Deference to regulators: a study in contrasts
Courts and policy-making plus guidance on bias and regulators
I spent a week by Lake Ontario, not reading or thinking about law and enjoyed mostly good weather. I’m still in semi-vacation mode, so this will be a short newsletter.
I did start re-reading Alexis de Tocqueville’s Democracy in America (it somehow seemed appropriate) and came across this quote in his introduction.
I do not know if I have succeeded in making known what I saw in America, but I am sure that I sincerely desired to do so, and that I never yielded, except unknowingly, to the need to adapt facts to ideas, instead of subjecting ideas to facts.
The role of courts in policy-making
Much has been written about the overturning of the precedent set by the Chevron decision in the United States - I’m not even remotely qualified to comment on US administrative law. However, by coincidence, the Federal Court of Appeal in Canada commented on the role of the courts in reviewing policy decisions of regulators that stands in sharp contrast to the new US approach. The FCA’s decision in Teksavvy Solutions Inc. v. Bell Canada, 2024 FCA 121 was released this week. Justice David Stratas wrote in the decision:
[12] Rate-setting and how to go about rate-setting are matters of discretion and policy founded on industry appreciation and specialized technical study—matters resting at the very core of the CRTC’s exclusive jurisdiction under the Telecommunications Act. They are something very much in the wheelhouse of the CRTC and are alien to us. For the most part, as an appeal court, we mainly handle matters of law and related matters such as procedural fairness. For the most part, we do not decide the merits of matters, especially those that draw on industry appreciation and specialized technical study.
[13] For this reason, Parliament has restricted us to a very limited role. Under subsection 64(1) of the Act, we can deal with only “question[s] of law or of jurisdiction” and, even then, only with leave. This Court’s decision in Canadian National Railway Company v. Emerson Milling Inc., 2017 FCA 79, [2018] 2 F.C.R. 573 tells us much about this limit.
[14] The phrase “question[s] of law” in subsection 64(1) of the Act means purely legal questions and extricable legal principles, not factually suffused and discretionary questions of mixed law and fact, and still less, questions of fact: Emerson at paras. 20-28 (decided under a substantially similar provision, s. 41(1), in the Canada Transportation Act, S.C. 1996, c. 10).
[15] The word “jurisdiction” in subsection 64(1) of the Act includes concerns about whether a CRTC proceeding was conducted fairly: Emerson at paras. 14-19.
[16] Often we will deny leave to appeal because the party seeking to appeal has not raised a question we can consider. When that happens, the appeal is doomed to fail or cannot be said to be “fairly arguable”: Apotex Inc. v. Allergan Inc., 2020 FCA 208 at para. 8; Lukács v. Swoop Inc., 2019 FCA 14; Lufthansa German Airlines v. Canadian Transportation Agency, 2005 FCA 295, 346 N.R. 79 at para. 9; Canada (Minister of Human Resources Development) v. Rafuse, 2002 FCA 31, 222 F.T.R. 160 at para. 12; Martin v. Canada (Minister of Human Resources Development) (1999), 252 N.R. 141, 178 F.T.R. 159 (F.C.A.) at para. 7.
[17] But even where we grant leave, this issue always remains live: whether we have a “question of law or of jurisdiction” before us under subsection 64(1) goes to our subject-matter jurisdiction. We cannot take on things that Parliament forbids us to take: see Emerson at para. 9, citing Green v. Rutherforth (1750), 27 E.R. 1144, 1 Ves. Sen. 462, at 471; Penn v. Lord Baltimore (1750), 27 E.R. 1132, 1 Ves. Sen. 444, at 446; Attorney General v. Lord Hotham (1827), 38 E.R. 631, 3 Russ. 415; Thompson v. Sheil (1840), 3 Ir. Eq. R. 135. And of even longer standing is the principle of legislative supremacy, one corollary of which is that Parliament’s laws bind courts, just like everyone else: Re: Resolution to amend the Constitution, [1981] 1 S.C.R. 753, 125 D.L.R. (3d) 1 at 805-806 S.C.R.; Reference re Secession of Quebec, [1998] 2 S.C.R. 217, 161 D.L.R. (4th) 385 at paras. 71–72; Ref. re Remuneration of Judges of the Prov. Court of P.E.I.; Ref. re Independence and Impartiality of Judges of the Prov. Court of P.E.I., [1997] 3 S.C.R. 3, 150 D.L.R. (4th) 577 at para. 101.
[18] In considering our jurisdiction in cases like this, we must remain on high alert. The say-so of a party that a “legal test” or “the Act” is involved is not enough. “Skilful pleaders” who are “armed with sophisticated wordsmithing tools and cunning minds” can express grounds in such a way as to make them sound like legal questions “when they are nothing of the sort”: JP Morgan Asset Management (Canada) Inc. v. Canada (National Revenue), 2013 FCA 250, [2014] 2 F.C.R. 557 at para. 49. Put another way, “the mere say-so of a party that a ‘legal test’ is implicated” or the expression of grounds of appeal “in an artful way to make them appear to raise legal questions when they do not” is “insufficient to found an appeal”: British Columbia Broadband at para. 51.
[19] Instead, we must look at the substance of what is being raised, not the form. See generally JP Morgan at paras. 49-50, cited in Emerson at para. 29; British Columbia Broadband at para. 51.
[20] In this appeal, Teksavvy gamely offers a number of grounds for setting aside the CRTC’s rates decision and phrases them as legal issues to get past the limitation in subsection 64(1). However, in my view, Teksavvy’s real concern is disagreement with the policy adopted by the CRTC and the discretion it exercised in setting the rates, matters that we are powerless to address.
Bias and regulators
Teksavvy also raised the issue of apprehension of bias, based on a reported one-on-one meeting between the CRTC Chair and an executive of Bell, during the rate setting hearings. (The Conflict of Interest and Ethics Commissioner reviewed a complaint about this meeting but did not refer it for further investigation.) Justice Stratas dismissed this apprehension of bias argument based on waiver, as the allegation was not raised at the earliest opportunity. He explained the rationale for the waiver rule quite succinctly:
[59] There are many good reasons supporting this legal rule.
[60] Raising an issue with the administrative decision-maker as soon as reasonably possible gives the decision-maker a chance to review the situation and correct any mistake or oversight it has made before any prejudice results. Where a mistake or oversight cannot be corrected, steps might nevertheless be taken that can mitigate any prejudice.
[61] If the issue matters to a party—and is not merely trivial—and if it has arguable merit, one would expect that a party would raise it as soon as reasonably possible.
[62] Finally—and in making this point, I cast no aspersions on Teksavvy here, which genuinely and in good faith pursued this submission—it is unseemly for a party to notice that a mistake or oversight has been made and then hide in the weeds, ready to pounce should the case go against it. Such a party has no real interest in correcting the mistake or oversight but rather wishes, for tactical reasons, to take out some insurance against an adverse result. Our administrative law never rewards purely tactical behaviour that benefits a party to the detriment of the larger public interest or the proper administration of justice.
Justice Stratas did, however, include some guidance on bias particularly relevant to regulators (as opposed to strictly adjudicative tribunals):
[64] …this Court has a general power of supervision over federal tribunals and it would be remiss if it did not offer a word or two about meetings between a regulator and a frequent party before it, such as the one in this case.
[65] Meetings between regulators and regulatees outside of the hearing room are a tricky area.
[66] At one end of the spectrum are meetings that are in the public interest, particularly where the regulator has a policy-making mandate and the regulator and the regulatee are in a long term relationship. Regulators need to understand the industry they regulate and the parties in it, their challenges, needs, aspirations, and plans. And regulatees need to understand the motivations of regulators, their view of the public interest and their need to protect it. It is evident from the register maintained under the Lobbying Act, most regulatees in sectors such as this engage in these meetings. It is accepted that they are part of doing business. For good measure, the preamble to the Lobbying Act has declared lobbying to be a “legitimate activity”. And the CRTC’s Code of Conduct correctly recognizes that “[f]ormal and informal contacts with parties with an interest in the communications industry are essential to maintaining and enhancing our expertise and knowledge”.
[67] At the other end of the spectrum are meetings to discuss live issues coming before the regulator or already before the regulator for hearing and decision. In effect, these meetings are means by which secret submissions can be offered outside of the hearing room, away from the eyes and ears of other parties to the hearing and the public. This subverts fairness and should not happen.
[68] Somewhere in the middle are social gatherings. The CRTC’s Code of Conduct permits attendance at social events and other meetings between CRTC members and industry representatives as long as CRTC members do not discuss matters before the CRTC during the events. But this can still invite unwelcome questions that can multiply, with mounting risk.
[69] Looking at this case as an example, why were the two together? What was discussed? Why were just the two of them there without any witnesses? Quite simply, meetings between two people, one a regulator and one a regulatee, without any independent witnesses or other evidence to substantiate why the meeting happened and what was discussed can be a recipe for trouble.
[70] In the evidentiary record before us is a CRTC policy that offers good practical guidance on this issue. It recognizes the benefits of regulator-regulatee meetings. But it also flags the risks and offers some ways the risks can be mitigated. For example, among other things, the policy suggests that a senior Commission staff person be present at such meetings. It also suggests that the purposes of the meeting be confirmed in writing.
Links of Interest
Virtual Hearings at Administrative Tribunals
In summary, virtual hearings can enhance access to justice, efficiency and transparency. To the extent that there are obstacles to achieving enhanced access to justice, efficiency and transparency, courts have explained how these can be surmounted.
Is Supreme Court Justice Jamal's recusal from the Bill 21 case appropriate?
But we all know that all judges carry with them their personal beliefs. These aren’t robots. And while we want to set up institutional rules and structure legal decision-making to mitigate the effects of those beliefs and ensure that courts decide on the ‘objective’ basis of what the law requires, at the end of the day judging - particularly at the Supreme Court which deals with ‘hard cases’ and especially in the context of morally-laden rights issues - is to a degree an inescapably political exercise. It is a creative task, laden with fairly broad discretion.
In that light, Justice Jamal’s recusal doesn’t seem so much a victory for legal ethics or propriety as it does a political victory for Bill 21’s defenders. And we should be deeply concerned if the SCC ends up splitting 4-3 in this upcoming case, such that Justice Jamal’s absence has an impact on the outcome.
An honourable move or a slippery slope?
[Eric] Maldoff says he fears the beginning of a trend.
“What I see here is that if you make enough of a fuss, you can put a judge in a position where they have to make an unpleasant choice,” he says.
“Once we start playing this game, where does it end? Can a Jewish judge still rule on a case involving restrictions on the use of religious symbols, for example? This could be seriously damaging to the judiciary’s ability to do its job.”
…But our profession should not tolerate working hours for young people of over 11 or 12 hours per day, however well-paid they are. There are mental health consequences to such hours, and our profession should insist that a good lawyer is a well-rounded person who has a life and interests outside the law (and the time in which to develop them).
Broad perspectives and strong foundations
Justice Malcolm Rowe tells students, new lawyers to be open to opportunities beyond the conventional practice of law
What the Ju/’hoansi can tell us about group decision-making
Though the small-world life of hunter-gatherers may seem far removed from our own digitalised and global world, the problems of group life have remained fundamentally the same for hundreds of thousands of years. In the face of conflict and polarisation, ancient human groups needed processes that yielded good outcomes. What can we learn from a political form shaped by hundreds of thousands of years of trial and error? By examining how hunter-gatherers achieve consensus, perhaps we can develop better strategies to solve the problems we face today.