The SCC Vavilov Decision: Will it Increase Regulatory Risk?

In December 2019, the Supreme Court of Canada in Vavilov[1] significantly reshaped the law of judicial review of administrative actions. Broadly speaking, the Supreme Court established reasonableness as the presumptive standard for judicial review: but it also expanded the role of a stricter correctness standard in reviewing many legal determinations made by administrative decision-makers — most significantly those involving statutory appeals of administrative actions. Moreover, Vavilov called for any reasonableness review to be “robust” and identified a variety of indicia for reasonableness that critics fear could serve as a basis for courts to more strictly supervise administrative decision-makers and more frequently overturn administrative decisions.


It did not take long for Vavilov to have an impact on Canadian energy regulators. Courts in Canada have long granted energy regulators considerable deference particularly when interpreting their home statutes.

In 2013, the Supreme Court of Canada, in a case involving the British Columbia Securities Commission, highlighted the deference that courts should grant to expert tribunals:

The bottom line here, then, is that the Commission holds the interpretative upper hand: under reasonableness review, we defer to any reasonable interpretation adopted by an administrative decision maker, even if other reasonable interpretations may exist. Because the legislature charged the administrative decision maker rather than the courts with ‘administer[ing] and apply[ing]’ its home statute, it is the decision maker, first and foremost, that has the discretion to resolve a statutory uncertainty by adopting any interpretation that the statutory language can reasonably bear. Judicial deference in such instances is itself a principle of modern statutory interpretation.

Accordingly, the appellant’s burden here is not only to show that her interpretation is reasonable, but also that the Commission’s interpretation is unreasonable. And that she has not done. Here, the Commission, with the benefit of its expertise, chose the interpretation it did. And because that interpretation has not been shown to be an unreasonable one, there is no basis for us to interfere on judicial review — even in the face of a competing reasonable interpretation.[2]

The following year, the Alberta Court of Appeal made a similar point with respect to the Alberta Securities Commission:

The Commission is an expert tribunal, charged with the administration of the Act. The standard of review of its decisions is presumptively reasonableness, particularly where the question relates to the interpretation of its enabling (or ‘home’) statute. Its findings of fact, findings of mixed fact and law, and credibility findings are also entitled to deference, and will not be overruled on appeal unless they demonstrate palpable and overriding error.[3]

Where this will all end up is hard to say. In 2020 both the Manitoba and Ontario courts have applied Vavilov to more strictly scrutinize decisions of energy regulators — particularly on statutory appeals.[4]


Major energy projects in Canada currently face extraordinary completion risk — whether by way of undue delay, major restructuring or outright abandonment. Judicial review has been a factor — and sometimes a significant factor — in contributing to that completion risk. One need look no further than the delay and restructuring of the Trans-Mountain Expansion project or the abandonment of the Northern Gateway project — each of which was, at the very least, materially affected by the timing and/or outcome of judicial review.

In the case of Northern Gateway, a robust judicial review process took several years to complete and resulted in the original federal approvals for the project being quashed.[5] By the time the judgement was rendered the federal government had changed. The new federal government had campaigned explicitly against Northern Gateway. For a variety of reasons — likely including a change in market conditions but certainly not excluding political, regulatory and legal challenges — Northern Gateway was cancelled shortly after the release of the Gitxaala decision.

Regarding the Trans-Mountain Expansion, judicial review and associated corrective administrative proceedings and Aboriginal consultations again took several years.[6] It is somewhere between arguable and probable that only the nationalization of Trans-Mountain by the federal government kept the project alive over the course of the whole judicial review process.

When proposed energy projects are approved by administrative bodies like the Canada Energy Regulator (CER), or equivalent provincial bodies, opponents of those projects frequently appeal or otherwise apply to courts to review and quash those decisions. The questions for administrative decision-makers, and the courts who review those decisions, is what standard must be met to avoid those decisions being overturned.

From the perspective of overall system coherence and efficiency, an optimal outcome would be an administrative law doctrine that encourages a relatively deferential standard of review — and embraces a relatively restrained approach by the courts to reviewing administrative decisions. As a general rule, this type of approach tends to result in greater regulatory finality.

In our previous Completion Risk post,[7] we had noted there has been widespread uncertainty about the current standard for judicial review of administrative decisions.[8]

We had identified this issue as among a handful of policy, legal and regulatory issues that have contributed to the level of completion risk faced by major energy projects in Canada — particularly those subject to federal jurisdiction.

The principal issues in administrative law roiling the courts for the last decade have been:

  • when to apply a relatively deferential reasonableness standard for judicial review and when to subject administrative decision-makers to a more exacting, entirely undeferential, correctness standard of review; and
  • if applying a reasonableness standard, what does that mean in practical terms.

These administrative law issues came before the Supreme Court in Vavilov, in December 2019. The Supreme Court, in a far-reaching 7 to 2 decision, fundamentally recast the Canadian law of judicial review of administrative decisions.[9] Vavilov extended the role that the undeferential correctness standard of review will play going forward — particularly in the important case of statutory appeals from administrative decisions. It added precision — but also some stringency and exactitude — to the conduct of a reasonableness review. Much will depend on how Vavilov is applied over time. Applied strictly however, Vavilov is unlikely to promote, encourage or assist systemic coherence and efficiency in administrative decision-making on major energy projects.

The Standard of Review

In Vavilov, the Supreme Court decisively expanded the role of correctness, with respect to certain legal issues. While deciding that reasonableness is the presumptive standard for judicial review, the Supreme Court held the following key issues are to be subject to a full correctness review: [10]

  • questions of law on statutory appeals
  • questions of constitutional law
  • questions of law which are of “central importance to the legal system as a whole”
  • questions of overlapping jurisdiction

The most significant change in the applicability of a correctness standard of review relates to statutory appeals. Statutory appeal mechanisms are common in Canadian administrative and regulatory law. Hundreds of varied administrative decision-makers may make decisions subject to one form of appeal right or another — indeed a majority of decisions made by senior energy regulators, including the new Canada Energy Regulator, are subject to statutory appeal.[11] In all of these cases of appellate review, any deference on legal issues within the area of expertise of administrative bodies, or in interpreting their home statutes, has entirely disappeared — to be replaced by a standard appellate review on the basis of entire correctness on all matters of law.

Among major national law firms experienced in representing regulated entities — including those in the energy field — the view is wide-spread that the changes in Vavilov relating to the standard of review on statutory appeals is significant and materially increases regulatory risk by adversely affecting the finality of administrative decisions.[12]

Conduct of a Reasonableness Review

The Supreme Court in Vavilov did not stop there. In addition to its analysis of the applicable standard for judicial review — and likely of equal precedential importance — the Supreme Court went on to describe a set of tests or rules for conducting reasonableness review. The majority in Vavilov described their overall reasonableness standard as requiring a “robust” review, as opposed to a restrained one.[13]

The criteria for meeting a reasonableness standard are set out in substantial detail over close to 40 paragraphs in the majority’s reasons.[14] This portion of the judgement is dense with citations and contains well over 20 declarative statements, any one of which could justify a court finding an administrative decision to be unreasonable. A reasonable decision must be based on internally coherent reasoning and must be justified based on a “constellation” of legal and factual factors that constrain and inform the decision-maker. These factors include (a) the governing statutory scheme, (b) other relevant statutory or common laws, (c) principles of statutory interpretation, (d) the evidence before the decision-maker, (e) the submissions of the parties, (f) the past practices of the decision-maker and (g) the potential impact of the decision on the affected parties.

Of particular importance are the following:

Statutory Scheme: An administrative decision will be unreasonable if it fails to comply with prescribed limitations on the scope of the outcome and is inconsistent with the statutory grant of powers given to the decision-maker.

Statutory Interpretation: Courts will scrutinize administrative decisions for the interpretation of statutes: a decision will be unreasonable if key elements of disputed statutory provisions are ignored or if inferior interpretations are adopted because they are convenient for the administrative decision-maker.

Common or International Law: Administrative decisions will be scrutinized for their application of common or international laws. An administrative decision will be unreasonable if there are unexplained or unjustified departures from commonly accepted legal interpretations.

The minority in Vavilov was direct:

We fear however that the majority’s multi-factored, open ended list of ‘constraints’ on administrative decision making will encourage reviewing courts to dissect administrative reasons in a ‘line by line treasure hunt for error’…These ‘constraints’ may function in practice as a wide-ranging catalogue of hypothetical errors to justify quashing an administrative decision.[15]

Some commentators foresee substantial uncertainty over the application of the reasonableness standards, more ways in which a decision can be found unreasonable and/or an increase in the standard that administrative decisions must meet on a reasonableness review.[16]

Vavilov and Regulatory Risk

We see two principal takeaways from Vavilov:

  • First, the regulatory risk on statutory appeals has clearly and materially increased as all legal issues decided by regulators will now be subject to a full correctness review.
  • Second, the regulatory risk flowing from the new guidance on performing reasonableness review has certainly not decreased. If anything, the combination of robustness and the detailed set of indicia of reasonableness create the clear potential for a more exacting review of regulatory decisions. Much will depend on the way the Supreme Court, and various other appellate courts, interpret and apply this portion of Vavilov in the next few years.

If Vavilov creates, or potentially creates, additional regulatory risk, it also contains the seeds of a solution.

The entire logic underlying the majority opinion is respect for legislative intent, which the majority says is the “polar star” of judicial review.[17] When the legislative branch has delegated power to an administrative tribunal without specifying a role for the courts, the very fact of that delegation suggests the legislature “intended the administrative decision-maker to function with a minimum of judicial interference.”[18] This justifies a deferential standard of review, such as reasonableness, but also demands compliance with any higher or different standard where the legislature has spoken, either by selecting a different standard of review or an appellate one.[19]

The majority is clear that, subject to certain rare issues relevant to the rule of law such as consistency with the constitution and compliance with jurisdictional boundaries, the courts will respect legislative direction in terms of setting an applicable standard of review and policing its application.[20]

If the application of Vavilov should prove unwieldy in fact or if it should unduly restrict the effective exercise of state power, federal and provincial legislatures have a broad power to set appropriate standards and practices both for any statutory appeals and of any judicial review of administrative action.[21]

Arguably this legislative standard-setting is long overdue.[22] The economic and policy importance of crisp and effective regulatory decision-making is manifest — at the same time so is the need for judicial standards to protect against abuse of state power. Likely, only an ongoing and focussed dialogue between legislatures and the courts will provide a durable, legitimate and appropriately balanced resolution of this critical issue.

*Jonathan Drance and Glenn Cameron (senior advisors) and Rachel Hutton (partner) with Stikeman Elliottt LLP.

  1. Canada (Citizenship and Immigration) v Vavilov, 2019 SCC 65 [Vavilov].
  2. McLean v British Columbia (Securities Commission), 2013 SCC 67 at paras 40–41.
  3. Walton v Alberta (Securities Commission), 2014 ABCA 273 at para 17.
  4. See Manitoba (Hydro-Electric Board) v Manitoba (Public Utilities Board) et al, 2020 MBCA 60; See also Enbridge Gas Inc. v Ontario Energy Board, 2020 ONSC 3616.
  5. Gitxaala Nation v Canada, 2016 FCA 187.
  6. Tsleil-Waututh Nation v Canada (Attorney General), 2018 FCA 153.
  7. Jonathan Drance, Glenn Cameron & Rachel Hutton, “Completion Risk, Legal Uncertainty, and Federal Energy Projects” (4 November 2019), online: Stikeman Elliott <>; See also, Jonathan Drance, “Federal Energy Projects Review: Time Lines in Practice” (2018) 6:3 Energy Regulation Q 23.
  8. See Dunsmuir v New Brunswick, 2008 SCC 9; The Honourable David Stratas, “The Canadian Law of Judicial Review: A Plea for Doctrinal Coherence and Consistency” (2016) 42:1 Queen’s LJ 27 at 29; Paul Daly & Leonid Sirota, Canadian Journal of Administrative Law and Practice Special Issue – A Decade of Dunsmuir / Les 10 ans de Dunsmuir (Toronto: Carswell, 2018); Paul Daly, “Struggling Towards Coherence in Canadian Administrative Law – Recent Cases on Standard of Review and Reasonableness” (2016) 62:2 McGill LJ 527; Shaun Fluker, “The Great Divide on Standard of Review in Canadian Administrative Law” (23 July 2018), online (blog): ABlawg <>.
  9. See Paul Daly, “The Vavilov Framework and the Future of Administrative Law” (2020) Ottawa Faculty of Law Working Paper No 2020-09; See also Shaun Fluker, “Vavilov on Standard of Review in Canadian Administrative Law” (6 February 2020), online (blog): ABlawg <>; David Mullan, “2019 Developments in Administrative Law Relevant to Energy Law and Regulation” (2020) 8:1 Energy Regulation Q 28.
  10. In particular, Vavilov subjects statutory rights of appeal to a full appellate standard, including a review for correctness on questions of law. Moreover, Vavilov has expanded the scope of correctness review for compliance with rule of law issues to cover a broader range of constitutional questions and has expanded the scope of matters of central importance to the legal system to include areas within the expertise of administrative decision-makers and the interpretation of their home statutes. See Vavilov, supra note 1 at paras 36–52 (Statutory Appeal Mechanisms), 55–57 (Constitutional Questions) and 58–62 (Questions of Central Importance to the Legal System). To this point, the various rule of law exceptions (and/or their predecessors) imposing a correctness standard of review have been interpreted and applied both rarely and narrowly. See Paul Daly, “Vavilov Hits the Road (Updated August 20)” (4 February 2020), online (blog): Administrative Law Matters <>.
  11. Mullan, supra note 9 at 29 (See footnote 12).
  12. See e.g. Maureen Killoran et al., “Supreme Court Majority alters framework for judicial reviews and statutory appeals” (20 December 2019), online (blog): Osler <>; See also Scott H. D. Bower, Brynne Harding & Russel J. Kruger, “Supreme Court of Canada Reforms Judicial Review” (3 January 2020), online (blog): Bennett Jones <>; Jackie VanDerMeulen & Rachel Devon, “Landmark Decision from the Supreme Court: New Framework for Judicial Review” (15 Januray 2020), online (blog): Fasken <>; Steven Mason et al., “The Supreme Court of Canada simplifies the standard of review analysis in historic Super Bowl trilogy” (19 December 2019), online (blog): McCarthy Tétrault <>; John A. Terry et al., “SCC re-rewrites the standard of review” (20 December 2019), online (blog): <> (For applicable qualifications and limitations, see these various websites).
  13. Vavilov, supra note 1 at para 13.
  14. Ibid at paras 99–138.
  15. Ibid at para 284.
  16. See Fluker, supra note 9; See also VanDerMeulen, supra note 12.
  17. Vavilov, supra note 1 at para 33.
  18. Ibid at para 24.
  19. Ibid at paras 32, 34, 36.
  20. Ibid at paras 32, 36.
  21. Nigel Bankes, “Statutory Appeal Rights in Relation to Administrative Decision Maker Now Attract an Appellable Standard of Review: A Possible Legislative Response” (3 January 2020), online (blog): ABlawg <>.
  22. Almost a generation ago, Justice Iacobucci called for such a legislative approach. See The Honourable Frank Iacobucci, “Articulating a Rational Standard of Review Doctrine: A Tribute to John Willis”, (2002) 27:2 Queens LJ 389 at 876–78.

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