When Do Guidelines Bind? Intended Effects on Third Parties

Paul Daly April 11, 2023

I have written a paper entitled, “How Binding are Binding Guidelines? An Analytical Framework” to be published later this year in Canadian Public Administration. You can access a pre-publication version here. In this post, I discuss how intended effects on third parties are an indicium of bindingness.

The extent to which a guideline is drafted and designed to have effects on the behaviour of third parties is an indicium of bindingness. In this respect, a distinction must be drawn between  internal administrative management documents and general norms designed to control the behaviour of third parties.

Internal administrative management documents are not designed for external use and often are informal in nature. Guidelines relating to such internal matters are less likely to be binding. This is because they are not intended to have effects on the behaviour of third parties. By contrast, general norms seek to direct the behaviour of third parties, sometimes establishing rights and obligations. These general norms, by virtue of their application to the world at large, are more likely to be binding.

Of course, internal guidelines may have effects outside the administrative structure in which they are used regardless of whether this indicium is satisfied. First, a guideline (binding or not) may be a relevant part of the statutory context for an administrative tribunal or court asked to interpret a statutory provision and may also be relevant to the exercise of a discretionary power (Agraira v. Canada (Public Safety and Emergency Preparedness), [2013] 2 SCR 559 (SCC): 85; Kanthasamy v. Canada (Citizenship and Immigration)), [2015] 3 SCR 909 (SCC): 32). Second, evidence may suggest that an internal guideline was treated as binding. Indeed, in Kanthasamy, a discretionary decision was invalidated because the decision-maker was over-reliant on internal guidelines about how to approach applications for humanitarian and compassionate relief from the provisions of immigration legislation; the decision-maker had wrongly treated the guidelines as prescribing thresholds for relief to be accorded when in reality the guidelines were descriptive. In Kanthasamy, the evidence before the court established that the internal guidelines had been treated as binding, which was a legal error. Most of the time, internal guidelines of that sort will not be binding, because they are not intended to affect the behaviour of third parties. The following analysis is directed to determining when the drafting and design of a guideline will reveal that it is intended to affect the behaviour of third parties thereby satisfying my third indicium of bindingness.

Affecting Behaviour

In most cases, the fact that guidelines are couched in mandatory terms and contain high levels of detail and precision will be enough to direct the behaviour of third parties. Sometimes, guidelines targeting third parties are coupled with the potential for coercive force to be brought to bear on those who fail to comply, in the form of penalties or other unfavourable consequences. This will indicate that the guidelines are binding.

A “linkage” between a power to sanction and the suggestion that guidelines represent the decision-maker’s view as to the situations in which sanctions will be imposed gives guidelines a “coercive tone” (Ainsley v. Ontario (Securities Commission), [1994] 121 DLR (4th) 79 (Ont. CA): 86) and binding force. For example, the Bank of Canada’s guidelines on systemic risk and the Canada Transportation Agency’s guidelines for the resolution of noise and vibration disputes expressly provide for consequences which will follow from non-compliance with the guidelines. This tends to indicate that such guidelines are binding.

The Bank of Canada’s (2018) Guideline Related to Bank of Canada Oversight Activities Under the Payment Clearing and Settlement Act was promulgated under the authority of the Payment Clearing and Settlement Act (S.C. 1996, c. 6, Sch, s.17). This is a highly detailed and prescriptive document relating to financial market infrastructures (FMIs) which may pose systemic risk. For example, part 3.2 imposes obligations on such entities (emphasis added):

Designated FMIs must meet a number of responsibilities to satisfy the Bank that they are adequately managing systemic risk for systemically important FMIs, and payments system risk for prominent payment systems. In particular, FMIs are required to maintain appropriate risk-management practices and to provide the Bank with all the information necessary for it to assess whether the FMI is operating in a safe and efficient manner. The Bank may enter into a legal agreement with designated FMIs to formalize and clearly articulate its expectations regarding the Bank’s oversight activities and the FMI’s responsibilities to the Bank.

These responsibilities are expressly linked (in Part 3.6) to the Bank’s enforcement powers. In the event that an FMI or participant fails to comply with (i) the PCSA; (ii) a directive issued by the Governor; or (iii) a binding agreement entered into with the Bank under the PCSA, the Governor may then apply to a superior court for an order directing the FMI or participant to comply.

The Canada Transportation Agency’s (2008) Guidelines for the Resolution of Complaints Over Railway Noise and Vibration, adopted under the Canada Transportation Act(S.C. 1996, c. 10, ss. 95.1-95.3). These guidelines set out (emphasis added):

  • the collaborative measures that parties must follow before the Agency conducts an investigation or a hearing into a complaint;
  • the elements that the Agency considers in determining whether a railway company is in compliance with the noise and vibration provisions of the CTA; and
  • how to file a complaint, list the information to be submitted, as well as the process to be followed.

As such, the guidelines structure the process by which individuals and railway companies resolve disputes about railway noise and vibration. They are not merely internal management documents but prescribe processes to be followed by third parties. No sanctions attach to a failure to follow the process but, clearly, the Agency will not move a matter to a formal hearing if the guidelines have not been complied with.  The guidelines contain a detailed description of the process on pp. 6-7 and set out the elements the Agency “will consider” in making a determination on pp. 13-14.

Internal Management

Guidelines relating to internal management will generally be non-binding. As they relate to internal management, such guidelines do not purport to have effects on third parties. Internal management guidelines take two particular forms.

First, internal management guidelines might relate to procedure rather than to substance, regulating how a matter might come before a decision-maker (Georgetown v. Eastern School District, [2009] PEIJ No 25 (QL) (PESC)) or the process to be used to address the matter (Thamotharem v. Canada (Minister of Citizenship and Immigration), [2008] 1 FCR 385 (FC)) without giving any indication as to the substantive considerations the decision-maker will take into account to make a decision. The Manitoba Labour Board’s guidelines on designated bargaining agents are an example. The Manitoba Labour Relations Act empowers the Manitoba Labour Board to “formulate general guidelines to further the operation of this Act” but specifies that “the board is not bound by those guidelines in the exercise of its powers or the performance of its duties and functions” (C.C.S.M. 2020, c. L10, s 141(2)). Under this power the Manitoba Labour Board (2017) has issued a general discursive guide to the legislation, and guidelines relating to the procedure to be followed when a bargaining agent has breached its duty of fair representation:

This  bulletin  is  intended  to  inform  employees who  are represented  by  a  bargaining  agent  of  the procedure to  be followed when an  application is  filed  with  the  Manitoba  Labour  Board  (the “Board”) alleging  that a bargaining  agent,  in  representing  the  rights  of  any  employee  under a collective agreement, has acted in a manner which is arbitrary, discriminatory or in bad faith, or, in the case of the  dismissal  of  the  employee,  where  it  is  alleged  that  the  bargaining  agent  has  acted  in  a  manner which is arbitrary, discriminatory or in bad faith or has failed to take reasonable care to represent the interests of the employee (2015: 1).

These guidelines do not purport to regulate anyone’s legal position in any way, as they relate to procedure rather than to substance.

Second, internal management guidelines might be designed to help decision-makers to exercise enforcement discretion. They do not tie expectations of compliance with guidelines to the threat of sanctions. Rather, internal management guidelines seek to structure the exercise of discretion to impose sanctions (R v. Beaudry, [2007] 1 SCR 190 (SCC)). The CRTC’s anti-spam guidelines are a classic of this genre. The CRTC’s guidelines on the enforcement of Canada’s anti-spam legislation are permissive and discursive in nature and include illustrative examples (Canada, Canadian Radio-television and Telecommunications Commission 2018). Moreover, they do not prescribe consequences for failure to follow the guidelines (emphasis added):

8.         When assessing the role individuals, businesses, or other entities play in potential section 9 violations, the Commission will consider a variety of factors. These include, but are not limited to,

  • the level of control that an individual or organization has over the activity that violates sections 6 to 8 of CASL, and the extent to which they have the ability to prevent or stop that activity (as required by the situation);
  • the degree of connection between the actions that could constitute a violation of section 9 of CASL, and those that contravene sections 6 to 8 of CASL. For example, selling a computer, which is then used to commit an unlawful activity, would not create a strong degree of connection between parties. However, selling malicious software to unsuspecting parties would suggest a stronger degree of connection; and
  • evidence that reasonable steps were taken, including precautions and safeguards to prevent or stop violations from occurring (s 8).

…

Potential enforcement action

15.       Following a determination that a section 9 violation has occurred, a variety of enforcement actions may be used by the Commission to promote compliance. The choice of enforcement action is typically based on considerations such as

  • the likely effect on compliance;
  • the nature and scope of the violation;
  • the degree of harm associated with the violation;
  • the level of co-operation by the alleged violator; and
  • the history of prior violations (s 15).

The CRTC is clear that it preserves enforcement discretion, which it will exercise in a flexible manner.

Summary

Guidelines designed to regulate third parties are more likely to be binding, especially where there is a threat of sanctions for non-compliance whereas those designed merely to regulate a decision-maker’s internal procedures or to indicate in a general sense how the decision-maker might exercise its discretion are more likely to be non-binding.

This content has been updated on April 11, 2023 at 14:56.