I. INTRODUCTION

In last year’s survey,^[1] I discussed briefly the Alberta Court of Appeal’s granting of leave to appeal in AltaLink Management Ltd. v Alberta Utilities Commission,^[2] a case which appeared to raise significant issues about the application of the honour of the Crown to regulatory proceedings in which the rights, claims and interests of Indigenous peoples were at stake. My prediction at that time was that, if the appeal were to succeed,

…it may very well presage more frequent appeals to the honour of the Crown in regulatory proceedings… Process, not in the sense of the mechanics of consultation but the canvas on which such decision-making takes place (the range of relevant factors), may expand considerably.^[3]

On June 17, 2021, the appeal was allowed,^[4] and, while the majority judgment of Watson and Wakeling JJA was not grounded in the constitutional principles of the honour of the Crown and Reconciliation, it almost certainly will have implications for the way in which the Alberta Utilities Commission (hereafter “Commission” or “AUC”) deals with matters engaging the rights, claims, and interests of Indigenous peoples as a component of its public interest jurisdiction. I am therefore devoting a considerable portion of this year’s survey to an analysis and evaluation of that decision.

I also revisit two of Vavilov’s^[5] lingering issues: What standard of review should appeal courts apply to their scrutiny of judicial review or appellate judgments? Despite that judgment’s explicit sidelining of the concept of jurisdiction as not only a ground of review but also one attracting the correctness standard, does jurisdiction (or a very close approximation) still have legs in the Vavilovian era of judicial review? Finally, in the context of recent proceedings before the Commission, I will comment on the obligations of regulated sectors towards those who are charged with regulating them.

II. ALTALINK MANAGEMENT LTD V ALBERTA (UTILITIES COMMISSION)^[6]

i. Introduction and Factual Background

For several reasons, this was one of the most eagerly awaited Energy Law judgments of 2021 involving as it did an appeal from the Commission’s decision in a matter in which principles of rate regulation encountered the rights, claims, and interests of two Alberta First Nations. More specifically, the Alberta Court of Appeal had to assess whether to uphold the Commission’s ruling that limited partnerships, in each of which one of the two First Nations held a majority interest, could not recover certain costs, as a component of their revenue requirements, in rates charged to customers. These were recurring audit and regulatory costs resulting from the approval of an agreement between AltaLink Management Ltd. (hereafter “AltaLink”) and the two limited partnerships transferring to the partnerships those portions of the assets of an electrical transmission line which were located on the reserves of the two First Nations.

The project giving rise to the proceedings before the Commission had had a lengthy and complicated gestation period. It could be traced back to 2002. That year, AltaLink had purchased TransAlta’s transmission system and the right to operate it. At that time, AltaLink realised that the transmission facilities in southwest Alberta needed upgrading. This epiphany led it eventually to conclude that the preferred siting of a new transmission line was one that involved the traversing of land belonging to the two First Nations. This required the consent of the two First Nations and that consent was given. In return for the First Nations’ consent, in 2010, AltaLink conferred an irrevocable option on the First Nations for the purchase of a percentage of the transmission assets crossing the First Nations’ territory using the vehicle of the two limited partnerships. In each of these partnerships, AltaLink in various corporate forms was also a party. However, the option conferred on the First Nations gave each of them a right to acquire up to 51% of the relevant partnership units. Shortly thereafter, the new transmission line became operational, and, by February 2014, both First Nations had exercised their options to acquire the maximum 51% provided for under the option contract with partnership agreements concluded three years later. At that point, the final round of regulatory proceedings that were the subject of the Commission’s hearing and its challenged ruling commenced with the filing of an application by AltaLink for the approval of the sale of the transmission assets crossing the First Nations land to the two limited partnerships as well as approval of interim general tariffs based on their revenue requirements for 2017 and 2018.

With respect to the matter of audit and regulatory costs estimated at $60,000 annually for each partnership, these were costs that arose out of the severing of the ownership of the transmission system and would not have otherwise been necessary. Neither an annual audit nor separate regulatory filings for the hived off portions of the transmission line would have been required.

ii. The Commission’s Ruling on the Audit and Regulatory Filing Costs

Section 101 of the Public Utilities Act^[7] requires Commission approval for any transfer of transmission assets, while section 17(1) of the Alberta Utilities Commission Act (hereafter “AUC Act”)^[8] mandates that, in any such proceeding, the Commission

…shall, in addition to any other matters that it may or must consider…give consideration to whether…operation of the proposed…transmission line…is in the public interest, having regard to the social and economic effects of the…line…and the effects of the…line on the environment.

For the purposes of exercising its authority under these sections, the Commission had developed a formula named the “no-harm” test. This test involves a balancing of the extent to which the asset transfer will benefit ratepayers against the negative impacts of the transfer. If, on balance, approval will benefit ratepayers or leave them no worse off, the project could be approved. If they will be worse off, the Commission will consider whether the harm can be mitigated by making approval subject to conditions. Among the factors that are considered are the impact of the transfer on rates charged to customers and reliability of service.

In this instance,^[9] the Commission concentrated on the extent to which rates charged by the partners as system operators would be increased were the audit and regulatory costs to be passed on to customers.^[10] However, the Commission refused to take into account a range of what AltaLink and the partnerships argued were more than trivial offsetting impacts:

[S]avings from routing the transmission line through First Nations lands that AltaLink Management asserted amounted to $32 million, and intangible benefits arising from the partnership with the First Nations generally described as “(1) access to the First Nations workforce; (2) strengthening AltaLinks’s relationship with other First Nations in Canada and the United States; and (3) support for the alignment of interests between AltaLink and the First Nations to enhance the long-term safe and reliable operation of utility assets on their reserve land”.^[11]

In imposing on its approval of the transfers the condition that the audit and regulatory costs not be passed on to customers, the Commission^[12] ruled that the cost savings occasioned by the routing of the transmission lines through First Nations territory were irrelevant to the application of the “no-harm” test. The application of the test was specific to the nature of the particular application — the transfer of assets. It was also a forward-looking standard. The location of the new transmission line had been resolved in the past and in separate proceedings and agreements. As for the intangible benefits, even if forward-looking, they were too speculative and unsupported by the evidence before the Commission. It was also unclear whether they or any component of them represented forward-looking benefits for ratepayers.

Given that there were no relevant or proven offsets to the negative impact of allowing the partnerships to pass the annual audit and regulatory approval costs on to ratepayers, the Commission held that the “no-harm” test dictated that, in approving the transfer of assets application and the interim General Tariffs, it was necessary to mitigate the financial harm by ruling that the contested costs not be passed on to ratepayers. It was agreed that the Commission had not previously made such an order.^[13]

iii. The Review Proceedings

AltaLink then sought leave to appeal the Commission’s decision and particularly the ruling on the recovery of the annual audit and regulatory costs to the Alberta Court of Appeal. Section 29 of the AUC Act provided for such an appeal on a question of law or jurisdiction with the leave of a single judge of the Court. Strekaf JA granted leave on two of the grounds relied upon by AltaLink in three of its legal capacities including as a partner with the two First Nations in the ownership of the transmission line assets. Described as questions of law, the two grounds were:

1. Did the AUC improperly fetter its discretion when considering the transfers by applying the “no-harm” test?
2. Did the AUC err by failing to consider all relevant factors?^[14]

A Court of Appeal panel consisting of Watson, Wakeling, and Feehan JJA allowed the appeal and ordered that the two partnerships be permitted to include the audit and regulatory process costs in their tariff applications and thereby recover them from ratepayers. The principal judgment was delivered by Watson and Wakeling JJA, with Feehan JA concurring but also proceeding to canvas constitutional bases for challenging the Commission’s ruling. Having granted the appeal on administrative law grounds, Watson and Wakeling JJA felt no need to explore the constitutional arguments albeit that they had been a significant presence in the grounds of appeal advanced by the appellant partnerships including AltaLink.^[15]

As for the administrative law grounds, the principal judgment held that the Commission had “erred”^[16] in adopting and applying an absolute rule that it need consider only forward-looking benefits. There was no warrant in the statute for taking such a narrow and formalistic approach. The Commission also “misfired”^[17] when it rejected the relevance of the previous stages of this undertaking and, especially, the costs savings occasioned by the routing and construction of the new transmission line. The savings from that phase were ones that would continue to be realized beyond the initial construction and operational phases and into the future. Included in those “predictable future benefits”^[18] were ones that benefited the environment. There were also the benefits that would accrue from the fostering of relationships with First Nations through participation in projects such as this, including the promotion of economic activity on reserves as contemplated for this very project.

In short, a broader view of the no-harm test and the public interest is appropriate. It includes any factors that the Commission considers relevant to the transfer and sale application whether or not those factors arise before or after the application.^[19]

Watson and Wakeling JJA then catalogued many of the historic barriers faced by Indigenous peoples to full participation in the wealth and opportunities afforded to others in Canada and particularly education and meaningful employment. As an antidote, participation in projects such as this were to be promoted and encouraged.^[20]

Feehan JA, while concurring with Watson and Wakeling JJA,^[21] went even further and advocated a template in which the evaluation of legal challenges such as this were rooted in the constitutional obligations arising out of the honour of the Crown and the imperative of Reconciliation.

iv. Analysis

Gordon Kaiser (in these pages)^[22] and Kristen van de Biezenbos (in the University of Calgary Faculty of Law Blog)^[23] have both provided an assessment, for the most part favourable, of this judgment. In particular, they have emphasised and expressed support for the Court’s recognition of the importance of the Commission factoring into the exercise of its public interest mandate over transmission line approval and operation the interests of First Nation groups participating in the industry as owners, partners, and operators. For Watson and Wakeling JJA, that sense of mandate should imbue the interpretation and application of relevant statutory provisions, an exercise rooted in an expansive sense of the scope of the “public interest” in the applicable statutory provision and structure. For Feehan JA, it seemingly went further than this in the sense that not only the statutory interpretation exercise but also presumably the constitutional validity of the statutory provisions themselves should be addressed by reference to the constitutional imperatives arising out of not just the honour of the Crown but also the pursuit of the constitutionally recognized principle of Reconciliation. I have little quarrel with most of what these commentators had to say. However, I do want to inject into the discussion of this judgment some cautionary elements especially from the perspective of administrative law and the principles of judicial review and its remedial capacities.

a. Scope of Appeal and Standard of Review

Watson and Wakeling JJA spent next to no time on the scope of the appeal provision in section 29(1) of the AUC Act. As noted already, it required leave of a single judge of the Court of Appeal and was confined to questions of law and jurisdiction. In a footnote, the joint judgment simply stated:

The appellate standards of review apply. Canada v. Vavilov, 2019 SCC 65, para. 37. An appeal court may substitute its view for those of the original adjudicator on questions of law.^[24]

This, of course, reflects the change wrought by Vavilov^[25] in which, absent statutory modification, the standards of review to be applied on an appeal to a court from a statutory decision-maker are those customarily applied to appeals in civil matters: correctness on issues of law and “palpable and overriding error” for findings of fact and mixed law and fact unless there is a “readily extricable” issue of law, these being the standards established for most civil appeals by Housen v Nikolaisen.^[26]

Aside from the fact that this element of the Supreme Court’s majority judgment in Vavilov has been subject to considerable criticism,^[27] there was nothing problematic with the application of this standard to the specifically legal determinations of the Commission in this matter. However, the grounds of appeal on which Strekaf JA gave leave — fettering of discretion and failure to consider all relevant factors — do raise questions as to whether they are properly characterized as pure questions of law or questions of mixed law and fact from which there is no readily extricable question of law, the latter being apparently beyond the scope of the appeal provision as not being questions of law or jurisdiction.^[28]

In this context, it is worth recalling the admonition of McLachlin CJ in Dr. Q v College of Physicians and Surgeons of British Columbia:

The nominate grounds [such as fettering of discretion and failure to take account of relevant factors], language of jurisdiction, and ossified interpretations of statutory formulae, while still useful as familiar landmarks, no longer dictate the journey.^[29]

By the time we reach Vavilov, fettering of discretion features not as a ground of review but as an element in one of the contextual factors, the “governing statutory scheme”,^[30] that the majority lists as relevant to the content and application of reasonableness review:

The statutory scheme also informs the acceptable approaches to decision making: for example, where a decision maker is given wide discretion, it would be unreasonable for it to fetter that discretion.^[31]

The question then becomes where this leaves for the purposes of section 29 allegations of fettering and failure to take account of relevant factors particularly in the context of the exercise of a broadly-based public interest discretion from which there is an appeal restricted to questions of law and jurisdiction. In the instance of fettering, where is the line to be drawn for access to appeal purposes between fact driven structuring of discretion, and fettering that, as a matter of law, is contingent much more directly on the meaning and purposes of the relevant sections of the statute and those of the statute as a whole? At what point, is discretion constrained by principally legal imperatives as opposed to the regulator’s assessment of the factual underpinnings and background to the matter before it, the latter being the territory of mixed law and fact determinations from which there is no readily extricable pure question of law? Indeed, the same question may be posed about a failure to take account of relevant factors (as alleged in this case) or, for that matter, taking account of irrelevant factors. Where is the boundary to be drawn between largely fact driven determinations as to relevance, on the one hand, and legally contingent assessments, on the other?

Looking at the judgment of Watson and Wakeling JJA from this perspective, three things stand out. First, it seems as though they have no problem with the mere existence of the general parameters of the “no-harm” test — an assessment of the impact of the project on ratepayers and on the reliability of electricity transmission with a view to establishing whether any harms will outweigh the benefits. It is an exercise in a regulator structuring of a discretion for the more efficient and predictable consideration of applications.^[32] Secondly, in many respects and situations, this is very much a largely fact driven inquiry. Thirdly, its exercise either generally, or, as here, with reference to the particular application may however generate purely or principally legal questions with the resulting opening of access to the AUC Act’s appeal provision as a pure question of law.

Interestingly, the majority judgment in its Brief Answers characterizes the Commission’s error solely in terms of “failing to take into account all relevant factors that determine whether a sale is in the public interest.”^[33] There is no mention of an unlawful fettering of discretion. However, that aside, the focus of the judgment is on its rejection of the Commission’s interpretation and application of the “no-harm” test on the basis that, properly applied, it allows only forward-looking benefits to be factored into the calculus and the balancing exercise the test requires.

For the Commission, this had meant that past benefits resulting from previous stages in the evolution of the overall project could not be advanced in support of the contention that the benefits far outweighed the costs of the approval in the form of the incidental and recurring audit and regulatory approval costs. Integral to the Commission’s analysis was the proposition that various stages in the overall development and approval processes had to be assessed separately for regulatory purposes and not accumulated in order to establish whether the benefits outweighed the costs to ratepayers and any adverse impacts on the reliability of the services provided. The Commission had also questioned whether any of the intangible benefits asserted by the applicants were even forward-looking, and, in the case of various collateral advantages to the two First Nations, sufficiently established or too speculative.^[34]

To the extent that the rejection of the Commission’s reasoning was rooted in the Court’s sense of a proper interpretation of the relevant provisions and the overall purpose of this aspect of the Act, it is hard to quarrel with these elements of the decision on the basis that they were not truly the subject of an appeal under the Act because they constituted determinations of questions of mixed law and fact, and not extricable questions of pure law. Disaggregating the various phases in the history of the siting, operation, and ownership of the new transmission line rather than treating it as an in effect integrated whole, could be characterized readily as productive of artificiality in the reality of the development and the application to it of the “no-harm” test. As such, the critical question of whether it was appropriate to restrict the benefit side of the balancing required by the “no-harm” rule to only forward-looking benefits can be classified as a pure question of law or a question of law readily extricable from a question of mixed fact and law, and thereby both legitimately subject to an appeal on law and/or jurisdiction and, after Vavilov, correctness review.

Putting this in terms of the questions on which Strekaf JA granted leave to appeal and the ground on which the Court of Appeal allowed the appeal, this error of law can be seen as having led to a failure on the part of the Commission to take account of relevant factors (the exclusion from the calculus of benefits that were not “forward-looking”), or maybe a fettering of discretion (the development and application of a gloss on the “no-harm” rule that restricted unduly the inquiry required by the statute and the Commission’s discretionary authority over the approval of the sale of transmission lines).

Nonetheless, this leaves over at least four questions. Probably the easiest of those questions is whether the Court of Appeal was justified as a remedial response to the finding of legal error in allowing the appeal and directing the Commission to permit the two partnerships to recover the contested incidental costs from ratepayers. Does it necessarily follow from the legal errors that the Commission’s order that the partnership bear the incidental costs must be seen as fatally flawed? Could it still be justified? In other words, should the matter have been remitted to the Commission for reconsideration based a legally proper reading of the “no-harm” rule?^[35] Though Watson and Wakeling JJA do not expressly state it, it seems implicit in their analysis that a proper interpretation and application of the “no-harm” rule would inevitably have led the Commission to the conclusion that there was no basis for denying the partnerships the right to pass on to ratepayers the contested incidental costs. This is underscored by a comparison between the magnitude of the benefits that the Commission excluded from its application of the “no-harm” rule and the seemingly trivial amount of those incidental costs.

The other three questions are more problematic.

Unlike Feehan J, Watson and Wakeling JJA were unwilling to take on board the constitutional challenges to the Commission’s determination based on the honour of the Crown and the principles of Reconciliation. Rather, they seemingly adopted the position that respected the admonition that, except in rare situations, it is not appropriate for a court to entertain constitutional arguments when a dispute can be determined by reference to common law rules and principles and/or the terms of the governing legislation. One can, however, make a similar argument with respect to the actual holding of Watson and Wakeling JJA. Why, having determined that the Commission had erred in law in its failure to factor forward-looking benefits into the calculus, did they then go on at length to discuss in general terms the benefits that might flow from the participation of Indigenous peoples in projects such as this? Was it in any way necessary for the determination of the relatively narrow issue that was at hand?

There may be two explanations for this lack of restraint. The one relates back to the first question. By identifying and quantifying in general terms the benefits that might flow to the appellants from participatory engagement in projects such as this, the decision to allow the appeal but not remit for further consideration might be even more dramatically justified. Secondly, the majority may have felt that at least they owed it to the parties to give some indication of the factors that might be relevant to a consideration of what count as intangible benefits in the calculus required by the “no-harm” rule and that preoccupied the parties in their approach to the appeal.

However, van de Biezenbos questions the practical utility of the judgment’s essay on the extent to which participation in energy projects such as this might advance the welfare of those living on First Nations reserves:

[B]ut in listing the benefits provided by “projects that increase the likelihood of economic activity on reserves,” the court doesn’t make clear what evidence could be used to provide proof that a particular project will do this… In fact, much of what the court cites in support of intangible benefits in this case is general information such as the high rate of unemployment on reserves (though no statistics are given for the [two reserves], nor is any evidence cited that the [two reserves] are providing specific economic benefits to their respective communities) and broad statements of approval for Indigenous efforts to “participate in mainstream commercial activities”.^[36]

More generally, van de Biezenbos worries legitimately about how, within the parameters of the “no-harm” test, any at large consideration of the importance of joint enterprises such as this to the advancement of the welfare of Indigenous peoples is to be assessed in the context of a balancing process that has in the past usually involved a

…highly specific and data-driven assessment of costs under the no-harm test and could conflict with its statutory mandate to ensure just and reasonable rates in the province.^[37]

In fact, the Court of Appeal recognizes this. First, Watson and Wakeling JJA accept that “a broader view of the no-harm test and the public interest is appropriate.”^[38] It was said to include “any factors the Commission considers relevant to the transfer and sale application whether those factors arise before or after the application.”^[39] Even more pointedly, the judgment recognizes the consequences of such an approach for the regulatory process and the costs that it is likely to involve in terms of time, the extent of participatory rights, and especially the assembly, presentation, and consideration of relevant evidence:

[A] forward-looking focus will result in consideration of all the relevant public interest factors most of the time [emphasis added].^[40]

In the name of a policy aimed at encouraging “the likelihood of economic activity on a reserve”^[41] and, with this case as an example, it might be argued that the Court of Appeal is condemning the Commission to a process the cost of which, as in this case, will probably be far in excess of the annual incidental audit and regulatory costs that are in issue. It also begs questions such as how the balancing process might work out in a proceeding where the Commission is confronted with having to decide whether to give approval to the siting of a transmission line that might cost more than the realistic alternatives but where that choice is being justified on the basis that it would be to the advantage of First Nations peoples over the lands of which the line would now cross.^[42]

Further complicating any evaluation of how the Commission should engage in inquiries of this kind is the concurring judgment of Feehan JA in which he explored a view of the process on the assumption that constitutional rights were in play. More particularly, what should be the consequences of engrafting onto the Commission’s discretionary decision-making process under section 17 of the AUC Act (approving transfers of ownership) and sections 121–125 of the Electric Utilities Act (approving of tariffs) the constitutional entitlements of Indigenous peoples derived from the honour of the Crown and the principles of Reconciliation?

The initial question is undoubtedly whether the honour of the Crown and the need for Reconciliation exist as free-floating or untethered constitutional obligations that potentially infuse the making of discretionary decisions that in any way implicate the rights, claims, and interests of Indigenous peoples. Feehan JA seems to accept that they do. However, in terms of the honour of the Crown, Supreme Court of Canada authority still supports the proposition that it is not a free-floating constitutional norm but rather one that must be located within at least one of four currently recognized and specific categories:

1. The duty to consult
2. A fiduciary duty arising out of the Crown’s assumption of “discretionary control over a specific Aboriginal interest”
3. Treating making and implementation giving rise to requirements such as “honourable negotiation and the avoidance of the appearance of sharp dealing”, and
4. Acting in such a way as to accomplish “the intended purpose of treaty and statutory grants to Aboriginal peoples.”^[43]

Of these four categories, my sense is that the only one that might have been relevant is that of fiduciary duty. However, even there, it is difficult on the face of the regulatory regime in question to see Indigenous peoples’ participation as partners with the private sector in energy projects as involving a situation where the Crown has assumed discretionary control over those participatory choices albeit that they may involve dealings with First Nation lands or territory. Whether viewed from the perspective of sui generis or ad hoc fiduciary duties, the Supreme Court has been cautious in its recognition of the existence of such obligations.^[44] The Court’s position is well summarized by the Alberta Court of Appeal in Fort McKay First Nation v Prosper Petroleum Ltd.:

1. “While the honour of the Crown is always at stake in its dealings with Aboriginal peoples, it is not engaged by every transaction.”
2. “Rather than being an independent cause of action, the honour of the Crown ‘speaks to how obligations that attract it must be fulfilled’.”^[45]

This stands in sharp contrast to the judgment of Feehan JA in AltaLink. Not only is his elaboration of the relevance of the honour of the Crown not rooted specifically in one of the four categories, but, at face value, appears to conflict with the first of the Fort McKay First Nation propositions. Maybe, it is implicit that Feehan JA is locating his elaboration of the scope of the honour of the Crown as arising out of the triggering of a fiduciary duty. Nonetheless, the following statement is not consistent with the more restrained approach to the existence of a fiduciary duty outlined in the Supreme Court’s jurisprudence as explained in Fort McKay First Nation:

I conclude that the Commission in exercising its statutory powers and responsibilities, must consider the honour of the Crown and reconciliation whenever the Commission engages with Indigenous collectives or their governance entities, and include in its decisions an analysis of the impact of such principles upon the orders made, when raised by the parties and relevant to the public interest [emphasis added].^[46]

Of course, if the approval of such transactions and associated tariff setting does engage the Crown’s fiduciary duties, the Commission (as the Crown’s agent for the regulation of the participation of Indigenous peoples) may very well be seen as responsible for a constitutionally infused exercise of its discretionary powers, though presumably not one that treats (as in the case of ad hoc fiduciary duties) the regulator as having “assumed a paramount obligation to one particular group at the expense of all others”.^[47]

This, however, does leave open the formal status of the principle of Reconciliation. Even if my analysis is correct and there are restraints on locating the existence of a fiduciary duty as one of the components of the honour of the Crown, the principle of Reconciliation may be of a different order. As outlined by Feehan JA, it might serve to place demands on regulators such as the Commission to always consider in the context of regulatory proceedings to which Indigenous peoples are in any form participants whether the proceedings contain any opportunities for the furthering of Reconciliation. This could be so as either a free-floating principle or another category in which the honour of the Crown is engaged.

In any event, if the threshold for the application of constitutional rights or even values is crossed in proceedings such as this, what is clear is that it will add to the Commission’s evaluation or application of the “no-harm” test and, more generally, its exercise of discretionary powers, a further dimension that does not lend itself to any precise quantification as part of the harms versus benefits calculus.

In terms of where this discussion commenced — the scope and application of the appeal provision in section 29(1) of the AUC Act — what should also be kept in mind, even where fiduciary duties  are in play, is the following statement by Wagner J (as he then was) for the majority in Williams Lake Indian Band:

Finally, although specific legal questions may arise, questions about the existence and breach of a fiduciary duty — the latter requiring an assessment of what are the applicable legal duties required of the fiduciary in the circumstances — are questions of mixed fact and law.^[48]

In other words, even where the exercise of a statutory discretionary power is infused with constitutional obligations, unless there are clearly extricable pure questions of law, the exercise of those powers will not be subject to correctness review. In the instance of access to a section 96 court by way of common law judicial review, deferential reasonableness review will be the standard albeit infused with the Vavilov reasonableness contextual factors.

In contrast, where resort to the court is by way of statutory appeal, the standard for review of inextricably questions of mixed fact and law will be that of palpable and overriding error. However, where access to an appeal or an application for judicial review is confined (as in AltaLink) to questions of law and jurisdiction, a literal reading of these principles might mean no access to court scrutiny except where a credible case can be made that the contested territory involves an extricable question of law as in the instance of a misfire in terms of a regulator’s application of a standard or the application of a set of criteria that is legally vulnerable as a matter of statutory interpretation irrespective of the facts.

The only possible ways around this may be:

So much for Vavilov providing much needed clarity to the law of judicial review and the standards to be applied!

III. TWO VAVILOVIAN SIDEBARS

i. The Standards Applicable to Appeals from Courts on Statutory Appeals or Judicial Review Applications

In last year’s article,^[51] I foreshadowed the Supreme Court’s hearing of the appeal in Northern Regional Health Authority v Horrocks.^[52] Among the issues raised in that case was whether the normal Housen v Nicolaisen standards applicable to appeals from judges to higher level courts (and now applied generally to appeals to courts from statutory authorities) should govern appeals from lower courts in the context of an initiating statutory appeal from or judicial review of a statutory body — correctness for questions of law generally including questions of law readily extricable from a finding of mixed fact and law, and palpable and overriding error for all other questions of mixed fact and law and questions of fact.

Horrocks has now been decided and an answer provided to this question. That answer was to the effect that there was no pressing need to overrule a comparatively recent Supreme Court judgment on this very question: Agraira v Canada (Public Safety and Emergency Preparedness).^[53] Housen did not apply. Relying on the judgment of LeBel J, Brown J (for the majority) stated:

A reviewing judge’s selection and application of the standard of review is reviewable for correctness… This approach accords no deference to the reviewing judge’s application of the standard of review. Rather the appellate court performs a de novo review of the administrative decision.^[54]

In this instance, given that the standard of review was that of correctness and that the first instance judge had correctly selected the standard of review, the appellate court’s next role had been to determine whether the first instance court’s ruling on the disputed question was correct.^[55] In contrast, if the appropriate standard had not been that of correctness but reasonableness, then the role of the appellate court would have been to step into the shoes of the first instance judge and review the decision de novo on a reasonableness standard.

ii. Flirting with the Revival of Jurisdiction^[56]

Horrocks started in the Manitoba Court of Queen’s Bench by way of an application for judicial review, not a statutory appeal.^[57]

However, because it was a classic case of duelling jurisdictions, it came within Vavilov’s third category of situation where the presumption of reasonableness review was rebutted. It involved “questions regarding jurisdictional boundaries between two or more administrative bodies.”^[58] In this instance, the possibilities were that both competing tribunals (labour arbitrator or Human Rights Commission) had jurisdiction or only one of them and, if the latter, which one. On that and related questions (such as possible priorities if both had jurisdiction), the standard of review was that of correctness. This was a classical jurisdictional stand off issue paralleling the 2000 judgment of the Supreme Court in Regina Police Assn. Inc. v Regina (City) Board of Police Commissioners^[59], a judgment which in its adherence to correctness review based on the concept of jurisdiction had survived the apparent purge of the concept of jurisdiction in Vavilov.

We would cease to recognize jurisdictional questions as a distinct category attracting judicial review.^[60]

From this, it appears as if it is only within the three Vavilov exceptional categories where the presumption of reasonableness review is rebuttable that the concept of jurisdiction will have any traction.

However, as I noted two years ago in my 2019 review of administrative law developments,^[61] in Bell Canada v Canada (Attorney General),^[62] released the same day as Vavilov and involving the first application of the application of correctness review for questions of law coming to the court by way of appeal, the Court

…seemed perfectly comfortable in viewing the critical interpretative issue in that case as “go[ing] directly to the CRTC’s statutory grant of power.” This seems like a definition of a true question of jurisdiction, and later this is further underscored by the majority’s reference to the “appellant’s primary jurisdictional argument” as well as this being an issue about “the scope of its authority”.^[63]

Despite the majority in Vavilov denying that they were reinsinuating the concept of true questions of jurisdiction into their formulation of the various contextual factors bearing on the conduct of reasonableness review,^[64] it is difficult to treat the following statement as anything other than a synonym for a form of jurisdictional assessment:

Reasonableness review does not allow administrative decision makers to arrogate powers to themselves that they were never intended to have and an administrative body cannot exercise authority which was not delegated to it.^[65]

This tension within the judgments in the two foundational cases aside, there remains the matter of statutory references to jurisdiction as a ground of appeal as in AltaLink and section 29(1) of the AUC Act and many other appeal provisions in regulatory legislation, not to mention section 18.1(4)(a) of the Federal Courts Act, enshrining jurisdictional error as one among its legislated catalogue of grounds of review. Are these to be taken as having been implicitly repealed by Vavilov, for some a heretical notion? Or, might such provisions be seen as an indirect legislative enshrining of both the concept of jurisdiction and its historical position as a correctness ground of review, thereby constituting “derogation[s]”^[66] from the presumption of reasonableness review? Albeit that it trades in the concept of jurisdiction in the context of an initial application for judicial review, Horrocks does not start to give an answer to these questions. The scenario of duelling jurisdictions takes place against the background of a category-based exception to the presumption of reasonableness review in which jurisdiction is a defining concept.

Ward v Commission des droits de la personne et des droit de la jeunesse^[67] is somewhat different in that it commenced as an appeal to the Quebec Court of Appeal^[68] from the Quebec Human Rights Tribunal.^[69] The relevant provision did not include a specific reference to jurisdiction but its exercise nonetheless, by reference to Vavilov, attracted automatically the new world of non deferential, correctness review on statutory appeals to courts from administrative decisions. However, what is interesting is the extent to which the Supreme Court majority seemed quite comfortable in describing the fatal error in Ward in terms of the Tribunal in effect arrogating to itself “jurisdiction”^[70] over what was in effect an action in defamation and not within the reach of the anti-discrimination provisions of the Quebec Charter of Human Rights and Freedoms.^[71]

Similarly, in the Manitoba (Hydro-Electric Board) case,^[72] in the context of an appeal from the Manitoba Public Utilities Board in a case involving a challenge to preferential rates for those living on reserves, where jurisdiction as well as law were grounds of appeal, the Court of Appeal saw the issue of impermissible discrimination in terms of both law and jurisdiction.^[73]

While the parameters are by no means clear and the continued existence of a concept of jurisdiction by no means generally accepted, I would suggest that there is at least some case law support for its survival whether under its own name or in the guise of questions of “authority.” It may, however, take a long time before a coherent and authoritative account of its place emerges.

IV. FAIR DEALING WITH THE ALBERTA SECURITIES COMMISSION – THE ATCO SAGA^[74]

On November 29, 2021, following on an investigation, the Alberta Utilities Commission’s Enforcement branch applied^[75] to the Commission for the commencement of a proceeding under sections 8 and 63 of AUC Act with a view to determining whether ATCO had acted unlawfully in the context of rate setting and, if so, should pay an administrative penalty. In particular, it was alleged that ATCO had acted in such a way as to transfer to ratepayers responsibility for a contract that it had entered into at above fair market rates in order to benefit a non-regulated affiliate. In particular, the report of the Enforcement branch asserted that ATCO had documented the scheme in such a way as to “conceal the [relevant] facts and other important information from the Alberta Utilities Commission (AUC) to mitigate the risk of regulatory disallowance.”^[76]

Aside from allegations of specific instances of illegality, Enforcement staff contended that the ATCO had breached its

…fundamental duty of honesty and candour to its regulator — the duty upon which the entire regulatory system relies to function efficiently and effectively.^[77]

In the body of the report on its investigation, the Enforcement branch relied upon precedents in the domain of law society disciplinary proceedings to the effect that

…regulatory bodies cannot protect the public in any meaningful way if they are not privy to accurate information concerning their members.^[78]

The professional disciplinary setting might not, as matter of initial impression, appear to have much to offer in the establishing of ethical and transparency obligations within the energy sector. However, in terms of general principles, there is a strong case for reading many of the same obligations into participatory conduct in the regulatory processes to which ATCO was subject. As the report points out, especially given the disparity in access to relevant information and resources as between ATCO and the Commission, anything less than such a duty has the potential to bring the regulatory system into disrepute and to compromise the integrity of the Act’s regulatory objectives.^[79]

The report also referenced^[80] the 2020 Report of the AUC Procedures and Processes Review Committee,^[81] all but one of the recommendations of which were adopted by the Commission and were applied to the proceeding under scrutiny. To the extent that these recommendations were aimed at reducing regulatory burden and creating a more efficient regulatory process, it became even more important that the information provided by regulated utilities be “full, fair and accurate”.^[82] In the new environment of “limited discovery processes and the elimination of oral evidence”,^[83]

[t]he benefits of a more efficient and reduced rates regulatory proceeding can be achieved only with a corresponding obligation on regulated utilities to be transparent, honest and candid.^[84]

The report then went on to assert that, in this proceeding, ATCO had been a beneficiary of the changes “without fulfilling its corresponding obligations”^[85]

As one^[86] of the members of the Procedures and Processes Review Committee, I endorse enthusiastically the principles identified and espoused by the Enforcement branch in its report. More generally, it is to be hoped that energy regulators generally and the entities that they regulate will treat these principles as implicit in the regulatory mandate.

 

*David J. Mullan, Emeritus Professor, Faculty of Law, Queen’s University.

1. David J. Mullan, “2020 Developments in Administrative Law Relevant to Energy Law” (2021) 9:1 Energy Regulation Q 21, online: ERQ <energyregulationquarterly.ca/regular-features/2020 developments-in-administrative-law-relevant-to-energy-law1#sthash.GE4Qu5Ra.dpbs>.
2. 2019 ABCA 482.
3. Mullan, supra note 1 at 41.
4. AltaLink Management Ltd v Alberta (Utilities Commission), 2021 ABCA 342.
5. Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 [Vavilov].
6. Supra note 4.
7. RSA 2000, c P-45.
8. SA 2007, c A-37.2.
9. Re AltaLink L.P. Transfer of Specific Transmission Assets to PiikaniLink L.P. and KainaiLink L.P. and the Associated 2017-2018 General Tariff Applications (13 November 2018), 22612-D01-2018, online (pdf ): AUC <efiling-webapi.auc.ab.ca/Document/Get/637186>.
10. Ibid at paras 39, 62 (as summarized by the Court of Appeal, supra note 4 at para 37).
11. As quoted and summarized by the Court of Appeal, supra note 4 at para 37.
12. As quoted and summarized by the Court of Appeal, ibid at paras 39-41, 53.
13. Ibid at para 1.
14. Supra note 2 at para 15.
15. Supra note 4 at paras 13, 79.
16. Ibid at para 54.
17. Ibid at para 55.
18. Ibid.
19. Ibid at para 57.
20. Ibid at para 58–75.
21. Ibid at para 81.
22. Gordon E. Kaiser, “Reconciliation: The Public Interest and a Fair Deal” (2021), 9:4 Energy Regulation Q 38, online: ERQ <energyregulationquarterly.ca/regular-features/reconciliation-the-public-interest-and-a-fair-deal>.
23. Kristen van de Biezenbos, “Alberta Court of Appeal Rules on Role of Honour of the Crown and Reconciliation in AUC Rate Applications” (26 October 2021), online (pdf ): Ablawg <ablawg.ca/wp-content/uploads/2021/10/Blog_KVDB_AUC_Reconciliation.pdf> (I should say however that I find the title somewhat misleading. A majority of the Court of Appeal did not rule on the role of the honour of the Crown and Reconciliation).
24. Supra note 4 at para 1, n 1.
25. Ibid at paras 36–54.
26. 2002 SCC 33. For a very recent discussion of the reach of Housen in the context of professional disciplinary proceedings and discretionary decision making, see Dhalla v College of Physicians and Surgeons of Manitoba, 2022 MBCA 7.
27. Among those first out of the gate was Nigel Bankes in his blog posting: “Statutory Appeal Rights in Relation to Administrative Decision-Maker Now Attract an Appellate Standard of Review; A Possible Legislative Response” (3 January 2020), online (pdf ): Ablawg <ablawg.ca/wp-content/uploads/2020/01/Blog_NB_Vavilov.pdf>.
28. In the past, however, I have asserted that in some applications for leave to appeal, questions of law have been interpreted to include inextricably mixed and factually suffused questions of law and fact: David J. Mullan, “2015 Developments in Administrative Law Relevant to Energy Law and Regulation” (2016), 5:1 Energy Regulation Q 15 at 30.
29. 2003 SCC 19 at para 24.
30. Vavilov, supra note 5 at paras 108–10.
31. Ibid at para 108, referencing Delta Air Lines Inc. v Lukács, 2018 SCC 2 at para 18.
32. For an authoritative discussion of the legitimacy of and limits on such structuring exercises, see, albeit in a very different context, the judgment of Evans JA in Thamotharem v Canada (Minister of Citizenship and Immigration), 2007 FCA 198.
33. Supra note 4 at para 11.
34. Ibid at paras 40, 53, where the Court summarized and quoted from the Commission’s decision.
35. See the discussion of the question of when not to remit but instead step into the shoes of the decision-maker in Vavilov, supra note 5 at paras 139–42.
36. van de Biezenbos, supra note 23.
37. Ibid.
38. Supra note 4 at para 57.
39. Ibid.
40. Ibid at para 58.
41. Ibid at para 59.
42. On the more general question of the capacity or legitimacy of energy regulators to implement broadly-based social objectives, see the contrasting judgments of the Ontario Divisional Court in Advocacy Centre for Tenants-Ontario v Ontario Energy Board (2008), 293 DLR (4^th) 684 (Ont Div Ct), and Dal Legal Aid Services v Nova Scotia Power, 2006 NSCA 74, with the former upholding the setting of lower power rates as part of combatting poverty and the earlier, admittedly under a differently configured statute, denying the regulator’s capacity to act in that manner. More recently, in Manitoba (Hydro-Electric Board) v Manitoba (Public Utilities Board), 2020 MBCA 60, the Court set aside as impermissibly discriminatory a policy of zero rates for those Indigenous peoples living on reserves. Interestingly, the judgment does not engage in any analysis as to whether the statute properly interpreted should allow for special consideration to be given to the fact that the policy was directed at the improvement of conditions on First Nations reserves whether as a matter of statutory interpretation or overarching constitutional considerations. Of the considerations that animated the Court in AltaLink, in the Manitoba Court of Appeal’s judgment, there was but one passing reference to the financial difficulties faced by First Nations peoples in Northern Manitoba.
43. Manitoba Metis Federation Inc. v Canada (Attorney General), 2013 SCC 14 at para 73.
44. See the judgments of Wagner J (majority) and Brown J (minority) in Williams Lake Indian Band v Canada (Aboriginal Affairs and Northern Development), 2018 SCC 4 (ad hoc fiduciary duty) at para 163 (Brown J), and Binnie J in Wewaykum Indian Band v Canada, 2002 SCC 79 (sui generis fiduciary duty) at paras 79–85. See also for a discussion of this case law, Fort McKay First Nation v Prosper Petroleum Ltd., 2020 ABCA 163 at paras 53–58.
45. Fort McKay First Nation, supra note 44 at para 54.
46. Supra note 4 at para 84.
47. See Williams Lake Indian Band, supra note 44 at para 163 (per Brown J).
48. Supra note 44 at para 38.
49. See footnote 28, supra.
50. Supra note 27.
51. Supra note 1.
52. 2021 SCC 42. For a fuller discussion of this aspect of Horrocks, see Paul Daly, “Life After Vavilov? The Supreme Court of Canada and Administrative Law in 2021” (18 November 2021), online: SSRN <papers.ssrn.com/sol3/papers.cfm?abstract_id=3962286>.
53. 2013 SCC 36.
54. Supra note 52 at para 10.
55. And similarly on further appeal to the Supreme Court of Canada.
56. For other commentary on this issue, see Mark Mancini, “Jurisdiction and the Post-Vavilov Supreme Court: Part 1” (4 November 2021), online (blog): Double Aspect <doubleaspect.blog/2021/11/04/jurisdiction-and-the-post-vavilov-supreme-court-part-i/>.
57. 2016 MBQB 89, rev’d 2017 MBCA 98.
58. Vavilov, supra note 5 at para 63.
59. 2000 SCC 14.
60. Vavilov, supra note 5 at para 65. The minority in Vavilov agreed with this position: see para 282.
61. David J. Mullan, “2019 Developments in Administrative Law Relevant to Energy Law and Regulation” (2020), 8:1 Energy Regulation Q 28, online: ERQ <energyregulationquarterly.ca/regular-features/2019-developments-in-administrative-law-relevant-to-energy-law-and-regulation>.
62. 2019 SCC 66.
63. Mullan, supra note 61 at 30 (citations omitted).
64. Vavilov, supra note 5 at para 109.
65. Ibid.
66. Ibid at paras 33–35.
67. 2021 SCC 43, delivered on October 29, 2021, just one week after Horrocks.
68. 2019 QCCA 2042.
69. 2016 QCTDP 18.
70. Supra note 67 at paras 1, 4, 22, 27, 28, 52, 113.
71. CQLR, c C-12.
72. Supra note 42.
73. Ibid at para 22–27.
74. For further details, see Bob Weber, “Alberta Utilities Commission investigators want probe of ATCO dealings on TMC camps”, The Canadian Press and Calgary Herald (30 November 2021), online: <calgaryherald.com/pmn/news-pmn/canada-news-pmn/alberta-utilities-commission-investigators-want-probe-of-atco-dealings-on-tmx-camps/wcm/dbc6fbc3-24b9-48af-85f2-938b040865c1>.
75. Alberta Utilities Commission Enforcement Staff, “Application of AUC Enforcement staff for the commencement of a proceeding pursuant to sections 8 and 63 of the Alberta Utilities Commission Act” (29 November 2021), 27013-X0034, online (pdf): AUC <www2.auc.ab.ca/Proceeding27013/ProceedingDocuments/27013_X0034_Application%20of%20Enforcement%20Staff%20re%20ATCO%20Electric_Redacted%202021-12-10_000042.pdf> (As of February 12, 2022, this matter had not been finalized as the Commission has provided ATCO and the Commission’s enforcement staff further time, until March 4, to reach a settlement against the background of the investigation report’s request to the Commission that there be an enforcement hearing. See The Canadian Press, “ATCO, investigators get more time” (12 February 2022) A2, online: The Calgary Herald <epaper.calgaryherald.com/calgary-herald/20220212/page/2>.)
76. Ibid at para 1(b) (Summary of Application and Relief Requested).
77. Ibid at para 2(d) (Summary of Application and Relief Requested).
78. Ibid at para 141, n 125, citing especially Kumar v Law Society of Saskatchewan 2015 SKCA 132 at para 7.
79. Ibid at para 141.
80. Ibid at para 142.
81. Kemm Yates, David J. Mullan & Rowland J. Harrison, “Report of the AUC Procedures and Processes Review Committee” (14 August 2020), online (pdf ): AUC <www.auc.ab.ca/Shared%20Documents/2020-10-22-AUCReviewCommitteeReport.pdf>.
82. Supra note 77 at para 141.
83. Ibid at para 143.
84. Ibid.
85. Ibid.
86. The other two members were C. Kemm Yates, Q.C. (Chair) and Rowland J. Harrison, Q.C.