In the January 9, 2015 noteworthy decision Hupacasath First Nation v. Canada (Attorney General)1the Federal Court of Appeal provided clarity on two important issues: firstly, the federal courts’ jurisdiction to review the exercise of prerogative powers; and secondly, the justiciability of the exercise of said powers – or the limits over which a court can exercise its judicial authority upon legal issues.

This bulletin outlines the ruling and reviews the scope of judicial authority granted by Parliament to the Federal Courts.

Case Background

Canada signed a reciprocal foreign investment agreement with the People’s Republic of China, known as the Agreement between the Government of Canada and the Government of the People’s Republic of China for the Promotion and Reciprocal Protection of Investments (the “Agreement”) in September 2012. The Agreement embodies inter alia a minimum standard of treatment to foreign investors by providing a guarantee against discriminatory treatment and also provides a protection from expropriation without compensation.

The Appellant, Hupacasath First Nation, (“Hupacasath”), is a band under the Indian Act, R.S.C. 1985, c. I-5 that has 285 members living on two reserves covering roughly 56 acres of land on Vancouver Island, British Columbia. However, it asserts Aboriginal rights, including self-government rights, and title over roughly 573,000 acres of land on Vancouver Island.

Before the Federal Court2, Hupacasath alleged that the Agreement might affect Aboriginal rights and interests it has asserted over lands in British Columbia and therefore, the Minister of Foreign Affairs had an obligation to consult Hupacasath prior to entering into the Agreement.

Justice Crampton dismissed the application and found that the Agreement was unlikely to cause harm to Hupacasath, concluding that Hupacasath’s asserted rights and interests were “non-appreciable” and “speculative”.

Hupacasath appealed the ruling to the Federal Court of Appeal.

As a preliminary issue, the Court of Appeal had to address the issue of whether the federal courts had jurisdiction over decisions by the Government of Canada to enter into international agreements and treaties falling under the Crown’s prerogative power, in light of the Ontario Court of Appeal decision in Black v. Canada (Prime Minister)3(“Black”). The Attorney General further argued that the exercise of a Crown prerogative power is not justiciable and therefore, Hupacasath’s case should not be heard at all.

The Court of Appeal, under Justice Stratas’ pen, thought otherwise. The Federal Courts system was granted jurisdiction to review the exercise of Crown prerogative powers. These powers, except in rare circumstances, are also justiciable.

Scope of Judicial Authority Granted by Parliament to Federal Courts

a) The Issue of Jurisdiction

The Court restated that the Crown’s prerogative is the “residue of discretionary or arbitrary authority, which at any given time is legally left in the hands of the Crown.” The conduct of foreign affairs is an area where the Crown holds such prerogative powers.

Courts have judicially reviewed prerogative powers in the past.  The question that arises in this case is whether the Federal Courts have been granted such jurisdiction by Parliament. In Black, the only appellate authority on this question in Canada, the Ontario Court of Appeal decided the Federal Courts do not have the power under the Federal Courts Act (“Act”) to review exercises of pure Crown prerogative. Only Superior Courts, by virtue of their inherent jurisdiction, would be authorized to review such decisions.

The coming into force provision of the Agreement is found at section 35.  Under the Agreement, the Governor in Council had to pass an order in council to authorize the Minister of Foreign Affairs to take the necessary actions to have the Agreement come into effect.  Then, the Agreement comes into effect when the Minister signs an instrument of ratification and delivers it to the People’s Republic of China.

According to the Ontario Court of Appeal’s literal interpretation of the Act, only decisions made by the Crown or under an order made under the Crown’s prerogative would fall within the purview of the Federal Courts.  Pure exercise of prerogative power would have to be reviewed in the provincial superior courts.

The Federal Court of Appeal rejected the narrow and literal interpretation of subsection 2(1) adopted by the Ontario Court of Appeal in Black. According to the strong reasons provided by Justice Stratas, the Federal Courts can review exercises of jurisdiction or power rooted solely in the Federal Crown prerogative.  Using the contextual and purposive analysis of the provision,  the Federal Court of Appeal had to distinguish this decision, which it did elegantly:

[54] An interpretation that the Federal Court has the power to review federal exercises of pure prerogative power is consistent with the Parliament’s aim to have the Federal Courts review all federal administrative decisions. The contrary interpretation would carve out from the Federal Courts a wide swath of administrative decisions that stem from the federal prerogative, some of which can have large national impact: for a list of the federal prerogative powers, see Peter W. Hogg, Q.C., et al., Liability of the Crown, supra at pages 23-24 and S. Payne, “The Royal          Prerogative” in M. Sunkin and S. Payne, eds., The Nature of the Crown: A Legal and Political Analysis (Oxford: Oxford University Press, 1999).

[56] The contrary interpretation – an interpretation that hives off exercises of federal prerogative power from exercises of powers under orders made by or under the prerogative power – is a technical distinction that serves only to trap the unwary and obstruct access to justice. In TeleZone, supra, a case postdating Black, the Supreme Court underscored (at paragraphs 18-19 and 32) the need to interpret these provisions with a view to avoiding these concerns.

[57] In the case at bar, these concerns are very much in play. If the contrary interpretation is adopted, the Governor in Council’s making of the order in this case authorizing the Minister to issue the instrument of ratification – a pure exercise of prerogative power – would have to be reviewed in the provincial superior courts. But the Minister’s issuance of the instrument of ratification in this case – an exercise of power “by or under an order made under the prerogative” under subsection 2(1) of the Federal Courts Act – would have to be reviewed under this Court’s exclusive jurisdiction under subsection 18 (1) of the Federal Courts Act. There would have to be two separate proceedings in two separate courts, with every potential for unnecessary expense, delay, confusion and inconsistency.

b) The Issue of Justiciability

The Attorney General, relying on previous Supreme Court of Canada’s decisions4, also argued that the exercise of pure federal Crown prerogative are only reviewable by the courts when Charter rights are in issue.

Although Justice Stratas recognized that some executive decisions are so political, cultural, social or historical that they are not amenable to the judicial process, he insisted that this category of decisions is “very small”.

Despite the fact that the vast majority of decisions are within the purview of legal analysis, Justice Stratas acknowledged that the decision-maker benefits from a large margin of appreciation:

[67] These cases show that the category of non-justiciable cases is very small. Even in judicial    reviews of subordinate legislation motivated by economic considerations and other difficult public interest concerns, courts will still assess the acceptability and defensibility of government decision-making, often granting the decision-maker a very large margin of appreciation. For that reason, it is often said that in such cases an applicant must establish an “egregious” case.

However, Justice Stratas specified that decisions such as the one at issue are still justiciable.

In the case at bar, Hupacasath is challenging the Canadian government’s decision to bring the Agreement into effect despite its alleged legal rights of being consulted in advance. Therefore, Justice Stratas concluded the question at issue in this case was whether or not legal rights exist, a question that falls squarely within the court’s jurisdiction. For said reason, he found that the Attorney General’s argument on non-justiciability was without merit.

Most Government Decisions Reviewable by Courts

The Federal Court of Appeal dismissed the appeal on the ground that Hupacasath did not meet the legal test to trigger a duty to consult and concluded that the reasoning of the Federal Court judge deserves deference.  Hupacasath’s evidence fell short and was deemed speculative. The court noted that in the event that any adverse impacts materialize on Hupacasath’s rights in the future, Hupacasath will be able to seek protection from the courts by way of injunctive relief or other extraordinary reliefs.  Hupacasath’s case was deemed premature.

What litigants people and organizations affected by government decisions, albeit from the Executive Branch, should take away from this decision is that the vast majority of the decisions taken by the government are reviewable by the courts.