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Federal Court of Appeal Rewrites Standard of Review

Needless to say, the issue of the standard of review applicable to orders of both judges and prothonotaries has been one of the most contentious issues before our Court and before all courts of appeal, including before the Supreme Court of Canada, in the last 10 to 15 years.

In Hospira Healthcare Corporation v. Kennedy Institute of Rheumatology, 2016 FCA 215, the Federal Court of Appeal reconsidered the standard of review applicable to discretionary orders made by prothonotaries. A unanimous panel of five judges decided that the standard of review originally enunciated in Aqua-Gem no longer has any application in the Federal Courts. Housen is now the gold standard (of review).

In Housen, the Supreme Court set out the standard applicable to decisions of trial judges. In relation to factual conclusions the applicable standard is that of palpable and overriding error. In relation to questions of law and questions of mixed fact and law, where there was an extricable legal principle at issue, the applicable standard is that of correctness.

The standard applicable to discretionary orders of prothonotaries in the Federal Courts was set out in Canada v. Aqua-Gem Investments Ltd., [1993] 2 F.C. 425 (and very slightly modified in Merck & Co. v. Apotex Inc., 2003 FCA 488): discretionary orders of prothonotaries ought not be disturbed unless (a) the questions raised are vital to the final issue of the case, or (b) the orders are clearly wrong as based upon wrong principle or misapprehension of facts. The FCA held that this standard is unnecessarily complex and no longer appropriate given the expanding roles of prothonotaries.

The Court noted that, other than in respect of the de novo review when the issue is vital, both standards “simply formulate the same principles through the use of different language.” Yet “the effectiveness of the process of appeals to a Federal Court judge from an order of a prothonotary has been tainted by the language used in Aqua-Gem.” Appeals require the judge to ask whether or not an order is vital to the final issue(s) of the case, which has given “much difficulty to decision makers.”

The Court adopted the reasoning from Zeitoun v. Economical Insurance, 2009 ONCA 415, where a unanimous Ontario Court of Appeal held that the prevailing standard of review applicable to appeals from Ontario masters, which is identical to the Aqua-Gem standard for all intents and purposes, should be abandoned and replaced by the standard in Housen.

The ONCA held that the application of a different standard to masters, which provided for de novo hearings, was the result of historical notions of hierarchy that were no longer applicable. Rather, reviewing courts should proceed on the presumption of fitness that judges and masters were capable of carrying out their mandates. There is no principled basis for interfering with a decision on the sole basis of the decision maker’s place in the hierarchy. Courts had already held that the Housen standard applied to discretionary decisions of motions judges and there was no reason that it should not also apply to discretionary decisions of masters.

The Supreme Court applied the Aqua-Gem standard in Z.I. Pompey Industrie v. ECU-Line N.V., 2003 SCC 27. The FCA nonetheless found that it had the ability to abandon the Aqua-Gem standard for two reasons.

First, the Supreme Court applied Aqua-Gem without comment on the standard itself. The true issue in Pompey was the correctness of the decision under appeal.

Second, in Carter v. Canada (Attorney General), 2015 SCC 5, the Supreme Court held that lower courts need not follow the decisions of higher courts in two situations: “(1) where a new legal issue is raised; and (2) where there is a change in the circumstances or evidence that “fundamentally shifts the parameters of the debate.”

The standard of review is certainly not a new legal issue, but the FCA found that there had been a sufficient change in circumstances due to “a significant evolution and rationalization of standards of review in Canadian jurisprudence.” In particular, the role of prothonotaries has continued to evolve since 1993. “Prothonotaries are no longer, if they ever were, viewed by the legal community as inferior or second class judicial officers. Other than in regard to the type of matters assigned to them by Parliament, they are, for all intents and purposes, performing the same task as Federal Court Judges.” Accordingly, the FCA held that the supervisory role of judges over prothonotaries enunciated in Rule 51 no longer requires that discretionary orders of prothonotaries be subject to de novo hearings.

A copy of the judgment can be found here.