Judgments

Decision Information

Decision Content

T-1958-87
Samuel, Son & Co., Limited and W. Grant Bray- ley (Applicants)
v.
Restrictive Trade Practices Commission and Director of Investigation and Research, (The Competition Act) (Respondents)
INDEXED AS: SAMUEL, SON & CO., LTD. V. CANADA (RESTRIC- TIVE TRADE PRACTICES COMMISSION)
Trial Division, Reed J.—Ottawa, November 10 and 13, 1987.
Combines — Flat rolled steel inquiry commenced in 1981 — Applicant ordered to attend to give evidence under Combines Investigation Act, s. 17 — Proceedings adjourned, and resumed in 1987 — Motion for disclosure of materials filed in support of s. 17 order — Although decision to issue s. 17 order reviewable to ensure compliance with rules of fairness or fundamental justice, inappropriate case for exercise of judicial discretion — Applicants not suffering prejudice — S. 17 meeting procedural requirements of Charter, s. 7 — Situation otherwise under new Competition Act.
Constitutional law — Charter of Rights — Life, liberty and security — Motion for disclosure of material filed in support of order under Combines Investigation Act, s. 17 — Decision to issue s. 17 order reviewable to ensure compliance with Charter rules or fairness or fundamental justice — Motion dismissed — Applicant not suffering prejudice if denied access as nature of investigation known — Chairman's decision not arbitrary — S. 17 meeting procedural requirements of Chart er, s. 7.
This was a motion for an order to compel the respondents to disclose all material filed in support of an order issued pursuant to section 17 of the Combines Investigation Act. An inquiry concerning flat rolled steel was commenced in 1981. The applicant, Brayley, was ordered to attend to give evidence pursuant to section 17. The proceedings were adjourned until 1987 when the Supreme Court, in Irvine, determined that the procedure followed by the hearing Officer did not offend the rules of natural justice or fairness. The notice of motion initiating these proceedings sought access to the material on which the 1981 order to attend was based. The Commission then vacated the 1981 order and issued a new order. The notice of motion was amended to seek access to the materials on which both orders were based. The information sought was said to be necessary to challenge the validity of the section 17 order. The applicants argued that section 17 orders are discretionary, and therefore that the rules of fairness and consequently the rules of fundamental justice under section 7 of the Charter apply. Furthermore, they argued that section 7 requires a
protective procedure of prior authorization which would involve disclosure of the material in question. The respondents argued that the decision to make a section 17 order is purely adminis trative and non-reviewable.
Held, the application should be dismissed.
The applicants could not be entitled to access to material related to the earlier order as it had been vacated.
The decision to issue a section 17 order is reviewable to ensure that the rules of fairness or fundamental justice under the Charter have been complied with. This was supported by the respondents' argument that such orders may be challenged for having been issued for an improper purpose, which demon strated that these orders are reviewable by a superior court. Also, a member of the Restrictive Trade Practices Commission has a discretion in issuing such orders.
As to the scope of the rules of fairness and fundamental justice, the cases referred to as authority for the proposition that the applicant had a right to know the nature of the material in question in order to contest the validity of the order were distinguished as they dealt with the right to cross-examine on affidavits filed in support of applications for search warrants.
The fact that a section 17 order is "ex parte" and made on "application" does not necessarily mean such orders are always returnable to provide the party against whom the order has been made with a chance to answer.
Even if there had been a breach of the rules of fairness, this was not an appropriate case for the Court to exercise its discretion to grant the relief sought. The applicants did not suffer any prejudice in being unable to review the material. They knew the nature of the investigation which had already commenced. The Chairman's decision was neither arbitrary, nor made without addressing his mind to the question of whether or not there were reasonable grounds on which to require that the applicants be ordered to attend.
As to whether prior authorization was required, Stelco Inc. v. Canada (Attorney General), is authority for the proposition that the procedure prescribed by section 17 does not offend the principles of natural justice. If the inquiry was being conducted under the new Competition Act, the applicants would be en titled to their remedy in light of the amendments to section 10 of the Combines Investigation Act. However, statutory amend ment is not indicative of the state of the law prior to the amendment.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
An Act to establish the Competition Tribunal and to amend the Combines Investigation Act and the Bank Act and other Acts in consequence thereof, S.C. 1986, c. 26, s. 67.
Canada Evidence Act, R.S.C. 1970, c. E-10.
Canadian Charter of Rights and Freedoms, being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.), ss. 7, 8.
Combines Investigation Act, R.S.C. 1970, c. C-23, ss. 10 (as. am. by S.C. 1986, c. 26, s. 24), 17, 32. (as am. by S.C. 1974-75-76, c. 76, s. 14).
Competition Act, R.S.C. 1970, c. C-23 (as am. by S.C. 1986, c. 26, s. 19), s. 9.
CASES JUDICIALLY CONSIDERED
APPLIED:
Stelco Inc. v. Canada (Attorney General), judgment dated October 22, 1987, Federal Court, Appeal Division, A-728-87, not yet reported.
DISTINGUISHED:
Re Butler Manufacturing Co. (Canada) Ltd. and Minis ter of National Revenue (1983), 42 O.R. (2d) 784 (S.C.); Corr (T.A.) et al. v. The Queen, [1987] 1 C.T.C. 148 (S.C. Ont.).
CONSIDERED:
Irvine v. Canada (Restrictive Trade Practices Commis sion), [1987] 1 S.C.R. 181; Hunter et al. v. Southam Inc., [1984] 2 S.C.R. 145; 11 D.L.R. (4th) 641; Thomson Newspapers Ltd. et al. v. Director of Investigation & Research et al. (1986), 57 O.R. (2d) 257 (C.A.); Ziegler v. Hunter, [1984] 2 F.C. 608; (1983), 81 C.P.R. (2d) 1 (C.A.); Stelco Inc. v. Canada (Attorney General), [1988] 1 F.C. 510 (T.D.); Yri-York Ltd. v. Canada (Attorney General), [1988] 2 F.C. 537 (T.D.).
REFERRED TO:
Re Director of Investigation and Research and Restric tive Trade Practices Commission et al. (1985), 18 D.L.R. (4th) 750 (F.C.A.); Restrictive Trade Practices Commission et al. v. Director of Investigation and Research, Combines Investigation Act (1983), 145 D.L.R. (3d) 540 (F.C.T.D.); A. G. Sask. et al. v. Boy- chuk et al., [1977] 5 W.W.R. 750 (Sask. C.A.); Tribune Newspaper Co. v. Ft. Frances Pulp & Paper Co., Re Macklin, [1932] 4 D.L.R. 179 (Man. C.A.); Rex v. Baines, [1909] 1 K. B. 258.
COUNSEL:
William J. Miller for applicants.
No one appearing for respondent Restrictive
Trade Practices Commission.
Peter A. Vita, Q.C. for respondent Director of Investigation and Research.
SOLICITORS:
Smith, Lyons, Torrance, Stevenson & Mayer, Ottawa, for applicants.
No one representing respondent Restrictive Trade Practices Commission.
Deputy Attorney General of Canada for respondent Director of Investigation and Research.
The following are the reasons for order ren dered in English by
REED J.: The applicants bring a motion seeking an order to compel the respondents to disclose all material filed in support of an order, issued pursu ant to section 17 of the Combines Investigation Act, R.S.C. 1970, c. C-23, as amended. Section 17 provides that a member of the Restrictive Trade Practices Commission, either at the behest of the Director of Investigation and Research or on the member's own motion, may order any person to be examined on oath or make production of documents.' The section 17 order in question requires the applicant Mr. W. G. Brayley to give evidence with respect to an inquiry relating to the
17. (1) On ex parte application of the Director, or on his own motion, a member of the Commission may order that any person resident or present in Canada be examined upon oath before, or make production of books, papers, records or other documents to such member or before or to any other person named for the purpose by the order of such member and may make such orders as seem to him to be proper for securing the attendance of such witness and his examination, and the pro duction by him of books, papers, records or other documents and may otherwise exercise, for the enforcement of such orders or punishment for disobedience thereof, all powers that are exercised by any superior court in Canada for the enforcement of subpoenas to witnesses or punishment of disobedience thereof.
(2) Any person summoned under subsection (1) is competent and may be compelled to give evidence as a witness.
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production, manufacture, purchase, sale and supply of flat rolled steel, plate steel, bar, structur al steel and related products. The inquiry pertains to section 32 [as am. by S.C. 1974-75-76, c. 76, s. 14] of the Combines Investigation Act, which sec tion prescribes it to be an offence for anyone to conspire, combine or agree to prevent or unduly limit competition. 2
The flat rolled steel inquiry was commenced by application, of the Director to the Commission in January 1981. An order was issued to the appli cant on February 2, 1981 requiring him to attend to give evidence. The inquiry hearings commenced in March 1981. (These hearings involved not only
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(3) A member of the Commission shall not exercise power to penalize any person pursuant to this Act, whether for contempt or otherwise, unless, on the application of the member, a judge of the Federal Court of Canada or of a superior or county court has certified, as such judge may, that the power may be exercised in the matter disclosed in the application, and the member has given to such person twenty-four hours notice of the hearing of the application or such shorter notice as the judge deems reasonable.
(4) Any books, papers, records, or other documents produced voluntarily or in pursuance of an order under subsection (1) shall within thirty days thereafter be delivered to the Director, who is thereafter responsible for their custody, and within sixty days after the receipt of such books, papers, records or other documents by him the Director shall deliver the original or a copy thereof to the person from whom such books, papers, records or other documents were received.
2 Subsection 32(1) provides:
32. (1) Every one who conspires, combines, agrees or arranges with another person
(a) to limit unduly the facilities for transporting, produc ing, manufacturing, supplying, storing or dealing in any product,
(b) to prevent, limit or lessen, unduly, the manufacture or production of a product, or to enhance unreasonably the price thereof,
(c) to prevent, or lessen, unduly, competition in the pro duction, manufacture, purchase, barter, sale, storage, rental, transportation or supply of a product, or in the price of insurance upon persons or property, or
(d) to otherwise restrain or injure competition unduly,
is guilty of an indictable offence and is liable to imprison ment for five years or a fine of one million dollars or to both.
the applicant but 28 other witnesses as well.) Objections to the procedure being followed by the hearing officer arose. The proceedings were adjourned to allow the parties to contest the validi ty of that procedure. The Supreme Court recently determined that the procedure being followed was valid (i.e. did not offend the rules of natural justice or fairness): Irvine v. Canada (Restrictive Trade Practices Commission), [1987] 1 S.C.R. 181. Consequent upon the Supreme Court's decision notice was given to the applicants that the inquiry would be resumed.
The applicants filed a notice of motion, dated September 21, 1987 initiating the present proceed ing. The notice of motion sought access to the material on which the Commission's February 2, 1981 order was based. The Commission, on Octo- ber 6, 1987 vacated the February 2, 1981 order and issued a new order effective October 6, 1987. There is no dispute that the Commission has the authority to vacate and re-issue the order, despite the recent amendments to the Combines Investi gation Act. An Act to establish the Competition Tribunal and to amend the Combines Investigation Act and the Bank Act and other Acts in conse quence thereof, S.C. 1986, c. 26, states:
67. (1) Notwithstanding any other provision of this Act, the members of the Restrictive Trade Practices Commission appointed under the Combines Investigation Act (in this section referred to as the "members" and the "Commission"), while this subsection is in force, continue in office as such and may exercise such of the powers and perform such of the duties and functions as were, before the coming into force of this Act, vested in them as such for the purpose only of completing any inquiry or other matter or proceeding commenced under the Combines Investigation Act or any other Act of Parliament before the coming into force of this section.
(2) For the purposes of any inquiry or other matter or proceeding referred to in subsection (1), the Combines Investi gation Act and any other Act of Parliament amended by this Act shall be read as if this Act had not come into force.
After the rescinding of the February 2, 1981 order and the issue of its replacement, on October 6, 1987, the applicants amended their notice of motion so as to seek access to the materials on which both the February 2, 1981 order and the
October 6, 1987 order were based. The applicants argue that they should be entitled to see both sets of materials because the two orders comprise, essentially, one transaction. I disagree. If the applicants are entitled to have access to any ma terial, it can only be to that on which the October 6 order is based. The earlier order having been vacated, it is now irrelevant.
The applicants seek access to the information in question, because, they say, they wish to challenge the validity of the section 17 order requiring the applicant, Mr. Brayley to attend and give evi dence. In order to do so, it is argued that it is necessary to know on what material the Chairman of the Commission based his decision to order Mr. Brayley to attend.
I find it necessary, first of all, to put the appli cants' claim in the context of the recent jurispru dence. The Supreme Court in Hunter et al. v. Southam Inc., [1984] 2 S.C.R. 145; 11 D.L.R. (4th) 641 held that section 10 of the Combines Investigation Act infringed section 8 of the Canadian Charter of Rights and Freedoms [being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.)]. Section 10 was held to authorize unreasonable searches and seizures because it did not provide a mechanism of prior authorization sufficient to ensure that the searches or seizures, authorized by that section were not arbitrary (i.e. it was held that there should exist a statutory procedure to ensure that reasonable grounds exist in order to authorize the entry and searches of premises).
It is clear, that based on the Hunter case, an argument might be made that a section 17 order, which requires someone to attend and bring docu ments is analogous to a search or seizure; there is a similarity between searching a person's premises (and seizing documents therefrom) and requiring an individual to attend at a certain place and bring documents with him to be handed over. This issue was addressed in the decision in Thomson News papers Ltd. et al. v. Director of Investigation &
Research et al. (1986), 57 O.R. (2d) 257 (C.A.). In that case the Ontario Court of Appeal held that section 17 orders were really no different from subpoenas duces tecum which can be issued in either civil or criminal proceedings, without any requirement of assessing their reasonableness and the conflicting interest of the parties. (The Thom- son decision is presently on appeal to the Supreme Court of Canada.) The Ontario Court of Appeal in the Thomson decision referred to an earlier deci sion of the Federal Court of Appeal: Ziegler v. Hunter, [1984] 2 F.C. 608; (1983), 81 C.P.R. (2d) 1. In the Ziegler case both Mr. Justice Le Dain and Mr. Justice Hugessen likened a section 17 order to a subpoena duces tecum. They referred to American authorities stating that such subpoenas are to be treated quite differently from searches and seizures.
The issue was again dealt with by the Federal Court of Appeal in Stelco Inc. v. Canada (Attor- ney General) (judgment dated October 22, 1987, Court file number A-728-87 not yet reported). The Court of Appeal reiterated the reasoning found in the Ontario Court of Appeal's decision in the Thomson case. These cases deal with the argu ment that section 17 orders should be considered to be searches or seizures and therefore subject to section 8 of the Charter. They reject that contention.
The above-mentioned jurisprudence also deals with another issue. While a section 17 order may be analogous to a subpoena duces tecum there is an important difference. An ordinary subpoena duces tecum, either in a civil or criminal proceed ing, is issued in the context of an actual trial where the parties have been identified (in the case of a criminal proceeding an accused has been charged) and the fact situation and legal consequences sought to be drawn therefrom are known. In the case of a section 17 order, however, the order requires individuals who may subsequently be charged with a criminal offence, to attend and give evidence before a charge is laid; and, the charge may be laid as a result of the testimony given. The
cases cited above (the Ontario Court of Appeal in the Thomson case and the Federal Court of Appeal decision in both Zeigler and Stelco) have indicated that this procedure does not infringe any right against self-incrimination. That is, there is no infringement of paragraph 11(c) of the Charter and the normal Canada Evidence Act [R.S.C. 1970, c. E-10] guarantees apply to protect the testimony a witness may give from being used against him or her in a subsequent proceeding.
One last piece of jurisprudence must be noted. Mr. Justice McNair, in what I will call the Yri- York [Yri-York Ltd. v. Canada (Attorney Gener al), [1988] 2 F.C. 537 (T.D.)] application was asked to stay the flat rolled steel inquiry, until the Supreme Court decision in the Thomson case was handed down. He found it inappropriate to do so (T-1983-87, order dated November 5, 1987).
The applicants' argument, now however, focuses on the procedural safeguards which flow from section 7 of the Charter and which flow at common law from the doctrine of fairness. It is argued that when an individual is ordered to attend an investigation and give evidence on oath, a coercive type of proceeding exists which consti tutes an infrigement of a person's liberty. Section 7 of the Charter provides:
7. Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.
The applicants argue that while the decision of the Chairman of the Commission, in ordering the applicant, Brayley, to attend to give evidence can be classified as administrative as opposed to judi cial or quasi-judicial, that decision is not automat ic or lacking in discretion, as is the issuing of subpoenas duces tecum by court officials. Juris prudence which demonstrates that section 17 orders are of a discretionary nature, it is argued, are: Re Director of Investigation and Research and Restrictive Trade Practices Commission et al. (1985), 18 D.L.R. (4th) 750 (F.C.A.); Restrictive Trade Practices Commission et al. v. Director of Investigation and Research, Combines Investiga tion Act (1983), 145 D.L.R. (3d) 540 (F.C.T.D.).
Consequently, counsel argues the issue of a section 17 order is the kind of decision to which the rules of fairness and consequently the rules of funda mental justice under the Charter, apply. The rules of fairness will vary depending upon the nature of the proceeding.
I would characterize the applicants' Charter argument on this point as having two aspects: (1) an assertion that section 7 requires in the case of a section 17 order a protective procedure of prior authorization, as the Supreme Court held was the case, in Hunter v. Southam, under section 8 for search and seizures; and, (2) part of that prior authorization procedure requires an assessment by an independent decision-maker as to whether the compelling of an individual to attend, give evi dence and bring documents is reasonable in the circumstances. Counsel would argue that the ma terials presented to that independent decision- maker should be available to the person compelled to attend since that person has a right to know the nature of the material which led to the authoriza tion of the issuance of the order. Thus, it is argued, the applicant has a right to know the nature of this material in order to enable him to contest the validity of the order.
The respondents' argument is that (1) the sec tion 17 order is not one to which the rules of natural justice, fairness, or fundamental justice apply—it is purely administrative in the non- reviewable sense; (2) if the order is reviewable, the scope of the rules of natural justice, fairness or fundamental justice do not require either any prior authorization procedure or the disclosure of the material in question.
I think it is fair to note in this regard that a significant part of the respondents' concern with the applicants' request seems to be that the origi nal section 17 order was made before the Charter of Rights came into force and before the Supreme Court decision in Hunter v. Southam. That order was made on the assumption that the proceedings
were totally confidential, at that point, and that there could be no disclosure of the materials filed with the Commission. It is suggested by counsel, although there is no affidavit evidence to this effect, that the Director may have filed with the Commission all his investigative files, rather than merely enough evidence to justify the issuing of a section 17 order. Whether the respondents filed different material in support of the October 9 order is not known. I should note that the respon dents have not offered to make that material avail able to the applicants. In any event, the respon dents see the applicants' motion as designed to gain access to all the Director's investigative files and not for any valid purpose related to the administrative guarantees of fairness.
I will deal first with the argument that a section 17 order is absolutely non-reviewable. I do not think this is the case. Counsel for the respondents argues that the order can only be challenged in the way that subpoenas usually are challenged: i.e. before the same body that issued the subpoena on the ground that, for example it was issued to a person who could not give material evidence or on the ground that it was obtained for an indirect or improper object. See: A. G. Sask. et al. v. Boy- chuck et al., [1977] 5 W.W.R. 750 (Sask. C.A.); Tribune Newspaper Co. v. Ft. Frances Pulp & Paper Co., Re Macklin, [1932] 4 D.L.R. 179 (Man. C.A.); Rex. v. Baines, [1909] 1 K.B. 258. The applicants argue that they are attempting to challenge the order before the body which makes it but that in order to do so they need the material being sought.
In my view the decision to issue a section 17 order is one that is reviewable for the purpose of ensuring that the rules of fairness, or fundamental justice (under the Charter) have been complied with. It seems to me that respondents' argument that such orders are attackable for example, for having been issued for an indirect or improper purpose, (grounds which in administrative law terms correspond to review for abuse of discretion, or for having been made in a perverse or arbitrary manner) itself demonstrates that these orders are
of a kind which could be reviewed by a superior court. I accept too the argument that the member of the Commission has a discretion in issuing such orders.
What then of the scope of the rules of fairness and fundamental justice. I should note I have been referred to no authority which would demonstrate that the ordinary common law rules of fairness require the production of the material in question. Re Butler Manufacturing Co. (Canada) Ltd. and Minister of National Revenue (1983), 42 O.R. (2d) 784 (S.C.) and Corr (T.A.) et al. v. The Queen, [1987] 1 C.T.C. 148 (S.C. Ont.) are referred to as authority for the proposition that the applicant has a right to know the nature of this material in order to enable him to contest the validity of the order. These cases are of no assist ance. They both deal with applications made to a court for issuance of a search warrant, which application was supported by affidavits. The cases only decide that cross-examination is to be allowed on the affidavits.
Counsel makes much of the fact that a section 17 order is described as being an "ex parte order" made on "application". It is argued that such orders are always returnable to enable the party, against whom the order has been given, to answer. It is argued, that part of that process necessarily involves access to the materials on which the order was originally made. I think this reads too much into the terms "ex parte" and "application" in section 17.
In any event, in so far as the applicants' claim is based on the argument that the rules of fairness (apart from any Charter argument) operate so as to require disclosure of the documents—an issue that it is said was expressly left open by the Supreme Court decision in the Irvine case (page 24 of the decision)—I find that claim easy to answer. Even if there had been a breach of the rules of fairness in this case, I would not deem it appropriate to exercise my discretion to grant the order sought. The applicants suffer no prejudice from being unable to review the material in ques tion. They know the nature of the investigation; indeed, it has already commenced. There is not a
shred of evidence to suggest that the Chairman's decision was arbitrary or made without addressing his mind to the question of whether or not there were reasonable grounds on which to require that the applicants be ordered to attend. It is simply not a case to exercise the Court's discretion in favour of the applicants.
That leaves for consideration the broader issue: whether section 7 of the Charter requires, in a case such as the present, a procedure for prior authori zation, analogous to that required by virtue of section 8 in the case of searches and seizures. It is to be noted that when section 10 of the Combines Investigation Act was amended [S.C. 1986, c. 26, s. 24], in response to the Hunter v. Southam decision, a prior authorization procedure was established to cover not only section 10 searches and seizures but also orders which had previously been granted under section 17 (refer: section 9 of the Competition Act (as am. by S.C. 1986, c. 26, s. 19). Thus, if the flat rolled steel inquiry was being conducted pursuant to the new Competition Act rather than the Combines Investigation Act, the applicants would be entitled to the remedy they seek. It is, of course trite law that, statutory amendment, in itself, cannot be taken as indica tive, one way or the other, of the state of the law prior to the amendment.
Before me, counsel argued that the jurispru dence (Hunter v. Southam, Thomson and Ziegler) did not deal with the section 7 argument in so far as it related to procedural guarantees. Specifically, it was argued that the question of whether or not there was inherent in the requirements of funda mental justice, in the case of an inquiry such as that in issue in this case, a need for a procedure of prior authorization, had not been argued in that jurisprudence. The jurisprudence, it was said, only dealt with either section 8 or the section 7 argu ment as it related to issues of substantive fairness and what is colloquially referred to as the right against self-incrimination.
Strangely, neither counsel cited to me the recent Federal Court of Appeal decision in Stelco Inc. v. Canada (Attorney General) (Court file No. A-728-87, decision dated October 22, 1987) nor
the Trial Division decision in that case, [1988] 1 F.C. 510. On reading those decisions, it seems to me that the issue of procedural fairness has been dealt with and determined by the Court of Appeal. Associate Chief Justice Jerome was asked in the Stelco case [at page 516] to determine whether "the procedure prescribed by the legislation [sec- tion 17 of the (Combines Investigation Act)] falls short of the requirements of fundamental justice." He stated that they did not. His decision charac terized section 17 orders as administrative and non-reviewable (refer pages 516-517 of his deci sion). While the Court of Appeal indicated that it might not agree with that characterization (at page 3 of its decision), it upheld the decision which had found that the procedure prescribed by the legislation did not offend the Charter principles of fundamental justice. Thus this issue has been determined by the Court of Appeal contrary to the position which the applicants take.
For the reasons given this application will be dismissed.
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