A-18-20
2021 FCA 171
Andriy Volodymyrovych Portnov (Appellant)
v.
The Attorney General of Canada (Respondent)
Indexed as: Portnov v. Canada (Attorney General)
Federal Court of Appeal, Nadon, Stratas and Rivoalen JJ.A.—By videoconference, May 11; Ottawa, August 23, 2021.
Administrative Law — Judicial Review — Regulations and orders — Appeal from Federal Court decision dismissing application for judicial review of Order Extending the Application of the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (Extending Order), Regulations Amending the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (2019 Regulations) that Governor in Council issued — Appellant seeking order to have both quashed — Under Freezing Assets of Corrupt Foreign Officials Act (Act), s. 4, when foreign states ask for assistance, when Governor in Council satisfied statutory prerequisites met, Governor in Council can issue order or regulation restricting or prohibiting any dealings with certain property held by designated individuals — This is what Governor in Council did when passing Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (2014 Regulations) in response to request from Ukraine — 2014 Regulations designated eighteen individuals, restricting, prohibiting their dealings with certain property for up to five years; appellant being one of eighteen — Appellant then challenged vires of 2014 Regulations in Federal Court but challenge failed on ground that statutory prerequisites for 2014 Regulations, their application to appellant were met at time 2014 Regulations made — Under Act, s. 6, Governor in Council can order extension of regulations previously made under s. 4 — In this case, on day before 2014 Regulations expired, Governor in Council did just that (Extending Order) — At same time, amended 2014 Regulations to remove two of eighteen individuals — Appellant was one of sixteen who remained subject to restrictions, prohibitions imposed by 2014 Regulations — Whether Federal Court’s decision reasonable — Regulations, like administrative decisions, orders, are product of administrative decision making — Thus, proper framework for reviewing regulations one used to review substance of administrative decision making — Today, framework for reviewing substance of administrative decision making is Canada (Minister of Citizenship and Immigration) v. Vavilov — Is intended to be sweeping, comprehensive — Vavilov instructing that reasonableness review of all administrative decision making must be conducted unless one of three exceptions leading to correctness review applying — This applies to regulations as species of administrative decision making — Thus, in conducting reasonableness review, Vavilov, not Katz Group Canada Inc. v. Ontario (Health and Long-Term Care), to be applied — Federal Court right in finding Governor in Council’s decision to enact extending Regulations reasonable — Governor in Council viewed Act, s. 6 as permitting extension of regulations if circumstances suggested extension necessary, consistent with purposes of Act — Governor in Council not interpreting s. 6 as requiring satisfaction of preconditions in s. 4 — In reaching this interpretation, Governor in Council alive to essential elements of text, context, purpose — Text of Act, s. 6, which gives Governor in Council discretion to extend regulation for specified period, power to extend it more than once, also supporting Governor in Council`s interpretation — Appellant not identifying any “omitted aspect” in Governor in Council’s interpretation, not showing that Governor in Council was oblivious to essential elements of text, context, purpose — Federal Court right in finding that application of Extending Order, 2019 Regulations to appellant not unreasonable on facts of present case — In circumstances of case, express explanations given for decision to extend 2014 Regulations, viewed in light of legislation, record, were adequate; did not suffer from any fatal, overriding flaws — They provided sufficient intelligibility, justification, transparency — Standards in Vavilov thus met — Overall, Federal Court right in determining that decision to extend 2014 Regulations, brought about by Extending Order, 2019 Regulations, reasonable; thus valid — Appeal dismissed.
Administrative Law — Judicial Review — Standard of Review — Federal Court dismissing application for judicial review of Order Extending the Application of the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (Extending Order), Regulations Amending the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (2019 Regulations) that Governor in Council issued — Appellant seeking order to have both quashed — Under Freezing Assets of Corrupt Foreign Officials Act (Act), s. 4, when foreign states ask for assistance, when Governor in Council satisfied statutory prerequisites met, Governor in Council can issue order or regulation restricting or prohibiting any dealings with certain property held by designated individuals — This is what Governor in Council did when passing Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (2014 Regulations) in response to request from Ukraine — Appellant’s challenge of vires of 2014 Regulations in Federal Court failing on ground that statutory prerequisites for 2014 Regulations, their application to appellant were met at time 2014 Regulations made — Whether applicable standard of review reasonableness or correctness — On judicial review, Federal Court right in selecting reasonableness as standard of review — None of exceptions to reasonableness review recognized in Canada (Minister of Citizenship and Immigration) v. Vavilov applying here — Appellant submitting that exception applying since case raising question of central importance to legal system as whole; that Governor in Council’s decision thus having to be reviewed for correctness — To determine whether narrow exception applying, real essence, essential character of appellant’s case having to be assessed — Whether criteria in Act, s. 4 having to be met before extension can happen under s. 6 question of statutory interpretation to be analyzed through prism of reasonableness — Question not transcending Act nor smacking of any constitutional or quasi-constitutional principle in present case — Thus, not qualifying as question of central importance to legal system as whole.
This was an appeal from a Federal Court decision dismissing an application for judicial review of the Order Extending the Application of the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (Extending Order) and of the Regulations Amending the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (2019 Regulations) that the Governor in Council issued. The appellant was seeking an order to have both quashed. Under section 4 of the Freezing Assets of Corrupt Foreign Officials Act (Act), when foreign states ask for assistance and when the Governor in Council is satisfied the statutory prerequisites are met, the Governor in Council can issue an order or regulation restricting or prohibiting any dealings with certain property held by designated individuals. This is what the Governor in Council did when it passed the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations (2014 Regulations) in response to a request from Ukraine. The 2014 Regulations designated eighteen individuals, restricting and prohibiting their dealings with certain property for up to five years. The appellant was one of the eighteen. The appellant then challenged the vires of the 2014 Regulations in the Federal Court but his challenge failed on the ground that the statutory prerequisites for the 2014 Regulations and their application to the appellant were met at the time the 2014 Regulations were made. Under section 6 of the Act, the Governor in Council can order the extension of regulations previously made under section 4. In this case, on the day before the 2014 Regulations expired, the Governor in Council did just that (Extending Order). At the same time, it amended the 2014 Regulations to remove two of the eighteen individuals. The appellant was one of the sixteen who remained subject to the restrictions and prohibitions imposed by the 2014 Regulations.
The principal issue was whether the Federal Court’s decision was reasonable.
Held, the appeal should be dismissed.
On judicial review, the Federal Court selected reasonableness as the standard of review and was right in doing so. None of the exceptions to reasonableness review recognized in Canada (Minister of Citizenship and Immigration) v. Vavilov applied here. The appellant submitted that one of those exceptions applied since the case raised a question of central importance to the legal system as a whole. Thus, he said that the Governor in Council’s decision had to be reviewed for correctness. Questions of central importance to the legal system as a whole must be “general questions of law” of “fundamental importance” and “broad applicability” with “significant legal consequences” for “the legal system”, “the justice system”, “the administration of justice as a whole” or “other institutions of government”. They must be questions that require “uniform”, “consistent”, “final” and “determinate” answers, failing which the constitutional principle of the rule of law will suffer. In assessing whether this narrow exception applied here, the “real essence” and “essential character” of the appellant’s case had to be assessed. The appellant, who wanted the continuing effect of the 2019 Regulations to end, submitted that the Extending Order could not have been made and the 2014 Regulations could not have been extended unless all of the preconditions for making them in the first place were met. In other words, all of the criteria in section 4 of the Act must again be met before an extension can happen under section 6. This was a question of statutory interpretation to be analyzed through the prism of reasonableness. This question did not transcend the Act nor did it smack of any constitutional or quasi-constitutional principle. Thus, it did not qualify as a question of central importance to the legal system as a whole.
The Attorney General argued that the rule that the appellant had to satisfy to end the continuing effect of the 2019 Regulations is found in Katz Group Canada Inc. v. Ontario (Health and Long-Term Care). This rule has three parts: (1) when a party challenges the validity of regulations, the party bears the burden of proof; (2) to the extent possible, regulations must be interpreted so that they accord with the statutory provision that authorizes them; and (3) the party must overcome a presumption that the regulations are valid. The first two parts of the Katz rule are well-accepted, judge-made principles. The third part—the presumption and the very narrow ways it can be rebutted—is more controversial. Later case law from the Supreme Court, particularly Vavilov, has overtaken it. In substance, regulations, like administrative decisions and orders, are nothing more than binding legal instruments that administrative officials decide to make—in other words, they are the product of administrative decision making. This suggests that the proper framework for reviewing regulations must be the one used to review the substance of administrative decision making. Today, the framework for reviewing the substance of administrative decision making is Vavilov. It is intended to be sweeping and comprehensive—a “holistic revision of the framework for determining the applicable standard of review”. Vavilov instructs that reasonableness review of all administrative decision making must be conducted unless one of three exceptions leading to correctness review applies. This applies to regulations as a species of administrative decision making. Thus, in conducting reasonableness review, Vavilov and not Katz had to be applied.
The Federal Court found the Governor in Council’s decision to enact the extending Regulations reasonable and found so properly. The appellant submitted that the Governor in Council, by not requiring fulfilment of the Act, section 4 preconditions before extending the 2014 Regulations, unreasonably interpreted section 6 of the Act. The Governor in Council viewed section 6 of the Act as permitting an extension of regulations if circumstances suggested the extension was necessary and consistent with the purposes of the Act. The Governor in Council did not interpret section 6 as requiring satisfaction of the preconditions in section 4. In reaching this interpretation, the Governor in Council was alive to the essential elements of text, context and purpose. The Governor in Council referred in particular to information received by the Government of Canada that supported an extension of the Regulations, the need for additional time for Ukraine to complete its criminal investigations and make actionable mutual legal assistance requests to Canada, the need to ensure that misappropriated assets held by officials of the former government were frozen so foreign persons could be held accountable as the Regulatory Impact Analysis Statement indicated. Implicit was a finding that section 6 aims to advance these purposes. Requiring all of the preconditions under section 4 of the Act to be met before regulations can be extended would frustrate these purposes.
The text of section 6 also supported the Governor in Council’s interpretation. Section 6 gives the Governor in Council discretion to extend a regulation for any period specified and further gives the Governor in Council the power to extend it more than once. If Parliament intended that a new request from the foreign state be required for each extension, it would have expressly included that requirement as it has done under legislative regimes with analogous sunset provisions. Overall, the appellant did not identify any “omitted aspect” in the Governor in Council’s interpretation and did not show that the Governor in Council was oblivious to the essential elements of text, context and purpose. The Federal Court was right in finding that the application of the Extending Order and the 2019 Regulations to the appellant were not unreasonable on the facts of this case. The assessment of reasonableness depends on the context. Several contextual considerations were relevant here and suggested that the Governor in Council’s decision to extend the 2014 Regulations under section 6 of the Act was relatively unconstrained within the meaning of Vavilov. First, section 6 requires the Governor in Council to determine whether an extension is necessary and consistent with the purposes of the Act. This is a factually suffused determination that draws upon the Governor in Council’s access to sensitive state-to-state communications, its expertise in international relations, and its role at the apex of the Canadian executive in developing government policy in many disparate areas including international democracy, anti-corruption and accountability. These are matters not normally within the ken of the courts and so courts are reluctant to second guess. That being said, the impact upon the appellant was also part of the context; the Governor in Council had to have some defensible reason consistent with the purposes of the Act to keep him subject to the 2014 Regulations. Another contextual consideration was that the appellant challenged the 2014 Regulations and the Federal Court found them and their application to him to be reasonable. The information concerning the appellant that the Governor in Council reasonably relied upon in making him subject to the 2014 Regulations combined with Ukraine’s need for “more time to complete its criminal investigations and make actionable mutual legal assistance requests to Canada” went some way towards supporting the reasonableness of the extension. Nothing in the Act, the Regulations or the Court’s reasons prevented the appellant from gathering new information supporting the removal of the restrictions and prohibitions affecting him and submitting the new information to the Governor in Council along with representations. Applicants for judicial review bear the burden of proving their case. Accordingly, the appellant bore the burden of demonstrating that the extension was unreasonable.
In his notice of application in the Federal Court and his notice of appeal herein, the appellant could have pleaded grounds that might have supported a plausible claim for disclosure of information but he did not do so. In his application for judicial review in the Federal Court and in his notice of appeal in the Federal Court of Appeal, the appellant did not raise the issue whether a sufficient reasoned explanation in support of the Governor in Council’s decision could be discerned, as Vavilov requires. However, some of the appellant’s oral submissions touched lightly on that issue; therefore, they were dealt with briefly. Based on Vavilov, the requirement that a reasoned explanation for an administrative decision be discernable is one that depends on the context, including the nature of the administrator and constraints acting on the decision maker. In this case, the context was a sensitive one, with confidentiality concerns relating to international relations, state-to-state communications, and the location and recovery of property that may have been misappropriated. For practical and legal reasons, the Governor in Council is limited in what it can provide by way of explanation. Thus, in this context, it would be inappropriate for a reviewing court to translate Vavilov’s requirement of a reasoned explanation into an obligation on the Governor in Council to provide a complete, comprehensive, public explanation why it extended the 2014 Regulations. In such situations, all a reviewing court can do is assess the reasonableness of the outcome the administrative decision-maker reached using surrounding documents and circumstances and whatever bits of reasoning or rationale, if any, it has before it, including any information the applicant for judicial review has been able to obtain. In the circumstances of this case, the express explanations given for the decision to extend the 2014 Regulations, viewed in light of the legislation and the record, were adequate and did not suffer from any fatal, overriding flaws. They provided sufficient intelligibility, justification and transparency—particularly on the statutory interpretation issue that the appellant made the main focus of his judicial review. The standards in Vavilov were thus met. Overall, the Federal Court was right in determining that the decision to extend the 2014 Regulations, brought about by the Extending Order and the 2019 Regulations, was reasonable and thus valid.
STATUTES AND REGULATIONS CITED
Canada Deposit Insurance Corporation Act, R.S.C., 1985, c. C-3, s. 10.01(4).
Customs Tariff, S.C. 1997, c. 36, ss. 77(3),(4), 77.3.
Federal Courts Rules, SOR/98-106, rr. 317, 318.
Freezing Assets of Corrupt Foreign Officials Act, S.C. 2011, c. 10, ss. 4, 6.
Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations, SOR/2014-44.
Insurance Companies Act, S.C. 1991, c. 47, s. 21(2).
Interpretation Act, R.S.C., 1985, c. I-21, ss. 13, 31(4).
Order Extending the Application of the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations, SOR/2019-69.
Railway Safety Act, R.S.C., 1985 (4th Supp.), c. 32, s. 33(6).
Regulations Amending the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations, SOR/2019-68.
CASES CITED
NOT FOLLOWED:
Katz Group Canada Inc. v. Ontario (Health and Long-Term Care), 2013 SCC 64, [2013] 3 S.C.R. 810.
APPLIED:
Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, 441 D.L.R. (4th) 1; Canada (Citizenship and Immigration) v. Mason, 2021 FCA 156.
CONSIDERED:
Portnov v. Canada (Foreign Affairs), 2018 FC 1248; Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190; Green v. Law Society of Manitoba, 2017 SCC 20, [2017] 1 S.C.R. 360; West Fraser Mills Ltd. v. British Columbia (Workers’ Compensation Appeal Tribunal), 2018 SCC 22, [2018] 1 S.C.R. 635; Coldwater First Nation v. Canada (Attorney General), 2020 FCA 34, [2020] 3 F.C.R. 3.
REFERRED TO:
Mouvement laïque québécois v. Saguenay (City), 2015 SCC 16, [2015] 2 S.C.R. 3; Alberta (Information and Privacy Commissioner) v. University of Calgary, 2016 SCC 53, [2016] 2 S.C.R. 555; Chagnon v. Syndicat de la fonction publique et parapublique du Québec, 2018 SCC 39, [2018] 2 S.C.R. 687; Canada (Citizenship and Immigration) v. Canadian Council for Refugees, 2021 FCA 72, [2021] 3 F.C.R. 294, 458 D.L.R. (4th) 125; Canada (National Revenue) v. JP Morgan Asset Management (Canada) Inc., 2013 FCA 250, [2014] 2 F.C.R. 557; Alaska Trainship Corporation et al. v. Pacific Pilotage Authority, [1981] 1 S.C.R. 261, (1981), 120 D.L.R. (3d) 577; Thorne’s Hardware Ltd. v. The Queen, [1983] 1 S.C.R. 106, (1983), 143 D.L.R. (3d) 577; Doctors Hospital and Minister of Health (Re) (1976), 12 O.R. (2d) 164, 68 D.L.R. (3d) 220 (Div. Ct.); United Taxi Drivers’ Fellowship of Southern Alberta v. Calgary (City), 2004 SCC 19, [2004] 1 S.C.R. 485; Terrigno v. Calgary (City), 2021 ABQB 41, 21 Alta. L.R. (7th) 376; Catalyst Paper Corp. v. North Cowichan (District), 2012 SCC 2, [2012] 1 S.C.R. 5; Morris v. Law Society of Alberta (Trust Safety Committee), 2020 ABQB 137, 12 Alta. L.R. (7th) 189; TransAlta Generation Partnership v. Regina, 2021 ABQB 37; 1120732 B.C. Ltd. v. Whistler (Resort Municipality), 2020 BCCA 101, 445 D.L.R. (4th) 448; Roncarelli v. Duplessis, [1959] S.C.R. 121, (1959), 16 D.L.R. (2d) 689; Shell Canada Products Ltd. v. Vancouver (City), [1994] 1 S.C.R. 231, (1994), 110 D.L.R. (4th) 1; Alexion Pharmaceuticals Inc. v. Canada (Attorney General), 2021 FCA 157; Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2020 FCA 100, [2021] 1 F.C.R. 374; League for Human Rights of B’Nai Brith Canada v. Odynsky, 2010 FCA 307, sub nom. League for Human Rights of B’nai Brith Canada v. Canada, [2012] 2 F.C.R. 312; ’Namgis First Nation v. Canada (Fisheries and Oceans), 2019 FCA 149; Forest Ethics Advocacy Association v. Canada (National Energy Board), 2014 FCA 245, [2015] 4 F.C.R. 75.
AUTHORS CITED
Regulatory Impact Analysis Statement, SOR/2014-44, C. Gaz. 2014.II.739.
Daly, Paul “Regulations and Reasonableness Review” in Administrative Law Matters (29 January 2021), online: <www.administrativelawmatters.com/blog/2021/01/29/regulations-and-reasonableness-review/>.
Keyes, John Mark “Judicial Review of Delegated Legislation: The Long and Winding Road to Vavilov”, (18 June 2020). Ottawa Faculty of Law Working Paper No. 2020-14, online: <http://dx.doi.org/10.2139/ssrn.3630636>.
Regulatory Impact Analysis Statement, SOR/2019-69, C. Gaz. 2019.II.864.
APPEAL from Federal Court decision (2019 FC 1648) dismissing an application for judicial review of the Order Extending the Application of the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations and of the Regulations Amending the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations that the Governor in Council issued. Appeal dismissed.
APPEARANCES
Geoff R. Hall, John W. Boscariol, Robert A. Glasgow and Ljiljana Stanic for appellant.
Roger Flaim, Andrea Bourke and Samantha Pillon for respondent.
SOLICITORS OF RECORD
McCarthy Tétrault LLP, Toronto, for appellant.
Deputy Attorney General of Canada for respondent.
The following are the reasons for judgment and judgment rendered in English by
[1] Stratas J.A.: Foreign states sometimes find themselves in political uncertainty or internal turmoil. For the unscrupulous, this presents an opportunity for personal gain. Public offices can be exploited. Public property can be pilfered and hidden abroad.
[2] When a measure of normalcy returns to foreign states, they sometimes want to trace the property, freeze it from further dispersal, and bring it back home. To assist them, Canada has passed a law: Freezing Assets of Corrupt Foreign Officials Act, S.C. 2011, c. 10 [the Act].
[3] Under section 4 of the Act, when foreign states ask for assistance and when the Governor in Council is satisfied the statutory prerequisites are met, the Governor in Council can issue an order or regulation restricting or prohibiting any dealings with certain property held by designated individuals.
[4] That happened here. The Governor in Council passed a regulation in response to a request from Ukraine: Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations, SOR/2014-44 (the “2014 Regulations”). According to the Regulatory Impact Analysis Statement for the 2014 Regulations, Ukraine’s former President, Viktor Yanukovych, his senior officials, close associates, and family members had “misappropriated state funds, or obtained property inappropriately” from “their [public] office[s] or family, business or personal connections”. This was said to be part of “[r]ampant corruption and other abuses by senior government officials” in Ukraine that “weakened the Ukrainian economy and depleted government coffers”, causing “billions of dollars” to be “stolen or diverted”. See Regulatory Impact Analysis Statement, SOR/2014-44, C. Gaz. II, Vol. 148, No. 7, at page 739.
[5] The 2014 Regulations designated eighteen individuals, restricting and prohibiting their dealings with certain property for up to five years. Mr. Portnov was one of the eighteen.
[6] Mr. Portnov challenged the vires of the 2014 Regulations in the Federal Court: [Portnov v. Canada (Foreign Affairs)] 2018 FC 1248. His challenge failed on the ground that the statutory prerequisites for the 2014 Regulations and their application to Mr. Portnov were met at the time the 2014 Regulations were made.
[7] Under section 6 of the Act, the Governor in Council can order the extension of regulations previously made under section 4. In this case, on the day before the 2014 Regulations expired, the Governor in Council did just that: Order Extending the Application of the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations, SOR/2019-69 (the “Extending Order”). At the same time, it amended the 2014 Regulations to remove two of the eighteen individuals: Regulations Amending the Freezing Assets of Corrupt Foreign Officials (Ukraine) Regulations, SOR/2019-68 (the “2019 Regulations”). Mr. Portnov was one of the sixteen who remained subject to the restrictions and prohibitions imposed by the 2014 Regulations.
[8] Mr. Portnov applied to the Federal Court for an order quashing the Extending Order and the 2019 Regulations. The Federal Court dismissed his application: Portnov v. Canada (Attorney General), 2019 FC 1648 (per Fothergill J.). Mr. Portnov now appeals to this Court.
[9] For the following reasons, I would dismiss Mr. Portnov’s appeal with costs.
A. The standard of review: reasonableness review
[10] The Federal Court selected reasonableness as the standard of review. I agree with the Federal Court. None of the exceptions to reasonableness review recognized in Canada (Minister of Citizenship and Immigration) v. Vavilov, 2019 SCC 65, [2019] 4 S.C.R. 653, 441 D.L.R. (4th) 1 [Vavilov] apply here.
[11] Mr. Portnov submits that one of those recognized exceptions applies. He says that this case raises “a question of central importance to the legal system as a whole”. Thus, he says that we must review the Governor in Council’s decision for correctness.
[12] Questions of central importance to the legal system as a whole must be “general questions of law” of “fundamental importance” and “broad applicability” with “significant legal consequences” for “the legal system”, “the justice system”, “the administration of justice as a whole”, or “other institutions of government”. They must be questions that require “uniform”, “consistent”, “final” and “determinate” answers, failing which the constitutional principle of the rule of law will suffer. See Vavilov, at paragraphs 58–59; Dunsmuir v. New Brunswick, 2008 SCC 9, [2008] 1 S.C.R. 190 [Dunsmuir], at paragraph 60.
[13] While the Supreme Court has heard nearly a hundred judicial reviews over the last twelve years—each one selected for hearing because of its high public importance—the number that have qualified under this exception can be counted on one hand: Mouvement laïque québécois v. Saguenay (City), 2015 SCC 16, [2015] 2 S.C.R. 3 (prayer at municipal council meetings); Alberta (Information and Privacy Commissioner) v. University of Calgary, 2016 SCC 53, [2016] 2 S.C.R. 555 (privacy interests and solicitor and client privilege); Chagnon v. Syndicat de la fonction publique et parapublique du Québec, 2018 SCC 39, [2018] 2 S.C.R. 687 (parliamentary privilege). Each of these raised a sweeping, transcendent point suffused with constitutional or quasi-constitutional principle.
[14] Questions “of wider public concern” or that touch “on an important issue” in a “general or abstract sense” are “not sufficient” and fall short of the mark: Vavilov, at paragraph 61, citing eight Supreme Court decisions; see also tens more from this Court to the same effect.
[15] In assessing whether this narrow exception applies, we must assess the “real essence” and “essential character” of Mr. Portnov’s case: Canada (Citizenship and Immigration) v. Canadian Council for Refugees, 2021 FCA 72, [2021] 3 F.C.R. 294, 458 D.L.R. (4th) 125 [Canadian Council for Refugees], at paragraph 48; Canada (National Revenue) v. JP Morgan Asset Management (Canada) Inc., 2013 FCA 250, [2014] 2 F.C.R. 557 [JP Morgan], at paragraphs 49–50.
[16] Mr. Portnov wants to end the continuing effect of the 2019 Regulations. If successful, he would no longer be subject to restrictions and prohibitions. His central submission is that the Extending Order could not have been made and the 2014 Regulations could not have been extended unless all of the preconditions for making them in the first place were met. In other words, all of the criteria in section 4 must again be met before an extension can happen under section 6.
[17] This is a question of statutory interpretation to be analyzed through the prism of reasonableness. This question does not transcend the Act, nor does it smack of any constitutional or quasi-constitutional principle. Thus, it does not qualify as a question of central importance to the legal system as a whole.
B. Reviewing regulations
[18] The Attorney General agrees that Mr. Portnov wants to end the continuing effect of the 2019 Regulations. He says that to accomplish that, Mr. Portnov must satisfy a special rule for attacking regulations. The rule is found in Katz Group Canada Inc. v. Ontario (Health and Long-Term Care), 2013 SCC 64, [2013] 3 S.C.R. 810 [Katz].
[19] There are three parts to the Katz rule: (1) when a party challenges the validity of regulations, the party bears the burden of proof; (2) to the extent possible, regulations must be interpreted so that they accord with the statutory provision that authorizes them; and (3) the party must overcome a presumption that the regulations are valid. On the third part, Katz suggests (at paragraphs 24 and 28) that the presumption is overcome only where the regulations are “irrelevant”, “extraneous” or “completely unrelated” to the objectives of the governing statute. A leading commentator on Canadian administrative law calls this “hyperdeferential”: Paul Daly, “Regulations and Reasonableness Review” in Administrative Law Matters (29 January 2021), online: <https://www.administrativelawmatters. com/blog/2021/01/29/regulations-and-reasonableness-review/>. I agree.
[20] The first two parts of the Katz rule are well-accepted, judge-made principles. The third part—the presumption and the very narrow ways it can be rebutted—is more controversial. In my view, later jurisprudence from the Supreme Court, particularly Vavilov, has overtaken it.
[21] The presumption of validity and the very narrow ways it can be rebutted were first introduced into Canadian law at a time when “legislative” decisions (e.g., Alaska Trainship Corp. v. Pacific Pilotage Authority, [1981] 1 S.C.R. 261, (1981), 120 D.L.R. (3d) 577 [Alaska Trainship], at page 274 [of the] S.C.R.) or decisions of “public convenience and general policy” (e.g., Thorne’s Hardware Ltd. v. The Queen, [1983] 1 S.C.R. 106, (1983), 143 D.L.R. (3d) 577 [Thorne's Hardware], at page 111 [of the] S.C.R.) could not be set aside unless “jurisdiction” was lost through some rare and significant error. These included “egregious” exceedance of authority (see e.g. Thorne’s Hardware and Alaska Trainship), pursuit of an improper purpose (Re Doctors Hospital and Minister of Health (1976), 12 O.R. (2d) 164, 68 D.L.R. (3d) 220 (Div. Ct.)) and the taking into account of wholly irrelevant considerations. Tellingly, in developing the third part of the rule, Katz relies upon all of the cases in this paragraph—cases based on concepts of “jurisdiction”—and later cases that rely on them.
[22] Over the last half-century, the role of “jurisdiction” as a controlling idea in Canadian administrative law has been on the decline, along with the concomitant need for challengers to show exceedance of authority, improper purpose or the taking into account of wholly irrelevant considerations. Concepts of “patent unreasonableness” and “reasonableness” and, later, just “reasonableness” have been in the ascendancy. By 2008, only a last small vestige of “jurisdiction” remained—correctness review on “true questions of jurisdiction” such as the vires of regulations: Dunsmuir, at paragraph 59, citing United Taxi Drivers’ Fellowship of Southern Alberta v. Calgary (City), 2004 SCC 19, [2004] 1 S.C.R. 485. In 2019, Vavilov eradicated that last vestige. Thus, the third part of the Katz rule is an artefact from a time long since passed.
[23] So how should we go about reviewing regulations today? We must begin by reminding ourselves that in answering questions like that we should concentrate on real substance, not superficial form: Canadian Council for Refugees; JP Morgan. In substance, regulations, like administrative decisions and orders, are nothing more than binding legal instruments that administrative officials decide to make—in other words, they are the product of administrative decision making. This suggests that the proper framework for reviewing regulations must be the one we use to review the substance of administrative decision making: see e.g. Terrigno v. Calgary (City), 2021 ABQB 41, 21 Alta. L.R. (7th) 376.
[24] Indeed, many Supreme Court cases considering regulations and subordinate legislation during the Dunsmuir era used that very framework, not the framework in Katz: see e.g. Catalyst Paper Corp. v. North Cowichan (District), 2012 SCC 2, [2012] 1 S.C.R. 5; Green v. Law Society of Manitoba, 2017 SCC 20, [2017] 1 S.C.R. 360 [Green]; West Fraser Mills Ltd. v. British Columbia (Workers’ Compensation Appeal Tribunal), 2018 SCC 22, [2018] 1 S.C.R. 635 [West Fraser]; see also the analysis in John Mark Keyes, “Judicial Review of Delegated Legislation: The Long and Winding Road to Vavilov”, (18 June 2020).
[25] Today, the framework for reviewing the substance of administrative decision making is Vavilov. It is intended to be sweeping and comprehensive—a “holistic revision of the framework for determining the applicable standard of review” (at paragraph 143). We are to draw upon Vavilov, not cases like Katz: we must “look to [the] reasons [in Vavilov] first in order to determine how [Vavilov’s] general framework applies to [a] case” (at paragraph 143).
[26] Vavilov offers us even more justification for not following Katz. Vavilov instructs us (at paragraph 143) that cases under the now-discarded category of “true questions of jurisdiction”—of which Katz is one—“will necessarily have less precedential force”. As well, in the course of its discussion abolishing the category of “true questions of jurisdiction”, Vavilov mentions that there are “cases where the legislature has delegated broad authority to an administrative decision maker that allows the latter to make regulations in pursuit of the objects of its enabling statute” (at paragraph 66) yet makes no attempt to carve out a special rule for regulations: see also the analysis in Morris v. Law Society of Alberta (Trust Safety Committee), 2020 ABQB 137, 12 Alta. L.R. (7th) 189, at paragraph 40; TransAlta Generation Partnership v. Regina, 2021 ABQB 37, at paragraph 46.
[27] More fundamentally, Vavilov instructs us to conduct reasonableness review of all administrative decision making unless one of three exceptions leading to correctness review applies. This applies to regulations as a species of administrative decision making: Federal Court’s reasons, at paragraph 23; 1120732 B.C. Ltd. v. Whistler (Resort Municipality), 2020 BCCA 101, 445 D.L.R. (4th) 448, at paragraph 39. For good measure, Vavilov cites Green and West Fraser with approval—cases that conducted reasonableness review without applying the Katz rule: see paragraph 24, above. Finally, the Katz rule applies across-the-board to all regulations regardless of their content or context. This sits uneasily with Vavilov which adopts a contextual approach to reasonableness review.
[28] Thus, in conducting reasonableness review, I shall not apply Katz. I shall follow Vavilov.
C. Conducting reasonableness review
[29] The Federal Court found the Governor in Council’s decision to enact the extending Regulations reasonable. It properly so found.
[30] Mr. Portnov rests his case mainly on one central submission: the Governor in Council had to fulfil the preconditions for making the 2014 Regulations under section 4 of the Act once again before extending them under section 6 of the Act. These preconditions include a request from the foreign state “in writing”, an assertion in the writing that “a person has misappropriated property of the foreign state or acquired property inappropriately by virtue of their office or a personal or business relationship” (subsection 4(1)), and findings that Mr. Portnov is “in relation to the foreign state, a politically exposed foreign person” (paragraph 4(2)(a)), “there is internal turmoil, or an uncertain political situation in the foreign state” (paragraph 4(2)(b), and “the making of the order or regulation is in the interest of international relations” (paragraph 4(2)(c)).
[31] Mr. Portnov says that the Governor in Council, by not requiring fulfilment of the section 4 preconditions before extending the 2014 Regulations, unreasonably interpreted section 6.
[32] Did the Governor in Council interpret section 6 in a reasonable way? Vavilov sets out the methodology for assessing the reasonableness of legislative interpretations reached by administrators. This Court recently summarized that methodology in Canada (Citizenship and Immigration) v. Mason, 2021 FCA 156 [Mason]. Although Mason was decided after this case was heard, it does nothing more than collect the disparate bits of guidance in Vavilov and consolidate them for the purposes of clarity.
[33] In conducting reasonableness review, this Court is entitled to look at the reasons offered by the decision maker, associated documents that shed light on the reasoning process, any submissions made to the decision-maker, and the record before the decision maker. Reasons can be express or implied. See generally Mason, at paragraphs 30–42 and the citations to Vavilov therein.
[34] In the specific case of decisions of the Governor in Council, reasoned explanations can often be found in the text of the legal instruments it is issuing (here, the 2019 Regulations and the Extending Order), prior legal instruments related to it (here the 2014 Regulations), and any associated Regulatory Impact Analysis Statements: see generally Coldwater First Nation v. Canada (Attorney General), 2020 FCA 34, [2020] 3 F.C.R. 3 [Coldwater]. As Coldwater demonstrates (at paragraph 74), express explanations can be quite brief yet still pass muster.
[35] In this case, these sources show that the Governor in Council viewed section 6 of the Act as permitting an extension of regulations if circumstances suggest the extension is necessary and consistent with the purposes of the Act. The Governor in Council did not interpret section 6 as requiring satisfaction of the preconditions in section 4. In reaching this interpretation, the Governor in Council was “alive to [the] essential elements” of text, context and purpose: Vavilov, at paragraph 120; Mason, at paragraph 42.
[36] The Governor in Council referred to “[i]nformation received by the Government of Canada [that] supports an extension of the Regulations”, the need for “additional time for Ukraine to complete its criminal investigations and make actionable mutual legal assistance requests to Canada”, the need to “ensure that misappropriated assets held by officials of the former government are frozen” so “foreign persons may be held accountable”, and the objective of furthering the “accountability, rule of law, and democracy in Ukraine”: Regulatory Impact Analysis Statement, SOR/2019-69, C. Gaz. II, Vol. 153, No. 6, at page 865. Implicit in this is a finding, quite sustainable, that section 6 aims to advance these purposes.
[37] Requiring all of the preconditions under section 4 of the Act to be met before regulations can be extended would frustrate these purposes. Take, for example, the precondition that “there is internal turmoil, or an uncertain political situation, in the foreign state” (paragraph 4(2)(b)). While there is turmoil and uncertainty in the foreign state, the foreign state may be unable to take measures to repatriate wrongly misappropriated property. Only when stability and certainty return to the foreign state can it finally take the measures necessary to repatriate misappropriated property. Mr. Portnov’s interpretation of section 6 would prevent that from happening, thereby putting misappropriated property beyond the reach of the foreign state and frustrating the purposes of the Act.
[38] As for context, aside from section 4 (which will be considered below), Mr. Portnov has not pointed to any other sections in the Act that would bear upon the Governor in Council’s interpretation.
[39] The text of section 6 also supports the Governor in Council’s interpretation. Section 6 gives the Governor in Council discretion to extend a regulation for any period specified and further gives the Governor in Council the power to extend it more than once. If Parliament intended that a new request from the foreign state be required for each extension, it would have expressly included that requirement as it has done under legislative regimes with analogous sunset provisions: see e.g. Canada Deposit Insurance Corporation Act, R.S.C., 1985, c. C-3, subsection 10.01(4); Customs Tariff, S.C. 1997, c. 36, subsections 77(3), 77(4) and section 77.3; Insurance Companies Act, S.C. 1991, c. 47, subsection 21(2); Railway Safety Act, R.S.C., 1985 (4th Supp.), c. 32, subsection 33(6).
[40] Further, if the preconditions in section 4 are read into section 6, then section 6 is rendered unnecessary. If extending a regulation requires the same steps as making the regulation in the first place, each extension becomes a fresh regulation, and there is no need for the sort of independent statutory power we see in section 6 to extend it.
[41] Mr. Portnov submits that if the Governor in Council’s interpretation is left in place, the Governor in Council effectively becomes the foreign state making a request. He raises the spectre of the Governor in Council extending extremely restrictive measures against people like him forever without any justification. But no administrator has untrammelled power like that. Discretion is always subject to the limits imposed by a reasonable reading of the legislation granting it, including its purpose, and must always remain within those limits. See Roncarelli v. Duplessis, [1959] S.C.R. 121, (1959), 16 D.L.R. (2d) 689; Shell Canada Products Ltd. v. Vancouver (City), [1994] 1 S.C.R. 231, (1994), 110 D.L.R. (4th) 1; Alexion Pharmaceuticals Inc. v. Canada (Attorney General), 2021 FCA 157, at paragraph 40.
[42] Overall, Mr. Portnov has not identified any “omitted aspect” in the Governor in Council’s interpretation, i.e., “a consideration that cannot be seen in the reasons and cannot be implied”, whose importance is so great that it “causes the reviewing court to lose confidence in the outcome reached by the decision maker”: Vavilov, at paragraph 122; Mason, at paragraph 42. He has not shown that the Governor in Council was oblivious “to [the] essential elements” of text, context and purpose: Vavilov, at paragraph 120; Mason, at paragraph 42.
[43] Assuming the Extending Order and the 2019 Regulations comply with a reasonable reading of section 6, Mr. Portnov submits that their application to him is unreasonable on the facts of this case. The Federal Court did not so find. I agree with the Federal Court.
[44] The assessment of reasonableness depends on the context: Vavilov, at paragraphs 88–90; Entertainment Software Association v. Society of Composers, Authors and Music Publishers of Canada, 2020 FCA 100, [2021] 1 F.C.R. 374 [Entertainment Software Association], at paragraphs 24–36. Several contextual considerations are relevant here and suggest that the Governor in Council’s decision to extend the 2014 Regulations under section 6 of the Act is relatively unconstrained within the meaning of Vavilov. First, as mentioned above, section 6 requires the Governor in Council to determine whether an extension is necessary and consistent with the purposes of the Act. This is a factually suffused determination that draws upon the Governor in Council’s access to sensitive state-to-state communications, its expertise in international relations, and its role at the apex of the Canadian executive in developing government policy in many disparate areas including international democracy, anti-corruption and accountability. These are matters not normally within the ken of the courts and so courts are reluctant to second guess: Canadian Council for Refugees, at paragraphs 36–38; League for Human Rights of B’Nai Brith Canada v. Odynsky, 2010 FCA 307, sub nom. League for Human Rights of B’nai Brith Canada v. Canada, [2012] 2 F.C.R. 312, at paragraph 76; Entertainment Software Association, at paragraphs 27–29 and 32. That being said, the impact upon Mr. Portnov is also part of the context; the Governor in Council must have some defensible reason consistent with the purposes of the Act to keep him subject to the 2014 Regulations.
[45] Another contextual consideration is that Mr. Portnov has challenged the 2014 Regulations and the Federal Court found them and their application to Mr. Portnov to be reasonable: Portnov v. Canada (Foreign Affairs), 2018 FC 1248 [cited above]. The information concerning Mr. Portnov that the Governor in Council reasonably relied upon in making him subject to the 2014 Regulations combined with Ukraine’s need for “more time to complete its criminal investigations and make actionable mutual legal assistance requests to Canada” (paragraph 36, above) goes some way towards supporting the reasonableness of the extension.
[46] Mr. Portnov tendered to this Court recent court orders from Ukraine. He says that they show that Ukraine “has effectively withdrawn its request” for assistance under the Act: memorandum of Mr. Portnov, at paragraph 80.
[47] These court orders purportedly go to the merits of whether the 2019 Regulations should continue. They should be submitted to the merits-decider under this legislative regime—the Governor in Council—not to this Court sitting in appeal of a reviewing court: Mason, at paragraph 73; ’Namgis First Nation v. Canada (Fisheries and Oceans), 2019 FCA 149; Forest Ethics Advocacy Association v. Canada (National Energy Board), 2014 FCA 245, [2015] 4 F.C.R. 75. We do not receive and weigh new evidence relevant to the merits.
[48] In any event, Mr. Portnov presented these court orders to the Court without any expert evidence concerning the status of these orders and their effect under Ukrainian law, the speed with which they were obtained, the proceedings in which they were made and whether they are under appeal or can still be appealed. These issues matter, especially when there are “different positions emanating from different sources within Ukraine about [Mr. Portnov]”: memorandum of the Attorney General, at paragraph 55.
[49] The Governor in Council has the power to repeal, amend, or vary the Regulations at any time: Interpretation Act, R.S.C., 1985, c. I-21, subsection 31(4). The Act provides certain administrative review mechanisms (see e.g. section 13) but it neither precludes reconsiderations nor restricts the availability of judicial review. The situation is analogous to that in Canadian Council for Refugees, above. Thus, nothing in the Act, the Regulations or these reasons prevents Mr. Portnov from gathering new information supporting the removal of the restrictions and prohibitions affecting him, such as the court orders he has presented to us, and submitting the new information to the Governor in Council along with representations. Nothing prevents Mr. Portnov from applying for judicial review of any decision by the Governor in Council not to act on the new information, though that judicial review may be difficult due to the relatively unconstrained and factual nature of the decision.
[50] Applicants for judicial review bear the burden of proving their case. Accordingly, Mr. Portnov bears the burden of demonstrating that the extension is unreasonable. In oral argument, Mr. Portnov submits that it was impossible for him to get all the evidence necessary to mount a meaningful challenge against the extension. For example, in this case, the Regulatory Impact Analysis Statement offered in support of the 2019 Regulations refers only to “[i]nformation received by the Government of Canada” without any specificity. He complains that this information was never disclosed to him.
[51] In his notice of application in the Federal Court and his notice of appeal in this Court, Mr. Portnov could have pleaded grounds that might have supported a plausible claim for disclosure of information. He did not do so. As well, Mr. Portnov requested information under rule 317 [Federal Court Rules, SOR/98-106] and the Attorney General objected to disclosing it under rule 318, but Mr. Portnov did not challenge the objection. Even if Mr. Portnov were ultimately unsuccessful in challenging the Attorney General’s objection—for example, because of some valid assertion of a privilege—as a tactical matter the Governor in Council might still have had to disclose more information: see Canadian Council for Refugees, at paragraphs 111–112. Finally, there were other ways by which Mr. Portnov or others on his behalf could have accessed information relied upon by the Governor in Council in making its decision and could have filed it in the judicial review proceedings without undermining important interests in confidentiality: see Canadian Council for Refugees, at paragraphs 98–122.
[52] In his application for judicial review in the Federal Court and in his notice of appeal in this Court, Mr. Portnov did not raise the issue whether a sufficient reasoned explanation in support of the Governor in Council’s decision could be discerned, as Vavilov requires. However, some of Mr. Portnov’s oral submissions can be taken to touch lightly on that issue and so, in this instance, I am prepared to deal briefly with it.
[53] The requirement that a reasoned explanation for an administrative decision be discernable is one that depends on the context, including the nature of the administrator and constraints acting on the decision maker: Vavilov, at paragraphs 91–98; see also Mason and Alexion, both above. If the requirement is put too high, the very reason why the legislator entrusted this jurisdiction to the administrator in the first place may be undermined along with other legitimate state objectives: Alexion, at paragraph 24. In this case, the context is a sensitive one, with confidentiality concerns relating to international relations, state-to-state communications, and the location and recovery of property that may have been misappropriated. For practical and legal reasons, the Governor in Council is limited in what it can provide by way of explanation.
[54] Thus, in this context, it would be inappropriate for a reviewing court to translate Vavilov’s requirement of a reasoned explanation into an obligation on the Governor in Council to provide a complete, comprehensive, public explanation why it extended the 2014 Regulations. As Vavilov shows, in some situations information about the basis for an administrative decision will necessarily be limited or non-existent: Vavilov, at paragraphs 136–138, citing Catalyst Paper. In such situations, all a reviewing court can do is assess the reasonableness of the outcome the administrative decision maker reached using surrounding documents and circumstances and whatever bits of reasoning or rationale, if any, it has before it, including any information the applicant for judicial review has been able to obtain using the methods described in paragraph 51 above: Vavilov, at paragraphs 136–138. As Vavilov suggests (at paragraphs 136–138), a review conducted in that way can still be meaningful and effective and discharge the court’s responsibility to enforce the rule of law.
[55] In the circumstances of this case, the express explanations given for the decision to extend the 2014 Regulations (summarized at paragraph 36 above), viewed in light of the legislation and the record, are adequate and do not suffer from any fatal, overriding flaws. They provide sufficient intelligibility, justification and transparency—particularly on the statutory interpretation issue that Mr. Portnov made the main focus of his judicial review. The standards in Vavilov have been met.
[56] Overall, I agree with the Federal Court that the decision to extend the 2014 Regulations, brought about by the Extending Order and the 2019 Regulations, is reasonable and, thus, valid.
D. Proposed disposition
[57] For the foregoing reasons, I would dismiss the appeal with costs.