The Return of Roncarelli: The Tesla Decision and the Rule of Law

  • October 29, 2018
  • By Rachel Weiner, staff lawyer, IAVGO Community Legal Clinic

Inherent in judicial review is a tension between the rule of law and legislative intent. Although the text of statutory provisions may be less important in the current era of presumptions of deference, the statutory context often plays a significant role. It is not as often that a judicial review application alleges abuses of power, as in the seminal case of Roncarelli v Duplessis [1959] SCR 121. However, within his first few months in office, Ontario’s new Premier, Doug Ford, has prompted a carefully worded but vehement defence of the rule of law in Tesla Motors Canada ULC v Ontario (Ministry of Transportation), 2018 ONSC 5062 (SCJ) [Tesla].

1. Tesla Decision

Under the Public Transportation and Highway Improvement Act, the Ontario government created subsidies for buyers of environmentally approved cars. Subsidies could also be payable to dealerships who passed on the savings to consumers. These programs were funded through cap-and-trade tax revenues.

Prior to the Ontario election, Tesla’s Model 3 luxury electric cars, priced at $75,000, qualified for a subsidy of $14,000. The Model 3 was not the most expensive car eligible for a subsidy.

After the provincial election, on July 11, 2018, Doug Ford’s new government revoked the cap-and-trade regulation and the subsidies. The government instituted a two-month transitional period for consumers who had already received and registered cars. The transitional period also applied to dealerships who had already ordered or received cars.

Car dealers received letters from the government outlining this transitional program. But Tesla received a customized letter explaining that the program only applied to orders for cars made by a “franchised automobile dealership” and not where vehicles “have been ordered directly from an original manufacturer by a consumer” (para 16). Tesla Motors Canada ULC is not a franchised automobile dealership.

Later in July, government officials singled out Tesla when speaking about the transitional program. Most notably, the Premier of Ontario stated in a press interview that:

giving rebates of up to $16,000 with our hard-earned money, to millionaires buying $80,000 cars, $100,000 cars. Uh we have an issue with that, we want to protect the little person […] That’s what I have, uh, message for Tesla. Stop trying to get rebates for your millionaire buddies, and putting it on the backs of the hardworking people … (para 22)

Tesla attempted to communicate with the Minister of Transportation on several occasions; however, it received no response. Therefore, Tesla applied for judicial review on an urgent basis before a single judge of the Superior Court of Justice. This judicial review, decided by Justice Myers, was ultimately successful.

2. The Superior Court’s Application of Roncarelli and Defence of the Rule of Law

Justice Myers’s decision in the Tesla case represents a pointed defence of the rule of law and procedural fairness, but it is mindful of the court’s role on judicial review.

Justice Myers acknowledged that the decisions to eliminate cap-and-trade and the subsidy were core government policy; nonetheless, the condition of the resulting transitional program was a discretionary decision under the Public Transportation and Highway Improvement Act (paras 37-40). He also affirmed that judicial review is an essential part of Canada’s constitutional structure, and should be available where executive action is taken “for improper reasons or without affording the applicant procedural fairness” (para 47).

Justice Myers cited Justice Rand’s reasons in Roncarelli, stating that “there is no such thing as absolute and untrammeled ‘discretion’;” executive action must be in good faith, limited by “the perspective in which the statute is intended to operate.” In “egregious cases”, where it is obvious the government’s purpose is colourable, courts may intervene (para 57).

Based on these principles, the condition in the transitional program had a colourable purpose because of its:

    (1) “distinct and unique” effect on Tesla for a rationale that was not communicated to the public, demonstrated by Tesla’s letter (para 59); and

     (2) “grossly overinclusive” scope, based on the government’s argument that the purpose was to protect small or medium-size dealerships (para 60).

Justice Myers was careful to explain that he was not opining on the policy merits of the government’s transitional program:

I am not assessing whether the goal of protecting small to mid-sized businesses that may be at risk of losses is wise policy. Rather, I am considering the actual exercise of discretion under which the Minister has adopted a condition of the transition program […] it was unrelated to the achievement of the supposed policy goal. It was also not related to any of the conservationist purposes of the electric car subsidy program. It was not related to any purpose under the Public Transportation and Highway Improvement Act. Therefore it cannot stand (para 61).

Notably, Justice Myers criticized the government’s failure to provide Tesla any procedural fairness. He stated that “where an executive decision singles out a person or business for financial and reputational harm and is taken on certain assumed facts, basic fairness calls out for the target to be entitled to provide a response” (para 63). Although arguably an independent basis to find against the Ontario government, the failure of the Ministry to respond may have also shown a lack of good faith, as described in Roncarelli.

Finally, the remedy chosen by Justice Myers also reflects his awareness of his judicial role. Instead of deciding that Tesla should get the rebate, he sent the matter back to the Minister of Transportation to decide again (para 65).

3. Conclusion

The outcome in Tesla could have been reached based on current principles of judicial review. That decision could have stated that there was no justified, intelligible, and transparent basis for the condition in the transitional program, and it was therefore unreasonable.

However, the reference to Roncarelli makes a strong statement about the constitutional role of the courts. When governments arbitrarily target individuals, companies or even other governments, courts may intervene on the basis of the rule of law. In this way, our Government for the People can be held accountable by the people.


Rachel Weiner is a staff lawyer at the Industrial Accident Victims’ Group of Ontario, a community legal clinic serving injured workers. Rachel’s practice currently focuses on representing injured workers before the WSIB and WSIAT, as well as supervising IAVGO’s student clinic, Advocates for Injured Workers.

Please note that all opinions expressed are that of the author, and do not reflect the views of the Ontario Bar Association or IAVGO Community Legal Clinic.