In the recently released decision of Cavendish Farms Corporation v. Lethbridge (City)[1], the Alberta Court of Appeal allowed an appeal from an application for judicial review and ordered a municipal assessment board to hold a new hearing because the reasons for decision it issued were “very sparse,” did “little to illuminate the reasoning process that led to the conclusion reached,” and “failed to reveal a rational chain of analysis” that led to the decision.[2]
Key takeaway
Reasons require reasoning.
Regulators and other administrative decision-makers in Canada have a long history of issuing reasons for decision that follow a pattern of: (1) setting out the statutory framework; (2) repeating the evidence and arguments raised before them; and (3) declaring a result without much, if any, explanation or analysis of how the facts and law brought them to that result.
In Cavendish Farms, the Alberta Court of Appeal (ABCA) put administrative decision-makers on notice that their decisions will not withstand scrutiny if they do not disclose some rational chain of analysis that led to the result. This decision reinforces and applies the Supreme Court of Canada’s Vavilov[3] decision regarding judicial review. In particular, the ABCA reinforced that:
- A reasonable decision is based on an internally coherent, rational chain of analysis;[4]
- Reasons for decision are the primary mechanism for demonstrating that a decision is reasonable;[5] and
- While reasons for decision do not need to provide painstaking detail, if they simply repeat statutory language, recite the arguments that were made, and state a peremptory conclusion, they are not helpful and will generally not meet the reasonableness standard because they fail to reveal a rational chain of analysis that led to the conclusion.[6]
The case and decision
This case arises from a decision originally made by the Lethbridge Composite Assessment Review Board (the Board). The Board is subject to the Municipal Government Act, RSA 2000, c M-26, and deals with certain decisions regarding municipal tax assessments. As part of the statutory scheme, the Board is required to provide written reasons for its decisions.
One of the issues the Board must decide is whether an assessment has properly characterized the machinery and equipment (M&E) portions of any improvements to a property. Those determinations are important because M&E is a subclass that receives preferential tax treatment.
Cavendish Farms Corporation (Cavendish) operates a large facility in Lethbridge that produces frozen products from fresh potatoes. It challenged the tax assessment of that facility by the City of Lethbridge and specifically took issue with the number of components at the facility that were characterized as M&E. The majority decision of the Board was described as “sparse,” and the Board majority did not explain why it rejected some of Cavendish’s evidence on the key matters in dispute. The decision was not unanimous, and the dissenting reasons were more detailed. The dissent specifically interpreted the statutory language and how it applied to evidence to explain how its conclusions were arrived at.
Cavendish applied for judicial review of the Board’s decision. The judge, at first instance, found that the majority decision was reasonable, notwithstanding the absence of reasons on two of the nine issues in dispute and sparse reasons on the others. She, therefore, dismissed the judicial review application. Cavendish appealed, and the ABCA sided with Cavendish.
As noted above, the ABCA emphasised that reasons are the primary mechanism by which decision-makers show that their decisions are reasonable. Quoting Vavilov, the Court reiterated that “[W] Where reasons are provided, but they failed to provide a transparent and intelligible justification…the decision will be unreasonable.”[7] The ABCA emphasised that the standard is not perfection, and a decision making body does not have to include details that recount all the arguments, jurisprudence, and statutory provisions raised in the case. However, the reasons for decision must contain some transparent line of reasoning that allow the parties to understand how the conclusions were arrived at.
In this case, the ABCA found that the very sparse reasons of the Board majority did “little to illuminate the reasoning process that led to the conclusion reached.”[8] The appeal was therefore allowed, and the matter was remitted back to a new panel of the Board for a new hearing.
Conclusion
Administrative decision-makers are an important part of the regulatory framework in Canada. They have a significant impact on both individuals and businesses. Transparent, intelligible reasons are key components of regulatory decision-making. Without them, the people and entities being regulated lack guidance on how legislation is interpreted and therefore lack guidance on how to govern themselves. Insufficient reasons lead to unnecessary expense, delay, and inconsistent application of the law. The Cavendish Farms decision builds on previous guidance from the ABCA and should lead to greater consistency, transparency, and efficiency by administrative decision-makers in Alberta.
If you have any questions about this decision and how it impacts your business or about judicial review of administrative decisions generally, please reach out to the authors Laurie Livingstone and David Konkin.
[1] 2022 ABCA, 312 (Cavendish Farms).
[2] Cavendish Farms at paras. 25 and 30.
[3] Canada (Minister of Citizenship and Immigration) v.Vavilov, 2019 SCC 65 (Vavilov).
[4] Cavendish Farms at para. 21 citing Vavilov atpara. 85.
[5] Cavendish Farms at para. 22 citing Vavilov atpara. 136.
[6] Cavendish Farms at para. 24 citing Vavilov atpara. 102-103.
[7] Cavendish Farms at para. 22.
[8] Cavendish Farms at para. 25.
