Fettering of Discretion and the Reasonableness Test

In Canada, a global reasonableness test is supposed to be applied in the review of administrative decisions, even where the allegation is that the decision-maker abused its discretion. The Supreme Court said as much in 2003 (see paras. 22-25).

But some of the traditional grounds of review for abuse of discretion fit uneasily under the general rubric of reasonableness. Bad faith is one: surely a decision taken in bad faith is objectionable per se, with no need to ask whether the bad faith was unreasonable (if that question even makes any sense!).

A more difficult problem is presented by fettering of discretion. On the one hand, fettering arguments allege that the decision-maker never exercised its power of decision in the first place, so one might think that a necessary pre-condition to deference is simply not present, or, more simply, that fettering arguments are "jurisdictional". Moreover, as suggested in Stemijon Investments Ltd. v. Canada (Attorney General), 2011 FCA 299: "A decision that is the product of a fettered discretion must per se be unreasonable" (at para. 24).

On the other hand, fettering arguments are usually based on some policy statement or guidelines issued by the decision-maker. Such statements and guidelines involve interpretations of the decision-maker's constitutive legislation, something which may be entitled to deference. Even where the argument is that the decision-maker has relied on a policy statement or guideline to the exclusion of all other relevant factors, the question is ultimately whether the weight accorded to competing factors by the decision-maker is reasonable. It is a question of "substantive unacceptability" (Canada (National Revenue) v. JP Morgan Asset Management (Canada) Inc., 2013 FCA 250, at para. 73).

On balance, I prefer the latter view. Fettering arguments are best treated as a species of statutory interpretation. The question will be whether policy statements or guidelines or a decision based on them are reasonable viewed in light of the statutory language, purpose and other contextual indicators as explained by the decision-maker. Indeed, the decision-maker is best placed to explain and justify a policy statement or guideline in terms of the context in which it operates.

This is the conclusion that Brown J. came to in Alberta (Director of Assured Income for the Severely Handicapped) v. Januario, 2013 ABQB 677:

[35]           I am satisfied that Dr Q resolves the question of where, within the analytical framework for judicial review, I am to address the Director’s argument about fettering discretion.  Since there appears to be little caselaw directly on point, and none from Alberta, it is worth making explicit the conclusion to be drawn from Dr Q.  Dr Q marks a substantial shift in the law of how, and where within the analytical framework of judicial review, a fettering argument is to be considered by a reviewing court.  The fettering by an administrative tribunal of its discretion was once a stand-alone nominate ground of judicial review within the category of abuse of discretion.  If proven, it automatically invalidated the tribunal’s decision.  Now, however, the standard of review to be applied to the tribunal’s reasons themselves also governs the standard by which the Court ought to consider a fettering argument. 

[36]           In effect, this subsumes my consideration of the Director’s fettering arguments into my review of the reasonableness of the Appeal Panel’s commencement date decision.  Doing so is also consistent with Dunsmuir.  While fettering discretion, like any other ground of abuse of discretion, has traditionally been understood as jurisdictional in nature (David P Jones & Anne S de Villars, Principles of Administrative Law, 5^th ed. (Carswell, 2009) at 175, the Supreme Court in Dunsmuir confined true questions of jurisdiction or vires to “the narrow sense of whether or not the tribunal had the authority to make the inquiry.”  This relegates the grounds of abuse of discretion to review for errors of law.  (Pastore v Aviva Canada Inc, 2012 ONCA 642 (CanLII), 2012 ONCA 642 at para 25.)  And, as to questions of law, in Dunsmuir the Supreme Court also held (at paras 60 and 70) that, aside from questions of general law “that [are] ... of central importance to the legal system as a whole”, a standard of reasonableness (and not correctness) should apply. 

[37]           In other words, a finding that an administrative tribunal has fettered its discretion in deciding a matter militates against a finding of reasonableness.

On the merits (which concerned the commencement date for payment of benefits), the decision-maker had not fettered its discretion:

[75]           The Appeal Panel did not decide the commencement date of Mr Januario’s benefits on the basis of departmental policy.  As I have already found, the commencement date decision was expressly based upon Dr Chan’s 2011 letter and the AISH Eligibility Assessment.  It was only after concluding that Mr Januario’s argument as to the commencement date was meritorious (“the Appeal Panel finds merit in the Appellant’s argument”) that it made any evaluation of departmental policy.  And, in that later reference to departmental policy, the Appeal Panel explicitly recognized that it was not bound by the policy.  Its statement that the policy was an “important factor and should be applied in this case”, simply affirmed the outcome which the Appeal Panel had already reached. 

As the "departmental policy merely affirmed the outcome that had already been decided upon" (at para.78) and was treated as relevant rather than determinative, the decision was reasonable.

Leaving the nominate grounds in place gives interventionist judges plenty of latitude to pick apart administrative decisions with which they disagree though which, reviewed deferentially, should be left alone.