T-1401-84
Auditor General of Canada (Plaintiff)
v.
Minister of Energy, Mines and Resources; Minis
ter of Finance; Deputy Minister of Energy, Mines
and Resources and Deputy Minister of Finance
(Defendants)
Trial Division, Jerome A.C.J.-Ottawa, January
11, March 7, 8, July 19 and November 1, 1985.
Constitutional law - Conventions - Cabinet confidential
ity - Whether taking precedence over access rights given by s.
13, Auditor General Act - Auditor General denied access to
information concerning expenditure of public funds for take
over of Fina by Petro-Canada - Prime Minister stating
information confidences of Queen's Privy Council for Canada
- Papers of previous ministry - Conventions forming inte
gral part of constitutional system - Importance - Nature of
sanctions for breach - Convention re cabinet documents
secrecy preserved in various statutes but not mentioned in
Auditor General•Act - Intention of Parliament - Legislative
history of Auditor General Act reviewed - "Value for money
auditing" concept incorporated in Act - Auditor General's
role as servant of Parliament - Government's accountability
for spending greater public interest than cabinet confidentiality
doctrine - No waiver of Privy Councillors' obligation to Her
Majesty - Ministers especially open to scrutiny when trustees
of account created for spending large sums of public money
Impractical Auditor General seek relief from Parliament,
Cabinet having denied disclosure - Declaration Auditor Gen
eral entitled to access to documents claimed and refusal
unjustified - Auditor General Act, S.C. 1976-77, c. 34, ss. 5,
6 (as am. by S.C. 1980-81=82-83, c. 170, s. 25), 7, 13, 14
Financial Administration Act, R.S.C. 1970, c. F-10, ss. 5(4),
55 (as am. by S.C. 1980-81-82-83, c. 170, s. 16) - Constitu
tion Act, 1867, 30 & 31 Vitt.; c. 3 (U.K.) IR.S.C. 1970,
Appendix I1, No. 5] (as am. by Canada Act 1982, 1982, c. 11
(U.K.), Schedule to the Constitution Act, 1982, Item 1), s. 103
- An Act to secure the more efficient auditing of the Public
Accounts, S.C. 1855, c. 78 - An Act to provide for the better
Auditing of the Public Accounts, S.C. 1878, c. 7, ss. 11, 48
The Consolidated Revenue and Audit Act, R.S.C. 1886, c. 29
- An Act to amend "The Consolidated Revenue and Audit
Act", S.C. 1888, c. 7 - Consolidated Revenue and Audit Act,
R.S.C. 1906, c. 24 - The Consolidated Revenue and Audit
Act, 1931, S.C. 1930 (2nd Sess.)-1931, c. 27 - Financial
Administration Act, S.C. 1951 (2nd Sess.), c. 12 - Financial
Administration Act, R.S.C. 1952, c. 116 - An Act to amend
the Financial Administration Act, S.C. 1966-67, c. 74
Access to Information Act, S.C. 1980-81-82-83, c. III,
Schedule I, s. 69 - Privacy Act, S.C. 1980-81-82-83, c. 1II,
Schedule II, s. 70.
Judicial review — Prerogative writs — Auditor General
denied access to documents for Cabinet confidentiality —
Mandamus and injunction sought on notice of motion —
Permanent relief available only by judgment in action —
Whether public duty compellable by mandamus existing —
Mandamus and injunctive relief discretionary — Granted
where other remedies exhausted — Declaratory judgment
appropriate remedy — Counsel agreeing to convert application
into action — Pleadings filed — Discoveries waived — Motion
treated as application for judgment — Declaration granted
plaintiff entitled to access and denial unjustified — Certificate
under Canada Evidence Act, s. 36.3 ineffective against
declaratory judgment — Canada Evidence Act, R.S.C. 1970, c.
E-10, s. 36.3 (as added by S.C. 1980-81-82-83, c. 111,s. 4).
Energy — Crown corporation, Petro-Canada, taking over
Fina — Parliament authorizing $1.7 billion expenditure —
Vote establishing Canadian Ownership Account with Minister
of Energy, Mines and Resources as trustee — Auditor General
having power to request information from Crown corporations
— Wishing to investigate Fina takeover — Petro-Canada
denying access to information — Governor in Council refusing
to direct Petro-Canada to comply — Prime Minister denying
access as information Privy Council confidence — Federal
Court declaring Auditor General having statutory access right
— Scrutiny of public funds expenditure greater public interest
than Cabinet confidentiality doctrine — Minister especially
liable to scrutiny where trustee of account created for expendi
ture of huge sums Petro-Canada Act, S.C. 1974-75-76, c.
61 — Appropriation Act No. 4, 1980-81, S.C. 1980-81-82-83,
c. 51, Sch., Vote Sc — Energy Administration Act, S.C.
1974-75-76, c. 47 (as am. by S.C. 1980-81-82-83, c. 114, s.
2), s. 65.26(3),(4) (as added idem, s. 39).
On February 3, 1981, it was announced that Petro-Canada, a
Crown corporation, had agreed to purchase Petrofina Canada
Inc. On March 21 that year Parliament, by a vote under the
Department of Energy, Mines and Resources, authorized the
expenditure of up to $1.7 billion to complete the transaction.
The vote established the Canadian Ownership Account (COA)
as a non-budgetary trust account in the Accounts of Canada.
The Minister of Energy, Mines and Resources was made
trustee of the revenues and investment assets of the COA. On
April 18, 1981, a Petro-Canada subsidiary made an offer of
$120 per share to the Petrofina Canada Inc. shareholders. That
offer was accepted.
The plaintiff is the Auditor General of Canada. His duties in
relation to the Accounts of Canada are set out in sections 5, 6
and 7 of the Auditor General Act and sections 5(4) and 55 of
the Financial Administration Act. The legislation gives him the
responsibility to "make such examinations and inquiries as he
considers necessary to enable him to report as required by" the
Auditor General Act. His annual report to the House of
Commons must "call attention to anything that he considers to
be of significance and of a nature that should be brought to the
attention of the House". In order to be able to discharge these
duties, the Auditor General is given "free access ... to informa
tion that relates to the fulfilment of his responsibilities". He
was also given the powers of a commissioner under the In
quiries Act and could "examine any person on oath on any
matter pertaining to any account subject to audit by him".
With respect to Crown corporations, he could request informa
tion and if it was not forthcoming, so advise the Governor in
Council who may direct the corporate officers to furnish the
information and give access to documents. The legislation
dealing with the duties and powers of the Auditor General did
not mention any restriction based on confidences of the Queen's
Privy Council.
Between March, 1982 and March, 1984 the plaintiff sought
information for his audit of the COA from the defendants and
from Petro-Canada. In his 1982, 1983 and 1984 Reports the
plaintiff made reference to his inability to determine whether
due regard to economy and efficiency had been exercised in the
expenditure of $1.7 billion in public funds to acquire the shares
and property of Petrofina Canada Inc. On March 9, 1984, the
Auditor General wrote to Petro-Canada, pursuant to subsection
14(2) of the Auditor General Act, asking for access to informa
tion on the Petrofina acquisition. When this request was denied,
the plaintiff wrote to the Governor in Council, pursuant to
subsection 14(3) of the Act, advising of the denial. The Gover
nor in Council replied by an Order in Council which did not
direct Petro-Canada to provide the information. Finally, the
Auditor General brought the matter to the attention of the
Prime Minister. A reply was received to the effect that access
would be denied as the information constituted confidences of
the Queen's Privy Council for Canada.
Initially, the Auditor General applied, by notice of motion,
for a mandatory order for access to the documents and an
injunction restraining the respondents from preventing the
gaining of free access and receiving information as provided by
subsection 13(1) of the Auditor General Act. The Court was
concerned in that a permanent order could be obtained only
after judgment in an action. Furthermore, there was a question
whether any public duty compellable by mandamus here exist
ed. Finally, in view of the discretionary nature of both man-
damus and injunction, had the applicant exhausted every other
remedy at his disposal: Hare!kin v. University of Regina,
[1979] 2 S.C.R. 561? So that the proceedings would not be
aborted, counsel met with His Lordship and an agreement was
reached to convert the application into an action and to treat
the motion (which had already been heard) as an application
for judgment.
In his statement of claim, the Auditor General seeks man-
damus or a declaration of entitlement to free access to specified
classes of documents relating to the Petrofina acquisition. Four
arguments were advanced as grounds for dismissing this action:
(1) the information sought was irrelevant to an audit of the
COA; (2) the Auditor General was estopped since in his 1981,
1982 and 1983 Reports he stated to the Commons that he had
received the information needed to fulfil his responsibilities; (3)
disclosure of the information would constitute a breach of the
constitutional convention protecting from disclosure confi
dences of the Queen's Privy Council for Canada. Additionally,
the confidences were protected by the convention concerning
papers of previous ministries and (4) the matter should be
resolved by the House of Commons rather than by the Court.
Also before the Court was a certificate, filed under section
36.3 of the Canada Evidence Act, stating the objection to
disclosure of the Clerk of the Privy Council in that the informa
tion constituted a confidence of the Queen's Privy Council
during the Trudeau administration.
Held, the plaintiff is entitled to a declaration that sections 5
and 13 of the Auditor General Act entitle him to access to
information contained in documents set out in the statement of
claim and refusal of access was and remains unjustified.
The issue in this case is whether the right of access to
information, given to the Auditor General in section 13 of the
Auditor General Act, takes precedence over the convention of
confidence of the Queen's Privy Council for Canada.
Conventions form an integral part of our constitutional
system. While the sanction for breaching a convention is politi
cal rather than legal, some conventions are more important
than some laws. It depends upon the principle they are meant
to safeguard. One convention is that the secrecy of Cabinet
deliberations is to be maintained. It is recognized in the House
Rules and in three statutes: Access to Information Act, Privacy
Act and Canada Evidence Act. It was significant that, in
enacting the Auditor General Act, Parliament had not placed
upon the right of access the limitation that the Cabinet confi
dentiality convention had to be respected. That omission should
not be attributed to oversight. The intention of Parliament was
that the Auditor General should not be so restricted.
The legislative history of the Auditor General Act is one of
increased responsibilities and powers. Under the latest version
of the Act—in force since 1977—the Auditor General, in his
annual report to the Commons, is to mention any case where
money was spent without due regard to economy or efficiency.
That was a statutory expression of the concept of "value for
money auditing" in the public sector. The purpose is to provide
a standard for measuring productivity and efficiency in the
public service—something which once had been thought of as
impossible to do. A professional servant of Parliament, the
Auditor General was responsible for assisting Members to
discharge their fundamental obligation of holding Government
accountable for every cent of public monies expended. It was
basic to the Parliamentary system that public expenditures be
under Parliament's constant and complete scrutiny. But the
process is so complex that scrutiny by Members is illusory
unless they are provided with professional accounting and
auditing support.
The suggestion that Parliament may not have directed its
mind to the question whether the Auditor General should have
unrestricted access to Cabinet confidences was laid to rest by
reference to the Hansard record of the debates in the House.
One there finds a statement by Mr. Andras to the effect that
the access provisions of the Auditor General Act had been
drafted so as to ensure that they would stand against all
subsequent legislation unless Parliament were to specifically
agree otherwise.
The certificate under section 36.3 of the Canada Evidence
Act would be a bar to an order for production of documents but
was ineffective against a declaratory judgment.
The accountability of Government in the spending of public
funds represents a greater public interest than any risk of
weakening the doctrine of Cabinet confidentiality. Where the
two interests conflict, the former must prevail.
The argument, that the confidence being one owed by the
Privy Councillors to Her Majesty, only she could waive the
obligation, was not well taken. There is here no question of any
waiver. It is rather a question of law duly enacted by Parlia
ment and assented to by Her Majesty.
If the effect of this judgment is that the Auditor General is
placed in a higher position than the Court, that was the result
of the language of a legislative enactment which was clear in
intent.
Every Minister is subject to scrutiny with respect to each
expenditure within his area of responsibility. The Ministers who
are named as defendants herein are all the more liable to
scrutiny since they act as trustees of the Canadian Ownership
Account—a vehicle created for the expenditure of large sums
of public money.
Nor could the Court accept the submission that, as a servant
of Parliament, the Auditor General should there resort for
relief. The Government has a majority in the House and it is
the Cabinet which has denied access to the information. The
result of any vote in the House was predictable.
CASES JUDICIALLY CONSIDERED
FOLLOWED:
Harelkin v. University of Regina, [1979] 2 S.C.R. 561;
Wilson v. Minister of Justice, judgment dated May 29,
1985, Federal Court, Appeal Division, A-115-84, not yet
reported.
CONSIDERED:
Burmah Oil Co Ltd v Bank of England (Attorney Gener
al intervening), [1979] 3 All E.R. 700 (H.L.); Re: Reso
lution to amend the Constitution, [1981] 1 S.C.R. 753.
REFERRED TO:
Attorney-General v. Jonathan Cape Ltd., [1976] Q.B.
752; Conway v. Rimmer, [1968] 1 All E.R. 874 (H.L.).
COUNSEL:
Gordon F. Henderson, Q.C., Emilio Binavince
and G. F. Windsor for plaintiff.
William Ian Corneil Binnie, Q.C. and
Graham Garton for defendants.
SOLICITORS:
Cowling & Henderson, Ottawa, for plaintiff.
Deputy Attorney General of Canada for
defendants.
The following are the reasons for judgment, as
amended, rendered in English by
JEROME A.C.J.: Following delivery of oral rea
sons at Ottawa, on November 1, 1985, 1 invited
counsel to make further submissions and I indicat
ed that I would amend the reasons for judgment,
where necessary, for punctuation and grammar. 1
adjourned the matter to November 12, 1985, at
which time I made some of those changes and
added certain comments by way of clarification.
These amended reasons incorporate the necessary
changes on account of punctuation and grammar,
as well as those additional comments.
The issue in this case, in the briefest possible
terms, is whether the right of access to informa
tion, given to the Auditor General of Canada in
section 13 of the Auditor General Act, S.C.
1976-77, c. 34, takes precedence over or must
defer to the convention of confidence of the
Queen's Privy Council for Canada.
When the application of a statute or individual
clauses of a statute to a particular factual situation
is in dispute, or in conflict with other similar
provisions, it is the responsibility of Courts of
competent jurisdiction, faced with the proper
request, to interpret the law. I use the words
"proper request" because the original motion had
serious procedural deficiencies which have now
been resolved and which I will deal with in greater
detail later. In interpreting the law, the first con
sideration, of course, is the language of the statute.
If I find it unequivocal, the matter ends there
unless I find two equally unequivocal and valid,
but inconsistent enactments. If Parliament has
failed to express its intention in clear words in the
statute, I should favour the interpretation which is
consistent and more in harmony with the general
purpose for which the statute was enacted. Finally,
where all such factors are inconclusive, it may be
possible to resolve the dispute on the basis of
public interest. Is it in the greater public interest
that one of these provisions prevail over the other?
For the reasons which follow, I find that all of
these factors bring me to the same conclusion. The
responsibility of the Auditor General is set out in
the opening sections of the Auditor General Act.
Under section 5, the Auditor General, as auditor
of the accounts of Canada, "shall make such
examinations and inquiries as he considers neces
sary to enable him to report as required" by the
Act. For the purpose of carrying out that responsi
bility, the Auditor General is provided with the
right of access to documents in section 13. Under
that section, the Auditor General has the power to
require such information, reports and explanations
from the public service of Canada as he deems
necessary for the fulfilment of his responsibilities,
to place one of his employees in a government
department, to examine any person under oath and
the authorization to exercise all the powers of a
commissioner under Part I of the Inquiries Act
[R.S.C. 1970, c. I-13].
There are five aspects of these statutory provi
sions that are worthy of note:
1. The words in section 5 "shall make such exami
nations and inquiries as he considers necessary".
2. The words in subsection 13(1) "Except as pro
vided by any other Act of Parliament that express
ly refers to this subsection". This is new language
in the current statute and with respect to the words
in the last half of the phrase "that expressly refers
to this subsection", I note that there are no such
enactments.
3. The duality of subsection 13(1) which first
provides the Auditor General "free access at all
convenient times to information that relates to the
fulfilment of his responsibilities"; second and addi
tionally, "he is also entitled to require and receive
from members of the public service of Canada
such information, reports and explanations as he
deems necessary for that purpose".
4. His entitlement is to information that relates to
the fulfilment of his responsibilities. Unless other
wise restricted, I see no reason why that should not
refer back to section 5.
5. In neither of these sections 5 and 13 is there
specific reference to any restriction on the basis of
confidences of the Queen's Privy Council.
I find the language unequivocal. Parliament did
not, as it has done in several other statutes, place
upon this right of access the qualification that it
must defer to the constitutional convention of
Cabinet confidentiality. Were I to find those fac
tors in balance, and I do not, the scrutiny and
accountability of Government in the spending of
public funds represents a greater public interest
than any risk of weakening the doctrine of Cabinet
confidentiality. I have therefore reached the con
clusion that where they are in conflict, the Auditor
General's right of access must prevail.
THE FACTS:
Petro-Canada is a Crown corporation incor
porated under the Petro-Canada Act, S.C.
1974-75-76, c. 61, and is an agent of Her Majesty.
On February 3, 1981, it was announced that
Petro-Canada and Petrofina S.A., the parent com
pany of Petrofina Canada Inc., had reached an
agreement on the purchase by Petro-Canada of
Petrofina Canada Inc. On March 21, 1981, almost
two months after the terms of the purchase had
been made public, the Parliament of Canada
established statutory authority to spend up to $1.7
billion to complete this purchase, by a vote under
the Department of Energy, Mines and Resources,
Vote 5c, Schedule to Appropriation Act No. 4,
1980-81, S.C. 1980-81-82-83, c. 51:
ENERGY, MINES AND RESOURCES
A--DEPARTMENT
ENERGY PROGRAM
Energy—Operating expenditures including payments, in the
current and subsequent fiscal years, in accordance with such
terms and conditions as may be prescribed by the Governor
in Council on the recommendation of the Minister and the
Minister of Finance, of such amounts as are from time to
time required for investment in shares, debentures, bonds or
other evidences of indebtedness of Petro-Canada in order to
increase Canadian public ownership of the oil and gas indus
try in Canada through the share purchase of and property
acquisition from Petrofina Canada Inc., by Petro-Canada,
(not to exceed 1.7 billion dollars which includes the interim
financing costs) for which purpose there shall be established
in the Accounts of Canada a non-budgetary trust account to
be known as the Canadian Ownership Account:
a) to which shall be credited all amounts received as a
consequence of a Canadian Ownership special charge
for the purpose of increasing the Canadian Public Own
ership of the oil and gas industry in Canada; and
b) to which shall be charged any investment made
hereunder for the share purchase of and property acqui
sition from Petrofina Canada Inc.
and to further provide that no investment shall be made
pursuant hereto in excess of the amount of the balance to the
credit of the account, and to provide a further amount
of 5,382,000
Vote 5c established the Canadian Ownership
Account (COA) as a non-budgetary trust account
in the accounts of Canada. Revenues credited to
the COA are collected under the Energy Adminis
tration Act, S.C. 1974-75-76, c. 47 [as am. by S.C.
1980-81-82-83, c. 114, s. 2]. Subsections 65.26(3)
and (4) of that Act [as added idem, s. 39] provide
that investments authorized by Vote 5c are to be
charged to the COA. Shares resulting from any
such investment are to be held in the name of the
Minister of Energy, Mines and Resources to the
credit of the COA. Thus, the Minister of Energy,
Mines and Resources was (and is) the trustee of
the revenues and investment assets of the COA.
Any investment made for the purchase of shares
and acquisition of property from Petrofina Canada
Inc. are to be charged to the COA.
On April 18, 1981, Petro-Canada Explorations
Inc. (PEX), a wholly-owned subsidiary of Petro-
Canada, made an offer to the shareholders of
Petrofina Canada Inc. to purchase their shares at
$120 per share subject to adjustment and condi
tions. The share purchase offer was on the same
financial terms as those agreed to between Petro-
Canada and Petrofina S.A., and was conditional
upon the completion of the transfer of certain
assets of Petrofina _Canada Inc. to Petro-Canada
Petroleum Inc. (PCPI), a wholly-owned subsidiary
of PEX, in exchange for preferred shares of PCPI.
This offer was accepted by the shareholders of
Petrofina Canada Inc. on May 1, 1981. The share
offer was open for acceptance from April 18, 1981
to February 28, 1983, and to the extent shares
were not sold on May 23, 1981, the price of the
shares was adjusted by imputed interest at the
London Inter-Bank Offered Rate for United
States dollar deposits (LIBOR), less any dividends
paid, until the shares were tendered for purchase.
The adjustment to purchase price for imputed
interest at LIBOR increased the price of shares
not initially tendered for purchase, beyond the
$120 per share price and the cost of interest paid
by PEX to the commercial banks which financed
the purchase of shares was paid from the COA.
This is recorded in the Summary Financial State
ments of Canada as an investment in shares of
Petro-Canada which are held in trust and credited
to the COA.
From February 2, 1981 to May 12, 1981, the
following transactions occurred in order to acquire
the assets and shares of Petrofina Canada Inc.:
(a) On February 2, 1981, Petro-Canada agreed to buy and
Petrofina S.A. agreed to sell Petrofina S.A.'s shares in
Petrofina Canada Inc. subject to conditions including approval
by resolution of the shareholders of Petrofina Canada Inc. of
the sale of the Petrofina Canada Inc. assets to PCPI.
(b) On February 23, 1981 Petro-Canada caused PCPI pre
ferred shares to be transferred to Petrofina Canada Inc.
(c) On April 18, 1981 Petro-Canada caused PEX to make an
offer to holders of common shares of Petrofina Canada Inc. to
purchase all the outstanding common shares at a price of $120
per share subject to adjustments and conditions. Shareholders
accepting the offer were to deposit their shares with trustees,
Montreal Trust Company (Canada) and Société Générale de
Banque (Europe) (the "trustees").
(d) Sometime prior to May 11, 1981 Petro-Canada caused
PEX to contract for loan financing of $1.5 billion from banks,
subject to obtaining a guarantee from Petro-Canada.
(e) On May 11, 1981 the shareholders of Petrofina Canada Inc.
met and approved by a special majority (more than 2/3) vote
the sale of its transferrable assets to PCPI.
(f) On May 11, 1981 the Governor in Council passed Order in
Council P.C. 1981-1235 amending Order in Council P.C. 1981-
259, which approved the capital budget of Petro-Canada, to
permit Petro-Canada to guarantee the obligations of PEX
under the offer to purchase all the outstanding shares of
Petrofina Canada Inc. and to guarantee the obligations of
PCPI under its agreement to purchase the assets of Petrofina
Canada Inc.
(g) On May 12, 1981 (i) Petrofina Canada Inc. transferred
certain assets not sold to PCPI to a subsidiary of Petrofina
S.A.; (ii) Petro-Canada caused PCPI to purchase the remaining
assets of Petrofina Canada Inc. in exchange for preferred
shares of PCPI, and (iii) Petro-Canada caused PEX to pur
chase from the trustees the shares of Petrofina Canada Inc.
deposited with them.
On February 2, 1981, the Governor General in
Council, in P.C. 1981-259, approved a supplemen
tary budget for Petro-Canada permitting it to
undertake share purchase investments to an
amount of $1.5 billion, including external financ
ing commitments for that amount. On May 11,
1981, P.C. 1981-259 was amended by P.C. 1981-
1235. Petro-Canada used guarantees authorized
by this amendment to establish bank lines of credit
in favour of PEX to enable it to acquire the shares
of Petrofina Canada using borrowed funds.
On March 26, 1982, the Governor General in
Council issued Order-in-Council P.C. 1982-971
prescribing the terms and conditions applicable to
the payments made from the COA. Schedule "A",
which is an agreement between Her Majesty the
Queen as represented by the Minister of Energy,
Mines and Resources and Petro-Canada reads in
part:
I. In addition to the funds already advanced from the Account,
the Minister shall advance to Petro-Canada such funds as are
available to the Account from time to time, such funds
advanced or to be advanced, not to exceed in total one billion
seven hundred million dollars ($1.7 billion), until such time as
Petro-Canada has received from the Minister an amount equal
to the sum of the total Investment and total Interest payable by
Petro-Canada in respect of the acquisition of ninety-five per
cent (95%) of the Shares (the "Full Payment Date").
2. Petro-Canada shall forthwith in respect of funds already
advanced and forthwith upon receipt of each further advance
from the Minister from the Account provide to the Minister
Acknowledgments of Indebtedness in the form attached as
Schedule "A" showing the amounts received and the dates of
receipt.
3. Petro-Canada shall provide to the Minister on or before the
15th day of each month prior to the Full Payment Date a
statement as of the last day of the preceding month showing the
then current status of:
(a) The total funds received from the Account;
(b) The estimate of Petro-Canada as to the total amount of
the Investment and Interest required to acquire ninety-five
per cent (95%) of the Shares; and
(c) The estimate of Petro-Canada as to the Full Payment
Date.
4. Petro-Canada shall forthwith where legislation is enacted
providing for the issuance of common shares of Petro-Canada
in consideration for advances from the Account, and on or
before the 31st day of March of each year thereafter until the
Full Payment Date, issue in the name of the Minister the whole
number of common shares of Petro-Canada of the par value of
one hundred thousand dollars ($100,000) which is determined
by dividing by one hundred thousand dollars ($100,000) (sic)
the total Investment advanced to Petro-Canada by the Minister
since March 31st of the previous year in respect of which no
common shares have been issued. The issuance by Petro-
Canada of such common shares shall fully satisfy and extin
guish the indebtedness of Petro-Canada to the Minister in
respect of the total Investment and Interest advanced by the
Minister to Petro-Canada since March 31 of the preceding
year.
5. Petro-Canada shall provide written notice to the Minister
forthwith upon the occurrence of the Full Payment Date and
shall within thirty (30) days of the Full Payment Date issue in
the name of the Minister the number of common shares of
Petro-Canada of the par value of one hundred thousand dollars
($100,000) which is determined by dividing the total Invest
ment since March 31st of the preceding year by one hundred
thousand dollars ($100,000) (sic). The issuance by Petro-
Canada of such common shares shall fully satisfy and extin
guish the indebtedness of Petro-Canada to the Minister in
respect of the total Investment and Interest advanced by the
Minister to Petro-Canada since March 31 of the preceding
year.
6. This Agreement shall have effect from December 31, 1981,
as if made on that date and shall continue in effect until June
30, 1983.
On June 29, 1982, Parliament amended the
Petro-Canada Act by S.C. 1980-81-82-83, c. 105,
to authorize the payment of a share premium in
addition to the par value of Petro-Canada shares.
Order-in-Council P.C. 1983-918 dated March 25,
1983 was passed pursuant to these amendments to
prescribe the payment of a premium of $11,031
with respect to each of the 12,451 Petro-Canada
common shares purchased with funds from the
COA.
From March, 1982 to March, 1984, the plaintiff
sought from the defendants, Petro-Canada and
other Government officials, access to information
he required for his audit of the COA. In his 1982,
1983 and 1984 reports to the House of Commons,
the plaintiff referred to the lack of evidence to
permit him to determine whether due regard to
economy and efficiency had been exercised in
using $1.7 billion in public funds paid from the
COA to acquire the shares and property of
Petrofina Canada Inc. He also reported that he
was encountering difficulties in obtaining the
information required to make such a determina
tion. On March 9, 1984, he wrote to Petro-
Canada, pursuant to subsection 14(2) of the Audi
tor General Act, asking to be provided with, and to
obtain access to, information relating to the acqui
sition of Petrofina Canada Inc., in particular infor
mation in the following documents:
(a) any analysis and/or evaluation reports pertaining to the
acquisition of Petrofina Canada Inc.;
(b) any presentations, documents, or memoranda presented to
members and representatives of the Government of Canada;
(c) any evaluations of the Petrofina Canada Inc. acquisition
and/or assets undertaken subsequent to the acquisition of
Petrofina Canada Inc.
This request for access was denied. On April 16,
1984, the plaintiff wrote to the Governor in Coun
cil pursuant to subsection 14(3) of the Auditor
General Act, advising of the failure of Petro-
Canada to provide him with, or to give him access
to, this information. Having been so advised, the
Governor in Council is authorized by subsection
14(3) to direct Petro-Canada to furnish the Audi
tor General with the information and access
sought. The Governor in Council, however, replied
by Order in Council P.C. 1984-2243 dated June
26, 1984, which declined to direct Petro-Canada to
provide the required information to the plaintiff.
Subsequent requests for access to the information
were made to the defendants, all of which were
denied.
On June 25, 1984, the plaintiff wrote to the
Prime Minister, The Right Honourable Pierre
Elliott Trudeau, to bring to his attention the fail
ure of the defendants to provide the plaintiff with
the required information. By letter dated June 29,
1984, the Prime Minister replied that the informa
tion requested constituted confidences of the
Queen's Privy Council for Canada and that the
plaintiff was not entitled to have access to such
confidences.
PROCEDURE:
The Auditor General asks this Court to resolve
the impasse. The initial application was by way of
notice of motion seeking:
(a) a mandatory order directing the Respondents to permit the
Applicant free access to information contained in documents
prepared for, or received by or considered by, the Respondents
in the exercise of their respective individual or joint statutory
responsibilities; and
(b) an order by way of permanent injunction, restraining the
Respondents from taking any action having the effect of pre
venting the Applicant from
(i) gaining free access to such information and
(ii) from receiving information pursuant to Section 13(1) of
the Auditor General Act.
In that form, it raised a number of procedural
questions which troubled me from the beginning,
especially since they were serious enough to have
received extensive consideration in the Supreme
Court of Canada in Harelkin v. University of
Regina, [1979] 2 S.C.R. 561 and in the Federal
Court of Appeal in Wilson v. Minister of Justice
(judgment dated May 29, 1985, Federal Court,
Appeal Division, A-115-84, not yet reported). It is
not necessary to make a detailed reference to the
facts or decisions in either case. Together, they
confirm my concern that a permanent order of the
nature sought is only available after judgment in
an action.
There were also at least two substantive ques
tions: First, whether any public duty compellable
by an order of mandamus is in existence here. It is
well established that the order of mandamus only
lies to compel the performance of a specific duty
set out in a specific statute. In the present case,
even if I were to find that section 13 of the
Auditor General Act does give the plaintiff the
right to compel production of documents from
public servants or from ministers of the Crown,
any corresponding duty of compliance on their
part must be an assumption, as opposed to a
specific responsibility, described in the very letter
of the law. The second substantive concern is that
since both mandamus and injunctive relief are
discretionary in nature, it may be entirely inappro
priate to grant either one of them unless the
applicant has first exhausted every other conven
ient remedy at his disposal (see Supreme Court of
Canada in Harelkin). In summary, it seemed quite
clear that if this Court is to be in a position to
resolve this dispute, it would have to be by way of
declaratory judgment, only available in the Trial
Division of the Federal Court of Canada, in an
action. In Wilson, Mahoney J. states [at page 3 of
his reasons]:
... faced with an application for declaratory relief, a trial judge
has two options: he may dismiss the application on the proce
dural ground without prejudice to the right of the applicant to
bring his action within a prescribed time or he may, on consent
and not merely in the absence of objection, order that the
proceeding be deemed to have been properly commenced pro
vided the parties place on the record an agreed statement of all
the facts upon which the issues are to be adjudicated.
Rather that abort the proceedings, I therefore
called counsel together in July. As a result of that
meeting, they agreed to transform the initial
application into an action between the parties, to
file the necessary pleadings, to waive discoveries,
and to treat the motion which I had already heard
as an application for judgment in the action.
By statement of claim filed August 2, 1985, the
plaintiff seeks mandamus or, alternatively, a dec
laration that he is entitled to free access to infor
mation contained in the following documents:
(i) All analysis and/or evaluation reports pertaining to the
acquisition of Petrofina Canada Inc. prepared for, or received
by or considered by, the Defendants in the exercise of their
respective individual or joint statutory responsibilities;
(ii) All presentations, documents or memoranda relating to the
use of funds from the accounts of Canada (in particular from
the Canadian Ownership Account) for the acquisition of
Petrofina Canada Inc. that were prepared for, or received for or
considered by, the Defendants in the exercise of their respective
joint or individual statutory responsibilities with respect to the
acquisition of Petrofina Canada Inc.;
(iii) All evaluations of the Petrofina Canada Inc. acquisition
and/or the assets acquired that were undertaken subsequent to
the acquisition, prepared for, or received by, or considered by,
the Defendants in the exercise of their respective individual or
joint statutory responsibilities;
(iv) to provide the Plaintiff with information, and reports and
explanations contained in the documents set out in (i),
applicable to payments of public monies made from the
accounts of Canada, more particularly, payments from the
Canadian Ownership Account Vote 5c, Appropriation Act
No. 4, 1980-81, to acquire shares and property of Petrofina
Canada Inc. and which the Plaintiff deems necessary to fulfill
his responsibility under the Auditor General Act.
The defendants argue this action should be dis
missed on four grounds. First, the information
sought by the Auditor General is irrelevant to his
audit of the Canadian Ownership Account.
Second, the Auditor General is estopped from
alleging that the information he seeks is required
for the performance of his duties since in 1981,
1982 and 1983, he reported to the House of Com
mons that he had been provided with all the
information and explanations required to fulfil his
audit responsibilities. Third, the disclosure of the
information sought would constitute a breach of
the constitutional convention which protects from
disclosure the confidences of the Queen's Privy
Council for Canada. Furthermore, the confidences
in issue relate to the ministry of former Prime
Minister Trudeau and are, therefore, protected
under the constitutional convention relating to the
papers of previous ministries. Fourth, the Auditor
General's claim for access to confidences of the
Queen's Privy Council should be dealt with by the
House of Commons and not by the courts.
The Clerk of the Privy Council has also objected
to the disclosure before the Court of the informa
tion sought by the plaintiff, by certifying in writing
that the information constitutes a confidence of
the Queen's Privy Council for Canada relating to
the period of the ministry of Prime Minister Tru-
deau. The certificate is filed pursuant to section
36.3 of the Canada Evidence Act, R.S.C. 1970, c.
E-10, s. 36.3 added by S.C. 1980-81-82-83, c. 111,
s. 4, and also to invoke the common law immunity
respecting disclosure of the confidences of the
Crown.
THE LAW:
It is admitted that the plaintiff is the auditor of
the accounts of Canada including the Canadian
Ownership Account, out of which public funds
were invested in Petro-Canada. The Auditor Gen
eral's responsibilities in relation to the accounts of
Canada are found in sections 5, 6 and 7 of the
Auditor General Act, and subsection 5(4) and
section 55 of the Financial Administration Act,
R.S.C. 1970, c. F-10.
Auditor General Act
5. The Auditor General is the auditor of the accounts of
Canada, including those relating to the Consolidated Revenue
Fund and as such shall make such examinations and inquiries
as he considers necessary to enable him to report as required by
this Act.
6. The Auditor General shall examine the several financial
statements required by section 55 of the Financial Administra
tion Act to be included in the Public Accounts, and any other
statement that ["the President of the Treasury Board or"
added by S.C. 1980-81-82-83, c. 170, s. 25, assented to on
November 30, 1983] the Minister of Finance may present for
audit and shall express his opinion as to whether they present
fairly information in accordance with stated accounting policies
of the federal government and on a basis consistent with that of
the preceding year together with any reservations he may have.
7. (1) The Auditor General shall report annually to the
House of Commons
(a) on the work of his office; and
(b) on whether, in carrying on the work of his office, he
received all the information and explanations he required.
(2) Each report of the Auditor General under subsection (1)
shall call attention to anything that he considers to be of
significance and of a nature that should be brought to the
attention of the House of Commons, including any cases in
which he has observed that
(a) accounts have not been faithfully and properly main
tained or public money has not been fully accounted for or
paid, where so required by law, into the Consolidated Reve
nue Fund;
(b) essential records have not been maintained or the rules
and procedures applied have been insufficient to safeguard
and control public property, to secure an effective check on
the assessment, collection and proper allocation of the reve
nue and to ensure that expenditures have been made only as
authorized;
(c) money has been expended other than for purposes for
which it was appropriated by Parliament;
(d) money has been expended without due regard to economy
or efficiency; or
(e) satisfactory procedures have not been established to
measure and report the effectiveness of programs, where
such procedures could appropriately and reasonably be
implemented.
(3) Each annual report by the Auditor General to the House
of Commons shall be submitted to the Speaker of the House of
Commons on or before the 31st day of December in the year to
which the report relates and the Speaker of the House of
Commons shall lay each such report before the House of
Commons forthwith after receipt thereof by him or, if that
House is not then sitting, on the first day next thereafter that
the House of Commons is sitting.
In order to facilitate the Auditor General in the
discharge of his responsibilities, Parliament enact
ed sections 13 and 14 of the Act:
13. (1) Except as provided by any other Act of Parliament
that expressly refers to this subsection, the Auditor General is
entitled to free access at all convenient times to information
that relates to the fulfilment of his responsibilities and he is also
entitled to require and receive from members of the public
service of Canada such information, reports and explanations
as he deems necessary for that purpose.
(2) In order to carry out his duties more effectively, the
Auditor General may station in any department any person
employed in his office, and the department shall provide the
necessary office accommodation for any person so stationed.
(3) The Auditor General shall require every person employed
in his office who is to examine the accounts of a department or
of a Crown corporation pursuant to this Act to comply with any
security requirements applicable to, and to take any oath of
secrecy required to be taken by, persons employed in that
department or Crown corporation.
(4) The Auditor General may examine any person on oath on
any matter pertaining to any account subject to audit by him
and for the purposes of any such examination the Auditor
General may exercise all the powers of a commissioner under
Part I of the Inquiries Act.
14. (1) Notwithstanding subsections (2) and (3), in order to
fulfil his responsibilities as the auditor of the accounts of
Canada, the Auditor General may rely on the report of the duly
appointed auditor of a Crown corporation or of any subsidiary
of a Crown corporation.
(2) The Auditor General may request a Crown corporation
to obtain and furnish to him such information and explanations
from its present or former directors, officers, employees, agents
and auditors or those of any of its subsidiaries as are, in his
opinion, necessary to enable him to fulfil his responsibilities as
the auditor of the accounts of Canada.
(3) If, in the opinion of the Auditor General, a Crown
corporation, in response to a request made under subsection
(2), fails to provide any or sufficient information or explana
tions, he may so advise the Governor in Council, who may
thereupon direct the officers of the corporation to furnish the
Auditor General with such information and explanations and to
give him access to those records, documents, books, accounts
and vouchers of the corporation or any of its subsidiaries access
to which is, in the opinion of the Auditor General, necessary for
him to fulfil his responsibilities as the auditor of the accounts of
Canada.
Financial Administration Act
5. ...
(4) The Treasury Board may prescribe from time to time the
manner and form in which the accounts of Canada and the
accounts of the several departments shall be kept, and may
direct any person receiving, managing or disbursing public
money to keep any books, records or accounts that the Board
considers necessary.
55. (1) A report, called the Public Accounts, shall be pre
pared by the Receiver General for each fiscal year and shall be
laid before the House of Commons by the Minister on or before
the 31st day of December next following the end of that year,
or if Parliament is not then sitting, within any of the first
fifteen days next thereafter that Parliament is sitting.
(2) The Public Accounts shall be in such form as the
Minister may direct, and shall include
(a) a report on the financial transactions of the fiscal year;
(b) a statement, certified by the Auditor General of Canada,
of the expenditures and revenues of Canada for the fiscal
year;
(c) a statement, certified by the Auditor General, of such of
the assets and liabilities of Canada as in the opinion of the
Minister are required to show the financial position of
Canada as at the termination of the fiscal year;
(d) the contingent liabilities of Canada; and
(e) such other accounts and information as are necessary to
show, with respect to the fiscal year, the financial transac
tions and financial position of Canada, or are required by
any Act to be shown in the Public Accounts.
Section 55 was repealed and the following sub
stituted by S.C. 1980-81-82-83, c. 170, s. 16:
16. Section 55 of the said Act is repealed and the following
substituted therefor:
"55. (1) A report, called the Public Accounts, shall be
prepared by the Receiver General for each fiscal year and shall
be laid before the House of Commons by the President of the
Treasury Board on or before the 31st day of December next
following the end of that year, or if the House of Commons is
not then sitting, on any of the first fifteen days next thereafter
that the House of Commons is sitting.
(2) The Public Accounts shall be in such form as the
President of the Treasury Board and the Minister may direct,
and shall include
(a) a statement of
(i) the financial transactions of the fiscal year,
(ii) the expenditures and revenues of Canada for the fiscal
year, and
(iii) such of the assets and liabilities of Canada as, in the
opinion of the President of the Treasury Board and the
Minister, are required to show the financial position of
Canada as at the termination of the fiscal year;
(b) the contingent liabilities of Canada;
(c) the opinion of the Auditor General of Canada as required
under section 6 of the Auditor General Act, and
(d) such other accounts and information relating to the fiscal
year as are deemed necessary by the President of the Trea
sury Board and the Minister to present fairly the financial
transactions and the financial position of Canada or as are
required by any Act to be shown in the Public Accounts.
In addition to determining whether sections 13 and
14 give the plaintiff the right of access to the
documents in question, I must determine what
effect, if any, a certificate filed pursuant to section
36.3 of the Canada Evidence Act, has on the
remedies sought in these proceedings:
36.3 (1) Where a Minister of the Crown or the Clerk of the
Privy Council objects to the disclosure of information before a
court, person or body with jurisdiction to compel the production
of information by certifying in writing that the information
constitutes a confidence of the Queen's Privy Council for
Canada, disclosure of the information shall be refused without
examination or hearing of the information by the court, person
or body.
(2) For the purpose of subsection (1), "a confidence of the
Queen's Privy Council for Canada" includes, without restrict
ing the generality thereof, information contained in
(a) a memorandum the purpose of which is to present
proposals or recommendations to Council;
(b) a discussion paper the purpose of which is to present
background explanations, analyses of problems or policy
options to Council for consideration by Council in making
decisions;
(c) an agendum of Council or a record recording delibera
tions or decisions of Council;
(d) a record used for or reflecting communications or discus
sions between Ministers of the Crown on matters relating to
the making of government decisions or the formulation of
government policy;
(e) a record the purpose of which is to brief Ministers of the
Crown in relation to matters that are brought before, or are
proposed to be brought before, Council or that are the
subject of communications or discussions referred to in para
graph (d); and
(n draft legislation.
(3) For the purposes of subsection (2), "Council" means the
Queen's Privy Council for Canada, committees of the Queen's
Privy Council for Canada, Cabinet and committees of Cabinet.
(4) Subsection (1) does not apply in respect of
(a) a confidence of the Queen's Privy Council for Canada
that has been in existence for more than twenty years; or
(b) a discussion paper described in paragraph (2)(b)
(i) if the decisions to which the discussion paper relates
have been made public, or
(ii) where the decisions have not been made public, if four
years have passed since the decisions were made."
THE CONSTITUTIONAL CONVENTION OF CABINET
CONFIDENTIALITY:
I have no difficulty in finding that there exists in
Canada a convention whereunder private delibera
tions between Ministers of the Crown for the
purpose of rendering advice to Her Majesty
remain confidential. The Supreme Court of
Canada has defined Constitutional conventions in
Re: Resolution to amend the Constitution, [1981]
1 S.C.R. 753, at page 883:
We respectfully adopt the definition of a convention given by
the learned Chief Justice of Manitoba, Freedman C.J.M., in
the Manitoba Reference, supra, at pp. 13-14:
What is a constitutional convention? There is a fairly
lengthy literature on the subject. Although there may be
shades of difference among the constitutional lawyers, politi
cal scientists, and Judges who have contributed to that
literature, the essential features of a convention may be set
forth with some degree of confidence. Thus there is general
agreement that a convention occupies a position somewhere
in between a usage or custom on the one hand and a
constitutional law on the other. There is general agreement
that if one sought to fix that position with greater precision
he would place convention nearer to law than to usage or
custom. There is also general agreement that "a convention
is a rule which is regarded as obligatory by the officials to
whom it applies". Hogg, Constitutional Law of Canada
(1977) p. 9. There is, if not general agreement, at least
weighty authority, that the sanction for breach of a conven
tion will be political rather than legal.
It should be borne in mind however that, while they are not
laws, some conventions may be more important than some laws.
Their importance depends on that of the value or principle
which they are meant to safeguard. Also they form an integral
part of the constitution and of the constitutional system. They
come within the meaning of the word "Constitution" in the
preamble of the British North America Act, 1867:
Whereas the Provinces of Canada, Nova Scotia, and New
Brunswick have expressed their Desire to be federally united
... with a Constitution similar in Principle to that of the
United Kingdom:
The nature of it is set out in paragraphs 65 and 68
of the defendants' brief, which refers to several
publications in which the public interest in respect
ing the secrecy of Cabinet deliberations is
explained [see Dawson, R.M., The Government of
Canada (University of Toronto Press, 5th ed.
1970) at page 185 and Mallory, J.R., The Struc
ture of the Canadian Government (MacMillan,
Toronto, 1971) at pages 90-91]. Both authors
stress that secrecy must be maintained in order
that Members of the Cabinet can freely debate all
subjects which may be before them for discussion.
Counsel also referred to decisions in other jurisdic-
tions having a parliamentary system of Govern
ment which have upheld the constitutional conven
tion respecting Cabinet confidences. In Burmah
Oil Co Ltd v Bank of England (Attorney General
intervening), [1979] 3 All E.R. 700 (H.L.) at page
707, Lord Wilberforce states:
One such ground is the need for candour in communication
between those concerned with policy making. It seems now
rather fashionable to decry this, but if as a ground it may at
one time have been exaggerated, it has now, in my opinion,
received an excessive dose of cold water. I am certainly not
prepared, against the view of the Minister, to discount the need,
in the formation of such very controversial policy as that with
which we are here involved, for frank and uninhibited advice
from the Bank to the government, from and between civil
servants and between Ministers ....
Another such ground is to protect from inspection by possible
critics the inner working of government while forming impor
tant governmental policy. I do not believe that scepticism has
invaded this, or that it is for the courts to assume the role of
advocates for open government. If, as I believe, this is a valid
ground for protection, it must continue to operate beyond the
time span of a particular episode. Concretely, to reveal what
advice was then sought and given and the mechanism for
seeking and considering such advice might well make the
process of government more difficult now.
I have no difficulty in accepting both statements as
accurately reflecting the law in Canada regarding
constitutional conventions. (See also Attorney-
General v. Jonathan Cape Ltd., [1976] Q.B. 752;
Conway v. Rimmer, [1968] 1 All E.R. 874
(H.L.)).
Moreover, there are three statutory manifesta
tions of official recognition in addition to a fourth
specific treatment in the Rules and Procedures of
the House of Commons. Members of the House of
Commons are entitled to put questions on the
Order Paper and to seek production of documents
from Government. On a daily basis, responses are
made on behalf of Cabinet that certain written
questions or portions of them will not be answered
because an answer would violate this convention of
Cabinet confidentiality. The refusal to produce
documents is frequently made on the same basis.
In the case of the motion for production of docu
ments, if the Member who sponsored the motion is
unsatisfied with the response, he may have the
matter transferred for debate and the Rules
specifically provide that during the second Private
Members' Hour set aside for that purpose, the
matter must come to a vote. Clearly, therefore, the
Convention is recognized in House Rules and dealt
with in a special way to provide Members the
opportunity to test it.
The Convention has also been recognized in
three statutes. Section 69 of the Access to Infor
mation Act, S.C. 1980-81-82-83, c. 111, Schedule
I provides:
69. (1) This Act does not apply to confidences of the Queen's
Privy Council for Canada, including, without restricting the
generality of the foregoing,
(a) memoranda the purpose of which is to present proposals
or recommendations to Council;
(b) discussion papers the purpose of which is to present
background explanations, analyses of problems or policy
options to Council for consideration by Council in making
decisions;
(c) agenda of Council or records recording deliberations or
decisions of Council;
(d) records used for or reflecting communications or discus
sions between Ministers of the Crown on matters relating to
the making of government decisions or the formulation of
government policy;
(e) records the purpose of which is to brief Ministers of the
Crown in relation to matters that are before, or are proposed
to be brought before, Council or that are the subject of
communications or discussions referred to in paragraph (d);
(/) draft legislation; and
(g) records that contain information about the contents of
any record within a class of records referred to in paragraphs
(a) to (I).
(2) For the purposes of subsection (1), "Council" means the
Queen's Privy Council for Canada, committees of the Queen's
Privy Council for Canada, Cabinet and committees of Cabinet.
(3) Subsection (1) does not apply to
(a) confidences of the Queen's Privy Council for Canada that
have been in existence for more than twenty years; or
(b) discussion papers described in paragraph (1)(b)
(i) if the decisions to which the discussion papers relate
have been made public, or
(ii) where the decisions have not been made public, if four
years have passed since the decisions were made.
A similar provision appears in section 70 of the
Privacy Act, S.C. 1980-81-82-83, c. 111, Schedule
II, which, for the purposes of this decision, I need
not recite. In enacting the Access to Information
Act and the Privacy Act, Parliament made conse
quential amendments to the Canada Evidence Act.
Finally, there is section 36.3 of the Canada Evi
dence Act to which I have just referred.
It seems to me that there are two consequences
of all of this. The first is that the existence of the
Convention is no longer in question, especially
since it has been recognized both in House Rules
and in the statutes. The second, and for the pur
poses of this decision, more significant conse
quence, seems to me to be that the failure to place
a similar restrictive provision in the Auditor Gen
eral Act can scarcely be attributed to oversight.
Parliament is presumed to know the law and even
without these statutory manifestations of that
acknowledgment, it would be a very persuasive
argument that the failure to put such a restriction
in must mean that Parliament intended to leave it
out. Since Parliament has already done so, i.e.
spelled out the restriction in three other statutes,
as I have pointed out, it seems to me that the
matter is settled beyond doubt. Parliament intend
ed those persons seeking relief under access to
information or privacy legislation not to have
access to confidential Cabinet material. It did not
intend the Auditor General to be subject to that
same restriction.
THE DEVELOPMENT OF THE CONCEPT OF THE
AUDITOR GENERAL:
The legislative history of the Auditor General
Act from 1855 to the present is one of increase in
both responsibilities and powers. The need for an
audit by an independent body was recognized by
the Constitution Act, 1867 [30 & 31 Vict., c. 3
(U.K.) [R.S.C. 1970, Appendix II, No. 5] (as am.
by Canada Act 1982, 1982, c. 11 (U.K.), Schedule
to the Constitution Act, 1982, Item 1)], section
103, but even before Confederation, by An Act to
secure the more efficient Auditing of the Public
Accounts, S.C. 1855, c. 78. A Board of Audit was
created, composed of an Auditor and two other
members. He was to audit all institutions support
ed from public monies, to take active responsibility
in the control, issue and recording of expenditures,
and to keep the Public Accounts. To assure his
independence, the Auditor was ineligible for a seat
in either Branch of the Legislature.
In 1878, the Governor General formally
appointed an Auditor General of Canada pursuant
to section 11 of An Act to provide for the better
Auditing of the Public Accounts, S.C. 1878, c. 7,
in which the audit and reporting functions of the
Auditor General were further expanded. The Act
also provided that every officer receiving public
moneys had to render an account to the Auditor
General who was to ensure that all payments were
authorized, properly expended and supported by
vouchers. The Auditor General was to examine the
accounts of all revenue forming the Consolidated
Revenue Fund (CRF) "and any other public
accounts which, though not relating directly to the
receipts or expenditures of the Dominion of
Canada, the Treasury Board may direct" [section
48].
Under the 1878 Act, the Auditor General was
also required to submit a statement of legal opin
ions, Council reports, special warrants and unau
thorized cheques to the Minister of Finance for
presentation to Parliament. The Auditor General
was to certify and report on the accounts submit
ted by the Minister, with reference to the Acts of
Parliament authorizing the issues from the CRF.
Annual Public Accounts were to be submitted to
Parliament by the Minister of Finance and Receiv
er General and countersigned by the Auditor Gen
eral. If the Minister did not present to the House
of Commons the Auditor General's report in any
account within the prescribed time, the Auditor
General was to forthwith present such report.
In 1886, Parliament passed The Consolidated
Revenue and Audit Act, R.S.C. 1886, c. 29. Under
this Act, the Auditor General was required to
examine every appropriation account within the
public service. The Minister of Finance and the
Receiver General were to transmit the appropria
tion accounts to the Auditor General for examina
tion before October 31 and where the Auditor
General deemed it necessary to report to the Gov
ernor in Council, he was to report through the
Minister of Finance and the Receiver General.
The audit and reporting functions of the Auditor
General were revised again in 1888 in An Act to
amend "The Consolidated Revenue and Audit
Act", S.C. 1888, c. 7. Under this statute, the
Auditor General was to report to the Treasury
Board through the Minister of Finance and
Receiver General any case where a sub-accountant
had expended money beyond his authority. The
Auditor General was to call attention to every case
where a payment was not properly chargeable
against a grant or was in any way irregular. The
Act also provided that under the direction of the
Auditor General, each of the appropriation
accounts was to be examined by an employee of
his office before he certified the account. The
Minister of Finance and the Receiver General
were to transmit to the Auditor General before
September 30 the issues from the Consolidated
Revenue Fund, as of June 30, to be reported on by
January 31 of the following year, if Parliament
was sitting, or within one week after it assembled.
The Auditor General's duty to countersign the
public accounts for Parliament was revoked.
In 1906, the office of the Auditor General was
the object of further legislative revision in the
Consolidated Revenue and Audit Act, R.S.C.
1906, c. 24, and again in 1931, the Auditor Gener
al's audit powers were extended under The Con
solidated Revenue and Audit Act, 1931, S.C. 1930
(2nd Sess.)-1931, c. 27, to accounts and records
relating to gold reserves, securities, inventory, and
any other account which the Treasury Board
directed. Under the Act, the Auditor General
could station officers in any department or branch
of the public service, and the department had to
provide the necessary accommodations. The Audi
tor General was to examine the departmental
accounts and the accounts of Canada, prepared in
such form as he desired, by such persons as the
Minister of Finance directed. A listing of accounts
included those forming the receipts and expendi
tures related to the CRF and any other account
Treasury Board directed. Accounts were submitted
in the format the Auditor General required. Each
account was to be examined by the Auditor Gener
al, who was to certify to the House of Commons
that the account had been examined under his
direction and was correct. The scope of the Audi
tor General's duty to report was further defined in
the 1931 Act which provided that the Auditor
General was to report annually to the House of
Commons the results of his audit of the accounts
of Canada in such a manner that would exhibit the
true state of the accounts. The Auditor General, in
reporting to the House, was to call attention to
every case where money was expended outside the
conditions of a grant, or where an objection by the
Auditor General was overruled by the Governor in
Council or the Treasury Board.
The scope of audit powers of the Auditor Gener
al was again expanded in 1951 in The Financial
Administration Act, S.C. 1951 (2nd Sess.), c. 12
and in the Financial Administration Act, R.S.C.
1952, c. 116.
In 1967, by An Act to amend the Financial
Administration Act, S.C. 1966-67, c. 74, the au
thority of the Minister of Finance to direct the
Auditor General to inquire into and report on
matters relating to the financial affairs of Canada
or on matters involving financial aid was repealed
and the power to direct the Auditor General on
such matters continued to reside only with the
Governor in Council and the Treasury Board. The
Auditor General's duty to report forthwith any
case where it appeared any person had improperly
retained public money was also addressed in the
Act, which provided that the Auditor General was
to report the relevant circumstances to the Presi
dent of the Treasury Board, rather than the Minis
ter of Finance.
In the current Auditor General Act which was
assented to on July 14, 1977, the Auditor Gener
al's duties were increased further as set out in
sections 5, 6 and 7. Pursuant to subsection 7(1),
the Auditor General is to report annually to the
House of Commons on the work of his office. In
that report, he is to bring to the attention of the
House of Commons anything that he considers to
be of significance and of a nature which should be
brought to its attention. Paragraphs (a) to (e) of
subsection 7(2) specify the types of cases which
should be included in the report, the most signifi
cant addition to which is "cases which he has
observed that money has been expended without
due regard to economy or efficiency". This is the
statutory expression of the concept of "value for
money auditing" in the public sector. It was pion
eered by the present plaintiff's immediate prede
cessor, James MacDonell, and it is a credit to him
that Canada has set the example which is now in
increasing use around the world. The purpose is to
provide a standard by which to measure produc
tivity and efficiency in the public service, which
had always been thought possible only in the pri
vate sector. This legislative history is entirely con
sistent with the view that the Auditor General was
brought into existence in the first place to act as a
professional servant of Parliament, particularly to
assist Members of the House of Commons in their
most fundamental obligation of holding the Gov
ernment of the day accountable for every penny of
expenditure of public funds.
The fundamental principle upon which the first
Parliament was born is that no money would be
extracted from the commoners unless they first
had a voice. It has also been expressed in this way
that unless attention be given to the grievances
expressed by the duly elected representatives, then
there will be no supply of money to Her Majesty.
That principle obviously applies to the raising of
public funds. It is equally basic to our Parliamen
tary system that the expenditure of public funds be
under a constant and complete scrutiny by Parlia
ment. The fact is, however, that the complexity of
the process renders scrutiny by ordinary members
meaningless unless it is accompanied by profes
sional accounting and auditing support, hence the
concept of the Auditor General. Hence also the
expansion of the concept over the years and the
substantial increase in the Auditor General's au-
thority and in the support staff and financial es
tablishment necessary to carry out that task, which
I now understand is in excess of $40,000,000
annually. It is not surprising, therefore, that under
the most recent Auditor General Act, the extensive
powers in section 13 were given a good deal of
attention when the bill was debated.
It has often been stated that there is great
danger in attempting to go behind the words of a
statute and to look to debates or votes for assess
ments in interpretation. The reasons for this are
obvious. Any Member voting in support of a given
piece of legislation may be doing so for a number
of motives entirely unrelated to those of the Cabi
net Member sponsoring it. Furthermore, the com
ments of any one Member in debate are far from
universal and finally, the words of the statute
should be relied upon to speak for themselves and
indeed it could be entirely improper to seek in the
recorded debates some interpretation which is not
supported by the actual language chosen by Par
liament in the Act. Here, however, it is not for the
meaning of the language in section 13 and section
5, but a collateral issue that I think the recorded
debates serve a useful purpose. One of the argu
ments put forward by counsel for the defendants is
that since Parliament did not make specific refer
ence to Cabinet confidences in the Auditor Gener
al's legislation, it should be assumed that it did not
intend to do so and therefore did not intend to
change the sanctity of the convention of Cabinet
confidentiality. It seems to me that that is the
classic two-edged sword. Obviously, in its own
terms, the proposition becomes difficult to prove,
that is that the failure to specify favourable treat
ment for the convention of Cabinet confidentiality
in a statute may now be considered to be an
indication of Parliament's intent to preserve it. Let
us assume, however, that there may be cases in
which that kind of omission will prove that intent.
Is it credible, in the present circumstance where
House rules verify that the subject of Cabinet
confidence is a daily fact of life in the House of
Commons and where Parliament has set out three
other clear examples of where it has taken the
trouble to enshrine this protection for Cabinet
confidentiality in the statutes? What justification
is there for me to find somehow that Parliament in
failing to spell out the same protection here was
not acting intentionally? Surely, the only reason
able conclusion is that Parliament left out any
restriction on the basis of confidentiality because it
intended to do so. Finally, any suggestion that
Parliament did not direct its mind to the necessity
of such unrestricted access in the hands of the
Auditor General is laid to rest by portions of the
debates. I would have found it surprising had it not
been carefully considered in the debates, and I
consider it appropriate to turn to the record of
Hansard only to confirm that it was:
Mr. Andras:
On "Access to information", in Clause 12 of Bill C-20, Mr.
Mazankowski remarked that the wording of Clause 12(1) of
the proposed legislation is overly restrictive and he suggested
that the wording of the existing legislation, that is Section
57(1) of the Financial Administration Act be retained. Our
advice from Justice was that under the previous wording, that is
the aforementioned Section 57, it would be possible through the
passage of any bill subsequent to the one we are dealing with,
Bill C-20, to prohibit the Auditor General's right of access by
including the words "notwithstanding any other Act", etc.
With the revised wording of clause 12(1) as we propose, the
access provisions of this legislation will stand against all other
subsequent acts unless Parliament specifically agrees—specifi-
cally agrees—that these provisions should be accepted in some
particular instance. So it is our view that the wording as it
stands is really stronger.
In the circumstances, I think a declaratory judg
ment is appropriate and I therefore do not propose
to grant a mandatory order. I will invite submis
sions from counsel on the precise form of the
judgment which takes effect when I sign it. As is
my practice, I may review these notes before they
are filed formally as reasons for judgment, but
only to edit them for grammar and punctuation.
Before receiving submissions from counsel, there
are a number of other matters that were raised
during argument and I want to comment briefly on
them.
Since this is a declaratory judgment rather than
an order for production of documents, the certifi
cate under section 36.3 of the Canada Evidence
Act, which would have been a complete bar to any
order on my part for production does not have a
direct bearing here. Second, since I have reached
the conclusion that the language and the intent of
Parliament are that the statute leaves to the Audi
tor General the determination of which examina
tions are necessary for the fulfilment of his respon
sibilities, the submission that he does not need to
see these specific documents fails as well. There
was an argument that since the confidence here
was one owed by Members of the Privy Council in
their responsibilities to Her Majesty (and I accept
that), only Her Majesty could waive such an obli
gation. This is not a waiver, however. It comes
about by force of the law duly enacted by Parlia
ment and assented to by Her Majesty upon the
advice of her Privy Councillors. It may be argued
that the effect of this judgment places the Auditor
General in a higher position than the Courts, since
my access to these documents would be presum
ably barred by a certificate under section 36.3.
That may be so. Indeed, he has vastly greater
powers than the elected Members, none of whom
could convene an inquiry, summon witnesses or
have any of the rights of examination set out in
section 13. If those are the consequences, so be it.
They are the consequences of the language of a
legislative enactment which I find clear in intent
and again entirely consistent with the most funda
mental responsibility of holding the Government
accountable for public expenditures. Let me also
add that any Minister of the Crown is subject to
that scrutiny in every expenditure for which he or
she has responsibility. The Ministers who are
defendants here are doubly so, because they are
the trustees of the Canadian Ownership Account
which is a vehicle created for no other purpose
except the expenditure of very large sums of public
money. Finally, there was a very extensive submis
sion that because the Auditor General is a servant
of Parliament, in a position to report to Parliament
and because he has all of the other powers con
ferred upon him by section 13, he ought to exhaust
those first before coming to Court and in any
event, he should seek redress by Parliament. Were
we dealing with discretionary relief of mandamus,
those arguments would be more pertinent. Here,
there is an impasse between two principles, each a
part of our law, and the plaintiff asks the Court to
resolve the impasse. It is the Court's obligation to
do so. Furthermore, there is a very practical limi
tation upon the possibility of a full resolution
within the precincts of the House of Commons.
The grievance is the denial of access to informa
tion in the hands of Cabinet. Cabinet occupies the
executive position because of the Government
majority in the House of Commons. The ultimate
disposition of any grievance would, I assume,
result from a motion to compel production of the
documents and whether in the standing commit
tees or on the floor of the House of Commons, the
resulting vote is predictably governed by the very
same majority.
This therefore returns me to my opening words.
The wisdom of clothing the Auditor General with
these responsibilities and with these powers is not
my concern. I find it consistent with public inter
est, with Parliament's fundamental responsibility
to scrutinize public spending and with the Auditor
General's responsibilities to audit the accounts,
and also to report to Parliament on whether such
expenditures have been made with due regard to
economy and efficiency. It is for these reasons that
the sections have used this language. I see no
reason to conclude that Parliament did not intend
the plain consequences of these words. Whatever
may be the sanctity of their confidences in their
sworn obligation as advisors to Her Majesty, when
the executive enters upon the expenditure of public
funds, they do so fully aware that every aspect of
what they do is subject to such examination as the
Auditor General considers necessary for the fulfil
ment of his statutory responsibility.
I therefore conclude that the plaintiff is entitled
to a declaration that section 5 and section 13 of
the Auditor General Act afford to the Plaintiff
access to information that he deems necessary for
the purpose of carrying out such examinations as
he considers necessary to audit the accounts of
Canada, the financial statements required by sec
tion 55 of the Financial Administration Act and to
permit him to report to Parliament, including
whether any money has been expended without
due regard to economy or efficiency. With specific
reference to the facts of this case, he is entitled to
a declaration that at the time of his initial request,
he was entitled to access to the information con
tained in the documents set out in the statement of
claim, and that the refusal of access was unjusti
fied then and, therefore, remains unjustified now.
There are two supplementary comments. First, I
think it is abundantly clear from the text of these
reasons, and there are several references to it, that
we are here in an area of public expenditure. Vote
5c, the Canadian Ownership Account, the respon
sibility of the defendants in this action to be the
guardians of the Canadian Ownership Account
established by Vote 5c—all of those should, as I
say, make it abundantly clear that we are dealing
with a specific finding of fact, that we are in the
area of public expenditure and since we are in an
area of public expenditure, the documents sought
in the statement of claim clearly come within the
audit responsibilities of the Auditor General. This
includes, of course, his report to Parliament and
the value for money audit, or whether these expen
ditures were made "without due regard to econo
my or efficiency".
Two things follow. The first is that since we are
in an area of public expenditure, which is clearly
within the audit responsibilities of the Auditor
General, by virtue of section 5, he is entitled to
make "such examinations and inquiries as he con
siders necessary".
The second is that arguments based on a differ
ent factual situation, that is to say a situation in
which we are not in the area of public expenditure
and therefore not in the audit responsibilities of
the Auditor General, are hypothetical as far as this
decision is concerned. They have no bearing on
this decision.
Finally, in the last sentence of the reasons, I said
this: "the refusal of access was unjustified then
and, therefore, remains unjustified now". To be
more specific, and as I have already set out in the
earlier parts of the reasons for judgment, I have
found that the convention of Cabinet confidential
ity should not have prevailed against the Auditor
General's requests for information when they were
first made. That convention did not permit the
Government of the day to refuse access to the
information in contravention of the provisions of
the Auditor General Act, as I have interpreted
them. It would be equally unthinkable to find that
a similar convention with respect to maintaining
the confidentiality of previous Governments would
enable the present Government to persist in that
wrongful refusal of access.
For these reasons, there will be judgment for the
plaintiff for the appropriate declarations, with
costs.
JUDGMENT
UPON motion made unto this Court for judg
ment in this action, in the presence of counsel for
the plaintiff and counsel for the defendants, having
read the pleadings and hearing the evidence
adduced before this Court on January 11, March
7, 8 and 20, May 31, November 1 and 12, 1985,
and it being made to appear to the satisfaction of
this Court firstly, that the information sought in
the statement of claim relates to a matter of public
expenditure, and, secondly, that the public expen
diture more particularly described in the statement
of claim comes within the scope of the Auditor
General's responsibilities as set out in the Auditor
General Act, S.C. 1976-77, c. 34, and upon hear
ing what was said by counsel aforesaid, and this
matter coming on this day for judgment:
1. IT IS HEREBY DECLARED THAT the plaintiff is
entitled pursuant to subsection 13(1) of the Audi
tor General Act to have access to information,
including information contained in documents that
are confidences of the Queen's Privy Council, that
relates to matters of public expenditure and that
comes within the scope of the Auditor General's
responsibilities as set out in the Auditor General
Act, as the plaintiff deems necessary for the pur
pose of carrying out these responsibilities including
the audit of the financial statements required by
section 55 of the Financial Administration Act,
R.S.C. 1970, c. F-10, and to permit the plaintiff to
report to Parliament, including whether any
money has been expended without due regard to
economy or efficiency.
2. AND IT IS FURTHER DECLARED THAT the plain
tiff has the right pursuant to subsection 13(1) of
the Auditor General Act to free access to the
information contained in the following documents,
including documents that are confidences of the
Queen's Privy Council:
(i) All analysis and/or evaluation reports per
taining to the acquisition of Petrofina Canada
Inc. prepared for, or received by or considered
by, the defendants in the exercise of their
respective individual or joint statutory respon
sibilities;
(ii) All presentations, documents or memoranda
relating to the use of funds from the accounts of
Canada (in particular from the Canadian Own
ership Account) for the acquisition of Petrofina
Canada Inc. that were prepared for, or received
by or considered by, the defendants in the exer
cise of their respective joint or individual statu
tory responsibilities with respect to the acquisi
tion of Petrofina Canada Inc.;
(iii) All evaluations of the Petrofina Canada
Inc. acquisition and/or the assets acquired, that
were undertaken subsequent to the acquisition,
prepared for or received by, or considered by,
the defendants in the exercise of their respective
individual or joint statutory responsibilities;
(iv) To provide the plaintiff with information,
and reports and explanation contained in the
documents set out in (a)(i) applicable to pay
ments of public monies made from the accounts
of Canada, more particularly, payments from
the Canadian Ownership Account, Vote 5c,
Appropriation Act No. 4, 1980-81, to acquire
shares and property of Petrofina Canada Inc.
and which the plaintiff deems necessary to fulfil
his responsibility under the Auditor General
Act.
3. AND IT IS DECLARED THAT at the time of his
initial request, the plaintiff was entitled to access
to the information contained in documents set out
in the statement of claim, and that the refusal of
access was unjustified then and, therefore, remains
unjustified now, notwithstanding the fact that this
information is contained in confidences of a previ
ous government.
4. The plaintiffs application for an order in the
nature of mandamus or injunction is denied.
5. AND IT IS ORDERED that the defendants do pay
to the plaintiff his costs of these proceedings as
between party and party forthwith after the taxa
tion thereof.
ERRATUM
In the report of Michael Bishop and Canadian Musi
cal Reproduction Rights Agency Limited v. Martin
Stevens, P.B.I. Records, Manacord Pub., François
Pilon, Son Soleil Inc., Downstairs Records Ltd., Unidisc
Productions Ltd., Télé-Métropole Inc., CRC Records
Ltd. and Enregistrements Audiobec Canada Inc.—
Audiobec Recording Canada Inc. at [1985] 1 F.C. 756,
the law firm of Léger, Robic & Richard, Montreal was
given as Solicitors for defendants. J.A. Léger and L.
Carrière were indicated as having appeared for defen
dants. In fact, Léger, Robic & Richard acted for only
one of the defendants, namely Télé-Métropole Inc. At
trial, Télé-Métropole Inc. was the sole defendant remai
ning active in the proceedings.
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.