Capturing Regulatory Capture by Expanding the Record: Sobeys West Inc. v. College of Pharmacists of British Columbia, 2016 BCCA 41

Canadian courts have generally been cautious about expanding the content of the record on judicial review. I am generally in favour of restraint (see e.g. here), as expanding the content of the record may have the effect of enticing courts to expand the scope of judicial review. But the factual matrix of Sobeys West Inc. v. College of Pharmacists of British Columbia, 2016 BCCA 41 indicates that, in some situations,it might not be possible to effect a meaningful judicial review without placing fresh material before the reviewing court.

I wrote about the first-instance decision here. The basic issue was whether the College, in outlawing pharmacy loyalty schemes, acted beyond its powers. Lurking in the background is the very real possibility that the College was discriminating against ‘big-box’ retailers and sacrificing the interests of consumers to the (vested) interests of its members. Relying heavily on affidavit evidence, Hinkson C.J. struck down the by-laws in question but the Court of Appeal, per Newbury J.A., reversed.

Counsel argued that the traditional rule limiting the content of the judicial review record to material that had been before the decision-maker “is clearly geared to tribunals that make adjudicative decisions at hearings, rather than legislative or policy-laden decisions at meetings that (as in the case at bar) may take place over an extended period while a matter is debated, refined and finally decided upon” (at para. 41). Newbury J.A. responded in forthright terms. Here, there was no suggestion that “the Council had attempted to ‘immunize its decisions from any scrutiny’ by limiting the material it considered. Had this been the case, a more flexible view of the admissibility of evidence might have been justified” (at para. 53). The first-instance judge had been wrong to permit the introduction of additional material.

There might, however, be strong rule-of-law considerations in favour of expanding the record in situations where by-laws are being reviewed for reasonableness. Often, the factual record will be patchy. In the absence of an adversarial procedure there is little to guarantee that the issues will have been thoroughly aired. This makes it difficult for a reviewing court to ensure that the by-laws are reasonable. Moreover, there are considerations of good administration that might justify expanding the record in a case like this one. Where it is plausible to suggest that a regulatory body has been ‘captured’ by an influential interest group (though I appreciate that this may not always be easy to demonstrate), good administration would favour permitting the applicant to introduce evidence to this effect. A general presumption that by-laws were adopted in good faith should not function as an indestructible shield for regulatory capture and rent seeking. In a world in which judicial review of administrative action extends to the reasonableness of general regulatory measures, it might be necessary to expand the record in cases involving an non-adjudicative decision-maker beyond those situations in which bad faith or procedural unfairness have been alleged (as long as the applicant was not lax in providing the decision-maker with relevant information).

To the extent that a decision taken by a non-adjudicative decision-maker might not demonstrate the qualities of justification, transparency and intelligibility (Dunsmuir, at para. 47), Newbury J.A. stated that “the standard may be met by a non-adjudicative tribunal even where, to paraphrase the petitioners’ factum, there is no record of proceedings (other than minutes of meetings), no evidence is tendered, no findings of fact or law are made, and there are no reasons in the formal sense” (at para. 69). This is true, but it does not conclusively answer the argument that the record should be expanded in such cases, at least where rule-of-law and good-administration concerns are active.

In the absence of additional evidence, however, there was no basis for judicial intervention:

Although the evidence supporting the need for the bylaws was thin, the Council was not, in the absence of a Charter challenge, required to select the least intrusive path, nor to wait until there was empirical evidence demonstrating the harm of customer incentive programs…Here, the Council, acting bona fide, was of the view that customer incentives offered by pharmacies were a matter of concern to the public interest. There was some evidence – anecdotal though it may have been in whole or in part – to support those concerns. The Council was obviously anxious to preserve the professional standards of pharmacists across the province. Other jurisdictions had discussed the matter and at least one had adopted a prohibition on incentive programs similar to that adopted by the Council. At the end of the day, it cannot in my view be said that the Council’s decision lay outside the range of “possible, acceptable outcomes” that are “defensible in respect of the facts and law” so as to require interference by a court of law. Put another way, the substance of the bylaws conformed in my respectful opinion to the rationale of the statutory regime to which the College is subject (at paras. 68, 70).

There is litigation ongoing in Alberta on a similar point. I would not be surprised if this case goes one step further, which would permit the Supreme Court of Canada to opine on the content of the record, something on which it has long been silent.

This content has been updated on March 4, 2016 at 16:28.