The Supreme Court of Canada’s November 2024 judgments in Auer v. Auer and TransAlta Generation Partnership v. Alberta make it less burdensome to challenge the legality of “subordinate legislation”, such as regulations, municipal bylaws, executive orders, and rules. Presumptively, the party challenging the subordinate legislation need only show that it is unreasonable, on the standard described in Canada (Minister of Citizenship and Immigration) v. Vavilov, to have it quashed on judicial review.

Previous jurisprudence indicated that the party seeking to invalidate subordinate legislation had to show that it was “irrelevant”, “completely unrelated”, or “extraneous” to the purpose of the statute pursuant to which it was made. This requirement has now been overruled. In this way, Auer and TransAlta confirm the Supreme Court’s commitment to the Vavilov framework in an effort to bring coherence, predictability, and unity to the law of judicial review.

Key takeaways

• Courts must presumptively review the legality of subordinate legislation on the Vavilov reasonableness standard.
• Subordinate legislation continues to benefit from a presumption of validity.
• The party challenging the subordinate legislation need not show that it is “irrelevant”, “completely unrelated”, or “extraneous” to the purpose of the enabling statute. Such a requirement would impose excessive deference.
• Rather, the party challenging the subordinate legislation must show that the subordinate legislation does not reasonably fall within the scope of the statutory authority pursuant to which it was made.
• The question is whether the regulation-maker’s interpretation of its authority is reasonable. Courts are not to begin with their own interpretation of the enabling statute.
• This approach opens the door to more rigorous scrutiny of subordinate legislation, but does not permit the court to second-guess the wisdom of subordinate legislation.

The framework for reviewing the legality of subordinate legislation

Auer and TransAlta hold that the reasonableness standard of review presumptively applies on judicial review of the legality of subordinate legislation. The Supreme Court concluded that this presumption applies to all subordinate legislation, regardless of the statutory delegate, their proximity to the legislature, or their process.

Although the Court previously held in Katz Group Canada Inc. v. Ontario (Health and Long‑Term Care) that a party challenging subordinate legislation must show that it is “irrelevant”, “completely unrelated”, or “extraneous” to the purpose of the enabling statute, the Court in Auer and TransAlta abandoned this test in favour of a more rigorous approach consistent with Vavilov. However, the following principles from Katz continue to apply:

• Subordinate legislation “must be consistent both with specific provisions of the enabling statute and with its overriding purpose or object”.
• Subordinate legislation continues to benefit from a presumption of validity.
• The subordinate legislation and the enabling statute must be interpreted using a broad and purposive approach to statutory interpretation.
• A review of the legality of subordinate legislation does not involve assessing policy merits. Courts may review only the legality or validity of subordinate legislation.

The Court noted that subordinate legislation will survive scrutiny if it reasonably falls within the scope of the delegated authority. In applying this test, the governing statutory scheme and other applicable statutory or common-law constraints set the bounds of reasonableness.

The Court also stressed that, on judicial review, courts should not evaluate whether the legislation is “necessary, wise, or effective in practice”. The consequences of the subordinate legislation are relevant only insofar as a reviewing court must determine whether the statutory delegate reasonably had authority to make subordinate legislation with those consequences.

In considering whether the statutory delegate reasonably had authority to make the subordinate legislation, the reviewing court is not to begin with its own interpretation of the enabling legislation. Instead, the court must begin with the statutory delegate’s interpretation and consider whether it is reasonable, having regard to the governing statutory scheme, other applicable legislation or common law, and the principles of statutory interpretation, as well as any other relevant constraints.

The Court acknowledged that statutory delegates often do not give formal reasons for subordinate legislation. However, the reasoning behind the subordinate legislation can often be deduced from a variety of sources, such as debates, deliberations, policy statements, and impact statements.

Application in Auer

In Auer, the Court held that the federal Child Support Guidelines reasonably fell within the Cabinet’s authority under the enabling statute, the Divorce Act.

The Court found that the Divorce Act granted “extremely broad” authority to establish child support guidelines. The only statutory limit on this authority is that the guidelines must be based on the principle that “spouses have a joint financial obligation to maintain the children of the marriage in accordance with their relative abilities to contribute to the performance of that obligation.”  This constraint uses broad terms: it does not prescribe a particular method of estimating child‑related costs or state the percentage of child‑related costs that each parent must cover.

Application in TransAlta

In TransAlta, the Court held that guidelines for municipal taxation that allegedly broke the rule against administrative discrimination reasonably fell within the statutory delegate’s authority.

TransAlta challenged the validity of the 2017 Alberta Linear Property Assessment Minister’s Guidelines established by the provincial Minister of Municipal Affairs under the Municipal Government Act, R.S.A. 2000, c. M-26 (the “Act”). These guidelines set out procedures for the assessment of all “linear properties” for municipal taxation purposes. TransAlta claimed that these guidelines contravened the common-law rule prohibiting administrative discrimination, because they expressly distinguished among the persons to whom they apply.

The Court concluded that the Act reasonably authorized discrimination by necessary implication. Indeed, the Act empowered the Minister to make regulations “respecting designated industrial property, including, without limitation, regulations respecting the specifications and characteristics of designated industrial property”. This broad grant of authority empowered the Minister to draw distinctions based on the “specifications and characteristics” of industrial property.

Impacts

Auer and TransAlta lower the bar that litigants must meet to challenge subordinate legislation, such as regulations, municipal bylaws, executive orders, and rules. The party challenging the subordinate legislation need not meet Katz’s “hyper-deferential” standard requiring them to show that the regulation is “irrelevant”, “extraneous” or “completely unrelated” to the purpose of the enabling statute. Instead, the standard of review accords with Vavilov: the presumption of reasonableness review applies.

Auer and TransAlta represent another strong statement from the Court reaffirming Vavilov — a trend that shows no sign of letting up. It also provides an illustration of the Court’s general approach to past precedent: although the Court altered the principles set out in Katz, it did not abandon the decision as a whole.

The approach set out in Auer and TransAlta would appear to extend broadly to all types of subordinate legislation, including municipal bylaws, orders, and rules. Litigants who wish to judicially review these instruments should still be prepared to contend with the presumption of validity, steer clear of policy or wisdom-laden arguments, and focus on establishing what might reasonably fall within the scope of the enabling statute’s authority.

McCarthy Tétrault can help. Our national dispute resolution team has unsurpassed expertise in administrative law and judicial review. For more information, please reach out to your McCarthy Tétrault contact, or to any of the authors.