exactly. Because if if I could, then I would be we'd be doing something other than judicial review. Right? We'd be doing a whole new kind of challenge. The question when it comes to regulations is more tricky, because nobody's making submissions to the minister or the governor in council about the regulations and there's no formal hearing process. And so in a way, the minister or the Government Council is considering nothing but also considering kind of everything, right?
[00:43:09] Erin So like could you almost like file an expert report of kind of the state of whatever was in the industry and say, well, they have this specific expert report in front of them, but this expert report is just telling you court what they should have known was already the situation in the industry.
[00:43:25] Jean Simon Exactly. So I think as we probably see more of these challenges coming in light of the decisions and in Auer and TransAlta, we're likely going to see more or development around the procedure and the evidence and strategy that's available to us to challenge those types of decisions.
[00:43:46] Ted So how were the appeals in TransAlta and Auer actually decided applying the Vavilov framework to the regulations?
[00:43:54] Chris So in TransAlta, the court decided that the regulation was reasonable, and the court does that by looking at the payments that were already made to TransAlta at the time of the agreement we talked about. You remember it was an agreement to do with power plants and when they would be retired. And so there were payments at that time. And the court then looked at the measure in the regulation, denying the ability to claim depreciation in respect to those agreements, and essentially concluded that the matter had already been addressed upfront with the agreements. And because there was a concept within the enabling statute that the depreciation rules should be equitable. The court thought it was equitable not to allow the depreciation to be taken into consideration.
[00:44:41] Erin Okay. And JS, what about Auer.
[00:44:43] Jean Simon Same results as Mr. Auer is stuck with the child support guidelines. And for much the same reasons that the Court finds while the the statute that grants under the Divorce Act that the powers to enact these guidelines very broad with respect to this power. And I think that highlights you know, this is a significant change, but it will remain challenging to challenge these these types of decisions because often the wording in the statute is very, very broad and gives whoever the governor and council, the minister, broad powers. But that's not the case for all regulation making powers. And some are more constrained and some are more specific about steps you need to take or the types of regulations you can make. So it does really depend. But here, broad power, they're fine.
[00:45:30] Erin Okay. So you've already started to I think your answer was kind of already alluding to this, JS. But what are the takeaways? You have one minute to sort of summarize the takeaways to these two cases and sort of the development of the law. What's the takeaway?
[00:45:43] Chris So I would say the takeaway is, for businesses operating in a highly regulated space, you need a strategy that deals with both the contents of the policy and the way that it's going to be implemented. The contents of the policy is going to remain something that you work on through GR PR and related functions, through consultations to the extent that those are available, consultation submissions are going to be massively important, in part because they can help to create a record in the event that there's a judicial challenge. But companies should also be aware that to the extent that the policy conversation doesn't go the way they want it to, there is a legal angle and it's a strong legal angle. Following Vavilov and following these two recent case TransAlta and Auer, to look at genuinely problematic regulations that are an overreach that go beyond what the legislators intended for our regulators to do. So it won't be applicable in every case, but it's something that is very much worth exploring with counsel because with careful attention to the enabling legislation in the context, there may be real issues, there may be real issues that could arise as simply is because the government did something expedient.
[00:46:57] Ted JS, what do you think?
[00:46:57] Jean Simon Yeah, I mean, I think my takeaway is very, very similar, but maybe I would boil it down to, you know, your previous understanding of your options when it comes to regulation, maybe a bit different now. Right. Certainly, GR work is going to be very important up front, but there's more of an option now to explore if you get to the end of the road. And it's not the result that you want. And certainly on our end as external counsel, where as my recommendation previously would have probably always been, this is not going to work. We can try, but it's going to be extremely challenging. It's going to be different now. There's going to be more cases where this may make more sense.
[00:47:35] Ted Great. Well, thank you both for this educational conversation. I've learned a lot, and we really enjoyed having you on.
[00:47:42] Erin Yeah. Thanks, guys.
[00:47:43] Jean Simon Thank you both.
[00:47:44] Chris Thanks.
[00:47:49] Ted So, Erin, what did you think of that episode?
[00:47:52] Erin So I actually thought it was really interesting. And that's, you know, I think a couple of lawyers sitting around talking about like nitty gritty developments in the case law. I thought it was actually, you know, thought was actually more interesting then as if you might think it could be.
[00:48:04] Ted I like it. It was like back to our roots. We got to go into like a deep technical legal issue for for an episode. It was just fun.
[00:48:12] Erin Yeah, we haven't done that in a while, but it's one that really, you know, you realize when you think about it, how many, like, regulations touch every single aspect of our day to day life, both our day to day lives as individuals and also the lives or the businesses of corporations, right? Our clients deal with regulations. And, you know, as JS said, everything from transport to import export laws to I can't even name all of the different things there would be.
[00:48:36] Ted Like health care, insurance.
[00:48:39] Erin I suspect securities. So, you know, really important, I think a fundamental shift in the law, and we may see a lot more cases coming up in us, given that this, you know, standard I think, JS advices has, you know, he would be much more inclined now to tell a client that it's worth bringing a challenge forward given this new standard. So we may see more in this space.
[00:49:02] Ted Yeah. Exciting. Awesome. For everyone listening, I hope you enjoyed and check us out wherever you get your podcasts. Bye.
