Different party, different risks: managing expectations and risks in judicial reviews

Courts do not have a “monopoly on adjudication”¹ in an administrative state. Rather, administrative decision-makers make decisions daily that have a significant impact on the lives of Canadian individuals and businesses. However, their powers are not unlimited. As the Federal Courts have explained, “all holders of public power are to be accountable for their exercises of power, something that rests at the heart of our democratic governance and the rule of law”². In the case of administrative agencies, this accountability is through judicial review. Although judicial review can be a powerful tool, it raises risks and strategic considerations for all participants.

Strategy and risk in judicial review

Judicial reviews can be two-party proceedings (the applicant and the decision-maker) or three-party proceedings (the applicant, the decision-maker and another affected party). Each party has risk and must consider carefully its strategy within the process.

Risks for the applicant

A party seeking judicial review—the applicant—faces three broad risks:

• Standard of review risk. Courts will normally defer to decisions made by administrative decision-makers. The standard of review is usually reasonableness, not correctness. As a result, courts will interfere only when 1) the outcome is clearly unsupported by the law and the facts; 2) the reasoning shows “clear logical fallacies”³; or 3) the decision-making process was procedurally unfair. Although a reasonableness review must be robust, in practice, the reasonableness bar is low, and (more often than not) courts find that decision-makers meet it.
• Remedial risk. Even if the decision is unreasonable, the typical remedy is to send the decision back to the same decision-maker for reconsideration. Thus, in effect, while a judicial review is not a do-over for applicants, it can be a do-over for decision-makers. An applicant may expend considerable time and resources on a judicial review and ultimately be successful, only to have the decision-maker reach the same decision again in a more defensible fashion.
• Relationship risk. Parties who are repeatedly before the same decision-maker should consider carefully whether reviewing the decision will have an adverse effect the next time the party is before the decision-maker. Although, in principle, administrative decision-makers should not let this influence future decisions; in practice, it is a risk.

Given the uphill battle that most applicants face on reasonableness review and remedies, judicial review is often an avenue of last resort—a stick to be considered when all of the carrots are gone. An applicant should understand that success can be difficult and remedies can be unsatisfying. Reflexively reviewing any adverse decision will consume money and attention; it is important to carefully consider all three risk factors before deciding whether to proceed.

Considerations for the decision-maker

The party being judicially reviewed—the administrative decision-maker—has a different set of considerations to balance:

• Participation. A decision-maker who responds to a judicial review application must carefully consider how it presents its argument on the application. The permitted role of the decision-maker varies depending on the statutory scheme being administered and, to some degree, the jurisdiction. Some decision-makers—such as those administering a consumer protection regime—are expected to participate actively in the judicial review proceedings so that the consumer can avoid costly and time-consuming adversarial proceedings. Other decision-makers are expected to take a less active role, particularly where there is already an affected party with the resources and motivation to actively respond. Overarching all of this is the need to maintain the neutrality of the decision-maker. The law is clear that a decision-maker should not be aggressive in defending its own decision to avoid a perception that the decision-maker has “entered the fray”.
• Educating the reviewing court. A judicial review application is a key opportunity for the administrative decision-maker to educate the court to help guide the court to the legally correct decision. In some respects, a decision-maker welcomes judicial oversight because it encourages diligence by the decision-maker and provides necessary guidance on key points of the relevant statutory regime. However, judicial oversight can be unhelpful if the court reaches a decision without being properly informed about the statutory regime and the factors that inform the reasonableness of the decision made. Private parties pursuing private interests may not bring to the reviewing court’s attention the full underlying context of the statutory scheme.
• Deference. The ability of a statutory decision-maker to fulfil its function depends in part on the courts giving the decision-maker sufficient latitude to do so. It is important that the courts show deference where deference is due. This does not mean that courts should not overturn an unreasonable decision. Rather, from the decision-maker’s perspective, it highlights the importance of 1) ensuring that staff carrying out the decision-maker’s function are properly educated on how to make decisions fairly, transparently, and reasonably; and 2) methodically and fairly bringing to the reviewing court’s attention the factors that made a decision reasonable in a particular case.

Additional risks for an affected party

Although not every judicial review has an affected party as the respondent, the stakes for such respondents can be high. After all, it is the affected party who managed to get what they wanted at the administrative level, and the applicant’s fundamental request is to reverse that. As a result, the affected party respondent faces the following risks:

• Lost investment risk. A party who receives an administrative approval might start taking expensive or time-consuming steps in reliance on that approval. Imagine being halfway through the construction of a project, only to find that the approval has been (at least temporarily) halted.
• Risk associated with regulatory changes. A respondent who got approval under one legal regime or from one set of administrative personnel might now face a different regime or different decision-making personnel for a re-approval. This creates uncertainty.

Affected parties (like defendants in civil cases) rarely wish to participate in a judicial review. But once they find themselves there, they can and should mitigate their risks to the greatest extent possible. This includes making a clear-eyed assessment of how the judicial review may turn out, being thoughtful about investment decisions before the process has been completed, and understanding the dynamics in the regulatory environment.

An affected party may also find itself forced to respond to a judicial review at the same time that it responds to a statutory appeal. Decisions of the Ontario Court of Appeal and the Federal Court of Appeal have split on the openness of courts to hear a judicial review application when the legislature has created a limited avenue for a statutory appeal—often restricted to issues of law. The Supreme Court of Canada will be determining this issue conclusively in a case it heard this fall.

The importance of thinking strategically

Although administrative law and judicial review applications have a reputation for being arcane and unpredictable, applicants, decision-makers and affected party respondents can all manage their respective risks and needs by thinking strategically about potential outcomes and likely remedies.