A-430-82
John C. Doyle (Appellant) (Applicant)
v.
Restrictive Trade Practices Commission, O. G.
Stoner, R. MacLellan, F. Roseman and F. H.
Sparling (Respondents) (Respondents)
and
Canadian Javelin Limited and Attorney General
of Canada (Mis -en-cause)
Court of Appeal, Pratte, Ryan and Le Dain JJ.—
Ottawa, February 8 and March 23, 1983.
Combines — Investigation of Canadian Javelin Limited
under s. 114 of Canada Corporations Act — Appeal from
dismissal of application for certiorari, prohibition and injunc
tion to stop investigation — S. 114 not ultra vires federal
Parliament — Parliament's authority to create companies
having non-provincial objects extending to investigations of
companies incorporated under federal legislation to determine
whether companies' activities fraudulent or illegal — State
ment of evidence, as signed by inspector's counsel, proper —
Nothing in Act that statement must be signed or drafted by
inspector himself — Contents of statement meeting legal
requirements — Under s. 114(23),(24) inspector required to set
out evidence obtained and to indicate grounds in support of
opinion — Whether inspector's investigation subject to proce
dural fairness — Under s. 114, two-stage investigation: first,
investigation by inspector followed by statement of evidence;
second, investigation by Commission hearing those concerned,
and report to Minister — Principles of natural justice not
applicable to investigation conducted by inspector — Inspector
acting as Crown prosecutor before Commission — Appeal
dismissed — Canada Corporations Act, R.S.C. 1970, c. C-32,
s. I14(1), (2), (22), (23), (24), (25), (26), (27), (29) (rep. and sub.
R.S.C. 1970 (1st Supp.), c. 10, s. 12).
Constitutional law — Distribution of powers — Property
and civil rights in the province — Peace, order and good
government — Argument that s. 114(2) of the Act, which
authorizes corporate investigations by Restrictive Trade Prac
tices Commission, ultra vires Parliament, rejected — Parlia
ment having authority to legislate concerning companies with
non-provincial objects — No encroachment on provincial
power to legislate concerning property and civil rights in
province or administration of justice — Canada Corporations
Act, R.S.C. 1970, c. C-32, s. 114(2).
The appellant, a shareholder of Canadian Javelin Limited, is
appealing the dismissal of an application for certiorari, prohibi
tion and injunction, to stop the investigation of the affairs of
the company conducted under section 114 of the Canada
Corporations Act. The appellant argues (1) that section 114,
whereby the Restrictive Trade Practices Commission may issue
an order "for the investigation of ' a company incorporated
under a federal Act, is ultra vires the federal Parliament
because it falls within the exclusive jurisdiction of the provinces
to legislate with respect to "property and civil rights in the
province" and "the administration of justice in the province";
(2) that the statement of evidence submitted by the respondent
Sparling had not been properly signed, in that it bore the
signature of the respondent's counsel; (3) that the contents of
the statement did not meet the requirements of the Act; (4)
that the statement was the result of an investigation carried out
without procedural fairness, more precisely, that the respondent
Sparling showed bias and did not give the appellant an opportu
nity to be heard before the statement was submitted to the
Commission.
Held, the appeal should be dismissed.
(1) Validity of section 114: The authority to enact legislation
providing for investigations during which witnesses can be
compelled to testify or to adduce evidence belongs to the
provinces in the case of investigations concerning a matter
within provincial legislative jurisdiction; it belongs to the feder
al Parliament in all other cases. Parliament's authority "to
make laws for the peace, order and good government of Cana-
da" authorizes it to legislate with respect to the incorporation
of companies having non-provincial objects. Thus Parliament
may not only create such companies, it may also prescribe that
inquiries be held concerning companies incorporated under its
legislation to determine whether their formation or activities
are tainted by fraud or illegality. This is a normal extension of
Parliament's legislative jurisdiction with respect to the incorpo
ration of companies and its exercise does not encroach on the
exclusive authority of the provinces to legislate with respect to
"property and civil rights" and "the administration of justice"
in the province.
(2) Signature: The Act does not require that the statement
be signed by the inspector responsible for the investigation, nor
does it provide that only the inspector may draft the statement.
Under subsection 114(2), the inspector is required to arrange
for a report to be prepared which in his opinion accurately
summarizes the evidence he has obtained. What is important is
that the statement be submitted to the Commission by the
inspector or at his request and that there be no reasonable
grounds for believing that where the inspector has not prepared
the statement himself, he has not adopted it as his own.
(3) Contents: A reading of subsections 114(23) and (24)
indicates that, in addition to setting out the evidence obtained,
the inspector must, in his statement, indicate on what grounds
he bases his opinion that the evidence discloses one or more of
the circumstances in subsection 114(2). This is precisely what
was done in the case at bar.
(4) Procedure to be followed in the investigation: The investi
gation in section 114 takes place in two stages: first, the
inspector submits to the Commission a statement of the evi
dence obtained after investigation, in which he normally makes
allegations against third parties; second, the Commission con
siders this statement, completes the investigation by receiving
additional evidence and, after giving all those concerned an
opportunity to be heard, reports to the Minister. Clearly the
legislator intended to apply to the investigation conducted by
the Commission the principles of natural justice and fairness.
However, it was not intended that those principles be applied to
the investigation conducted by the inspector whose role before
the Commission resembles that of a Crown prosecutor in a
criminal case. While it is true that a duty to observe procedural
fairness may exist without it being expressly imposed by stat
ute, it does not follow that the legislator must always be
assumed to have intended to impose such duty.
CASES JUDICIALLY CONSIDERED
FOLLOWED:
John Deere Plow Company, Limited v. Wharton, [1915]
A.C. 330 (P.C.); Multiple Access Limited v. McCut-
cheon, et al., [1982] 2 S.C.R. 161; The Attorney General
of Canada v. Inuit Tapirisat of Canada et al., [1980] 2
S.C.R. 735.
DISTINGUISHED:
In re Pergamon Press Ltd., [1970] 3 W.L.R. 792 (Eng.
C.A.).
REFERRED TO: _
Nicholson v. Haldimand-Norfolk Regional Board of
Commissioners of Police, [1979] 1 S.C.R. 311; Mar-
tineau v. Matsqui Institution Disciplinary Board, [1980]
1 S.C.R. 602; Regina v. Race Relations Board, Ex parte
Selvarajan, [1975] 1 W.L.R. 1686 (Eng. C.A.).
COUNSEL:
Robert Décary, Grégoire Lehoux and Mario
Simard for appellant (applicant).
James Mabbutt for respondents (respondents)
Restrictive Trade Practices Commission, O.
G. Stoner, R. MacLellan and F. Roseman.
François Garneau for respondent (respond-
ent) F. H. Sparling.
SOLICITORS
Noel, Décary, Aubry & Associés, Hull,
Quebec, for appellant (applicant).
Deputy Attorney General of Canada for
respondents (respondents) Restrictive Trade
Practices Commission, O. G. Stoner, R.
MacLellan and F. Roseman.
Desjardins, Ducharme, Desjardins &
Bourque, Montreal, for respondent (respond-
ent) F. H. Sparling.
The following is the English version of the
reasons for judgment rendered by
PRATTE J.: The appellant is a shareholder of
Canadian Javelin Limited, a company which has
been the subject of an investigation under section
114 of the Canada Corporations Act.' He is
appealing the decision of Marceau J. of the Trial
Division dismissing the application for certiorari,
prohibition and an injunction he had made in an
attempt to stop this investigation.
In order to understand the case it is necessary to
be familiar with section 114 of the Canada Corpo
rations Act and know that it contains the following
provisions:
114. (1) Five or more shareholders holding shares represent
ing in the aggregate not less than one-tenth of the issued capital
of the company or one-tenth of the issued shares of any class of
shares of the company may apply, or the Minister on his own
initiative may cause an application to be made, to the Restric
tive Trade Practices Commission established under the Com
bines Investigation Act (hereinafter called the "Commission"),
upon reasonable notice to the company or other interested party
or ex parte if the Commission is of the opinion that the giving
of notice would in view of the allegations made by the appli
cants or on behalf of the Minister unduly prejudice any investi
gation that might be ordered by the Commission, for an order
directing an investigation of the company in respect of which
the application is made.
(2) Where it is shown to the Commission by the Minister or
upon the solemn declaration of the applicant shareholders that
there are reasonable grounds for believing that in respect of the
company concerned,
(a) its business or the business of a company affiliated
therewith is being conducted with intent to defraud any
person;
(b) in the course of carrying on its affairs or the affairs of a
company affiliated therewith, one or more acts have been
performed wrongfully in a manner prejudicial to the interests
of any shareholder;
(c) it or a company affiliated therewith was formed for any
fraudulent or unlawful purpose or is to be dissolved in any
manner for a fraudulent or unlawful purpose; or
(d) the persons concerned with its formation, affairs or
management, or the formation, affairs or management of a
company affiliated therewith, have in connection therewith
been guilty of fraud, misfeasance or other misconduct,
the Commission may issue its order for the investigation of the
company, and appoint an inspector for that purpose.
' R.S.C. 1970, c. C-32 [as am. by] (1st Supp.), c. 10, s. 12.
(22) With the written concurrence of the Commission, the
inspector may, at any stage of an investigation, and in addition
to, or instead of, continuing the investigation, remit any docu
ments or records, or returns or evidence to the Attorney
General of Canada for consideration whether an offence has
been or is about to be committed against any statute, and for
such action as the Attorney General may be pleased to take.
(23) At any stage of an investigation
(a) the inspector may, if he is of the opinion that the
evidence obtained discloses a circumstance alleged under
subsection (2), or
(b) the inspector shall, if so required by the Minister,
prepare a statement of the evidence obtained in the investiga
tion, which shall be submitted to the Commission and to each
person against whom an allegation is made therein.
(24) Upon receipt of the statement, the Commission shall fix
a place, time and date on which evidence and argument in
support of the statement may be submitted by or on behalf of
the inspector, and at which the persons against whom an
allegation has been made in the statement shall be allowed full
opportunity to be heard in person or by counsel.
(25) The Commission shall consider the statement submitted
by the inspector under subsection (23) together with any
further or other evidence or material submitted to the Commis
sion, and shall, as soon as possible thereafter, report thereon to
the Minister.
(26) A report of the Commission under subsection (25) shall
be made public by the Minister unless in the opinion of the
Commission, given in its report to the Minister, it is undesirable
in the public interest or unnecessary to publish the report or
any part thereof in which case the report or the part so reported
upon shall not be published.
(27) In its report to the Minister under subsection (25), the
Commission may, if it considers it in the public interest to do
so, 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;
and the Minister is hereby vested with all necessary powers in
that regard.
(29) No report shall be made by the Commission under
subsection (25) against any person unless that person has been
allowed full opportunity to be heard as provided in this section.
An investigation under section 114 is therefore
carried out in two stages. First, the inspector
appointed by the Commission examines the affairs
and management of the company and, if he is of
the opinion that the evidence obtained discloses
one of the circumstances described in subsection
114(2), submits to the Commission a statement of
the evidence he obtained. The Commission then
gives the inspector and all those against whom an
allegation has been made in the statement an
opportunity to be heard and reports to the
Minister.
On May 17, 1977 the Restrictive Trade Prac
tices Commission, pursuant to an application by
the Minister of Consumer and Corporate Affairs,
ordered that Canadian Javelin Limited be the
subject of an investigation. The order it issued that
day reads in part as follows:
The Commission hereby orders that an investigation be
conducted of the affairs and management of Canadian Javelin
Limited from the date of its incorporation including, without
limiting the generality of the foregoing, the investigation of its
source and disposition of capital funds, its maintenance of
corporate books and accounting records, its disclosure of finan
cial information to shareholders, its compliance with statutory
obligations, its acquisition, operation and disposition of its
assets and of those of its affiliated companies, the disposition of
its shares and of those of its affiliated companies, and its
dealing with affiliated companies, and that Mr. Frederick H.
Sparling, Director, Corporations Branch, Department of Con
sumer and Corporate Affairs, be appointed as inspector for that
purpose.
The respondent Sparling then proceeded to
carry out his investigation. On January 26, 1982
he submitted to the Commission a statement of the
evidence he had obtained. In that document he
stated first that he had come to the conclusion that
appellant Doyle had fraudulently used Canadian
Javelin Limited for his personal gain at the
expense of the other shareholders of the company;
he went on to formulate recommendations that he
proposed the Commission should make to the Min
ister. After receiving this statement the Commis
sion summoned the appellant and the other per
sons concerned to appear at public hearings that
were to commence on April 26, 1982. Shortly after
these hearings commenced the appellant filed an
application in the Trial Division for certiorari,
prohibition and an injunction requesting that
Sparling and the Commission be prohibited from
proceeding any further in this matter. He main
tained that section 114 of the Canada Corpora
tions Act was unconstitutional and that in any
event the Commission should not have proceeded
on the basis of the statement of evidence submitted
to it in this case since this document had not been
prepared in accordance with the Act. Marceau J.
dismissed this application [T-3351-82, order dated
May 21, 1982]. It is this decision that the appel
lant is disputing at present. In support of his
appeal he relied on four of the arguments he had
made at trial. He argued that the Canadian Par
liament did not have jurisdiction to enact section
114 of the Canada Corporations Act, that the
statement of evidence submitted by the respondent
Sparling had not been properly signed, that its
contents did not meet the requirements of the Act
and that it was the result of an investigation that
the respondent Sparling had conducted without
procedural fairness.
1. Constitutionality of section 114
The appellant argued that subsection 114(2) of
the Canada Corporations Act, which authorizes
the Restrictive Trade Practices Commission to
issue an order "for the investigation of" a company
incorporated under an Act of the federal Parlia
ment, was unconstitutional. He maintained that
this provision was ultra vires the federal Parlia
ment because it fell within the exclusive jurisdic
tion of the provinces to legislate with respect to
"property and civil rights in the province" and
"the administration of justice in the province".
This argument does not seem to me to be valid.
Neither the provincial legislatures nor the federal
Parliament have exclusive authority to enact legis
lation providing for investigations during which
witnesses can be compelled to appear to testify or
adduce evidence. It all depends on the subject and
purpose of such investigations. This authority
belongs to the provinces in the case of investiga
tions concerning a matter within provincial legisla
tive jurisdiction; it belongs to the federal Parlia
ment in all other cases. Moreover, it has long been
established that Parliament's authority "to make
laws for the peace, order and good government of
Canada" authorizes it to legislate with respect to
the incorporation of companies having non-provin
cial objects (John Deere Plow Company, Limited
v. Wharton, [1915] A.C. 330 [P.C.]). Further
more, this authority of Parliament with respect to
the incorporation of companies must not be inter
preted or defined narrowly (Multiple Access Lim
ited v. McCutcheon, et al. [[1982] 2 S.C.R. 161]).
In my view in the exercise of this authority Parlia
ment may not only create or authorize the creation
of companies with non-provincial objects but may
also provide that investigations may take place
respecting companies incorporated under its legis
lation with a view to determining whether their
formation or activities are not tainted by fraud or
illegality. This authority to order that investiga
tions be carried out appears to me to be a normal
extension of Parliament's legislative jurisdiction
with respect to the incorporation of companies. I
do not see how its exercise can constitute an
encroachment on the exclusive authority of the
provinces to legislate with respect to "property and
civil rights in the province" and "the administra
tion of justice".
2. Irregularity of the statement of evidence
The appellant's other three arguments pertain to
the statement of evidence submitted to the Com
mission by the respondent Sparling. This docu
ment, it was argued, did not meet the requirements
of the Act and the Commission should therefore
not have proceeded on the basis of it. This alleged
irregularity of the statement was based on the way
in which it was signed, its contents and the way in
which the respondent Sparling conducted his
investigation.
(A) Signature
The record reveals that, on January 26, 1982,
the respondent Sparling filed with the Restrictive
Trade Practices Commission a document with the
following heading:
STATEMENT OF EVIDENCE
RESTRICTIVE TRADE PRACTICES COMMISSION
IN THE MATTER OF AN INVESTIGATION UNDER SECTION
114(2) OF THE CANADA CORPORATIONS ACT, DIRECTING AN
INVESTIGATION OF CANADIAN JAVELIN LIMITED, A COMPANY
INCORPORATED UNDER THE COMPANIES ACT, S.C. 1934,
CHAP. 33, AS AMENDED.
This document was not signed by the respondent
Sparling; it concluded with the following:
THE WHOLE RESPECTFULLY SUBMITTED
PIERRE BOURQUE, COUNSEL FOR THE INSPECTOR
DESJARDINS, DUCHARME, DESJARDINS & BOURQUE
The appellant deduced from this that the state
ment in question had not been prepared by the
respondent Sparling but rather by his counsel,
Pierre Bourque. Since subsection 114(23) provides
that the statement of evidence must be prepared
by the inspector responsible for the investigation,
the appellant invoked the "delegates non potest
delegare" rule and maintained that the statement
of evidence was null and void.
This argument is based entirely on the premise
that the respondent Sparling unlawfully delegated
to his counsel the task of preparing the statement
of evidence. This premise does not seem to me to
be well founded. The Act does not require that the
statement be signed by the inspector responsible
for the investigation. Nor does it provide that only
the inspector may draft the statement. As I under
stand the Act, it requires first that the inspector be
of the opinion that the evidence obtained during
his investigation discloses one of the circumstances
set out in the various paragraphs of subsection
114(2); it also requires that the inspector prepare
and submit to the Commission a statement of the
evidence obtained in the investigation; as I inter
pret it, this obliges the inspector to arrange for a
report to be prepared which, in his opinion, accu
rately and adequately summarizes the evidence he
has obtained. It matters little whether the inspec
tor drafts the statement himself or assigns this task
to a third party; it matters little if the statement
bears no signature or is signed by counsel for the
inspector. What is important is that the statement
be submitted to the Commission by the inspector
or at his request and that there be no reasonable
grounds for believing that where the inspector has
not prepared the statement himself, he has not
adopted it as his own. In this I share the following
opinion of Marceau J.:
[TRANSLATION] In the absence of a formal requirement in
the Act, the inspector was not required to prepare himself and
sign personally the "statement of the evidence" he intended to
submit to the respondent Commission in the performance of his
duties under the said section 114, seeing that it had been
established that this "statement" was his and that it had been
signed and submitted on his behalf ....
(B) Contents of the statement
The appellant maintained that the statement
submitted to the Commission by the respondent
Sparling contained other than what it should have
contained. What the inspector must prepare,
according to the Act, is a "statement of the evi
dence obtained in the investigation". The appellant
argued that the document submitted to the Com
mission in the case at bar, rather than containing
merely a neutral and impartial statement of the
evidence obtained, contained a subjective state
ment of this evidence in which the inspector gave
his personal assessment of the evidence and the
conclusions he drew therefrom.
This argument must also be rejected. A reading
of subsections 114(23) and (24) indicates that the
Act contemplates that the inspector must make
allegations against third parties in his statement
and that he must submit arguments in support of
his statement to the Commission. This shows, in
my view, that in addition to setting out the evi
dence obtained, in his statement the inspector
must indicate on what he bases his opinion that the
evidence discloses one or more of the circum
stances provided for in subsection 114(2). This is
precisely what the respondent Sparling did in the
statement he submitted to the Commission.
(C) Procedure to be followed in the investiga
tion
The appellant's final argument is that the state
ment of evidence submitted to the Commission by
-the respondent Sparling is null and void because it
is the result of an investigation conducted without
regard to the principles of natural justice or, more
precisely, without procedural fairness. First, the
appellant maintained, the respondent Sparling
should not have been appointed an inspector
because there were grounds, at the time of his
appointment, for doubting his impartiality; second,
the serious accusations he made against the appel
lant in his report indicate his bias; third, he did not
give the appellant an opportunity to be heard
before the statement of evidence was prepared and
submitted to the Commission. In support of these
arguments the appellant relied on the well-known
decisions in which it was held that the requirement
of procedural fairness must be complied with by
authorities making administrative decisions and
also, in certain cases, by mere commissions of
inquiry (Nicholson v. Haldimand-Norfolk
Regional Board of Commissioners of Police,
[1979] 1 S.C.R. 311; Martineau v. Matsqui Insti
tution Disciplinary Board, [1980] 1 S.C.R. 602; In
re Pergamon Press Ltd., [1970] 3 W.L.R. 792
[Eng. C.A.]; Regina v. Race Relations Board, Ex
parte Selvarajan, [1975] 1 W.L.R. 1686 [Eng.
C.A.]).
In order to assess the validity of this argument
properly, we must remember that the investigation
provided for in section 114 takes place in two
stages. First, the inspector investigates and sub
mits to the Commission a statement of the evi
dence obtained, in which he normally makes alle
gations against third parties; second, the
Commission considers this statement, completes
the investigation by receiving any additional evi
dence that is submitted to it and, after giving all
those concerned an opportunity to be heard,
reports to the Minister. The role of the inspector in
such an investigation cannot be compared to that
of the investigators responsible for investigating
and reporting on Pergamon Press Ltd. Here the
inspector investigates first and, if he finds that
there are grounds for believing that one of the
circumstances described in subsection 114(2) has
occurred, becomes a prosecutor before the Com
mission, which is then responsible for completing
the investigation by hearing all those concerned
and reporting thereon. It seems certain to me that
the legislator's intention was that the principles of
natural justice and fairness invoked by the appel
lant should apply to the investigation conducted by
the Commission; it seems certain to me as well
that it was not the intention that these same
principles should apply to the inspector, who plays
in this investigation a role similar to that of a
Crown prosecutor in a criminal case. As Estey J.
stated in The Attorney General of Canada v. Inuit
Tapirisat of Canada et al., [1980] 2 S.C.R. 735,
at page 755, while it is true that a duty to observe
procedural fairness may exist without it being
expressly imposed by statute, it does not follow
that the legislator must always be assumed to have
intended to impose such a duty. It all depends on
the applicable legislation and the interpretation it
should be given.
For these reasons I would uphold Marceau J.'s
decision and dismiss the appeal with costs.
RYAN J.: I concur.
LE DAIN J.: I concur.
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.