The Reviewability of Policy: Harold the Mortgage Closer Inc. v. Ontario (Financial Services Regulatory Authority, Chief Executive Officer), 2024 ONSC 4464 and Air Passenger Rights v. Canada (Attorney General), 2024 FCA 128

Two recent Canadian cases have dealt with the reviewability of soft law instruments and, in both instances, the courts came out against judicial review.

In Harold the Mortgage Closer Inc. v. Ontario (Financial Services Regulatory Authority, Chief Executive Officer), 2024 ONSC 4464, the applicants challenged guidance issued by the Authority. Under the guidance, the Authority publishes details of enforcement action on its website. A licensee subject to enforcement action may resist the action in a de novo hearing before the Financial Services Tribunal. Here, the applicants complained, first, that publication of the notice of enforcement action caused reputational harm and, second, that the Authority should have posted the licensees’ response on its website.

Backhouse J held that the guidance was not justiciable. The Authority was not exercising a statutory power of decision in adopting the guidance and the guidance did not affect any of the applicants’ legal rights and obligations:

FSRA is not specifically required or empowered by statute to issue the Transparency Guidance or publish the NOP. In this case, the Decisions were to provide a non-binding guidance document on FSRA’s administrative processes and to publish (or not publish) documents on FSRA’s website. Section 3 of the FSRA Act provides FSRA’s statutory objects: the goals FSRA strives to achieve. Section 3 does not confer any jurisdiction, authority, or a statutory power of decision upon FSRA. Section 6 provides FSRA’s natural person powers, empowers FSRA to administer and enforce legislation, and prohibits FSRA from establishing, acquiring, or dissolving subsidiary corporations. While the Transparency Guidance states that the policy achieves FSRA’s statutory objects, neither ss. 3 nor 6 confer any authority or obligation on FSRA to publish NOPs and FSRA does not rely on either section to do so.

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Although the applicants have an interest in their reputation, the publication of allegations by the regulator does not give rise to a right to judicial review. The Decisions here do not affect the legal rights, interests, property, privileges, or liberty of the applicants. The Transparency Guidance issued by FSRA simply describes when and how FSRA will publish documents related to its enforcement proceedings. Reputational damage in the circumstances of this case does not give rise to a right of judicial review (at paras. 70, 75).

Note that I provided some consultancy services to the Authority in respect of this matter.

The Federal Court of Appeal arrived at the same conclusion in Air Passenger Rights v. Canada (Attorney General), 2024 FCA 128. The issue here related to the publication by the Canadian Transportation Agency of a statement on its website at the outset of the COVID-19 pandemic. There was a wave of flight cancellations and significant concern in the airline industry about the economic consequences of shutting down international travel. In relevant part, the statement read:

While any specific situation brought before the CTA will be examined on its merits, the CTA believes that, generally speaking, an appropriate approach in the current context could be for airlines to provide affected passengers with vouchers or credits for future travel, as long as these vouchers or credits do not expire in an unreasonably short period of time (24 months would be considered reasonable in most cases).

The applicant here recognized that the statement was not a “decision” but nonetheless argued that judicial review was appropriate because “(a) the Statement is a pre-judgment by the CTA of air passengers’ rights to refunds for cancelled flights, and (b) the CTA acted in response to improper third-party influence in formulating and posting the Statement contrary to its Code of Conduct, giving rise to reasonable apprehension of bias” (at para. 14).

Walker JA held that judicial review was unavailable. She distinguished the statement from cases addressing the lawfulness of guidelines that, though notionally non-binding, had a mandatory character (at para. 23) and held that the statement itself did not cause any affect on rights and obligations. First, it was the actions of third parties, such as credit card companies, that affected passengers’ rights and obligations:

At its core, APR’s argument that the Statement is justiciable is based on the premise that the actions of third parties (airlines and credit card companies) taken in reliance on the Statement prejudicially affected air passengers’ rights and access to refunds for cancelled flights in circumstances where refunds should arguably have been available to them. APR insists that the Statement had the practical effect of facilitating the airlines’ retention of passengers’ money without providing services.

APR’s evidence and arguments are not persuasive. The actions of third parties are not the actions of the CTA, nor is the CTA responsible for the decisions taken by airlines and credit card companies. APR’s evidence demonstrates only that third parties used the Statement to justify refund and credit card chargeback refusals. The prejudicial effects asserted by APR flow not from the Statement or the conduct of the CTA but from the interpretation and use of the Statement by third parties. APR asks the Court to consider the Statement from the public’s perspective but there is little evidence in the record of that perspective outside of a limited number of email chains in which frustrated air travellers vented their dissatisfaction with the Statement. In any event, the public’s possible interpretation of the Statement does not establish prejudicial effect or justiciability (at paras. 29-30).

Second, the statement itself was non-binding:

Third-parties’ mischaracterization of the Statement, whether as a ruling or approval, was not endorsed by the CTA and does not transform the Statement into a mandatory pronouncement. The Statement is written in simple language and conveys a possible way forward in unprecedented circumstances, subject to the adjudication of each case on its own merits. It is drafted using permissive language and addresses one topic. It does not purport to provide a detailed overview of the state of Canadian legislation and jurisprudence regarding the right to refunds, nor does the Statement alter an air passenger’s legal entitlement to a refund for certain cancelled flights. Although APR asserts that the Statement misinforms the travelling public about their refund rights, it has pointed to no requirement that the CTA reference the relevant refund legislation, tariff and case law when issuing an interim statement that makes clear reference to travellers’ ability to file a complaint despite the guidance in the Statement (at paras. 31-32).

The analysis here is strikingly similar to that of Backhouse J in the Ontario case.

However, the applicant had another string to its bow, in the form of an argument that judicial review is always available where procedural fairness is put in issue, especially where a reasonable apprehension of bias is alleged. This too was rejected by Walker JA:

This Court does not have plenary jurisdiction to intervene in the conduct of a federal board, commission or tribunal based on allegations of misconduct or perception of bias absent a matter in respect of which a remedy is available. Essentially, APR is asking the Court to censure the CTA regardless of the legal effects of its conduct. This is not the Court’s role. At the admitted risk of repetition, for a remedy to be available a matter must “affect legal rights, impose legal obligations, or cause prejudicial effects” (Democracy Watch at para. 29). The Statement does not do so and it is not otherwise amenable to judicial review (at para. 44).

There is something to be said for the applicant’s argument on this point. Allegations of bias have sometimes been given special treatment as far as reviewability is concerned (see e.g. Fundy Linen Service Inc. v. Workplace Health, Safety and Compensation Commission, 2009 NBCA 13). This point merits further consideration. However, if an artful pleader were able to allege a reasonable apprehension of bias in order to circumvent the well-established principles set out by Backhouse J and Walker JA, I am not sure this would be a desirable development in the law of judicial review.

This content has been updated on September 16, 2024 at 16:00.