Judgments

[1995] 3 F.C. 306

A-184-94

George Addy, Director of Investigation and Research, appointed pursuant to the Competition Act (Appellant)

v.

Charles Samson, Marie Marier, Michel Lamoureux, Denise Cloutier, Claude Gagnon, Daniel Tousignant, André Robert, Nathalie Poisson, Richard Laprise, Suzanne Leblanc, Armand Bolduc, Marie-Josée Bolduc, Claude Turcotte, René Cyr (Respondents)

Indexed as: Samson v. Canada (C.A.)

Court of Appeal, Hugessen, Décary JJ.A. and Chevalier D.J.—Montréal, May 18; Ottawa, June 13, 1995.

Competition — Appeal from Trial Division decision quashing orders to compel respondents to testify at inquiry under Competition Act, s. 10 — Respondents are notaries alleged to have agreed upon uniform fee tariff for real estate deals — Evidence available to appellant insufficient to prosecute respondents — Trial Judge not taking into account undue effect of agreement as essential element of offence — Legislative, regulatory framework of inquiry reviewed — Inquiry having legitimate objectives, not designed to incriminate respondents — Rules of natural justice not infringed.

This was an appeal from a Trial Division decision quashing orders made under section 11 of the Competition Act to compel the respondents to testify at an inquiry held pursuant to section 10 of said Act. The respondents are notaries providing services connected with real estate transactions in the Sherbrooke area of Quebec. In July 1993, the appellant initiated an inquiry into an alleged agreement among them to observe minimum fee tariffs for transactions made between November 1992 and May 1993. Soon after, ex parte orders were granted by Nadon J. requiring the respondents to appear for examination. The Trial Judge held that the orders infringed section 7 of the Charter in requiring the respondents to testify when they were suspects and the appellant already had enough evidence to make a finding as to their guilt. The issue on appeal was whether the Trial Judge was right in so deciding.

Held, the appeal should be allowed.

The Trial Judge erred in law in concluding that the evidence available to the Director of Investigation and Research was already sufficient to allow him to prosecute the respondents for a breach of the Competition Act. She was also wrong in indicating that the only essential components of this crime were “that an agreement exists to set prices, that this agreement limits the real estate transaction market and that the applicants-plaintiffs are responsible for it”. Such reasoning failed to take into account the requirement to establish that an agreement to set prices or limit a market is undue before such an agreement becomes a criminal offence. Whether an agreement which is the subject of a prosecution under paragraph 45(1)(c) of the Act has an undue effect is a crucial aspect of the definition of the crime. Nothing in the information or in the other documents before the Trial Judge suggested that the Director already had the evidence he needed to undertake the kind of analysis mandated by the Supreme Court of Canada in R. v. Nova Scotia Pharmaceutical Society. The Director could not conclude that criminal offences had been committed by the respondents without first examining the possible application of subsection 45(7) of the Act. The evidence already available to him could not be used to undertake such a study.

In determining the predominant purpose of an inquiry, it is necessary to examine its entire context and in particular the legislative and regulatory background against which it is held. Only such an examination can indicate the real purpose of the testimony sought. In the case at bar the legislative and regulatory framework of the inquiry at which the respondents were summoned to testify was provided by the Competition Act. The Act as a whole embodies a complex scheme of economic regulation; its purpose is to eliminate activities that reduce competition in the market place. It is thus not concerned with “real crimes” but with what have been called “regulatory” or “public welfare” offences. It results from this that the content of the Act is far from being exclusively criminal. Even in cases where the inquiry indicates that a crime has been committed it is far from certain that this will result in a criminal prosecution in which a conviction is sought. Moreover, the Act now allows the authorities to make use of purely civil proceedings in the Competition Tribunal, an administrative tribunal having no criminal jurisdiction. The inquiry at which the respondents have been summoned to testify will be held to achieve legitimate, public and important objectives. It was not designed to incriminate them and the summonses did not infringe the rules of natural justice.

STATUTES AND REGULATIONS JUDICIALLY CONSIDERED

Canada Evidence Act, R.S.C., 1985, c. C-5, s. 5(2).

Canadian Charter of Rights and Freedoms, being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44], ss. 7, 13, 24(2).

Competition Act, R.S.C., 1985, c. C-34 (as am. by R.S.C., 1985 (2nd Supp.), c. 19, s. 19), ss. 1.1 (as enacted idem), 10 (as am. idem, s. 23), 11 (as am. idem, s. 24), 12 (as am. idem), 13 (as am. idem), 14 (as am. idem), 34(2) (as am. idem, s. 28), 45(1) (as am. idem, s. 30), (7), 78 “anti-competitive act” (as am. idem, s. 45), 79(1) (as am. idem).

Securities Act, S.B.C. 1985, c. 83.

CASES JUDICIALLY CONSIDERED

FOLLOWED:

R. v. Nova Scotia Pharmaceutical Society, [1992] 2 S.C.R. 606; (1992), 114 N.S.R. (2d) 91; 93 D.L.R. (4th) 36; 313 A.P.R. 91; 74 C.C.C. (3d) 289; 43 C.P.R. (3d) 1; 15 C.R. (4th) 1; 10 C.R.R. (2d) 34; 139 N.R. 241; Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425; (1990), 65 D.L.R. (4th) 161; 54 C.C.C. (3d) 417; 29 C.P.R. (3d) 97; 76 C.R. (3d) 129; 47 C.R.R. 1; 106 N.R. 161; 39 O.A.C. 161; British Columbia Securities Commission v. Branch, [1995] 2 S.C.R. 3.

CONSIDERED:

R. v. S. (R.J.), [1995] 1 S.C.R. 451; (1995), 121 D.L.R. (4th) 589; 177 N.R. 81; 78 O.A.C. 161; Attorney General of Canada v. Canadian National Transportation, Ltd. et al., [1983] 2 S.C.R. 206; (1983), 49 A.R. 39; 3 D.L.R. (4th) 16; [1984] 1 W.W.R. 193; 28 Alta. L.R. (2d) 97; 7 C.C.C. (3d) 449; 76 C.P.R. (2d) 1; 38 C.R. (3d) 97; 49 N.R. 241; Irvine v. Canada (Restrictive Trade Practices Commission), [1987] 1 S.C.R. 181; (1987), 41 D.L.R. (4th) 429; 24 Admin. L.R. 91; 74 N.R. 33; General Motors of Canada Ltd. v. City National Leasing, [1989] 1 S.C.R. 641; (1989), 58 D.L.R. (4th) 255; 24 C.P.R. (3d) 417; 93 N.R. 326; 32 O.A.C. 332.

AUTHORS CITED

Stanbury, W. T. “Legislation to Control Agreements in Restraint of Trade in Canada: Review of the Historical Record and Proposals for Reform”, in Khemani, R. S. and W. T. Stanbury (eds.). Canadian Competition Law and Policy at the Centenary. Halifax, N.S.: Institute for Research on Public Policy/L’Institut de recherches politiques, 1991, Chapter 6.

APPEAL from Trial Division decision ([1994] 3 F.C. 113 (1994), 77 F.T.R. 179 (T.D.)) quashing orders made under section 11 of the Competition Act to compel the respondents to testify at an inquiry conducted pursuant to section 10. Appeal allowed.

COUNSEL:

François Rioux and André Dorion for appellant.

Bruno J. Pateras, Q.C., for respondents.

SOLICITORS:

Deputy Attorney General of Canada for appellant.

Pateras & Iezzoni, Montréal, for respondents.

The following is the English version of the reasons for judgment rendered by

Hugessen J.A.: The appellant Director of Investigation and Research, appointed pursuant to the Competition Act,[1] is appealing a Trial Division judgment [[1994] 3 F.C. 113 which quashed orders made pursuant to section 11 [as am. idem, s. 24] of the said Act to compel the respondents to testify at an inquiry conducted pursuant to section 10 [as am. idem, s. 23]. The Judge concluded that the orders in question infringed section 7 of the Charter [Canadian Charter of Rights and Freedoms, being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44]] because they required the respondents to testify when they were suspects and the appellant already had all the necessary evidence to make a finding as to their guilt.

The respondents are all notaries practising in the Sherbrooke area. In July 1993 the appellant initiated an inquiry pursuant to subparagraph 10(1)(b)(iii) of the Act regarding the provision by notaries in the Sherbrooke area of services connected with real estate transactions.

To begin with, the relevant portion of subsection 10(1) of the Act should be cited:

10. (1) The Director shall

…

(b) whenever he believes on reasonable grounds that

…

(iii) an offence under Part VI or VII has been or is about to be committed, or

…

cause an inquiry to be made into all such matters as he considers necessary to inquire into with the view of determining the facts.

Section 11, under which the orders in question were made, is also relevant to the questions raised by the instant appeal, together with sections 12 [as am. by R.S.C., 1985 (2nd Supp.), c. 19, s. 24], 13 [as am. idem] and 14 [as am. idem]:

11. (1) Where, on the ex parte application of the Director or the authorized representative of the Director, a judge of a superior or county court or of the Federal Court is satisfied by information on oath or solemn affirmation that an inquiry is being made under section 10 and that any person has or is likely to have information that is relevant to the inquiry, the judge may order that person to

(a) attend as specified in the order and be examined on oath or solemn affirmation by the Director or the authorized representative of the Director on any matter that is relevant to the inquiry before a person, in this section and sections 12 to 14 referred to as a “presiding officer”, designated in the order;

(b) produce a record, or any other thing, specified in the order to the Director or the authorized representative of the Director within a time and at a place specified in the order; or

(c) make and deliver to the Director or the authorized representative of the Director, within a time specified in the order, a written return under oath or solemn affirmation showing in detail such information as is by the order required.

(2) Where the person against whom an order is sought under paragraph (1)(b) in relation to an inquiry is a corporation and the judge to whom the application is made under subsection (1) is satisfied by information on oath or solemn affirmation that an affiliate of the corporation, whether the affiliate is located in Canada or outside Canada, has records that are relevant to the inquiry, the judge may order the corporation to produce the records.

(3) No person shall be excused from complying with an order under subsection (1) or (2) on the ground that the testimony, record or other thing or return required of the person may tend to criminate the person or subject him to any proceeding or penalty, but no testimony given by an individual pursuant to an order made under paragraph (1)(a), or return made by an individual pursuant to an order made under paragraph (1)(c), shall be used or received against that individual in any criminal proceedings thereafter instituted against him, other than a prosecution under section 132 or 136 of the Criminal Code.

(4) An order made under this section has effect anywhere in Canada.

12. (1) Any person summoned to attend pursuant to paragraph 11(1)(a) is competent and may be compelled to give evidence.

(2) Every person summoned to attend pursuant to paragraph 11(1)(a) is entitled to the like fees and allowances for so doing as if summoned to attend before a superior court of the province in which the person is summoned to attend.

(3) A presiding officer shall permit a person who is being examined pursuant to an order under paragraph 11(1)(a) and any person whose conduct is being inquired into to be represented by counsel.

(4) Any person whose conduct is being inquired into at an examination pursuant to an order under paragraph 11(1)(a) and that person’s counsel are entitled to attend the examination unless the Director or the authorized representative of the Director, or the person being examined or his employer, establishes to the satisfaction of the presiding officer that the presence of the person whose conduct is being inquired into would

(a) be prejudicial to the effective conduct of the examination or the inquiry; or

(b) result in the disclosure of confidential commercial information that relates to the business of the person being examined or his employer.

13. (1) Any person may be designated as a presiding officer who is a barrister or advocate of at least ten years standing at the bar of a province or who has been a barrister or advocate at the bar of a province for at least ten years.

(2) A presiding officer shall be paid such remuneration, and is entitled to be paid such travel and living expenses, and such other expenses, incurred in the performance of his duties under this Act, as may be fixed by the Governor in Council.

14. (1) The presiding officer may administer oaths and take and receive solemn affirmations for the purposes of examinations pursuant to paragraph 11(1)(a).

(2) A presiding officer may make such orders as he considers to be proper for the conduct of an examination pursuant to paragraph 11(1)(a).

(3) A judge of a superior court or county court or of the Federal Court may, on application by a presiding officer, order any person to comply with any order made by the presiding officer under subsection (2).

(4) No order shall be made under subsection (3) unless the presiding officer has given to the person in respect of whom the order is sought and the Director twenty-four hours notice of the hearing of the application for the order or such shorter notice as the judge to whom the application is made considers reasonable.

In the reasons for the judgment under appeal the Judge explained her reasoning as follows [at pages 123-125]:

In the circumstances of the case at bar there is no question that the Director has all the information that could lead him to conclude that the applicants-plaintiffs committed a criminal offence. I set out here the key passages of the information:

On July 20, 1993 the Director initiated an inquiry pursuant to s. 10(1)(b)(iii) of the Act concerning the provision by notaries in the Sherbrooke area of Quebec of services connected with real estate transactions between November 1992 and May 1993. The informant is an agent assigned to this inquiry and in that capacity has full knowledge of the case;

The parties concerned in this inquiry are the Association des notaires du district de St-François (hereinafter “the Association”) and its members who in December 1992 signed an agreement to observe minimum fee tariffs;

In February 1993 a consumer in the city of Windsor, Quebec filed a complaint with the Director after he was told by three notaries in the Windsor area that since January 1, 1993 notaries in that area had agreed to set the prices of their professional fees involving real estate transactions;

In the price survey conducted by the informant certain notaries stated that notaries in the St-François district had agreed in November 1992 or December 1992 to impose a uniform fee tariff;

A document dated March 15, 1993 and provided by a Sherbrooke notary lists the members of the Association’s executive and members of the Association’s various committees, including the committee on “coercive measures” and the “rate-setting” committee; the notaries on the “coercive measures” committee were Charles Samson, Suzanne Leblanc, Claude Gagnon, Michel Lamoureux, Richard Laprise and Claude Turcotte, and the notaries on the “rate-setting” committee were Charles Samson, Richard Laprise, Suzanne Leblanc, Marie Marier and Michel Lamoureux, as appears from a copy of this list filed in support hereof in Appendix 5;

A review of the information obtained to date indicated that notaries in the St-François district concluded an agreement in December 1992 to apply a minimum tariff for providing services connected with real estate transactions in the St-François district; this information gave the Director reasonable grounds to believe that offences had been committed pursuant to s. 45(1)(c) of the Act;

The following persons signed the “qualifications and hiring memorandum” described in Appendices 1 and 2, as appears in Appendix 3:

…

Additionally, these persons were all part of the executive of the Association des notaires du district de St-François and of the “coercive measures” committee and/or the “rate setting” committee.

Accordingly, there can be no doubt from reading the information and the evidence in the record that an agreement exists to set prices, that this agreement limits the real estate transaction market and that the applicants-plaintiffs are responsible for it. They are all members of the executive and members of the coercive measures and rate-setting (committees).

When the Director has all this information and corroborating evidence, I find it hard to understand what else he needs from the suspect notaries except to incriminate themselves.

He could have summoned the notaries’ clients or employees of the Bureau d’enregistrement to see what documents had been notarized during this short period, but he chose to summon the suspected notaries. In the circumstances I cannot find any legitimate reason in which the public interest justifies the Director’s application or even the valid objective of preserving and encouraging competition in Canada. [Emphasis in original.]

The Judge concluded [at page 126]:

There may be situations in which the interests of the community are greater and exercise of the power of compellability more legitimate. One example would be when combines investigators seek to obtain information from the only persons holding information about transactions which are the subject of the investigation and they seek to obtain information on such transactions in general without being solely concerned with the self-incrimination of these suspects.

However, that is not the case here. Based on the circumstances established by the information and the evidence in the record, the Director in my opinion has already concluded that criminal offences were committed by the applicants-plaintiffs and their own testimony can only add to the evidence of their misconduct.

If I understand these passages correctly, the Judge considered that the evidence available to the Director was already sufficient to allow him to prosecute the respondents for a breach of the Act. With respect, in my opinion this conclusion is wrong in law.

Though she does not say so expressly, it seems clear that the Trial Division Judge had paragraph 45(1)(c) [as am. idem, s. 30] of the Act in mind when she said that the Director had “already concluded that criminal offences were committed”. That section reads as follows:

45. (1) Every one who conspires, combines, agrees or arranges with another person

…

(c) to prevent or lessen, unduly, competition in the production, manufacture, purchase, barter, sale, storage, rental, transportation or supply of a product, or in the price of insurance on persons or property, or

…

is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years or to a fine not exceeding ten million dollars or to both.

It appears from the passage of the reasons cited above that the Trial Judge felt that the only essential components of this crime were “that an agreement exists to set prices, that this agreement limits the real estate transaction market and that the applicants-plaintiffs are responsible for it”. With all due deference to the Trial Judge, she erred in thinking this. In particular, she completely failed to take into account the requirement that the prosecutor must establish that an agreement to set prices or limit a market was undue before such an agreement can become a criminal offence.

In R. v. Nova Scotia Pharmaceutical Society[2] Gonthier J., speaking for the Court, defined the crime now described in paragraph 45(1)(c) of the Act as follows:

The offence created by s. 32(1)(c) [45(1)(c)] comprises two material elements:

1.   An agreement entered into by the accused (“Every one who conspires, combines, agrees or arranges with another person”); and

2.   An undue prevention or lessening of competition flowing from this agreement (“to prevent, or lessen, unduly, competition in the production, manufacture, purchase, barter, sale, storage, rental, transportation or supply of a product, or in the price of insurance upon persons or property”).

(The word “indûment”, which I added, was omitted from the first line of paragraph 2 of the French version. This is probably an error by the translator: “indûment” (unduly) figures prominently in the English text and nearly all the remainder of the judgment is devoted to an exhaustive study of the meaning to be given to this one word.)

A little later in the same judgment, at page 650 Gonthier J., explaining the role of the word “unduly” in Canadian competition law as compared with the law of other jurisdictions, said the following:

Section 32(1)(c) of the Act lies somewhere on the continuum between a per se rule and a rule of reason. It does allow for discussion of the anti-competitive effects of the agreement, unlike a per se rule, which might dictate that all agreements that lessen competition attract liability. On the other hand, it does not permit a full-blown discussion of the economic advantages and disadvantages of the agreement, like a rule of reason would. Since “unduly” in s. 32(1)(c) leads to a discussion of the seriousness of the competitive effects, but not of all relevant economic matters, one may say that this section creates a partial rule of reason.

Gonthier J. then analysed, at page 651, the points that should be taken into account in interpreting the word “unduly”:

First of all, there are two major elements to this inquiry, that is (1) the structure of the market and (2) the behaviour of the parties to the agreement. As a preliminary step, definition of the relevant market is required.

The Judge noted, at pages 652-653 with respect to the first point:

Indeed market share as such cannot suffice to conclude on the structure of the market, and s. 32(1)(c) would lose some of its effectiveness and would stray from its objectives if it incorporated a market-share threshold. Market share alone is not determinative, as was rightly pointed out in Canadian General Electric, at p. 501.

The aim of the market structure inquiry is to ascertain the degree of market power of the parties to the agreement, as was said in Canadian Coat and Apron Supply Ltd., at p. 64. In this respect, many factors other than market share are relevant. Some were listed in J. W. Mills, at pp. 307-8: (1) the number of competitors and the concentration of competition, (2) barriers to entry, (3) geographical distribution of buyers and sellers, (4) differences in the degree of integration among competitors, (5) product differentiation, (6) countervailing power and (7) cross-elasticity of demand (see also Canadian General Electric, supra).

The following passage, at pages 655-656 clearly indicates the Judge’s thinking on the second point:

The second part of the framework found in case law involves an examination of the behaviour of firms. In both R. v. McGavin Bakeries Ltd. (No. 6) (1951), 3 W.W.R. (N.S.) 289 (Alta. S.C.), at p. 303, and Canadian General Electric, supra, at pp. 531-2, the court considered which facet of competition was affected by the agreement (price, quality, service or other) and whether it was the prime concern of the buying public. The object of the agreement is without doubt the most important behavioural element in the inquiry, but others may be relevant, such as the manner in which the agreement has been or will be carried out and, in general, any behaviour that tends to reduce competition or limit entry (see J. W. Mills, supra, at p. 309).

The aim of the inquiry is the likely effect of the agreement. I can only quote from R. v. Northern Electric Co., [1955] 3 D.L.R. 449 (Ont. H.C.), at p. 469:

In considering whether the agreement or conspiracy comes within the statute, one does not judge the unlawfulness by what was done pursuant to the agreement (although this may be evidence of the agreement) but … one examines the nature and scope of the agreement as proved and decides whether that agreement, if carried into effect, would prejudice the public interest in free competition to a degree that in fact would be undue.

Finally, Gonthier J. concluded, at page 657:

Section 32(1)(c) therefore requires, in addition to some market power, some behaviour likely to injure competition. It is the combination of the two that makes a lessening of competition undue.

I have taken the liberty of citing lengthy passages from the judgment in R. v. Nova Scotia Pharmaceutical Society, supra, not only because it is the most recent Supreme Court judgment on the point but especially because the judgment very clearly indicates that the question of whether an agreement which is the subject of a prosecution under paragraph 45(1)(c) of the Act has an undue effect is, far from being a pure formality, a crucial aspect of the very definition of the crime. According to published statistics, more than half of the acquittals made by the courts in cases of prosecutions brought under paragraph 45(1)(c) (or its predecessors) resulted from the fact that the Court was not persuaded that the agreement in question had an undue effect.[3]

Nothing in the information or in the other documents before the Trial Judge suggested that the Director already had the evidence he needed to undertake the kind of analysis which the Supreme Court held was necessary.

There is another error in the Trial Judge’s reasoning. The respondents are notaries and the Director’s inquiry dealt with an alleged agreement regarding the prices of their professional services. Subsection 45(7) of the Act provides:

45. …

(7) In a prosecution under subsection (1), the court shall not convict the accused if it finds that the conspiracy, combination, agreement or arrangement relates only to a service and to standards of competence and integrity that are reasonably necessary for the protection of the public

(a) in the practice of a trade or profession relating to the service; or

(b) in the collection and dissemination of information relating to the service.

In my opinion, the Director could not conclude that criminal offences had been committed by the respondents without first examining the possible application of this important legislative provision. It is clear that the evidence already available to him could not be used to undertake such a study.

However, though the Trial Judge erred when she concluded that the mere fact that the respondents subscribed to an agreement the effect of which was to set prices and limit the market sufficed to make them guilty of the offence mentioned in paragraph 45(1)(c), that does not mean that her conclusion was necessarily wrong. The Supreme Court just recently considered the point again (left open by the judgment in Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission)),[4] namely whether section 7 of the Charter provides residual protection against self-incrimination to a person who is compelled to testify. The protection is “residual” because the Charter already gives any witness the protection of section 13: his testimony cannot be used later to incriminate him. Even the secondary evidence resulting from his testimony may be excluded if the Court feels it was obtained in the circumstances described in subsection 24(2) of the Charter. However, the Court held that in some admittedly limited circumstances these protections (as well as those found in subsection 12(3) of the Act, supra, or subsection 5(2) of the Canada Evidence Act)[5] will not suffice and in such cases merely compelling a suspect to testify could infringe the rules of fundamental justice.

In R. v. S. (R.J.),[6] the Court examined the question of the compellability of an accused person at the trial of another person charged with the same offence, but in another case. The Court held that there was a residual protection against self-incrimination but found that in the circumstances of that case the co-accused witness could not rely on it. On account of the number and diversity of the opinions expressed it is difficult to draw from the judgment any general rules that could serve as a guide in the case at bar, in which it is sought to compel the testimony of a suspect at an administrative inquiry. Since the Court returned to the latter point a few weeks later and made a clear and precise ruling on it, I will move on to the second case without further ado.

In British Columbia Securities Commission v. Branch,[7] a hearing held pursuant to the British Columbia Securities Act [S.B.C. 1985, c. 83] was at issue. The respondents objected to being summoned as witnesses in an administrative inquiry on the ground that the inquiry could only be for the purpose of collecting evidence for their eventual prosecution. In a joint opinion by Sopinka and Iacobucci JJ., concurred in by five other judges, the Court made a decisive ruling on the point.

To begin with, Sopinka and Iacobucci JJ. set out the general rules which they derived from S. (R.J.), supra, and from other earlier cases, at pages 14-16:

In view of the conclusions reached in S. (R.J.), any test to determine compellability must take into account that if the witness is compelled, he or she will be entitled to claim effective subsequent derivative use immunity with respect to the compelled testimony or other appropriate protection. The common feature of the respective compellability tests proposed in the reasons in S. (R.J.) is that the crucial question is whether the predominant purpose for seeking the evidence is to obtain incriminating evidence against the person compelled to testify or rather some legitimate public purpose. This test strikes the appropriate balance between the interests of the state in obtaining the evidence for a valid public purpose on the one hand, and the right to silence of the person compelled to testify on the other.

In applying this test, the Court must first determine the predominant purpose for which the evidence is sought. To qualify as a valid public purpose, compelled testimony in a criminal prosecution or prosecution under a provincial statute must be for the purpose of obtaining evidence in furtherance of that prosecution. In S. (R.J.), Sopinka J. suggested some guidelines for determining whether this is the predominant purpose. In other proceedings, discerning the purpose is more complex. Where evidence is sought for the purpose of an inquiry, we must first look to the statute under which the inquiry is authorized. The fact that the purpose of inquiries under the statute may be for legitimate public purposes [sic] is not determinative. The terms of reference may reveal an inadmissible purpose notwithstanding that the statute did not so intend: see Starr v. Houlden, [1990] 1 S.C.R. 1366. Indeed, even if the terms of reference authorize an inquiry for a legitimate purpose in some circumstances, the object of compelling a particular witness may still be for the purpose of obtaining incriminating evidence.

It would be rare indeed that the evidence sought cannot be shown to have some relevance other than to incriminate the witness. In a prosecution, such evidence would simply be irrelevant. There may, however, be inquiries of this type and it would be difficult to justify compellability in such a case. In the vast majority of cases, including this case, the evidence has other relevance. In such cases, if it is established that the predominant purpose is not to obtain the relevant evidence for the purpose of the instant proceeding, but rather to incriminate the witness, the party seeking to compel the witness must justify the potential prejudice to the right of the witness against self-incrimination. If it is shown that the only prejudice is the possible subsequent derivative use of the testimony then the compulsion to testify will occasion no prejudice for that witness. The witness will be protected against such use. Further, if the witness can show any other significant prejudice that may arise from the testimony such that his right to a fair trial will be jeopardized, then the witness should not be compellable.

We recognize that the purpose of calling a particular witness will not be readily apparent and that such purpose must be inferred in many cases from the overall effect of the evidence proposed to be called. If the overall effect is that it is of slight importance to the proceeding in which it is compelled but of great importance in a subsequent proceeding against the witness in which the witness is incriminated, then an inference may be drawn as to the real purpose of the compelled evidence. If that relationship is reversed then no such inference may be drawn. As stated in S. (R.J.), the issue of compellability may arise at the time when the witness is called to testify (the subpoena stage) and at a subsequent penal proceeding against the witness (the trial stage). By reason of the foregoing, the true purpose of the evidence will often not be apparent until the latter stage.

As in the case of any breach of Charter rights, the burden of establishing a breach is on the party alleging it. In this context, the burden of proof with respect to the predominant purpose of the compelled testimony will be on the witness who asserts that it is not sought for a legitimate purpose. If this is established, the witness should not be compelled unless the party seeking to compel the witness justifies the compulsion as referred to above.

If I read this passage correctly it is necessary, in determining the predominant purpose of an inquiry, to examine its entire context and in particular the legislative and regulatory background against which it is held. Only such an examination can indicate the real purpose of the testimony sought. The result in Branch, supra, is summarized by Sopinka and Iacobucci JJ. as follows, at pages 26-28:

We must determine the predominant purpose of such an inquiry at which a witness is compelled to attend. In Pezim v. British Columbia (Superintendent of Brokers), [1994] 2 S.C.R. 557, Iacobucci J., writing for the Court referred to the regulatory nature of the Securities Act (at p. 589):

It is important to note from the outset that the [Securities Act] is regulatory in nature. In fact, it is part of a much larger framework which regulates the securities industry throughout Canada. Its primary goal is the protection of the investor but other goals include capital market efficiency and ensuring public confidence in the system: David L. Johnston, Canadian Securities Regulation (1977), at p. 1. [Emphasis added.]

The goal of protecting our economy is a goal of paramount importance. In Pezim, the preeminence of securities regulation in our economic system was emphasized (at pp. 593 and 595):

This protective role, common to all securities commissions, gives a special character to such bodies which must be recognized when assessing the way in which their functions are carried out under their Acts.

…

The breadth of the [British Columbia Securities] Commission’s expertise and specialization is reflected in the provisions of the [Securities Act]. Section 4 of the Act identifies the Commission as being responsible for the administration of the Act. The Commission also has broad powers with respect to investigations, audits, hearings and orders.

…

In reading these powerful provisions, it is clear that it was the legislature’s intention to give the Commission a very broad discretion to determine what is in the public’s interest ….

It must also be noted that the definitions in the [Securities Act] exist in a factual or regulatory context. They are part of the larger regulatory framework discussed above. They are not to be analyzed in isolation but rather in their regulatory context.

Clearly, this purpose of the Act justifies inquiries of limited scope. The Act aims to protect the public from unscrupulous trading practices which may result in investors being defrauded. It is designed to ensure that the public may rely on honest traders of good repute able to carry out their business in a manner that does not harm the market or society generally. An inquiry of this kind legitimately compels testimony as the Act is concerned with the furtherance of a goal which is of substantial public importance, namely, obtaining evidence to regulate the securities industry. Often such inquiries result in proceedings which are essentially of a civil nature. The inquiry is of the type permitted by our law as it serves an obvious social utility. Hence, the predominant purpose of the inquiry is to obtain the relevant evidence for the purpose of the instant proceedings, and not to incriminate Branch and Levitt. More specifically, there is nothing in the record at this stage to suggest that the purpose of the summonses in this case is to obtain incriminating evidence against Branch and Levitt. Both orders of the Commission and the summonses are in furtherance of the predominant purpose of the inquiry to which we refer above. The proposed testimony thus falls to be governed by the general rule applicable under the Charter, pursuant to which a witness is compelled to testify, yet receives evidentiary immunity in return: S. (R.J.), supra.

In the case at bar the legislative and regulatory framework of the inquiry at which the respondents were summoned to testify rests primarily on the Competition Act. It states its purpose as follows [s. 1.1 (as enacted by R.S.C., 1985 (2nd Supp.), c. 19, s. 19]:

1.1 The purpose of this Act is to maintain and encourage competition in Canada in order to promote the efficiency and adaptability of the Canadian economy, in order to expand opportunities for Canadian participation in world markets while at the same time recognizing the role of foreign competition in Canada, in order to ensure that small and medium-sized enterprises have an equitable opportunity to participate in the Canadian economy and in order to provide consumers with competitive prices and product choices.

This Act and its predecessors have already been examined and analysed by the Supreme Court on several occasions. In my opinion, the passages from the judgments cited below make it clear beyond any doubt that the analysis of the British Columbia Securities Act in Branch, supra, by Sopinka and Iacobucci JJ. also applies to the Competition Act.

In Attorney General of Canada v. Canadian National Transportation, Ltd. et al.,[8] Dickson J. (as he then was) said in an opinion concurred in by Beetz and Lamer JJ.:

Is it in fact accurate to say that s. 32(1)(c) is unconnected to a regulatory scheme? Staying for the moment with s. 32(1)(c) in isolation, what is notable about this provision is the vagueness of the offence it prescribes. The basic test for criminality is “unduly” restricting competition. Considered as criminal law this requirement of “undue” restriction has posed difficult interpretive questions for the courts. See Aetna Insurance Co. v. The Queen, [1978] 1 S.C.R. 731. Considered as economic legislation the specification of “undue” restriction makes the impact of s. 32(1) totally unpredictable in the absence of some policy direction afforded by a larger context.

Later in the same judgment Dickson J. stated, at pages 275-276:

The earlier parts of the Combines Investigation Act set out a complex administrative machinery. Part I of the Act provides for a system of investigation and research under which inquiries can be made by the Director of Investigations and Research. Part II supplements the investigatory procedure by provisions which allow the Director to prepare a report to be submitted to the Restrictive Trade Practices Commission, which in turn reports to the Minister of Consumer and Corporate Affairs assessing the effect on the public interest of the arrangements and practices in question and making recommendations as to the application of remedies to these arrangements and practices. These provisions are of relevance to an assessment of s. 32(1)(c) because they indicate the existence of a process by which a policy is evolved to give substance to the offence of “unduly” restricting competition.

Even before the promulgation of the 1976 amendments which elaborated these administrative procedures, the determination of what was an illegal business combination was at least partly an administrative decision made on the basis of economic policy considerations. In [Constitutional Aspects of Canadian Anti-Combines Law Enforcement] (1969), 47 Can. Bar Rev. 161, Professor McDonald says at pp. 211 and 213:

The decision to prosecute is usually made only after the parties and the facts of each case have been subjected to investigation by the Director of Investigation and Research and to a hearing before the Restrictive Trade Practices Commission in accordance with the provisions of the Act. Indeed, the scheme of the statute envisages the decision to prosecute only being made after the winnowing process of the administrative discretions, upon consideration of the Restrictive Trade Practices Commission view of the effect of the arrangement upon the public interest, and after the exercise of any relevant political judgment.

…

Often the critical aspect of enforcement is not who absorbs the cost, but rather who exercises any discretion as to whether, and if so whom, to prosecute. This can be very important in anti-combines cases because only at this point may such factors as unequal business pressures, the extent of complicity or economic effect be accommodated. The decision is presumably also based partly on the Commission’s appraisal of the public interest involved, and upon the Commission’s recommended remedies.

Section 32(1)(c) depends upon the administrative machinery which controls the exercise of this discretion.

In Irvine v. Canada (Restrictive Trade Practices Commission)[9] Estey J., for the Court, said:

The area under investigation concerns trading crimes which by nature are difficult of investigation. Persons conspiring to profit improperly from trade combinations do not create much physical evidence and have every opportunity to disguise their conduct. The impact of the crime on the individuals affected is in each case very small in economic terms but in gross produces sizeable criminal profit. Again this type of crime requires more than the usual combination of informants and complainants from the public at large. The demonstration of the crime generally requires the early and active investigative action by the state itself. An awareness of these concerns by the legislators is apparent when the investigative program established in the Act is read as a whole. The interpretation of the Act in its dying days and of the successor statute will perhaps attract different tests and standards not applicable in these proceedings when the issues then before the courts will have arisen after the advent of the Charter.

(In my opinion the qualification made by Estey J. in the last sentence of the quoted passage does not in any way alter his analysis of the purposes of an inquiry held pursuant to the Act.)

In General Motors of Canada Ltd. v. City National Leasing,[10] Dickson C.J., speaking for a unanimous Court, said the following:

From this overview of the Combines Investigation Act I have no difficulty in concluding that the Act as a whole embodies a complex scheme of economic regulation. The purpose of the Act is to eliminate activities that reduce competition in the market-place. The entire Act is geared to achieving this objective. The Act identifies and defines anti-competitive conduct. It establishes an investigatory mechanism for revealing prohibited activities and provides an extensive range of criminal and administrative redress against companies engaging in behaviour that tends to reduce competition. In my view, these three components, elucidation of prohibited conduct, creation of an investigatory procedure and the establishment of a remedial mechanism, constitute a well-integrated scheme of regulation designed to discourage forms of commercial behaviour viewed as detrimental to Canada and the Canadian economy.

In Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission),[11] four of the five judges who wrote had occasion to examine the purpose of the Act. Although they differed on several other points, their statements are very relevant to the problem now before this Court.

First, Wilson J. at pages 487-488:

The part of the Combines Investigation Act in which s. 17 appears serves two legislative purposes. First, it provides for the effective investigation of suspected criminal and quasi-criminal activity. Second, it makes it possible to monitor economic activity in Canada so as to ensure that the government’s economic objectives are met. There can be little doubt that each of these legislative objectives are [sic] of sufficient importance to warrant infringement of individual rights and freedoms. Society has a very real interest both in controlling crime and in ensuring the stability of the market place.

La Forest J., for his part, said at pages 509-510:

Nor do I regard it as determinative that the Act defines offences and provides for the imprisonment of those who commit them. While I recognize that these features give the Act something of the flavour of criminal law, I do not believe that the fact that an Act provides for sanctions usually associated with the criminal law necessarily means that those subject to its operation have the same expectations of privacy as persons suspected of committing what are by their very nature criminal offences. While I will have more to say about this matter later, it is for the present sufficient to observe that there are pragmatic reasons for the inclusion of imprisonment among the sanctions provided for in the Act which do not alter its essential character as regulatory legislation and which are in fact indicative of the activities and matters it is designed to regulate.

What, in my view, is determinative is the nature of the conduct addressed by the legislation and the purposes for which it is designed to regulate that conduct. There can be little doubt that the conduct prohibited by the Act is far removed from what is the typical concern of the criminal law system, i.e. the “underlining [of] crucial social values” (emphasis added) where “[t]he sort of things prohibited—acts of violence, dishonesty and so on—are acts violating common sense standards of humanity” which we regard as meriting disapprobation and punishment; see Law Reform Commission of Canada, Our Criminal Law (1976), at pp. 3, 5 and 7; see also R. v. Chiasson (1982), 135 D.L.R. (3d) 499 (N.B.C.A.), at p. 503; reasons adopted [1984] 1 S.C.R. 266; R. v. Morgentaler, [1988] 1 S.C.R. 30, at p. 70. At bottom, the Act is really aimed at the regulation of the economy and business, with a view to the preservation of the competitive conditions which are crucial to the operation of a free market economy. This goal has obvious implications for Canada’s material prosperity.

Additionally, at pages 510-511:

The Act is thus not concerned with “real crimes” but with what has been called “regulatory” or “public welfare” offences. The distinction is clearly made by the Law Reform Commission of Canada in Criminal Responsibility for Group Action (Working Paper 16, 1976), at pp. 11-12. After having defined real crimes as those concerned with the reinforcement of society’s fundamental values, the Commission says, at p. 12, that a regulatory offence

is not primarily concerned with values, but with results. While values necessarily underlie all legal prescriptions, the regulatory offence really gives expression to the view that it is expedient for the protection of society and for the orderly use and sharing of society’s resources that people act in a prescribed manner in prescribed situations, or that people take prescribed standards of care to avoid risks of injury. The object is to induce compliance with rules for the overall benefit of society.

The regulatory nature of the offences defined in the Act is made clear by even a cursory consideration of the secondary literature on Canadian competition law. That literature concerns itself with the question of whether Canada should have anti-combines legislation as much as with the sufficiency and details of the legislation. The potential effectiveness of combines legislation in achieving the goals I have referred to, and the possible ill-effects the pursuit of these goals may have on our international competitiveness, have been much debated. It is difficult to imagine a similarly pragmatic and instrumental debate in respect of the offences, such as murder, assault or theft, which we would immediately and unhesitatingly regard as concerned with criminal behaviour and deserving of punishment.

And finally, at pages 511-512:

From this overview of the Combines Investigation Act I have no difficulty in concluding that the Act as a whole embodies a complex scheme of economic regulation. The purpose of the Act is to eliminate activities that reduce competition in the market-place. The entire Act is geared to achieving this objective. The Act identifies and defines anti-competitive conduct. It establishes an investigatory mechanism for revealing prohibited activities and provides an extensive range of criminal and administrative redress against companies engaging in behaviour that tends to reduce competition. In my view, these three components, elucidation of prohibited conduct, creation of an investigatory procedure, and the establishment of a remedial mechanism, constitute a well-integrated scheme of regulation designed to discourage forms of commercial behaviour viewed as detrimental to Canada and the Canadian economy.

Next, L’Heureux-Dubé J. said, at pages 593-594:

… the Act’s purpose is to eradicate practices that impair free competition in the market-place. First, in my view, it cannot be disputed (and indeed it was not disputed before this Court) that this legislative purpose serves important socio-economic interests. Second, the existence of a mechanism of discovery is necessary in order to properly serve the regulatory objective of the legislation. That the mandatory production of corporate documents is rationally connected to the Act’s main purpose is in my view clear.

Finally, under the heading “Purpose of the Act” Sopinka J. [at page 597] simply quoted part of the passage from the judgment of Dickson C.J. in General Motors, supra, which I have reproduced above.

In the Supreme Court’s most recent judgment on the point, Nova Scotia Pharmaceutical Society, supra, I adopt the following two passages from the judgment of Gonthier J., at pages 648-649:

At the outset, it must be noted that the Act is central to Canadian public policy in the economic sector, and that s. 32 is itself one of the pillars of the Act.

…

The Act can thus be seen as a central and established feature of Canadian economic policy.

Before concluding this review of the legislative and regulatory background to the inquiry held pursuant to the Act, I would add two comments.

First, as several of the passages cited above made clear, the content of the Act is far from being exclusively criminal. Even in cases where the inquiry indicates that a crime was committed it is far from certain that this will result in a criminal prosecution in which a conviction is sought. Since 1952 the Act has allowed the authorities to seek a kind of injunction from the criminal courts. Subsection 34(2) [as am. idem, s. 28] reads:

34. …

(2) Where it appears to a superior court of criminal jurisdiction in proceedings commenced by information of the Attorney General of Canada or the attorney general of the province for the purposes of this section that a person has done, is about to do or is likely to do any act or thing constituting or directed toward the commission of an offence under Part VI, the court may prohibit the commission of the offence or the doing or continuation of any act or thing by that person or any other person constituting or directed toward the commission of the offence.

According to the writer Stanbury, supra, the Crown increasingly uses this procedure under the acronym POWC (Prohibition Order without Conviction).

Secondly, I note that the Act now allows the authorities to make use of purely civil proceedings in the Competition Tribunal. This is an administrative tribunal which has no criminal jurisdiction. Subsection 79(1) [as am. idem, s. 45] is specially relevant to the case at bar:

79. (1) Where, on application by the Director, the Tribunal finds that

(a) one or more persons substantially or completely control, throughout Canada or any area thereof, a class or species of business,

(b) that person or those persons have engaged in or are engaging in a practice of anti-competitive acts, and

(c) the practice has had, is having or is likely to have the effect of preventing or lessening competition substantially in a market,

the Tribunal may make an order prohibiting all or any of those persons from engaging in that practice.

The term “anti-competitive act” is given a non- limiting definition in section 78 [as am. idem] of the Act and it seems to me it should include the commission of an offence prescribed by section 45.

I conclude from this that the inquiry at which the respondents have been summoned to testify will be held to achieve legitimate, public and important objectives and is not simply designed to incriminate the respondents. Accordingly, this inquiry meets the standards laid down by the Supreme Court in Branch, supra, and therefore the summonses do not infringe the rules of natural justice.

I should mention a final point. The respondents specifically relied on a paragraph of Lamer C.J.’s minority opinion in S. (R.J.), supra. The paragraph in question reads as follows, at page 471:

As an example of a situation where a judicial exemption from compellability would, in my view, be warranted, the following hypothetical case can be considered. Suppose that the members of a trade association in a particular industry met and agreed upon a scheme to fix the prices of the goods they produced, an indictable offence under s. 45(1)(c) of the Competition Act, R.S.C., 1985, c. C-34. Suppose further that the Director of Investigation and Research obtained documents clearly indicating the persons involved and the nature of their involvement—for example, an agreement to fix prices signed by the parties. If the Director commenced an inquiry and obtained subpoenas compelling the signatories to testify, it would, in my view, be open to the signatories to apply to the Court for an exemption from compulsion to testify. In such a case, where the facts revealed that the Director had already concluded that an offence had been committed and had identified the parties to the offence, the court would be justified in concluding that forcing the suspects to testify would violate their s. 7 rights. In these circumstances, I believe the court would have the discretion to declare the subpoenas to be of no force and effect, thereby excusing the suspects from testifying.

What is one to say of this “hypothetical case”?

First, of course, I note that none of the Chief Justice’s colleagues adopted his opinion. The paragraph is an isolated obiter dictum.

Second, and I say this with respect, I feel that the “hypothetical case” is based on exactly the same mistake which I have identified in the reasoning of the Trial Judge in the case at bar: it completely disregards both the “unduly” component and the special situation mentioned in subsection 45(7) of the Act and jumps immediately from existence of the agreement to the commission of a criminal offence. I repeat: an agreement to set prices is not in itself a criminal offence.

Finally, the analysis of the purpose of the inquiry and its legislative and regulatory background required by Branch, supra, is completely absent. That analysis would have shown that the predominant purpose of the inquiry was to pursue economic and commercial objectives of great importance to the public, not to incriminate the respondents.

I therefore conclude that the paragraph in question does not assist the respondents in any way.

I would allow the appeal with costs, set aside the Trial Division judgment and dismiss the respondents’ application with costs.

Décary J.A.: I concur.

Chevalier D.J.: I concur.

---