T-2014-85
Canadian Tobacco Manufacturers' Council,
Benson & Hedges (Canada) Inc., Imperial Tobac
co Limited, RJR-Macdonald Inc. and Rothmans
of Pall Mall Canada Limited (Applicants)
v.
National Farm Products Marketing Council
(Respondent)
Trial Division, Cullen J.—Ottawa, September 24
and 25; Vancouver, October 3, 1985.
Judicial review — Prerogative writs — Public hearings held
by respondent — Respondent fettering its jurisdiction —
Respondent irregularly in possession of evidence after hearing
— Failure to observe duty of natural justice — Farm Products
Marketing Agencies Act, S.C. 1970-71-72, c. 65, ss. 8(3),(5), 9.
In connection with an inquiry into the merits of establishing
a national marketing agency for flue-cured tobacco, the
respondent held public hearings in the four cities most directly
concerned. When the applicant Council (C.T.M.C.) sought to
have the respondent compel the Ontario Tobacco Board to
produce an important cost of production study, the respondent
answered that its stated policy on procedure prevented it from
doing so. The respondent was adamant that it could not compel
the attendance of witnesses or the production of documents.
The respondent and the Ontario Board also maintained that the
report was not complete at that time. However, the respondent
later had in its possession, after the public hearings, a copy of
that study but did not inform the applicants of this fact.
This application seeks a series of prerogative writs to require
the reopening of a public hearing and the introduction into
evidence of the cost of production study.
Held, the application should be allowed.
With its power spelled out in subsection 8(5) of the Act,
there can be no doubt in law that the Council could have
compelled production of the 1983 cost of production study and
the information used to prepare the report. And if the report
was not complete when the applicant Council first asked for it,
the Council had authority to adjourn the hearing until it was
complete, compel its production and require the attendance of
its authors.
The argument, that if a hearing is not adversarial in nature
but rather a fact finding mission where the parties are
encouraged to bring whatever evidence they wish, parties
cannot be ordered to produce evidence, must be rejected. There
are parties who disagree, have a right to cross-examine wit
nesses, examine any documents produced and then to argue
their position.
Not to compel production of the report when that evidence
might be crucial to the Council's deliberations is a clear case of
the Council fettering its jurisdiction.
Furthermore, while the Council asked for extensive informa
tion from each of the corporate applicants, it did not do so with
regard to the Ontario Board.
The ultimate appearance of unfairness, however, was for the
respondent to have in its possession, after the public hearings, a
copy of the study with no intention to disclose this fact, and no
intention to reopen the hearings so that the applicants might
question it.
That the respondent should ignore no evidence of significant
importance is evident when one considers that the information
it gathers, the decision it takes and the recommendations it
makes to the Minister affect the freedom of the marketplace,
the future of the tobacco industry in Canada and, if an agency
is approved, additional costs to the applicants and, ultimately,
to the consumer, of millions of dollars. There had clearly been a
failure to observe a duty of natural justice.
There remains the question of whether, on the law, authority
exists for the Court exercising its discretion to issue the pre
rogative writs sought. If the respondent were merely a fact-
gathering agency, the applicants would have no resort to pre
rogative writs. However, the respondent does make decisions
which will impact on the parties. It gathers facts, studies data,
makes decisions and finally recommendations to the Minister.
As Pigeon J. said in Saulnier v. Quebec Police Commission:
. when I recall that the whole purpose of these reports is to
present facts and recommendations on which normally the
Minister will act the argument that no rights have been deter
mined and that nothing has been decided is pure sophistry."
The Council's decision, therefore, is a decision subject to
judicial review.
As a matter of law, the question whether the respondent
relied upon the study was irrelevant.
CASES JUDICIALLY CONSIDERED
APPLIED:
Re Green, Michaels & Associates Ltd. et al. and Public
Utilities Board (1979), 94 D.L.R. (3d) 641 (Alta. S.C.
App. Div.); Van Hul and Honkoop et al. v. P.E.I. Tobac
co Commodity Marketing Board (1985), 51 Nfld. &
P.E.I.R. 124 (P.E.I.S.C.); Nordenfelt v. Maxim Norden-
felt Guns and Ammunition Company, [1984] A.C. 535
(H.L.); Saulnier v. Quebec Police Commission, [1976] 1
S.C.R. 572; (1975), 57 D.L.R. (3d) 545; Martineau et al.
v. Matsqui Institution Inmate Disciplinary Board,
[1978] 1 S.C.R. 118; (1977), 74 D.L.R. (3d) 1; Trapp v
Mackie, [1979] 1 All ER 489 (H.L.); Edwards et al. v.
Alta. Assn. of Architects et al., [1975] 3 W.W.R. 38
(Alta. S.C.); Estate & Trust Agencies (1927) Ld. v.
Singapore Improvement Trust, [1937] A.C. 898 (P.C.);
Re Doyle and Restrictive Trade Practices Commission et
al. (1984), 6 D.L.R. (4th) 407 (F.C.A.); Mehr v. Law
Society of Upper Canada, [ 1955] S.C.R. 344.
REFERRED TO:
Guay v. Lafleur, [1965] S.C.R. 12; (1964), 47 D.L.R.
(2d) 226.
COUNSEL:
Michael A. Kelen for applicant Canadian
Tobacco Manufacturers' Council.
John B. Claxton, Q.C. for applicant Benson
& Hedges (Canada) Inc.
Simon V. Potter for applicant Imperial
Tobacco Limited.
Georges R. Thibaudeau for applicant RJR-
Macdonald Inc.
Frank K. Roberts, Q.C. for applicant Roth-
mans of Pall Mall (Canada) Limited.
Brian J. Saunders, David Byer for respondent
National Farm Products Marketing Council.
François Lemieux, James H. Smellie, David
Wilson for Ontario Flue-Cured Tobacco
Growers' Marketing Board and Prince
Edward Island Tobacco Commodity Market
ing Board.
SOLICITORS:
Michael Kelen, Ottawa, for applicant Canadi-
an Tobacco Manufacturers' Council.
Lafleur, Brown, de Grandpré, Montreal, for
applicant Benson & Hedges (Canada) Inc.
Ogilvy, Renault, Montreal, for applicant
Imperial Tobacco Limited.
Doheny MacKenzie, Montreal, for applicant
RJR-Macdonald Inc.
Smith, Lyons, Torrance, Stevenson & Mayer,
Toronto, for applicant Rothmans of Pall Mall
(Canada) Limited.
Deputy Attorney General of Canada for
respondent National Farm Products Market
ing Council.
Herridge, Tolmie, Ottawa, for Ontario Flue-
Cured Tobacco Growers' Marketing Board
and Prince Edward Island Tobacco Com
modity Marketing Board.
Honeywell, Wotherspoon, Ottawa, for Simcoe
Leaf Tobacco Co. Ltd., Dibrell Brothers of
Canada Ltd. and Standard Commercial
Tobacco Company of Canada Ltd.
The following are the reasons for order ren
dered in English by
CULLEN J.: The application here seeks a series
of prerogative writs, the end result of which would
require the reopening of a public hearing and the
introduction into evidence of a Touche, Ross 1983
cost of production study in connection with an
inquiry into the merits of establishing a national
marketing agency for flue-cured tobacco.
On October 15, 1984, the Ontario Flue-Cured
Tobacco Growers' Marketing Board (the Ontario
Tobacco Board) submitted a 64-page proposal to
the respondent for the establishment of a Canadi-
an Flue-Cured Tobacco Marketing Agency under
the provisions of the Farm Products Marketing
Agencies Act [S.C. 1970-71-72, c. 65] (the Act).
On or about February 12, 1985 a supplement to
the proposal was submitted to the respondent by
the Ontario Tobacco Board and the Prince
Edward Island Tobacco Commodity Marketing
Board. The supplement alleges, inter alla, that
Ontario Tobacco Growers have received a price for
their product which is less than the cost of produc
ing tobacco and a reasonable return and that the
tobacco growers have retained Touche, Ross &
Partners to make "an independent assessment" of
the matter. To be exact, the supplement states:
The Ontario Board retained Touche, Ross & Partners to make
an independent assessment of the matter. Touche, Ross &
Partners has concluded that, in 1983, Ontario flue-cured tobac
co growers received a minimum average price which was below
the cost of production and a reasonable return for producing
that crop.
On or about January 7, 1985 the respondent
published in the Canada Gazette, newspapers and
farm journals a notice of public hearing in connec
tion with the inquiry noted above. The inquiry was
to be quite comprehensive in scope. The notice
indicated, among other things:
The purpose of the hearing will be to determine the merits of
establishing an agency and whether the production and market
ing of tobacco would be more effectively carried out through
the use of an agency to be established pursuant to Section 18 of
the Farm Products Marketing Agencies Act.
In furtherance of this objective, the Council panel shall include
the following in its inquiry:
a) an assessment of the current status of Canadian tobacco
producers and the potential effects on them of establish
ing a national agency;
b) an analysis of the current problem areas in the tobacco
industry and the potential stabilizing and beneficial
effects that an agency may create;
c) a determination of the potential for ensuring that under
the operation of an agency, consumers will be assured of
receiving a secure supply of a quality product at a
reasonable price;
d) the degree of federal-provincial co-operation required to
implement the proposed marketing plan;
e) a review of the terms, assertions, and the draft market
ing plan contained in the tobacco proposal under
consideration;
f) an assessment of whether any restrictions should be
placed on the activities of a tobacco agency or on any of
the powers to be acquired through the operation of
Section 23 of the Act.
The notice of hearing invited interested persons
to file written submissions on or before March 1,
1985 and some 61 submissions were filed. Among
them was a submission by the applicants. The
Canadian Tobacco Manufacturers' Council
(C.T.M.C.) is a non-profit Canadian corporation
incorporated under the Canadian Corporations
Act [R.S.C. 1970, c. C-32]. The C.T.M.C. was
admitted at the public hearing of the respondent as
an intervenor and agent for its four member com
panies; Benson & Hedges (Canada) Inc., Imperial
Tobacco Limited, RJR-Macdonald Inc. and Roth-
mans of Pall Mall Canada Limited. These four
companies purchase, either directly or through
their purchasing agents, substantially all of the
tobacco grown in Canada and manufacture in
excess of 98% of the cigarettes and cigarette
tobacco sold in Canada.
In the submission made by the Ontario Tobacco
Board to the respondent dated March 1, 1985 the
first factor mentioned was "Ontario Growers have
realized less than their cost of producing tobacco
for eight of the past nine years".
A most comprehensive brief was filed by the
applicants with the respondent and, as Mr, Chris-
topper M. Seymour, executive secretary of the
C.T.M.C. says in his affidavit in support of the
application, it was a submission "analyzing the
current problem areas in the tobacco industry and
questioning the allegation that the Ontario tobacco
growers have not received a price for their tobacco
equal to their cost of producing tobacco plus a
reasonable return".
Mr. Seymour also makes the point: "The
Respondent requested extensive information from
each of the four tobacco companies both before
and during the Public Hearing (emphasis mine).
The companies gathered the information requested
and submitted it to the Respondent as requested."
The hearings took place in London, Ontario,
Charlottetown, P.E.I., Montreal, Quebec, and
Ottawa, Ontario, over a period from April 16,
1985 to May 31, 1985.
It would seem on the face of it from Mr. Sey-
mour's affidavit that the rules of natural justice
were followed. We have a notice of a public hear
ing, it is published in several periodicals, 61 parties
submitted briefs, the hearings took place in the
four cities most directly concerned and, as he says
in paragraph 13 of his affidavit:
Throughout the Public Hearing before the Inquiry Panel, both
the Ontario Tobacco Board and the Applicants were represent
ed by counsel, evidence was adduced by questions and answers
from tens of witnesses who were duly sworn to tell the truth,
evidence was led through counsel for the Ontario Tobacco
Board and followed by cross-examination by counsel to the
Applicants. Evidence was responded to through the duly sworn
testimony of witnesses called by counsel to Applicants, who in
turn were cross-examined by counsel to the Ontario Tobacco
Board as well as other intervenors. The Inquiry Panel conduct
ed its Public Hearings under the published "National Farm
Products Marketing Council Rules of Procedure with regard to
the Conduct of Hearings under section 8 of the Act".
However, in the opinion of the applicants, there
was a denial of natural justice in that the respond
ent acted in excess of its jurisdiction and breached
the rules of natural justice and the duty to act
fairly. The applicant maintained that the respond
ent had fettered its jurisdiction and had failed in
its duty to inform.
Under the Act where inquiry is ordered, a public
hearing is mandatory. The Chairman of the Coun
cil under the authority of subsection 8(3) of the
Act appointed members to conduct the public
hearings on behalf of the Council, and this panel
had all the powers of a commission appointed
under Part I of the Inquiries Act [R.S.C. 1970, c.
I-13]. (See subsection 8(5) of this Act.) This panel
reports to the Council. Section 9 of the Act
requires the Council to give notice of any public
hearings and indicates how this must be done. The
Council/panel under section 10 "may make rules
respecting the conduct of public hearings".
There is no question that the Council/panel had
the power to require the attendance of witnesses
and the production of papers. The Inquiries Act
also provides a sanction for those who fail to
comply with the Council/panel authority. Inciden
tally, the rules of procedure of the National Farm
Products Marketing Council, with regard to the
conduct of hearings, are very extensive, and I will
have more to say on that later.
Earlier I underlined a phrase from the supple
ment to the original application which read, "and
that the tobacco growers have retained Touche,
Ross & Partners to make an independent assess
ment of the matter".
Although the respondent and the Ontario
Tobacco Board maintained that the Touche, Ross
& Partners report was not complete until June 25,
1985, the Ontario Tobacco Board on February 12,
1985 was prepared to say unequivocally, "Touche,
Ross & Partners has concluded that in 1983,
Ontario flue-cured tobacco growers received a
minimum average price which was below the cost
of production and a reasonable return for produc
ing that crop".
The brief filed by the applicants reached quite
the opposite conclusion. It is no wonder therefore
on day one of the hearings in London, April 16,
1985, the C.T.M.C. made a motion for an order
requiring:
... that the Ontario Board produce the Touche Ross cost of
production study in time so that the manufacturers can consid
er that for the purpose of this inquiry.
There then followed what seems to me an
unusual event. Without ruling on the motion the
Chairman suggested to counsel for the Ontario
Marketing Board, "maybe part of the problem
could be overcome if in fact you (speaking to
counsel for the Ontario Tobacco Board) were will
ing to consider taking that statement (the refer
ence to the Touche Ross 1983 COP study) out of
your presentation. It hangs there as a means of
forcing the other people to try and get what it is
you meant by it. It is mentioned in the deficiency
statement...."
It was therefore not surprising that counsel for
the Ontario Tobacco Board orally advised the
inquiry panel that its reference to the 1983 COP
study was being deleted from the supplement to
the proposal. To be fair, counsel for the Ontario
Tobacco Board, after taking the step indicated
above, said: "Then, Mr. Chairman, in supplement
to that, because we are relying, for the statements
and propositions contained in the proposal, on two
studies that have been introduced in evidence and
upon the updates calculated by the Ontario Board
in respect of the cost/price gap, I am prepared to
file as O.B.4 with the panel the 1983 figures,
calculated by the Ontario Board on the basis of the
Fisher study. That, in a sense, replaces the need
for the reference to 1983 and covers the basis of
our statement for 1983 in respect of the price/cost
gap ... It is the updated costs based on Fisher".
Also, it was the position of the Ontario Tobacco
Board that the study was not complete, and its
completion date was June 1985, sometime after
the hearings.
This situation takes an O. Henry twist when we
consider that prior to the commencement of the
public hearings the respondent had sent a Notice
of Deficiency to the Ontario Tobacco Board stat
ing that its material was deficient by not providing
a copy of the 1983 COP study (emphasis mine).
The applicant then tried another approach by
filing before the inquiry panel a motion, orally
heard May 10, 1985, for an order that the Ontario
Tobacco Board produce all materials used by
Touche, Ross in the development of a 1983 cost of
production. The motion was denied and the inquiry
panel refused to compel the production of this
evidence.
The decision of the panel emphasized "that no
one is on trial in these proceedings. There are no
plaintiffs and no defendants. This hearing is a fact
finding mission and the parties participating have
been encouraged to bring whatever arguments and
evidence they wish (emphasis mine) before the
panel, and are subject to being cross-examined
under oath". This is not strictly accurate. As
indicated earlier, despite a most comprehensive
brief which obviously the applicants were prepared
to rely on to make their position, the respondent
requested extensive information from each of the
four tobacco companies both before and during the
public hearing and the companies gathered the
information requested and submitted it to the
respondent!
Also in looking to the Council's own Rules of
Procedure over the signature of its Chairperson,
we find the following at Rule 43:
Unless the Council directs otherwise, the order of appearance
at a public hearing shall be as follows:
(a) applicant
(b) respondent
(c) intervenors
(d) interested parties
(e) the applicant in reply.
So possibly no plaintiffs and defendants but cer
tainly applicants, respondents, intervenors and a
right of reply vested in the applicant. We have
parties who disagree, have a right to cross-examine
individual witnesses and examine any written
documents produced and then to argue their
position.
Further, in its Rules of Procedure the Council
has a heading:
Orders and Decisions
44. The Council may approve, dismiss or vary the whole or any
part of an application or generally with respect to the issues
and conclusions associated with subject-matter of the hearing,
regardless of whether an application is or is not involved, and
may grant such further or other relief, in addition to or in
substitution for that requested or applied for as to the Council
seems just and proper.
45. The Council may give orally or in writing the reasons for its
orders or decisions.
46. The decision of the Council shall be effective the day on
which it is made or on such later day as may be stated in the
decision.
One final development in connection with the
1983 COP study is alleged by Mr. Seymour in his
affidavit and supported in an affidavit by Robin
M. R. Smith, a professional agrologist of the City
of Vancouver. Mr. Seymour's affidavit is based on
being informed by Robin Smith, and "verily
believe that the 1983 COP Study of Touche, Ross
& Partners entitled 'Cost of Production of Ontario
Flue-Cured Tobacco' dated June 1985 was deliv
ered to the Respondent after the Public Hearings
had terminated." Mr. Smith's affidavit says:
1. I am an expert on cost of production (C.O.P.) information
for farm products, and I appeared as an expert witness of
C.O.P. at the National Farm Products Marketing Council
(N.F.P.M.C.) public hearing in connection with an inquiry into
the merits of establishing a National Tobacco Marketing
Agency.
2. As a C.O.P. expert, I am in periodic communication with
persons at the N.F.P.M.C. I have had discussions with Harry
E. Halliwell, the Economic Advisor of the N.F.P.M.C., and he
has admitted to me that the N.F.P.M.C. obtained the 1983 cost
of production study of Touche Ross and Partners entitled "Cost
of Production of Ontario Flue Cured Tobacco" dated June,
1985 after the public hearings had terminated.
Mr. Seymour's affidavit suggests the report
"was delivered" and Mr. Smith's affidavit suggests
it was "obtained". Later, the evidence indicates
(Ex. 6 of Mr. Seymour's affidavit) that counsel for
the tobacco manufacturers wrote to the Chairman
of the Council stating it had come to the attention
of the tobacco manufacturers that the 1983 COP
study had been "submitted" (counsel's words) to
the N.F.P.M.C., requested a copy, the "covering
letter from the Ontario Growers to the
N.F.P.M.C. forward the study". (Again counsel's
wording.) He also requested a reopening of the
hearing so that the tobacco manufacturers could
make submissions with respect to it.
Although no written reply was received to this
letter the evidence is that Mr. Harry Halliwell, a
senior official of the N.F.P.M.C. advised counsel
for the tobacco manufacturers that a decision to
reopen the public hearing could not be made until
a meeting of the respondent and that it probably
could not be heard before the probable date of
delivery of the respondent's report to the Minister
of Agriculture. There is no denial or affirmation of
receipt of the 1983 COP study. It seems to me,
however, that if the respondent did not have the
report, the Chairperson or Mr. Halliwell could
have said so directly, and there would be no need
to consider reopening the hearing because the
request was based solely on possession of the
report by the respondent after the public hearings.
The facts are fairly straightforward.
With its powers spelled out in subsection 8(5) of
the Act there can be no doubt in law that the panel
could have compelled the production of the 1983
COP study and/or information used to prepare the
report. If the report was not complete until June,
1985, the panel had every authority necessary to
adjourn the hearing until it was complete and then
compel its production, and require the attendance
of the people at Touche, Ross who prepared the
report. Its stated policy on procedure, however,
made it impossible for it to take these actions. The
panel Chairman, in refusing to compel production
of the information used in preparing the 1983
COP study, said in his decision:
All parties have been treated equally in this regard and previ
ous requests to compel the production of parties and evidence
have been denied.
The panel placed itself in an invidious position
because this policy prevented it from having a
report which to quote the Chairman:
The Board and the Manufacturers are in disagreement as to
whether the work being done on the 1983 costs of production
study is relevant to these proceedings. The panel is of the view
that any information which illustrates the feasibility of how a
proposed agency would operate to benefit producers or consum
ers would be useful in its deliberations ... For the reasons
previously stated the panel regrets this decision by the Ontario
Board (ie. not to advance any arguments based on the 1983
Study and refuse to answer any questions about the Study) and
views the omission as a missed opportunity to make a signifi
cant contribution to its objective of assisting the Panel to
understand how the proposed agency would operate to improve
the situation in the tobacco industry.
The Panel however has a stated policy of allowing parties to
choose the submissions and supporting evidence they wish to
make in this hearing. (Underlining mine.)
What clearer case could there be of a panel
fettering its jurisdiction? By its own admission it
felt the study would make "a significant contribu
tion to its objective".
Re Green, Michaels & Associates Ltd. et al.
and Public Utilities Board (1979), 94 D.L.R. (3d)
641 (Alta. S.C. App. Div.), at page 654, after
commenting on a Board's authority to establish
guidelines, Clement J.A. said:
In saying this, I exclude guidelines which would have the
effect of pre-determining the exercise of the discretion. Guide
lines of that nature would, of course, constitute an invalid fetter
on the discretion, certainly if acted on.
Here the panel was adamant that it would not
compel the attendance of witnesses or the produc
tion of documents. This was predetermined, and
would enable the applicant or the respondent to
refuse to bring evidence that might very well be
crucial to its deliberations.
Also, there can be no doubt there was unfairness
both actual and perceived. The suggestion by the
Chairman that reference to the 1983 COP study
be deleted from the Supplement strikes me as
improper. The "stated policy" which tied its own
hands so it could not secure a study it thought
would make a "significant contribution" is surely
unfair to those who knew of the study but could
not secure a copy or get questions answered nor
could they cross-examine or put in rebuttal
evidence.
Again, although the tobacco manufacturers had
a most comprehensive submission, when asked by
the panel for extensive information from each of
the four tobacco companies, both before and
during the public hearing, "the Companies gath
ered the information requested and submitted it to
the Respondent as requested". The same approach
does not appear to have been taken with regard to
the Ontario Tobacco Board.
The ultimate appearance or perception of
unfairness, however, was to have in the respond
ent's possession, after the public hearings, a copy
of the Touche, Ross study with no intention to
inform about this fact, and no intention to reopen
the hearing so the tobacco manufacturers might,
as the English say, "have at it".
Were the rights of the respondent affected
directly or indirectly by the report to be made to
the Minister? The right to expect a free market
system is reflected in the words of McQuaid J. in
Van Hul and Honkoop et al. v. P.E.I. Tobacco
Commodity Marketing Board (1985), 51 Nfld. &
P.E.I.R. 124 (P.E.I.S.C.), where [at pages 129-
130] he comments first, and then refers to remarks
made by Macnaghten L.J. from Nordenfelt v.
Maxim Nordenfelt Guns and Ammunition Com
pany, [1894] A.C. 535 (H.L.):
Though somewhat foreign to the socio-economic climate in
which we now live, the fundamental principle of the market
place is that of a free market, unrestricted by government
regulation. When considering the implications of any market
ing scheme, the purpose of which is to control or regulate the
freedom of the marketplace, one must always commence at and
work from fundamental principle.
That approach was confirmed by, inter alia, the Court of
Appeal of this Province in Re Prince Edward Island Retail
Gasoline Dealers Association (1982), 37 Nfld. & P.E.I.R. 46;
104 A.P.R. 46. Quoting from that decision at p. 50:
"The common law principle was clearly enunciated in the
classic decision in Nordenfelt v. Maxim Nordenfelt Guns and
Ammunition Co., [1894] A. C. 535 wherein Macnaughten,
L.J. stated:
'The public have an interest in every person's carrying on
his trade freely: so has the individual. All interference with
liberty of action in trading, and all restraints of trade
themselves, if there is nothing more, are contrary to public
policy, and therefore void. This is the general rule. But
there are exceptions: restraint of trade and interference
with individual liberty of action may be justified by the
circumstances of a particular case'.
"It is always open to the legislative authority to restrict that
general common law principle by statutory enactment where
it considers it appropriate to do so, and thus restrict that
individual liberty of action. However, any statute which
purports to modify what was hitherto a part of the common
law, such as the right to trade freely, must be clear and
distinct in its intention to do so, and in the absence of a
concise and unambiguous declaration of intention in the
statute, there is no presumption, whether by inference or
otherwise, that the common law is to be altered. (Craies on
Statute Law (5th Ed.), p. 114-115; p. 310; Leach v. Rex,
[1912] A.C. 305, at p. 311)".
What is called for, then, is a strict and narrow as opposed to
a liberal and open, interpretation of any statute which would
have as its apparent object the restriction of the common law
principle of a free market. It is, of course, a corollary to this
when the executive branch of government, the Executive Coun
cil, purports, by Order-in-Council, to enact regulations, or
delegate powers and authority, under the provisions of legisla
tion, that it be clearly seen to be acting strictly within the
narrow confines of that legislation as narrowly interpreted. And
it follows, even more rigidly, that any administrative tribunal to
which power or authority has been delegated by the executive
branch, exercise only the limited authority which has been
vested in it within the limitations of the empowering legislation.
There are no presumptions in law in favour of the right of the
administrative tribunal to impose its authority on the individu
al; when questioned, the onus is upon the tribunal in question to
show itself to be clearly not only within the legislative authority
of the statute, but as well to be acting clearly within the
authority delegated to it.
With this correct view of the market place, and
legislative restrictions the respondent has a most
important responsibility in this situation. The
future of the tobacco industry may very well be at
stake, and the manner in which the tobacco indus
try is to operate in the future will probably be
determined by the respondent through the infor
mation or facts it gathers, the decisions it takes
and the recommendations made to the Minister.
The applicants face many millions of dollars in
additional cost to them if an agency is approved,
and of course ultimately this cost, or a good por
tion of it, is passed on to the consumer. The
consumer may also be involved if the world price is
significantly lower than the price established by
the agency for then a subsidy would be paid by all
Canadian taxpayers whether smokers or not. I
mention this to point up that no evidence of "sig-
nificant importance" should be ignored; in fact it
should be demanded by the respondent.
Given the fact that we are dealing with legisla
tive authority here, no court can nor wants to
substitute its decisions for those of the respondent.
But where there has been a failure to observe a
duty of natural justice, or where a tribunal fails in
its duty to act fairly, or where it fetters its author
ity or refuses to exercise the authority given, then
it is incumbent upon the Court to so indicate and
take its responsibility. Here, by fettering its au
thority well in advance of the hearing, by failing to
use the powers given it by Parliament, by requiring
extensive information from one participant and not
the other, by recommending a course of action to
counsel for the Ontario Tobacco Board, and by
having in its possession after the hearing the
Touche, Ross Report and failing to inform, or
reopen, the hearing, there has been a clear case of
failure to observe a duty of natural justice.
Although, as indicated earlier, the prerogative
writs are discretionary, the Court must be satisfied
on the law that authority exists for exercising the
discretion. Administrative Law Cases, Text, and
Materials by J. M. Evans, H. N. Janisch, D. J.
Mullan, R. C. B. Risk, published in 1980 by
Emond-Montgomery Limited, at page 857 states:
... the use of mandamus to compel the observance of the rules
of natural justice is a common phenomenon.
Similarly with regard to certiorari, we have
evolving what counsel for the applicant calls "the
Saulnier's effect" referring to Saulnier v. Quebec
Police Commission, [1976] 1 S.C.R. 572; (1975),
57 D.L.R. (3d) 545 distinguishing Guay v.
Lafleur, [1965] S.C.R. 12; (1964), 47 D.L.R. (2d)
226.
In the Saulnier case, Pigeon J., at page 579
S.C.R.; 550 D.L.R., accepts and quotes the dis
senting judgment of Rinfret J.A.:
I believe that the Lafleur case is clearly distinguishable from
the one now being discussed. In Lafleur the Supreme Court
was concerned with the Income Tax Act—here we have a
Quebec statute. In that case it had to decide whether the
doctrine audi alteram partem applied: here it is written right
into the Act by sec. 24. Finally there it was said [at page 229]
that "... the appellant has no power to determine any of the
former's (Respondent's) rights or obligations". In my opinion
Appellant (i.e. the Commission) has done just that.
Appellant has rendered a decision that may well impair if not
destroy Respondent's reputation and future. When I read the
first and fourth considerants and the conclusions of the sixth
recommendation and when I recall that the whole purpose of
these reports is to present facts and recommendations on which
normally the Minister will act the argument that no rights have
been determined and that nothing has been decided is pure
sophistry.
In Martineau et al. v. Matsqui Institution
Inmate Disciplinary Board, [1978] 1 S.C.R. 118;
(1977), 74 D.L.R. (3d) 1, Pigeon J. states at pages
132-133 S.C.R.; 11-12 D.L.R.:
In Saulnier the application was for a writ of evocation
equivalent to certiorari under art. 846 C.C.P. The duty of the
Police Commission to act judicially is spelled out in s. 24 of the
Police Act, 1968 (Que.), c. 17:
The Commission shall not, in its reports, censure the
conduct of a person or recommend that punitive action be
taken against him unless it has heard him on the facts giving
rise to such censure or recommendation. Such obligation
shall cease, however, if such person has been invited to
appear before the Commission within a reasonable delay and
has refused or neglected to do so. Such invitation shall be
served in the same manner as a summons under the Code of
Civil Procedure.
However, the majority of the Court of Appeal had held that
the Commission was not obliged to act judicially relying on the
view expressed in this Court in Guay v. Lafleur ([(1964), 47
D.L.R. (2d) 226 at page 228], [1965] S.C.R. 12), at p. 18:
... the maxim "audi alteram partem" does not apply to an
administrative officer whose function is simply to collect
information and make a report and who has no power either
to impose a liability or to give a decision affecting the rights
of parties.
We were unanimously of the opinion that the function of the
Police Commission was not simply to collect information and
make a report but that this report on which action could be
taken did affect the rights of the applicant. Judicial review was
granted because, not only was there a duty to act judicially but
the decision affected the rights of the applicant. At the risk of
repetition I will stress that this does not mean that whenever
the decision affects the right of the applicant, there is a duty to
act judicially.
The ingredients necessary for a judicial review
are also enunciated in Trapp y Mackie, [1979] 1
All ER 489 (H.L.).
In Edwards et al. v. Alta. Assn. of Architects et
al., [1975] 3 W.W.R. 38 (Alta. S.C.)—the head-
note is sufficient:
The council of respondent association resolved that its profes
sional guidance committee "proceed with a formal hearing"
into a complaint made against the applicants, members of
the association. Council, however, failed to follow certain
procedures which were clearly laid down in the association's
own bylaws as a necessary preliminary to the holding of a
formal hearing. Applicants applied for an order prohibiting
the holding of the formal hearing ordered by council and it
was contended that prohibition did not lie since the profes
sional guidance committee did not have the power to make a
final adjudication of the rights of the applicants.
Held, recommendations made to council by the professional
guidance committee following the completion of a formal
hearing were of such significance that it was proper to say
that the committee "determined" the rights of members
whose conduct was under investigation; furthermore, the
committee was under a duty to act judicially.
Counsel for the Association had argued stren
uously, as did counsel here [at page 48]:
... prohibition does not lie because the professional guidance
committee does not have the power, acting under the complaint
procedure or otherwise, to make a final adjudication of the
rights of the applicants.
The judgment here cites with approval, Lord
Maugham in Estate & Trust Agencies (1927) Ld.
v. Singapore Improvement Trust, [ 1937] A.C. 898
(P.C.), at page 917:
A proceeding is none the less a judicial proceeding subject to
prohibition or certiorari because it is subject to confirmation or
approval by some other authority.
The remedies sought are at the Court's discre
tion. If the respondent was simply a fact gathering
agency, the applicants would have no resort to
these prerogative writs. Also, if I accept the view
of counsel for the respondent, at best the respond
ent gathers facts and makes recommendations, and
because no final decision is made, there is nothing
to which the writs can apply.
However, it is clear that the respondent does
make decisions which will impact on the parties. It
is my view that the respondent gathers information
or facts, studies this data, makes decisions and
then follows with recommendations to the Minis
ter. There is universal agreement here—namely if
the Ontario Tobacco Board can establish to the
satisfaction of the respondent that the price
received by the farmer is less than his cost of
production and a reasonable return for producing
the crop it will form the basis for a recommenda
tion to the Minister of Agriculture.
In Re Doyle and Restrictive Trade Practices
Commission et al. (1984), 6 D.L.R. (4th) 407 a
Federal Court of Appeal decision Le Dain J. states
[at pages 410-411] :
Thus the Commission finds that of the five specific allega
tions of fraud made by the Inspector, four have been substan
tiated. This alone leads us in the words of Section 114(27) of
the Canada Corporations Act "in the public interest" to
"request the Minister to institute and maintain or settle
proceedings in the name of the company whose affairs and
management were the subject of the investigation and
report",—Javelin International Limited.
The issue is whether the nature and effect of the commis
sion's report, as reflected by the foregoing passage and legisla
tive provisions, make it a decision within the meaning of s. 28.
If it is such a decision, there is no dispute and, in my opinion,
there can be no doubt that it is, by virtue of the express
legislative provision for hearing, including the right to counsel,
one required by law to be made on a judicial or quasi-judicial
basis.
The meaning of the word "decision" in s. 28, apart from the
condition that it be one that is required to be made on a judicial
or quasi-judicial basis, has been considered by this court in
cases involving the distinction between the ultimate or final
decision of a tribunal in the exercise or purported exercise of its
jurisdiction or powers and other decisions or positions adopted
by it in the course of exercising or declining to exercise its
jurisdiction. This court has held that it is only the former that is
a decision within the meaning of s. 28. The leading cases are Re
A.-G Can. and Cylien (1973), 43 D.L.R. (3d) 590, [1973] F.C.
1116; Re B.C. Provincial Council United Fishermen & Allied
Workers Union and B.C. Packers Ltd. et al. (1973), 45 D.L.R.
(3d) 372, [ 1973] F.C. 1194 sub nom. B.C. Packers Ltd. et al. v.
Canada Labour Relations Board et al., 1 N.R. 201, and Re
Anti-Dumping Act; Re Danmor Shoe Co. Ltd. et al., [1974] 1
F.C. 22, 1 N.R. 422. The effect of this jurisprudence was
recently summed up by Heald J. in Re Anheuser-Busch, Inc.
and Carling O'Keefe Breweries of Canada Ltd. et al. (1982),
142 D.L.R. (3d) 548 at p. 552, 69 C.P.R. (2d) 136 at p. 140, 45
N.R. 126, where he said:
That jurisprudence is to the effect that the Federal Court of
Appeal has jurisdiction to review under s. 28 only final orders
or decisions—that-is—final in the sense that the decision or
order in issue is the one that the tribunal has been mandated
to make and is a decision from which legal rights or obliga
tions flow.
I take the words "from which legal rights or obligations flow"
to be a reference to the statements in the earlier cases that the
decision must be one that has the legal effect of settling the
matter before the tribunal and binding the tribunal, in the sense
that its powers are spent, and also to the statements that
opinions of a tribunal as to the limits of its jurisdiction or
powers are not decisions within the meaning of s. 28 because
they do not have legal effect. The criterion or principle which I
draw from this jurisprudence, for purposes of the issue in the
present case, is that a decision within the meaning of s. 28 is
one which has the legal effect of a binding decision. The precise
nature of the legal effect is not in issue in determining whether
it is a decision. That is one of the factors in determining
whether the decision is one required by law to be made on a
judicial or quasi-judicial basis. cf. Minister of National Reve
nue v. Coopers & Lybrand (1978), 92 D.L.R. (3d) 1, [1979] 1
S.C.R. 495, [1978] C.T.C. 829. The express legislative provi
sion for hearing is certainly another, and as I have suggested, a
conclusive one in the present case. But the requirement of
hearing or fair procedure does not necessarily mean that what
is involved is a determination having the legal effect of a
binding decision: cf. Re Pergamon Press Ltd., [1971] 1 Ch.
388, where such a procedure was held to be necessary in the
investigation of the affairs of a company although it was
acknowledged that the investigation did not involve a decision.
The finding of fraud by the commission in the present case is
not, in my opinion, a determination that by itself has the legal
effect of a binding decision. It does not by itself produce any
legal effect. It is not binding on anyone. It is not conclusive of
anything. It was the basis, however, of the commission's deter
mination that it was in the public interest to request the
Minister, pursuant to s-s. 114(27), to institute and maintain or
settle proceedings in the name of the company. That determi
nation, as implemented by the request, has in my opinion the
legal effect of a binding decision. It has the legal effeçt of
permitting the Minister to exercise the powers conferred on him
by that subsection, and it is binding and conclusive in that
respect, unless set aside on review. (Emphasis added.)
Counsel for one of the applicants declared: "In
matters such as this, simple, elementary justice
demands that the Panel allow the intervenors to
see the study". It is not a rule of procedure, but a
fundamental rule of our law. He asked rhetorical
ly, "How can one (the Respondent) put it in a file,
and the other parties cannot see it?"
The impact here on the applicants is direct. A
decision and recommendation in favour of an
agency as indicated earlier will cost them many
extra millions of dollars. The respondent, and now
this Court, represent their last avenue of appeal
before the Governor in Council decision.
Another counsel for one of the applicants puts
the matter this way: "The Act itself makes it
mandatory that if an inquiry is to be made then a
public hearing must take place, and that calls on
the Respondent to proceed and to do so fairly." In
his view, the panel acted unfairly, and erred in
particular in the following ways:
1. Chairman's suggestion to remove reference to the study.
2. Erred in refusing to rule on the first motion.
3. Erred in rejecting the second motion.
4. Erred in refusing a subpoena or adjourn.
5. Erred in having the report after the hearing.
6. Erred in refusing to re-open.
Counsel puts the matter most succinctly, and
correctly.
I do agree with counsel for the respondent who
stated that the inquiry is not restricted to the
hearing, but here this vital study was central to the
decision that the panel had to make and it was
inappropriate and unfair in the circumstances not
to take the action suggested by the applicants—to
compel its production when complete by simply
reopening the hearing. Also to suggest these hear
ings are not adversarial is stretching things a bit.
And yes, the Minister can decide to establish the
agency and not have a public hearing, but once an
inquiry is ordered the respondent has wide powers,
and should not fetter them as it did here.
The rights of the applicants are affected as is
clearly indicated in the evidence, and could be
affected significantly. Who can really deny that
the applicants will be adversely affected if the
respondent decides to approve the application of
the Ontario Tobacco Board and make that recom
mendation to the Minister of Agriculture?
Did the respondent rely on the study? Whether
it did or not is irrelevant and the law is quite clear
on that subject. Cartwright J. in Mehr v. Law
Society of Upper Canada, [1955] S.C.R. 344, says
at page 350:
Laidlaw J. A. who delivered the unanimous judgment of the
Court of Appeal dealt with it in these words:—([1954] O.R.
337 at 342)
The objection taken in respect of the declaration made
jointly by Mr. and Mrs. Hsiung can be answered in a word.
The report of the Committee shows that: "The Committee
has not given any effect to these declarations because the
Hsiungs were not present in person and available for cross-
examination." That statement is accepted by the Court and
is conclusive.
With the greatest respect I am unable to agree with either of
these passages. They appear to me to be directly contrary to the
following language of Lord Eldon in Walker v. Frobisher
((1801) 6 Ves. 70 at 72; 31 E.R. 943) which was approved in
the unanimous judgment of this Court delivered by my brother
Rand in Szilard v. Szasz ([1955] S.C.R. 3) on Nov. 1, 1954:—
But the arbitrator swears it (hearing further persons) had
no effect upon his award. I believe him. He is a most
respectable man. But I cannot from respect for any man do
that which I cannot reconcile to general principles. A judge
may not take upon himself to say whether evidence improp
erly admitted had or had not an effect upon his mind. The
award may have done perfect justice, but upon general
principles it cannot be supported.
One further point: the applicants here do not
seek to prevent, or for that matter unduly delay
the hearings of the respondent unnecessarily but
want to make certain "the Hearings are complete
and deserving of the respect of reasonable men".
It is my judgment that this application be
allowed, the hearing be reopened and the respond
ent compel the Ontario Tobacco Board to produce
the Touche, Ross & Partners 1983 Cost of Produc
tion Study and the parties be so notified and given
an opportunity, if desired, to examine, cross-exam
ine, introduce rebuttal evidence and to argue their
respective positions as is provided in its Rules of
Procedure. It will only be necessary to notify the
parties participating in this application, although
others who participated in the hearings at London,
Ontario, Charlottetown, P.E.I., Montreal, Quebec,
and Ottawa, Ontario are free to request an oppor
tunity to be heard by the respondent.
Costs shall be to the applicants.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.