What is Reasonableness?

June 22, 2021

By Brian Babcock

Judicial review is the mechanism by which courts supervise the actions of statutory decision makers. Typically, we think of formal tribunals, ranging from labour arbitrators to Human Rights Tribunals, or government officials.

There are other, less common decision makers who exercise statutory powers which affect everyday life. How do courts review the decisions of these less formal decision makers?

The usual standard is reasonableness, which “is not a line by line treasure hunt for errors” as so eloquently stated by the Alberta Court of Appeal, in Intact Insurance Company v Parsons.

The case reviewed the decision of an umpire under the Alberta Insurance Act, which is similar in this area with the Ontario act.

Now, you might think that an umpire is a decision maker in baseball, but the term has a long history in insurance law. Where there is a valuation dispute under an insurance policy, the common statutory conditions of a policy provide for a process called appraisal. So if your house is damaged in a fire, and you and your insurer disagree about the cost of repair or replacement, you can each appoint an “appraiser” to set a value. Now, these sort of appraisers need not have any particular qualifications. Do not confuse them with real appraisers.

The statutory conditions provide that if the appraisers agree, that settles the dispute. Except, they are not hired because they will agree. Sure, sometimes you and the insurer will agree to split the difference, but if you are at the appraisal stage, you likely end up with an umpire.

An umpire is expected to make a final choice between the appraisers’ values. Like the appraisers, the umpire does not need to have any particular training or qualifications, as long as the two appraisers agree to the selection. So in the burned house example, it might be a contractor, an insurance adjuster, or even a lawyer. The only requirement is that they be independent. There is no particular procedure required, though provincial laws governing statutory decision making establish minimal standards of fairness.

In Parsons, the insurer was unhappy with the result from the umpire, so sought judicial review, as just like a ball or strike call in baseball, an umpire’s decision is not subject to appeal.

The court in reviewing the decision in Parsons confirmed that the standard of review of the umpire is whether or not it was reasonable. The umpire’s decision was essentially about interpreting facts and applying expertise, so the standard of correctness, used to review errors in law, did not apply.

The court made several interesting additional points in upholding the umpire’s decision that are a useful primer as to basic principles of judicial review:

  • If a decision maker intends to consider information beyond that introduced by the parties, the rules of fairness require that he alert the parties, and give them an opportunity to make submissions on whether judicial notice is appropriate, and on the proper interpretation of the information in question.
  • Administrative decision makers will have expertise and acquire knowledge about the sort of matters which they hear.
  • Umpires however are appointed ad hoc – remember the comment above about no particular qualifications being required – so they need to be especially careful about procedural fairness when applying background knowledge.
  • But judicial review is always discretionary. Even if the umpire made a procedural error, the decision will not be set aside unless it results in a miscarriage of justice.
  • “Reasonableness” requires internally coherent reasoning in the decision.
  • Review for reasonableness “is not a line by line hunt for errors”.
  • Where, as in the case of an umpire, the process is intended to be summary and informal, even if the umpire’s reasons do not fully explain the decision, it may still be reasonable.
  • The review looks for the justification for the decision; transparency in the process and reasoning; and intelligibility.
  • The decision maker may assess and weigh the evidence.
  • Where there is contradictory credible evidence, it is not unreasonable for the decision maker to prefer some evidence over other evidence – this is the essence of fact finding.
  • In all but exceptional cases, the reviewing court will not disturb the decision maker’s findings of fact.

This decision is an important reminder that courts continue to try to discourage applications for judicial review in all but the clearest cases of errors. There simply are so many administrative decisions made every single day that the courts would drown if they had to review every decision that might be wrong.

If you are upset by an administrative or statutory decision, the avenues of appeal (if allowed) or judicial review, are very technical. Having a lawyer review your case to see whether it is worth pursuing is a good investment. Even if the decision is wrong, it might be an expensive and frustrating process to go to review. If however, the decision is unreasonable, a lawyer can help navigate the complex principles of judicial review.