[2001] 1 F.C. 219
T-1027-00
The Commissioner of Competition (Applicant/ Respondent)
v.
Air Canada, Robert Milton, Lise Fournel, M. Robert Peterson, Calin Rovinescu (Respondents/ Petitioners)
and
853350 Alberta Ltd., Canadian Airlines Corporation, Canadian Airlines International Ltd., Canadian Regional Airlines (1998) Ltd. (Respondents)
Indexed as: Canada (Commissioner of Competition) v. Air Canada (T.D.)
Trial Division, Reed J.—Ottawa, July 10 and 21, 2000.
Practice — Judgments and orders — Reversal or variation — R. 399 motion to set aside ex parte order requiring air carrier to divulge records in inquiry into predatory pricing, abuse of dominant position, contrary to Competition Act — R. 399 applicable to ex parte orders under Competition Act, s. 11 — Order, to be set aside, must be based on misleading, incomplete, incorrect facts — To be upheld, order must relate to production of information, documents for purpose of inquiry, not prosecution of criminal offence — Documents sought, questions asked relevant to Commissioner’s inquiry — Motion to set aside heard by different judge from one granting ex parte order due to exceptional circumstances.
Competition — Motion to set aside ex parte order to produce records, information issued under Competition Act, s. 11(1)(b), (c) — Commissioner of Competition inquiring into air carrier’s conduct related to predatory pricing, abuse of dominant position contrary to Competition Act — Under Act, s. 11, Court must be satisfied inquiry commenced, person subject to order likely to have information relevant to inquiry — Material sought relevant.
Constitutional law — Charter of Rights — Unreasonable search or seizure — Competition Act, s. 11 said to infringe Charter, s. 8 — Information required to be produced for purposes of inquiry only, not prosecution — Not falling within category of self-incriminating disclosure — Production not compulsion in nature of forced labour — Information now being kept in electronic form — To protect information from disclosure as not previously in documentary form could prevent Commissioner from discharging statutory duty of inquiry — Act, s. 11(1)(c) not unconstitutional.
This was a motion under rule 399 to have an ex parte order of Tremblay-Lamer J. set aside or varied. That order required Air Canada to divulge certain records in the context of an inquiry into predatory pricing and abuse of dominant position, contrary to paragraph 50(1)(c) and section 79 of the Competition Act. It was argued on behalf of Air Canada that the Commissioner of Competition had put forward insufficient evidence to constitute reasonable grounds for believing that the carrier was guilty of predatory pricing or had abused its dominant position. Counsel for Air Canada also submitted that the material put before Tremblay-Lamer J. did not disclose evidence of a policy or practice of anti-competitive acts and that the matching of a competitor’s price is not abusive conduct. Two issues were raised on this motion: (1) whether the circumstances were appropriate to justify the varying or rescinding of the ex parte order, and (2) whether section 11 of the Competition Act is unconstitutional because it allows unreasonable search and seizure contrary to section 8 of the Charter.
Held, the motion should be dismissed.
(1) Rule 399 applies to orders issued under section 11 of the Competition Act, and when such orders are obtained from the Federal Court, they are governed by the Federal Court Rules, 1998. An order of the Court, even an ex parte order, should not be lightly set aside. What must be proven is that the order that was granted was based on misleading, incomplete or incorrect facts. If it can be demonstrated that the documents or information are irrelevant to the inquiry, the portions of the order that require their production can be vacated. Moreover, if there are considerations of unconstitutionality or other illegality that have not been brought to the attention of the issuing judge, these can be raised in a rule 399 motion when the order in question is an ex parte one. When assessing whether a variation or setting aside of a section 11 order is justified, it is essential, for the order to be upheld, that it relate to the production of information and documents for the purpose of an inquiry, not for the prosecution of a criminal offence. Under section 11 of the Competition Act, the Court must satisfy itself that an inquiry has been commenced and that the person against whom the order is made is likely to have information relevant to the inquiry. Air Canada has not demonstrated that Tremblay-Lamer J. granted the order on the basis of information that was incomplete, misleading or incorrect. Neither has it shown that the documents that were sought and the questions that were asked were irrelevant to the Commissioner’s inquiry.
(2) It was argued that section 11 of the Act is unconstitutional on the ground that it allows unreasonable search and seizure contrary to section 8 of the Charter. Section 11, which provides that a judge may, not shall, issue an order, confers a residual discretion upon the judge. It does not authorize the issuing of an order to produce information if the Commissioner were acting on a whim. A court may not grant a section 11 order on the basis of a bald assertion by the Commissioner that an inquiry has been commenced. It must be satisfied that the person against whom the order is sought is likely to have relevant information, and it may refuse to grant an order if there is insufficient evidence to support a conclusion that a bona fide inquiry has been commenced. Air Canada’s argument, that the requirement to make a written return under oath as to the information produced amounted to compulsion in the nature of forced labour, did not prevail. In assessing whether oral testimony and documents could be compelled, it is relevant to consider whether the predominant purpose for seeking the evidence was to obtain incriminating evidence against the person who was being compelled to testify, or whether it was to serve some legitimate public purpose. The information that Air Canada was being required to produce was for the purpose of an inquiry only, not for the purpose of a prosecution; it does not fall within the category of a self-incriminating disclosure. Such information is to be produced as an answer to written interrogatories, rather than orally through the discovery of various employees and officers of Air Canada. Production of the information in a “new” documentary form results from the fact that the information is now kept in electronic form. To protect that information from disclosure because it was not in documentary form, could prevent the Commissioner from discharging his statutory duty of inquiry.
A motion to vary or set aside an order should be brought before the judge who issued that order. However, there could be exceptional circumstances, as in this case where it was desirable to avoid a perception of conflict of interest, that require the motion to be heard by another judge.
STATUTES AND REGULATIONS JUDICIALLY CONSIDERED
Canadian Charter of Rights and Freedoms, being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44], ss. 7, 8.
Combines Investigation Act, R.S.C. 1970, c. C-23, s. 17.
Competition Act, R.S.C., 1985, c. C-34 (as am. by R.S.C., 1985 (2nd Supp.), c. 19, s. 19), ss. 10 (as am. idem, s. 23; S.C. 1999, c. 31, s. 45), 11 (as am. by R.S.C., 1985 (2nd Supp.), c. 19, s. 24; S.C. 1999, c. 2, s. 37), 15 (as am. by R.S.C., 1985 (2nd Supp.), c. 19, s. 24; S.C. 1999, c. 2, ss. 8, 37), 50(1)(c), 79 (as enacted by R.S.C., 1985 (2nd Supp.), c. 19, s. 45; S.C. 1990, c. 37, s. 31; 1999, c. 2, s. 37).
Competition Tribunal Rules, SOR/94-290.
Federal Court Rules, 1998, SOR/98-106, rr. 3, 399.
Securities Act, S.B.C. 1985, c. 83, s. 128(1).
CASES JUDICIALLY CONSIDERED
APPLIED:
British Columbia Securities Commission v. Branch, [1995] 2 S.C.R. 3; (1995), 123 D.L.R. (4th) 462; [1995] 5 W.W.R. 129; 4 B.C.L.R. (3d) 1; 60 B.C.A.C. 1; 97 C.C.C. (3d) 505; 7 C.C.L.S. 1; 38 C.R.R (4th) 133; 27 C.R.R. (2d) 189; 180 N.R. 241; 99 W.A.C. 1; Samson v. Canada, [1995] 3 F.C. 306 (1995), 131 D.L.R. (4th) 360; 64 C.P.R. (3d) 417; 189 N.R. 89 (C.A.).
CONSIDERED:
Re Softkey Software Products Inc. (1994), 57 C.P.R. (3d) 480; 84 F.T.R. 153 (F.C.T.D.); SGL Canada Inc. v. Canada (Director of Investigation and Research), [1998] F.C.J. No. 1951 (T.D.) (QL); Baron v. Canada, [1993] 1 S.C.R. 416; (1993), 99 D.L.R. (4th) 350; 78 C.C.C. (3d) 510; 18 C.R. (4th) 374; 13 C.R.R. (2d) 65; [1993] 1 C.T.C. 111; 93 DTC 5018; 146 N.R. 270; Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425; (1990), 67 D.L.R. (4th) 161; 54 C.C.C. (3d) 417; 29 C.P.R. (3d) 97; 76 C.R. (3d) 129; 47 C.R.R. 1; 106 N.R. 161; 39 O.A.C. 161.
REFERRED TO:
Boehringer Ingelheim (Canada) Inc. v. Bristol-Myers Squibb Canada Inc. (1998), 83 C.P.R. (3d) 51 (Ont. Gen. Div.); Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927; (1989), 58 D.L.R. (4th) 577; 25 C.P.R. (3d) 417; 94 N.R. 167; Canadian Egg Marketing Agency v. Richardson, [1998] 3 S.C.R. 157; (1998), 223 A.R. 201; 166 D.L.R. (4th) 1; 231 N.R. 201; Indian Manufacturing Ltd. v. Lo (1997), 75 C.P.R. (3d) 338; 215 N.R. 76 (F.C.A.).
MOTION under rule 399 to have an ex parte order requiring the production of records in the context of an inquiry under the Competition Act set aside or varied. Motion dismissed.
APPEARANCES:
William J. Miller and Donna C. Blois for applicant/respondent.
R. Michel Decary, Mireille A. Tabib and Patrick Gérard for respondents/petitioners.
SOLICITORS OF RECORD:
Industry Canada, Legal Services, Hull, Quebec, for applicant/respondent.
Stikeman Elliott, Montréal, for respondents/ petitioners.
The following are the reasons for order rendered in English by
[1] Reed J.: The respondents/petitioners (Air Canada) bring a motion pursuant to rule 399 [Federal Court Rules, 1998, SOR/98-106] to have an ex parte order of Madam Justice Tremblay-Lamer, dated June 12, 2000, set aside or varied. The order requires Air Canada to produce records, described in Appendix A to the order, and to prepare a written return of information, under oath or affirmation, in response to questions listed in Appendix B. The order was issued as a result of an application made by the Commissioner of Competition pursuant to paragraphs 11(1)(b) and (c) of the Competition Act, R.S.C., 1985, c. C-34 [as am. by R.S.C., 1985 (2nd Supp.), c. 19, s. 24; S.C. 1999, c. 2, s. 37].
[2] Sections 10 [as am. by R.S.C., 1985 (2nd Supp.), c. 19, s. 23; S.C. 1999, c. 31, s. 45] and 11 of the Competition Act read:
10. (1) The Commissioner shall
(a) on application made under section 9,
(b) whenever the Commissioner has reasons to believe that
…
(ii) grounds exist for the making of an order under Part VII.1 or Part VIII, or
(iii) an offence under Part VI or VII has been or is about to be committed,
…
cause an inquiry to be made into all such matters as the Commissioner considers necessary to inquiry into with the view of determining the facts.
…
11. (1) Where, on the ex parte application of the Commissioner or the authorized representative of the Commissioner, a judge of a superior or country court or of the Federal Court is satisfied by information on oath or solemn affirmation that an inquiry is being made under section 10 and that any person has or is likely to have information that is relevant to the inquiry, the judge may order that person to
(a) attend as specified in the order and be examined on oath or solemn affirmation by the Commissioner or the authorized representative of the Commissioner on any mattter that is relevant to the inquiry before a person, in this section and sections 12 to 14 referred to as a “presiding officer”, designated in the order;
(b) produce a record, or any other thing, specified in the order to the Commissioner or the authorized representative of the Commissioner within a time and at a place specified in the order; or
(c) make and deliver to the Commissioner or the authorized representative of the Commissioner, within a time specified in the order, a written return under oath or solemn affirmation showing in detail such information as is by the order required. [Underlining added.]
Rule 399
[3] Counsel for the Commissioner argues that rule 399 does not apply to ex parte orders issued pursuant to section 11 of the Competition Act. He argues that that Act provides a complete statutory code for governing the issuance of such orders and it does not contain provisions allowing for a review of the order or an appeal of the order.
[4] If this position is correct, the only way a person could contest the validity of an order would be by refusing to comply with it, thereby attracting a contempt prosecution in which the validity of the order could be contested as a defence. This is what appears to have happened in British Columbia Securities Commission v. Branch, [1995] 2 S.C.R. 3, with respect to subsection 128(1) of the B.C. Securities Act [S.B.C. 1985, c. 83]. Any contempt proceeding in relation to Madam Justice Tremblay-Lamer’s order, I note, would be pursued in accordance with the Federal Court Rules, 1998.
[5] I do not accept the argument that rule 399 does not apply to orders issued pursuant to section 11 of the Competition Act. When such orders are obtained from the Federal Court, they are governed by the Federal Court Rules, 1998.
[6] I turn, then, to the circumstances that justify the varying or rescinding of an ex parte order pursuant to rule 399. Counsel for the Commissioner relies upon the decision in Re Softkey Software Products Inc. (1994), 57 C.P.R. (3d) 480 (F.C.T.D.); and in SGL Canada Inc. v. Canada (Director of Investigation and Research), [1998] F.C.J. No. 1951 (T.D.) (QL).
[7] In the Softkey case, Associate Chief Justice Jerome stated [at paragraph 5]:
… unless the party seeking to rescind or vary the ex parte order can establish it was made on the basis of misleading, incomplete, or incorrect facts, there is nothing to warrant the interference of another judge. This was also clearly established by the Supreme Court of Canada in Wilson, at p. 124:
The reviewing judge must not substitute his discretion for that of the authorizing judge. Only if the facts upon which the authorization was granted are found to be different from the facts proved on the ex parte review should the authorization be disturbed. [Emphasis added.]
[8] In SGL, Mr. Justice McKeown stated [at paragraph 3]:
The matter, to be properly before me, requires the applicant to show that a willful omission or fraud was involved in the Director’s material before the judge who granted the ex-parte order. There is no such evidence before me. [Underlining added.]
[9] Paragraph 399(a) of the Rules provides:
399. (1) On motion, The Court may set aside or vary an order that was made
(a) ex parte;
…
if the party against whom the order is made discloses a prima facie case why the order should not have been made.
[10] Counsel for Air Canada argues that rule 399 provides for a lower threshold than counsel for the Commissioner asserts. This argument is based on: the text of the rule itself, which only requires disclosure of a prima facie case as to why the order should not have been made; rule 3, which requires that the Rules be interpreted and applied to obtain “the just … determination of every proceeding”; the fact that the order, being ex parte, was made without the person against whom it was issued having had any opportunity to make representations.
[11] Counsel for Air Canada argues that an order can be varied or set aside when the affidavit evidence on which it was based is inadequate; when the information or documents that are ordered to be produced are irrelevant to the proceedings; when the statutory provisions authorizing the issuance of the order or the order itself are unconstitutional or otherwise illegal.
[12] The jurisprudence cited by the Commissioner must be read in context. For example, Associate Chief Justice Jerome’s statement, quoted above, is intended to be read together with the quotation from the Wilson decision to which he referred. Also, Mr. Justice McKeown in the quotation from the SGL decision, set out above, makes it very clear that his comments are addressed to the “matter before [him]”. I do not read his comments as a statement that the variation or setting aside of an order is justified only in cases where there has been wilful omission or fraud. I read his comments as indicating that these are two, but not the only, circumstances in which a variation or setting aside is justified.
[13] At the same time, as noted in the quotation from the Wilson decision, supra, an order of the Court, even an ex parte order, is not lightly set aside. The non-disclosure or errors, in the evidence placed before the issuing judge, must be such as to have caused the issuing judge, had he or she known of them, to have refused to grant the order. I accept that what must be proven is that the order that was granted was based on misleading, incomplete, or incorrect facts. I also agree, however, that if the person against whom the order was issued can show that the documents or information are irrelevant to the inquiry, the portions of the order that require their production can be vacated. Also, if there are considerations of unconstitutionality or other illegality that have not been brought to the attention of the issuing judge, in my opinion, these can be raised in a rule 399 motion when the order in question is an ex parte one.
Adequacy of disclosure to and material before the court
[14] The Commissioner’s inquiry relates to paragraph 50(1)(c) of the Competition Act (predatory pricing) and section 79 [as enacted by R.S.C., 1985 (2nd Supp.), c. 19, s. 45; S.C. 1990, c. 37, s. 31; 1999, c. 2, s. 37] (abuse of dominant position). The former is a criminal offence, and the decision to lay a charge in that regard is not made by the Commissioner. It is made by the Attorney General. It is governed by criminal law and procedure.
[15] Abuse of dominance is conduct reviewable before the Competition Tribunal at the instance of the Commissioner. The proceeding is governed by the Competition Tribunal Rules [SOR/94-290], which are akin to rules of civil procedure. Air Canada argues that the order of June 12, 2000, should not have been made because the material filed by the Commissioner to support the request for the order was incomplete and contained material misstatements. Counsel argues that there was insufficient evidence to support a conclusion that the Commissioner had reasonable grounds to believe that Air Canada had committed the offence of predatory pricing or had engaged in conduct that constituted an abuse of dominant position.
[16] The affidavit of Mr. Schwartzman, which was placed before Madam Justice Tremblay-Lamer, was the basis on which the June 12, 2000 order was requested. Parts of it read as follows:
2. I have been assigned by the Commissioner to work on his inquiry into the pricing and supply of airline passenger seats on Toronto-Moncton, Toronto-Fredericton, Toronto-Saint John and Toronto-Charlottetown flights (“the routes”) operated by Air Canada and/or Canadian Airlines International Ltd. (“Canadian Airlines”) and its affiliate, Canadian Regional airlines (1998) Ltd. As such I have personal knowledge of the matters referred to in this affidavit, except that which is based on information and belief and, where so stated, I verily believe that information to be true.
3. On May 8, 2000, the Commissioner commenced an inquiry, pursuant to section 10 of the Act, into Air Canada’s pricing and supply of airline passenger seats on its Toronto-Moncton, Toronto-Fredericton, Toronto-Saint John and Toronto-Charlottetown routes (“the Routes”) because he believed and continues to believe on reasonable grounds that the actions of Air Canada are contrary to paragraph 50(1)(c) and/or section 79 of the Act.
…
7. Air Canada, based in Montreal, is Canada’s largest air carrier and, following its merger with Canadian Airlines Corporation, Air Canada will have more than 80% of the domestic passenger market and will account for close to 90% of the domestic passenger revenues.
…
12. Air Canada and Canadian Airlines integrated their flight schedules effective April 2, 2000 and are providing airline passenger service through coordinated efforts. Through code sharing and commercial arrangements, these two airlines will offer an integrated network directly serving over 205 destinations on five continents with a fleet of over 365 aircraft. Once the two airlines merge, the resulting corporation will be the eleventh largest air carrier in the world and seventh largest in North America, with over $10 billion in revenues.
13. The Commissioner engaged an airline consulting firm to review the pricing and capacity changes introduced by Air Canada. The consultants have confirmed that, after the entry of WestJet, Air Canada has significantly increased its non-stop seat capacity on the Routes with the exception of the Toronto-Charlottetown route and has dropped its fares on all of the Routes to match or undercut the WestJet fares.
14. On May 19, 2000 I was advised by our consultant that on the Toronto-Moncton, Toronto-Fredericton and Toronto-Saint John routes, as part of the restructuring of the schedules of Air Canada and Canadian Airlines, the flights are operated by Canadian Airlines or their affiliate, CRAL. On the Toronto-Charlottetown route, the one flight per day is operated by Air Canada. There is both an Air Canada and Canadian Airlines code applied to all of these flights (“codeshare”). The Commissioner does not know how the inventory or seats are being divided between Air Canada, Canadian Airlines and CRAL.
…
17. In completing his inquiry pursuant to section 10 of the Act, the Commissioner must determine the capacity, revenues, costs and strategic plans for the Routes for Air Canada, Canadian Airlines and CRAL and how the capacity, revenue and costs are divided between the airlines. The Commissioner must also assess the pricing and capacity policies of Air Canada, Canadian Airlines and CRAL.
18. As the operators of these Routes, Air Canada, Canadian Airlines and CRAL are likely to have information which is relevant to this inquiry. Canadian Airlines Corporation is likely to have information which is relevant to this inquiry due to its position as the parent of Canadian Airlines. As the majority shareholder of Canadian Airlines Corporation, 853350 Alberta Ltd. is also likely to have relevant information.
[17] Counsel for Air Canada argues that there are several elements of both the offence of predatory pricing, and the conduct of abuse of dominant position, for which no grounds are set out in the evidence that was presented to Madam Justice Tremblay-Lamer. Counsel notes that in order to find predatory pricing, as defined in paragraph 50(1)(c) of the Act, there has to be a policy of unreasonably low prices, and that the conduct has to have the “effect or tendency of substantially lessening competition or eliminating a competitor, or designed to have that effect”. Counsel notes that section 79 (abuse of dominance) requires a finding that the person has engaged in a practice of anti-competitive acts, and that that practice has had, or is likely to have the effect of preventing or lessening competition. Counsel argues that the material put before Madam Justice Tremblay-Lamer did not disclose any evidence of a policy, or a practice, or that the effect of the alleged conduct was not a lessening of competition or an attempt to accomplish such.
[18] In addition, counsel for Air Canada argues that the law is clear that the matching of a competitor’s price is not abusive conduct (Boehringer Ingelheim (Canada) Inc. v. Bristol-Myers Squibb Canada Inc. (1988), 83 C.P.R. (3d) 51 (Ont. Gen. Div.). Mr. Craig Landry, Manager, North America Market Management of Air Canada, filed an affidavit that it is his belief that Air Canada did not undercut Westjet’s fares, and if it did, it did so unwittingly. He states that he believes that the Commissioner and any airline consulting firm hired by him to review the pricing changes introduced by Air Canada following Westjet’s entry into the market knew or must have known that Air Canada has never undercut Westjet’s publicly announced fares, and that if Air Canada in fact undercut a “buy-up-level” fare of Westjet, it cannot have done so knowingly or intentionally (paragraphs 3-7 of his affidavit). He explains the competitive intelligence gathering undertaken by Air Canada, and the limited information obtained thereby. He asserts that Air Canada merely met the prices of a competitor.
[19] When assessing whether a variation or setting aside of a section 11 order is justified, it is essential to keep in mind that the order relates to the production of information and documents for the purpose of an inquiry, not for the purpose of the prosecution of a criminal offence. Much of the jurisprudence cited by counsel for Air Canada refers to the latter, not the former.
[20] The obligation on the Court is not that it must be satisfied that reasonable grounds exist to believe that either predatory pricing or abuse of dominance has occurred. Under section 11 of the Competition Act, the Court must satisfy itself that: (1) an inquiry has been commenced; and that (2) the person against whom the order is made is likely to have information relevant to the inquiry. The statutory scheme is different than, for example, section 15 [as am. by R.S.C., 1985 (2nd Supp.), c. 19, s. 24; S.C. 1999, c. 2, ss. 8, 37] of the Competition Act pursuant to which search and seizure warrants are issued.
[21] In addition, it is obvious from the above description of Mr. Landry’s affidavit that Air Canada’s arguments are addressed to the merits of Air Canada’s position in response to the allegation that the conduct in question occurred. It is the kind of evidence and arguments that are appropriately made to the Commissioner in the context of his enquiry. It is the kind of evidence and argument that would be appropriately addressed to the Court, or the Competition Tribunal, as the case may be, if a decision were eventually made by either the Attorney General or the Commissioner to proceed against Air Canada.
[22] I have not been persuaded that Air Canada has demonstrated that the information that was provided to Madam Justice Tremblay-Lamer was incomplete, misleading or incorrect to a degree that would have led her to refuse to grant the order.
Relevance of material sought
[23] Air Canada argues that much of the documentation and information that is requested is not relevant to the Commissioner’s inquiry, or only marginally so, and that the burden placed on Air Canada, in being required to respond to the requests, outweighs the benefits to the Commissioner. Mr. John Baker, Vice President and General Counsel of Air Canada, filed an affidavit in this regard. It reads in part:
3. The Order is divided into the following two parts. First, pursuant to Appendix “A”, Air Canada is required to provide all documents in its possession that are responsive to a list of twenty-seven (27) required records (“Appendix ”A” documents”). Second, pursuant to Appendix “B” Air Canada is required to provide written interrogation type responses to nineteen (19) questions (“Appendix B documents”). The Appendix A documents and Appendix B documents are to be provided to the Commissioner (attention Charles Schwartzman) by no later than 4:00 o’clock (EST) on July 7, 2000.
4. In order to comply with the Order in the period set out in same, Air Canada retained the services of the law firm of Stikeman Elliott to assist it in compiling the information. As well, certain employees of Air Canada have been assigned to prepare the Appendix B documents. From June 19, 2000 to the present, at least four (4) lawyers and/or articling students of Stikeman Elliott have been working at Air Canada specifically with respect to the Order.
5. I have reviewed the Order and believe that the information requested is not essential nor relevant to the Commissioner’s inquiry or is excessively burdensome, including certain of the Appendix A documents and/or Appendix B documents …
[24] Among the documents requested, to which particular exception is taken, are those described in items 12, 19, 21:
12. Provide all records regarding the terms and conditions of any currently leased aircraft used on the specified routes.
…
19. Provide all lease records and summary sheets or overviews regarding the terms and conditions of all aircraft under lease to the Air Carrier since January 1, 1999.
…
21. Provide all records regarding the terms and conditions of all aircraft purchases and/or sales made by the Air Carrier since January 1, 1999.
[25] Among the information requests, to which particular exception is taken, are questions 4 and 8:
4. Provide the amount of seat inventory allocated to each booking class code, by flight number and aggregated by day and month since January 1, 2000, 24 hours prior to flight departure for the specified routes for each Air Carrier.
…
8. Provide full details of all costs of more than 1% of total costs from January 1, 2000 to the present. For the purposes of this question, “total costs” includes variable, fixed, allocated and out-of-pocket expenses for the specified routes. Provide this cost information by flight and by seat mile and then aggregated by day and month for each Air Carrier. Describe how expenses are determined by Air Carrier to be fixed, variable (with flight) or out-of-pocket. Indicate which costs would be considered fixed for a period of one month, six months and one year and explain why.
[26] Mr. Baker also states that the requirement that Air Canada produce records that are electronic in nature is excessively burdensome because it requires Air Canada to review the computer hard drives and electronic mail of each relevant employee:
6. In addition to the above, the requirement in the Order to provide records that are electronic in nature would require Air Canada to review the computer hard drives and electronic mail of each relevant employee. I believe this requirement to be excessively burdensome and, in certain cases, irrelevant. To begin, since certain questions require responses from as far back as January 1, 1996 in order to fully respond to the Order, electronic mail must be searched as far back as 1996. Since many employees receive approximately 6,000-12,000 electronic mail messages annually, to search back to 1996 would be excessively burdensome. Second, requiring electronic mail for all employees with information responsive to Appendix A documents without limiting it to employees at a specific level (e.g. senior management) is both excessive in respect of the total number of employees, and irrelevant as non-senior level employees do not have the power to make Air Canada policy. Finally, in order to provide electronic mail created more than approximately six (6) months ago or longer would require at least two-three (2-3) weeks of work to recreate the file.
[27] Counsel for the Commissioner noted that, at the time the Commissioner sought the section 11 order, he did not know what the record-keeping practices of Air Canada were. Counsel indicated that in so far as there were real difficulties in responding to the requests, as a result of the form in which they had been asked, this should be the subject of discussion between counsel, before the Court was asked to adjudicate further on it. That aspect of Air Canada’s present motion was therefore set aside to allow for such discussion.
[28] I note that at a general level I have not been persuaded that Air Canada has shown that the documents that are sought and the questions that are asked are irrelevant to the Commissioner’s inquiry. Paragraph 17 of Mr. Schwartzman’s affidavit is particularly relevant in this regard.
Unconstitutionality
[29] I turn then to the arguments that section 11 and particularly paragraph 11(1)(c) are unconstitutional.
[30] It is argued that section 11 is invalid for reasons similar to those set out in Baron v. Canada, [1993] 1 S.C.R. 416. In that case search and seizure provisions were held to be invalid because no residual discretion was left with the issuing authority. The statutory provisions were held to infringe section 8 of the Canadian Charter of Rights and Freedoms [being Part I of the Constitution Act, 1982, Schedule B, Canada Act 1982, 1982, c. 11 (U.K.) [R.S.C., 1985, Appendix II, No. 44]] because they allowed unreasonable search and seizure. Air Canada also argues that section 11 allows unreasonable search and seizure because it allows the Court to issue a paragraph 11(1)(c) order only on proof that an inquiry has been commenced, and that inquiry could have been commenced by the Commissioner on a whim.
[31] Section 11 provides that a judge may, not shall, issue an order. Residual discretion exists. Also, I cannot conclude that section 11 authorizes the issuing of an order to produce information if the Commissioner were acting on a “whim”. I cannot envisage a court granting a section 11 order on the basis of a bald assertion by the Commissioner that an inquiry has been commenced. It seems to me that any judge would require more than that. He or she is likely to require some description of the nature of the alleged conduct that is the subject of the inquiry, the basis of the Commissioner’s decision to commence an inquiry and his reason for believing that conduct to which the inquiry is addressed has occurred. Also, the judge must be satisfied that the person against whom the order is sought is likely to have relevant information. This does not mean that the Court second guesses the Commissioner’s decision that he has reasons to believe that the conduct that is the subject of the inquiry in question occurred, but it does allow the Court to refuse to grant an order when there is insufficient evidence to support a conclusion that a bona fide inquiry has been commenced.
[32] Counsel for Air Canada argues that either the particular order or section 11 itself, and particularly paragraph 11(1)(c), is invalid because it infringes sections 7 and 8 of the Canadian Charter of Rights and Freedoms. It is argued that the requirement that Air Canada “make … a written return under oath … showing such information” (préparer […] une déclaration écrite faite sous serment […] des renseignements) is an infringement of one’s right to be free of self-incrimination. It is argued that it is an infringement of person’s liberty because the production of the information is a compulsion in the nature of forced labour.
[33] I believe it to be common ground that while section 7 is designed to protect individuals, not corporations (see Irwin Toy Ltd. v. Quebec (Attorney General), [1989] 1 S.C.R. 927), corporations may challenge the constitutionality of a statutory provision by establishing that if the provision in question were applied to an individual, an infringement of section 7 would occur (see Canadian Egg Marketing Agency v. Richardson, [1998] 3 S.C.R. 157).
[34] It is argued that paragraph 11(1)(c) is invalid because when addressed to an individual, it requires the person to manufacture evidence against himself or herself. Air Canada’s argument is based on the decisions in Thomson Newspapers Ltd. v. Canada (Director of Investigation and Research, Restrictive Trade Practices Commission), [1990] 1 S.C.R. 425; and British Columbia Securities Commission v. Branch, [1995] 2 S.C.R. 3.
[35] In the Thomson case, the Supreme Court held that the corporate officers of a corporation that was suspected of predatory pricing, could be ordered to testify under oath and produce documents pursuant to the then section 17 of the Combines Investigation Act [R.S.C. 1970, c. C-23]. In coming to her decision, Madam Justice L’Heureux-Dubé stated, at page 588:
… an order requiring an individual or the officer of a corporation to produce documents does not involve the fabrication of evidence; the individual or officer acts as a “mere conduit” for the delivery of pre-existing records. [Underlining added.]
[36] The “fabrication of evidence” may be an unfortunate translation of a text that was originally written in French, since “fabrication of evidence” in English carries with it the connotation of falsification. In any event, the meaning is clear.
[37] In the Branch decision, the Court made two pronouncements relevant to the present case. The first was that in assessing whether oral testimony and documents could be compelled, it was relevant to consider whether the predominant purpose for seeking the evidence was to obtain incriminating evidence against the person who was being compelled to testify, or whether the predominant purpose was to serve some legitimate public purpose.
[38] In addition, the distinction between pre-existing information and compelled self-incriminating testimony was again considered. The following description is found in the headnote [at page 6]:
… th[e] right… [to silence] attaches to communications that are brought into existence by the exercise of compulsion by the state and not to documents that contain communications made before such compulsion and independently thereof. [Underlining added.]
[39] In the Branch case the following statements were made by Madam Justice L’Heureux-Dubé, at page 57:
Unlike testimonial compulsion, for which special considerations apply, it is not necessary to recognize any additional protections at the trial stage in order for pre-existing documents to be compellable at the subpoena stage. Indeed, as I noted in Thomson Newspapers, supra, at p. 588:
… an order requiring an individual or the officer of a corporation to produce documents does not involve the fabrication of evidence; the individual or officer acts as a “mere conduit” for the delivery of pre-existing records. … Thus, there is no suggestion that the use of such evidence in a subsequent trial would affect the fairness of the proceedings.
A clear line must be drawn between, on one hand, the compelled production of pre-existing documents and, on the other hand, the compelled production of documents which are themselves produced pursuant to statutory compulsion. While the latter may, indeed, engage some self-incriminatory concerns since the individual will have generated them under state compulsion, it is evident that the former should not engage such concerns since they have not been generated subject to any such compulsion.
[40] Counsel for Air Canada, argues that the answering of many of the questions posed in the June 12, 2000, order requires the creation of documents that did not previously exist, and thus offends the guarantee that one cannot be required to produce self-incriminating evidence. Counsel for Air Canada argues that any question that requires some analysis, some work on the part of the person under inquiry is unconstitutional; that is, that it goes against the caveats articulated in Thomson and Branch.
[41] I do not find it necessary to consider the argument that the constitutional guarantee does not apply in the present case, because the information that Air Canada is being required to produce, is for the purposes of an inquiry only, not for the purpose of a prosecution. This is because, in any event, I do not think the information that Air Canada is being asked to produce falls within the category of a self-incriminating disclosure.
[42] Counsel for the Commissioner gave a very apt illustration. If one is asked to produce a net worth statement, the document itself may not be pre-existing, but the information is, and this will be found in a number of already existing sources. To be required to respond to a written interrogatory requiring one to disclose one’s net worth, may require the creation of a document that did not exist before, but all that is being disclosed is pre-existing documentary or computer recorded information.
[43] The information that Air Canada is being required to produce, pursuant to paragraph 11(1)(c) is not different in kind from that held to be compellable in Thomson. It is only different in form; it is to be produced as an answer to written interrogatories, rather than orally through the discovery of various employees and officers of Air Canada, or through the production of quantities of files, computer hard drives and the like.
[44] The production of the information in a “new” documentary form is, in part, the result of information now being kept in electronic form. To protect that information from disclosure, on the ground that it was not previously in a documentary form, could effectively prevent the Commissioner from undertaking his statutory duties of inquiry.
[45] Counsel for Air Canada argues that even if the particular order in this case does not compel the production of anything other than pre-existing information, paragraph 11(1)(c) on its face allows the granting of an order that could compel the production of self-incriminating evidence. It is noted that the Court is not entitled to read down legislative provisions to save them from being unconstitutional.
[46] Paragraph 11(1)(c) must be read in the context of section 11 as a whole. Paragraph 11(1)(a) requires the attendance of individuals to give information on oath. Paragraph 11(1)(c) is of a similar nature except that it seeks answers in writing. The difference between the two is the form in which the information is provided, orally in one case, in writing in the other. The use of written interrogatories is a common procedure, and is usually considered to be less intrusive and burdensome than oral examination.
[47] The fact that some work may be involved in answering interrogatories does not make paragraph 11(1)(c) different in kind from paragraphs 11(1)(a) and 11(1)(b). Both these provisions can lead to employees and officers of a corporation being required to undertake activities in which they would not otherwise engage (for example, searching through filing cabinets in order to locate documents).
[48] Lastly, while I have not referred to the analysis set out in Samson v. Canada, [1995] 3 F.C. 306 (C.A.), that decision is highly relevant to the present arguments, and supports the Commissioner’s position. I cannot conclude that paragraph 11(1)(c) is unconstitutional.
Motion not heard by issuing judge
[49] A motion to vary or set aside an order should be brought before the judge who made that order. In exceptional circumstances this is not possible (see Indian Manufacturing Ltd. v. Lo (1997), 75 C.P.R. (3d) 338 (F.C.A.)). In the present case, Madam Justice Tremblay-Lamer did not hear this motion to vary or set aside her order because of concerns that she could be perceived to be in a conflict of interest situation. Counsel for Air Canada is now involved in the case, and that counsel is a member of the Stikeman Elliott firm. Thus, exceptional circumstances exist that require the motion to be heard by another judge.
Conclusion
[50] For the reasons given, the motion to set aside or vary the order of June 12, 2000, will be dismissed.