Simon's Megalomaniacal Legal Resources

Appeals - Standard of Review (SOR) - Extricable Issues of Law

Vavilov [para 37] makes the point that we should separate 'readily extricable principles of law' from mixed issues of fact and law wherever possible.

. Kitmitto v. Ontario (Securities Commission)

In Kitmitto v. Ontario (Securities Commission) (Div Court, 2024) the Divisional Court considers (and dismissed) related appeals from two Capital Markets Tribunal (CMT) decisions, one respecting 'merits' and one respecting 'sanctions' [under Securities Act (SA), s.10(1)], here addressing SA 76 "which prohibits insider trading and tipping" ['Part XVIII - Continuous Disclosure ' ('Trading where undisclosed change' and 'Tipping')].

Here the court considers all of the appellate standards of review for: 'palpable and overriding' errors, 'extricable errors of law' (that can sometimes occur with mixed findings of law and fact), and discretionary decisions:

[26] The standard of review is palpable and overriding error for questions of fact and for questions of mixed fact and law (where the legal principle is not readily extricable), including with respect to the application of correct legal principles to the evidence.

[27] A palpable and overriding error is an obvious error that is sufficiently significant to vitiate the challenged finding: Longo v. MacLaren Art Centre, 2014 ONCA 526, 323 O.A.C. 246, at para. 39. The appellant must show that the error goes to the root of the challenged finding such that it cannot safely stand in the face of the error: Waxman v. Waxman (2004), 2004 CanLII 39040 (ON CA), 186 O.A.C. 201 (C.A.), at para. 297, leave to appeal refused, [2004] S.C.C.A. No. 291.

[28] When the decision under appeal is fact-intensive or involves the exercise of discretion, care must be taken in identifying extricable errors of law since the process of severing out legal issues can undermine the standard of review analysis. An arguably unreasonable exercise of discretion is not an error of law or jurisdiction: Wood Buffalo (Regional Municipality) v. Alberta (Energy and Utilities Board), 2007 ABCA 192, 80 Alta. L.R. (4th) 229, at para. 8; Natural Resource Gas Limited v. Ontario (Energy Board), 2012 ONSC 3520 (Div. Ct.), at para. 8; Conserve Our Rural Environment v. Dufferin Wind Power Inc., 2013 ONSC 7307 (Div. Ct.), at para. 13.

[29] While an appellate court is empowered to replace a tribunal’s findings on questions of law with its own, the correctness standard does not detract from the need to respect the tribunal’s specialized function. The tribunal’s subject matter experience and expertise relating to the requirements of its home statute are to be taken into account: Reisher v. Westdale Properties, 2023 ONSC 1817 (Div. Ct.), at paras. 9-10, citing Planet Energy (Ontario) Corp. v. Ontario Energy Board, 2020 ONSC 598 (Div. Ct.), at para. 31; Vavilov, at para. 36.

. Glencore Canada Corporation v. Canada

In Glencore Canada Corporation v. Canada (Fed CA, 2023) the Federal Court of Appeal considered a second appeal (first was from the Tax Court) of the tax categorization status of 'non-completion fees' that the taxpayer received on the failure of it's auction bids to purchase shares of another corporation.

In these quotes the court states the applicable SOR, but also considers extricable legal issues:

[21] The Tax Court judgment is subject to appellate standards of review as set out in Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235. Determinations of fact and mixed fact and law are entitled to deference and attract the palpable and overriding error standard of review. Determinations of law (including extricable legal questions) are subject to correctness review.

[22] Recently, the Supreme Court of Canada commented on the application of these standards of review in circumstances where the overall conclusion is based on an extricable error of law (Deans Knight Income Corp. v. Canada, 2023 SCC 16 at para. 121). The reasons of the majority state that no deference is owed to the overall conclusion, but that deference continues to apply to factual findings. However, it cautions that “facts which were decisive when answering the wrong legal question are not necessarily as salient when answering the right one.”

. Tibollo v Robinson

In Tibollo v Robinson (Div Court, 2023) the Divisional Court considered how an error of mixed fact and law may 'contain' an extricable error of law, subject to the higher SOR of correctness:

[11] For questions of law, the standard of review is correctness. For questions of mixed fact and law, the standard of review is palpable and overriding error unless there is an extricable question of law, to which the correctness standard would apply. As stated in Housen v. Nikolaisen 2022 SCC 33, [2002] 2 SCR 235 at para 27:

Once it has been determined that a matter being reviewed involves the application of a legal standard to a set of facts and is thus a question of mixed fact and law, then the appropriate standard of review must be determined and applied. Given the different standards of review applicable to questions of law and questions of fact, it is often difficult to determine what the applicable standard of review is. In Southam, supra, at para. 39, this Court illustrated how an error on a question of mixed fact and law can amount to a pure error of law subject to the correctness standard:

... if a decision-maker says that the correct test requires him or her to consider A, B, C, and D, but in fact the decision-maker considers only A, B, and C, then the outcome is as if he or she had applied a law that required consideration of only A, B, and C. If the correct test requires him or her to consider D as well, then the decision-maker has in effect applied the wrong law, and so has made an error of law.

Therefore, what appears to be a question of mixed fact and law, upon further reflection, can actually be an error of pure law.

[12] Both parties agree that the motion judge applied the correct test in this case as set out in Grefford v. Fielding, (2004) 2004 CanLII 8709 (ON SC), 70 O.R. (3d) 371 (S.C.). However, in applying the Grefford test, Mr. Tibollo argues the motion judge made two errors:

1. In relation to the second branch of the test, the motion judge misapplied the law and therefore committed an error in law.

The standard of review for this alleged error is correctness.

2. In relation to the third branch of the test, the motion judge made a finding of fact without an evidentiary basis, and therefore committed an error of fact.

The standard of review for this alleged error is overriding and palpable error.

. Markowich v. Lundin Mining Corporation

In Markowich v. Lundin Mining Corporation (Ont CA, 2023) the Court of Appeal considered the SOR that applies when an extricable legal error occurs within an issue of mixed law and fact (it's 'correctness'):

(1) Standard of review

[39] The standard of review on a question of law is correctness: Housen v. Nikolaisen, 2002 SCC 33, [2002] 2 S.C.R. 235, at para. 8. Questions of fact or mixed fact and law that do not raise an extricable question of law are to be reviewed on a standard of palpable and overriding error: Housen, at paras. 10 and 36. However, where an error of mixed fact and law can be attributed to the application of an incorrect standard, a mischaracterization of a legal test or a similar error in principle, this is an error of law, reviewable on a correctness standard of review: Housen, at paras. 33 and 36; Mask v. Silvercorp Metals Inc., 2016 ONCA 641, 132 O.R. (3d) 161, at para. 37.

[40] In this case, the primary issue on appeal is the motion judge’s interpretation of the definition of “material change” in the Securities Act, which is a question of law reviewable on a standard of correctness. Given that the motion judge applied this incorrect definition to the evidence available on the motion, his application of the test is also reviewable on a standard of correctness.

. Canada (Border Services Agency) v. Danson Décor Inc.

In Canada (Border Services Agency) v. Danson Décor Inc. (Fed CA, 2022) the Federal Court of Appeal considers the 'extracting' of an extricable legal issue in the course of establishing the standard of review in a mixed fact and law appeal:

[13] Consequently, appeals filed pursuant to subsection 68(1) of the Customs Act such as this one are no longer subject to review based on administrative law standards, but rather on appellate standards. I am thus of the view that the assessment of the evidence, and in particular the expert evidence, is beyond the jurisdiction of this Court sitting on appeal of the Tribunal. Since subsection 68(1) grants a statutory right to appeal decisions of the CITT to this Court solely on questions of law, the applicable standard of review is correctness: Vavilov at para. 37. The first issue, therefore, is to examine the grounds of appeal to determine whether they do raise a question of law. As this Court noted in Neptune Wellness Solutions v. Canada (Border Services Agency), 2020 FCA 151, [2020] CarswellNat 4287 (at para. 16), it is not always easy to identify an extricable question of law when it is embedded in a question of mixed fact and law. In order to determine whether an appeal undertaken pursuant to subsection 68(1) of the Customs Act raises an extricable question of law, the Court must strive to identify the "“essential character”" or "“true substance”" of the appeal and the best way to do this is to look at the notice of appeal and, if necessary, to the appellant’s memorandum of fact and law: Canada (Attorney General) v. Impex Solutions Inc., 2020 FCA 171, [2020] CarswellNat 4332 at para. 37; Keurig Canada Inc. v. Canada (Border Services Agency), 2022 FCA 100, [2022] CarswellNat 1814 at para. 17 [Keurig].

[14] In the case at bar, it is very clear from the notice of appeal and from the appellant’s factum that the substance of what is being raised is best characterized as an issue of law and revolves around the proper interpretation of the Schedule to the Act, and more particularly the interpretation of headings 25.17 and 68.02. Indeed, much of the arguments turn on the various processes to which goods can be subjected without being excluded from Chapter 25, and on the distinction between "“polishing”" and "“levigating”", which is clearly a question of law. As for the alleged absence of any supporting evidence, it has often been characterized as an error of law: see Canada (Attorney General) v. Best Buy Canada Ltd., 2021 FCA 161, [2021] CarswellNat 2923, at para. 25. I will therefore review the decision of the CITT on the correctness standard.

. Covenoho v. HomeLife Response Realty Inc.

In Covenoho v. HomeLife Response Realty Inc. (Div Court, 2022) the Divisional Court demonstrated the sometimes complexity of the standards of review that can apply to the separate issues of an appeal case:

Issue #1- Standard of Review

[26] Counsel for Right at Home has referenced the principles for appellate review as set out in Housen v. Nikolaisen 2002 SCC 33. On a question of law, the standard of review is correctness. On questions of fact, the standard of review is palpable and overriding error. Finally, on questions of mixed fact and law, the standard of review lies upon a spectrum.

[27] The Deputy Judge was required to interpret an offer to purchase in light of the specific factual matrix that existed in this case, including the Appellant’s Independent Salesperson’s Agreement. This is, at most, a contractual interpretation case. The standard of review to be adopted in reviewing the interpretation of a contract was set out by the Supreme Court of Canada in Saatva Capital v. Creston Moly 2014 SCC 53, [2014] 2 S.C.R. 633. In that decision, Rothstein J. concluded (at para. 50) that contractual interpretation involved issues of mixed fact and law. Rothstein J. went on to observe (at para. 53) that it might be possible to identify an extricable question of law in interpreting a contract. However, those types of extricable questions will be rare.

[28] In this case, the Deputy Judge’s decision on the interpretation of the effect of the offer to settle appears to lie somewhere along the spectrum. It might be possible to identify different portions of the Deputy Judge’s decision that required this Court to apply different standards of review. There is also an interesting issue about the standard of review that should be applied on a Rule 12.02 motion as those motions permit the Deputy Judge to make findings of fact but are not a full trial. As noted in Van de Vrande v. Butkowsky 2010 ONCA 230, a Rule 12 motion is situated between a Rule 20 and a Rule 21 motion under the Rules of Civil Procedure.

[29] Determining those questions is not necessary, however, as I have concluded that the Deputy Judge’s decision is correct and that the appeal is devoid of any merit in all respects.

. 1475182 Ontario Inc. o/a Edges Contracting v. Ghotbi

In 1475182 Ontario Inc. o/a Edges Contracting v. Ghotbi (Div Ct, 2021) the Divisional Court set out examples of 'extricable question of law' drawn from mixed fact and law issues:

[29] More difficult are questions of mixed fact and law, which involve the application of a legal standard to a set of facts. Generally, the standard of review is palpable and overriding error. But where there is an extricable question of law, such as a where the decision-maker applies an incorrect standard, fails to consider a required element of a legal test or makes a similar error in principle, then the error is properly characterized as an error of law and the applicable standard of review is correctness. See Housen, para. 36.

. Neptune Wellness Solutions v. Canada (Border Services Agency)

In Neptune Wellness Solutions v. Canada (Border Services Agency) (Fed CA, 2020) the Federal Court of Appeal discussed the nature of an 'extricable question of law embedded in a question of mixed fact and law', for standard of review purposes:

[16] The Court must examine the specific grounds of appeal to ensure they in fact raise a question of law, and not questions of fact or of mixed fact and law masquerading as questions of law. The challenge lies in those cases where there is an extricable question of law embedded in a question of mixed fact and law. Guidance as to how to discern questions of law from a question of mixed fact and law is found in the decision of this Court in Canadian National Railway v. Emerson Milling Inc., 2017 FCA 79 at paras. 24-28, [2018] 2 F.C.R. 573, where the Court provided examples of what constitutes an extricable question of law embedded in a question of mixed fact and law:

26 […] Extricable questions of law/legal standards are best regarded as questions of law of the sort intended by Parliament to be reviewed by this Court under subsection 41(1). In a number of cases, this Court determined appeals where extricable questions of law/legal standards (in addition to other legal and jurisdictional questions) were present:

• Canadian National Railway v. Canadian Transportation Agency, 2010 FCA 65, [2011] 3 F.C.R. 264 (F.C.A.) (CN 2010) and Canadian National Railway v. Canadian Transportation Agency, 2008 FCA 363, 383 N.R. 349 (F.C.A.) (CN 2008). What matters fall into certain defined terms in the Act, triggering the revenue cap in the Act? The extricable legal question was the definition of the defined terms in the Act.

• Dreyfus, above at para. 18. Two issues were raised that involve extricable questions of law, namely statutory interpretation. Does the "evaluation approach," a methodology adopted by the Agency for deciding questions under sections 113-116, deviate from the proper interpretation of the sections? Did the Agency fail to consider matters that the statute requires it to consider?

• Canadian National Railway v. Richardson International Ltd., 2015 FCA 180, 476 N.R. 83 (F.C.A.). Do the facts of the case constitute a "line of railway" and a "connection" for the purposes of triggering the carrier's interswitching obligations? The extricable question of law was the meaning of these terms.

• Canadian National Railway v. Viterra Inc., 2017 FCA 6 (F.C.A.). On the facts, were the obligations of the carrier under section 113 triggered? Was the carrier's rationing methodology a confidential contract under subsection 113(4) of the Act?

[17] More recently, in Bell Canada v. British Columbia Broadband Association, 2020 FCA 140 at paras. 49-51, the Court noted that a question of law may also be factually infused, as in the case of procedural fairness. In all cases, it is the true substance of the question on appeal that governs, and not the form by which it is expressed. Examination of the notice of appeal and the memoranda of fact and law assist in determining the essential character of the issue.