L'Affaire Nadon: a Note on Justice Rothstein's Recusal

A few weeks ago I appeared before the Senate Standing Committee on Legal and Constitutional Affairs about the proposed modifications to the Supreme Court Act. You can watch the hearing here (warning, quicker to stream than to download). I prepared lengthy written submissions, which you can download here.

These modifications are, of course, the subject of a reference to the Supreme Court of Canada itself, which will be heard on January 15. The most interesting recent news is that Justice Rothstein has recused himself. This is unsurprising. Justice Rothstein was appointed from the Federal Court of Appeal. The reference specifically asks the Court to opine on whether such an appointment [EDIT: to one of the "Québec seats"] would have been lawful. If he had taken part in the reference, Justice Rothstein may have had to opine on the legality of his own appointment [EDIT: especially because Parliament proposes to clarify both sections 5 and 6 of the Supreme Court Act]. Moreover, several of his former colleagues are intervening in the reference [EDIT: and he is a former colleague of Justice Nadon]. Helpfully, Justice Rothstein's sensible decision also ensures that the reference will not result in a tie (although this is a case in which, for institutional reasons, the Court is likely to speak with one voice).

Although Justice Rothstein recused himself about a month ago, the decision was only made public yesterday. Matters seem to have been brought to a head by an argument made by Rocco Galati, one of the interveners, last week. On Galati's motion to intervene, he requested (it seems) that Justice Rothstein recuse himself from the motion. The Chief Justice heard the motions and responded that Galati's request was moot. As we now know, it was moot because Justice Rothstein has recused himself entirely, as the Chief Justice informed the parties to the case yesterday.

This information is only available due to the Court's willingness to make available on its website the dockets of all pending cases. It also publishes the written submissions of all parties to pending cases. And of course it streams and archives its oral hearings. Its website is an excellent resource for which the Court should be commended.

Here is the summary of the written submissions I made to the Senate committee:

The Committee has been asked to consider sections 471 and 472 of Bill C-4, which modify the Supreme Court Act. It has been asked to consider them in the midst of an important controversy. In late September, 2013, Prime Minister Harper nominated the Honourable Justice Marc Nadon, then a member of the Federal Court of Appeal, to replace the retiring Morris J. Fish as a member of the Supreme Court of Canada. After Justice Nadon was sworn in, but before he could take an active part in proceedings before the Court, a challenge was launched to the legality of his nomination. Mr. Rocco Galati, a Toronto lawyer, contended amongst other things that Justice Nadon was not eligible for elevation to one of the three seats on the Court reserved for jurists from Québec. Justice Nadon stepped aside pending the resolution of the challenge to his nomination.

Subsequently, the federal government took two steps. It proposed modifications to the Supreme Court Act as part of Bill C-4. And it referred two questions to the Court for the decision: whether federal court judges can be appointed to the Court pursuant; and whether Parliament can enact declaratory provisions to end the ongoing uncertainty about the validity of Justice Nadon’s appointment and to confirm for the future that judges from the federal courts can be elevated to the Court.

In my written submissions, I propose to address three issues: (1) Can a member of the Federal Court or Federal Court of Appeal be appointed to one of the three Québec seats on the Supreme Court of Canada in accordance with the provisions of the Supreme Court Act? (2) Do the provisions of Bill C-4 alter the existing law? (3) Do the provisions of Bill C-4 require a constitutional amendment?

A brief summary of my answers is as follows: (1) No: The most natural reading of the English and French versions of ss. 5 and 6 of the Supreme Court Act is that sitting or former judges and lawyers with 10 years’ experience are eligible for appointment (s. 5), but that in the case of the three seats on the Supreme Court of Canada reserved for Québec there is an additional requirement that the appointee be a current judge or practitioner from the province (s. 6).

A purposive approach underpins this conclusion. The most obvious inference is that the object of s. 6 is to ensure that the Québec judges on the Court have current knowledge of Québec’s Civil Code. This is confirmed by the legislative history leading to the adoption of s. 6 and its subsequent evolution. The purpose of ensuring familiarity with civil law underpinned the policy choice to list the Québec courts and Québec bar as the sole sources from which the Québec seats on the Court could be filled.

(2) Yes: Parliament may enact declaratory provisions to cure doubts or mistaken interpretations of existing law by declaring the law’s ‘true meaning’ not only for the future but also for the past. A court faced with the question will have to take the declaratory provisions into account and will likely conclude that the proposed ss. 5.1 and 6.1 serve to put the appointment of Justice Nadon beyond all doubt. Whether the deployment of Parliament’s powers in the judicial domain is desirable is a separate question.

(3) Maybe: It remains to be seen what approach the Supreme Court of Canada will take to the interpretation of the amending formulas set out in Part V of the Constitution Act, 1982. There is scope for it to take an approach which would protect core provisions of the Supreme Court Act from unilateral amendment by Parliament. The Court may well conclude that a change to s. 6 of the Supreme Court Act constitutes a change to the “composition of the Supreme Court of Canada” and requires a constitutional amendment. There is accordingly a risk that s. 6.1, declaratory or not, is beyond the powers of Parliament because alterations to s. 6 of the Supreme Court Act can be accomplished only by a constitutional amendment. Equally, however, the Court may conclude that the Supreme Court Act can be amended by Parliament.

A useful counterbalance to the arguments made in my written submissions is the Attorney General's factum, which can be downloaded from the Supreme Court's website.

Internal Appellate Review: the Role of the New Refugee Appeal Division

I made a presentation last week to the members of the new Refugee Appeal Division and their legal advisers. The RAD hears appeals from the Refugee Protection Division: most of the relevant statutory provisions are contained in Part IV of the Immigration and Refugee Protection Act.

One of the questions the members of the RAD have been asking themselves in their decisions to date is whether they should be deferential to findings made by the RPD. My presentation focused on this. My answer was a heavily qualified yes: the RAD should show some deference to the RPD, but it should not apply rigidly tests developed for review by courts of administrative decisions.

Regulatory Capture and Agency Inaction

There is an interesting piece over at the RegBlog on agency capture and review by America's Office of Information and Regulatory Affairs of agency inaction. Michael Livermore and Richard Revesz argue that agency failures to act may well result from agency capture and may be as damaging as inefficient agency action resulting from capture.

Accordingly, they argue that OIRA's mandate should extend to agency inaction:

Our most important recommendation is to eliminate a basic flaw that significantly limits OIRA’s capture-reducing potential: a near exclusive focus on agency action, without attention to agency inaction. Capture can have deleterious effects on the regulatory system by promoting unnecessary and inefficient rulemaking and also by impeding efficient regulation that serves the public interest.

Balanced anti-capture review needs to correct for the wide range of effects that outside pressure can have on agency decision making. Limiting review to agency action places an entrenched bias at the heart of OIRA review, sapping normative force from its anti-capture justification.

To remedy this problem, we propose a mechanism to review inaction through review of petitions for rulemakings that have been submitted to agencies, but which have been denied or have languished. This review would help OIRA identify important areas where agencies are failing to act, without remaking OIRA into a roving commission with the power to set agencies’ agendas. The petitioning process strikes a workable balance: debiasing OIRA’s role while providing agencies with continued discretion to set regulatory priorities.

But the focus on agency failure to adopt regulations is surely too narrow. Agency capture is also one possible reason for the retention of regulations that are long past their sell-by date though beneficial to some sectoral interests. Retaining them might benefit groups of bureaucrats, enterprises or associations but not the public at large. OIRA review (and the various fixed or ad hoc arrangements in other jurisdictions that resemble it) should also concern itself with inaction once regulations have been adopted.

Tyler Cowen made this point (albeit without reference to agency capture) in a recent New York Times op-ed:

Many regulations, when initially presented, can sound desirable. The problem is that, taken in their entirety, excess rules divert attention from pressing issues like the need for innovation and new jobs.

Michael Mandel, an economist at the Progressive Policy Institute, compares many regulations to “pebbles in a stream.” Individually, they may not have a big impact. But if there are too many pebbles, a river’s flow can be thwarted. Similarly, too many regulations can limit business activity. When the number of rules mounts, it can become hard for a business to know whether it is operating within the law’s confines. The issue is all the more problematic when federal, state and local constraints all apply...

The Office of Information and Regulatory Affairs, within the White House, has advocated a retrospective review of unnecessary regulations. That’s a good idea, but the office has a full-time staff of only about 50, and its budget, adjusted for inflation, has declined since the early 1980s. The regulatory agencies outspend the office by a factor of about 7,000. The core problem is that the system is not geared for an efficiency-oriented regulatory review.

If Livermore and Revesz are right about review of agency inaction, the next logical step is to start the difficult process of pruning existing regulations, a task that is neither easy nor cheap.

Finding the Range of Reasonableness

Ronald Dworkin gave a good example to illustrate what he called "strong" and "weak" discretion. Imagine a sergeant A who is told to pick "any five men" for a mission. Contrast her with a sergeant B told to pick "the five most experienced men". One has strong discretion, the other weak.

Time to Double Down on Dunsmuir?

The Supreme Court of Canada released a fascinating administrative law decision this morning: McLean v. British Columbia (Securities Commission), 2013 SCC 67. The majority reasons were written by Moldaver J.; Karakatsanis J. wrote a set of concurring reasons.

Closing the Backdoor to a Right to Reasons?

I have been bothered for about a month now by a hypothetical question I received from an audience member at a talk I gave at the end of October. I was explaining some cases which hold either (a) that plainly inadequate reasons make a decision unreasonable or (b) the absence of sufficient reasons makes a decision impossible to review (see also here).

Gaming Regulatory Processes

There is an interesting new paper by Yehonatan Givati called "Game Theory and the Structure of Administrative Law", interesting principally because of its focus on advance ruling and licensing rather than the well-known distinction between adjudication and rulemaking. Here is the abstract:

How should administrative agencies choose among the different policymaking instruments at their disposal? Although the administrative law literature has explored this question with respect to the instruments of adjudication and rulemaking, it has failed to appreciate two other powerful instruments at agencies’ disposal: advance ruling and licensing. Taking these four policymaking instruments into consideration, this Article provides a general theory to guide agencies in selecting the most suitable policymaking instrument in different policy environments. To do so, the Article utilizes a new game-theoretic framework, focusing on two central dimensions of policymaking instruments in particular: timing and breadth. This framework provides two valuable implications. First, it highlights two key administrative challenges that are underappreciated by the academic literature: the hold-up and leniency problems. And second, the framework shows that administrative agencies are underutilizing two powerful policy making instruments, namely, licensing and advanced rulings. I argue that these two instruments area valuable across areas of law.

Here is an extract:

Specifically, when firms are relatively homogenous, so the agency knows that most firms’ reaction to a chosen policy will be desirable, or that most firms’ reaction will be undesirable, agencies should choose rulemaking as a policymaking instrument. When firms are relatively heterogeneous, so the agency’s only guess is that firms will be more or less evenly split between those with desirable reaction to the policy and those with an undesirable one, agencies should choose either licensing or adjudication supplemented with advance ruling. In this region, the more firms have an undesirable reaction to the policy, the more likely it is for adjudication supplemented with advance ruling to be superior to licensing...

There is some resemblance to Braithwaite and Ayres' classic Responsive Regulation, though Givati's paper is focused more on what happens at the policymaking rather than enforcement stage.The paper can be downloaded here.

Along similar lines is a keynote speech given by regulatory lawyer Rodney V. Northey during the Canadian Energy Summit: "Regulatory Chess: How energy proponents should approach regulatory approvals". Northey likens the search for regulatory approval to a game of chess (and draws illuminating contrasts with dominos and checkers):

In my experience, the game of chess offers an apt image for regulatory strategy. Right off the bat, there are two things about chess that appear well-suited to guide regulatory strategy:

• Chess reflects the idea that regulatory approvals are not mechanical, straight-line processes. In chess, it is very rare that one side can end the game in a few quick steps.
• Chess also reflects the idea that regulatory processes involve multiple pieces, doing different things, toward an overall objective.

Indeed, even the image of chess may not quite capture the complexities of regulatory processes which involve multiple players. Sometimes an applicant might find itself playing multiple games of chess simultaneously, facing and responding to different strategies from different players. This is something that requires a lot of smarts.

One of the notable aspects of the Supreme Court of Canada's recent decision in Katz Group Canada Inc. v. Ontario (Health and Long-Term Care), 2013 SCC 64 is how alive the Court was to the dynamism of the process of regulating drug prices:

[41]                          It bears repeating that Ontario’s totemic struggle to control generic drug prices has been an incremental one, due in part to an evolving awareness of the mechanisms that can lead to high drug prices, and in part to the dynamic nature of the problem: each time the government has introduced new measures, market participants have changed their business practices to obviate the restrictions and keep prices high.

[42]                          The private label Regulations are part of this incremental regulatory process, tailored to address a proposed business model in which the private label manufacturer is a substitute for a manufacturer which already has its drugs on the market in Ontario.

I think the result here was the correct one. Courts responding to regulatory measures in dynamic environments should be deferential. Regulation under uncertainty is a complex business and one which should be left primarily to regulators.