Exceptional Circumstances: Court Of Appeal For British Columbia Finds New Exception To Reasonableness Review

• Published date: 08 February 2022
• Subject Matter: Government, Public Sector, Litigation, Mediation & Arbitration, Energy and Natural Resources, Mining, Constitutional & Administrative Law, Trials & Appeals & Compensation
• Law Firm: McCarthy Tétrault LLP
• Author: Mining Prospects, Kara L. Smyth and Mark Risebrough

O.K. Industries Ltd. v. District of Highlands ("Highlands")¹ marks the first time² a court applied the correctness standard of review to a question falling outside the categorical exceptions established by the Supreme Court of Canada ("SCC") in Canada (Minister of Citizenship and Immigration) v. Vavilov ("Vavilov").³ The Court of Appeal for British Columbia ("BCCA") found that the rule of law in general required a departure from the presumption of reasonableness in circumstances involving a complex question of statutory interpretation that had significant legal consequences on provincial and municipal governments purporting to regulate mining resources. The BCCA's reasoning provides interesting commentary on the SCC's categorical exceptions to the reasonableness standard and sets an interesting example for potential future exceptions.

Background Information

The Standard of Review

Vavilov was a "game changer" in Canadian administrative law.⁴ Please see our previous post for a discussion of Vavilov and the standard of review analysis. As discussed therein, all administrative decisions are presumptively reviewed on the deferential reasonableness standard, unless either legislative intent or the rule of law indicate otherwise. The SCC explained three circumstances where the rule of law requires a correctness review, namely, where the impugned decision raises: (a) a constitutional question; (b) a general question of law of central importance to the legal system as a whole; or (c) a question related to the jurisdictional boundaries between administrative bodies.⁵ These are the categorical exceptions to a reasonableness review.

The Supreme Court, however, did not foreclose the possibility that another categorical exception to a reasonableness review could be recognized in exceptional circumstances:

However, we would not definitively foreclose the possibility that another category could be recognized as requiring a derogation from the presumption of reasonableness review in a future case. [...] [T]he recognition of any new basis for correctness review would be exceptional and would need to be consistent with the framework and overarching principles set out in these reasons. In other words, [...] on the basis of legislative intent [...] [or] on the rule of law [emphasis added].⁶

The Facts

Briefly, Highlands involved a dispute between O.K Industries Ltd. ("OKI"), a quarrying and road paving company, and the District of Highlands ("District"), a municipal corporation created under the Community Charter ("CC").⁷ The issue was whether OKI had to comply with the District's bylaws before undertaking its provincially approved mining operations.

In 2015, OKI purchased raw land in the District from the Province of British Columbia ("Province") to establish a rock quarry. The District later refused OKI's application to re-zone the land to allow for the rock quarry. In 2020, the Ministry of Mines ("MoM") granted OKI a permit under the Mines Act ("MA")⁸ to operate the rock quarry and complete specific activities. Despite the permit, the District argued that OKI was required to comply with its bylaws, which required OKI to re-zone the land and acquire permits for certain surface activities. OKI proceeded with the authorized activities without complying with the bylaws, and the District issued a cease work order. OKI petitioned for judicial review, requesting the Supreme Court for British Columbia ("BCSC") to quash the cease work order and declare the bylaws inapplicable to OKI's authorized activities.

The BCSC's Decision

Hinkson C.J. described the nature of the dispute as one of competing jurisdictions, namely, whether the District interpreted its jurisdiction over lands within its municipal boundaries under the CC and Local Government Act ("LGA")⁹ in a manner that was incompatible with the Province's jurisdiction over mines and minerals under the MA.¹⁰ While the BCSC found the dispute raised a jurisdictional question requiring a correctness review,¹¹ it is also important to note that the BCSC applied a reasonableness review as well and came to the same conclusion.¹² The SCC in Vavilov described the rationale and parameters of the jurisdictional exception:

[T]he rule of law requires that the correctness standard be...