T-1716-00
2002 FCT 750
Larny Holdings Limited carrying on business as Quickie Convenience Stores (Applicant)
v.
Canada (Minister of Health) and John T. Zawilinski, Manager, Tobacco Enforcement Unit, Health Canada (Respondents)
Indexed as: Larny Holdings Ltd. v. Canada (Minister of Health) (T.D.)
Trial Division, Nadon J.--Ottawa, January 14 and July 5, 2002.
Federal Court Jurisdiction -- Trial Division -- Manager of Tobacco Enforcement Unit, Health Canada sending letter to applicant warning that continued sale of multi-packs (two packs) of cigarettes at slightly reduced price contravened Tobacco Act, s. 29 for which could be prosecuted -- Applicant ceasing practice, seeking judicial review of that "direction" -- Federal Court Act, s. 18(1)(a) must be read in conjunction with s. 18.1(3)(b) setting out Trial Division's powers on application for judicial review of "decision, order, act or proceeding" -- Judicial review under s. 18 must be given broad, liberal interpretation -- Extending to decisions, orders determining rights even if not ultimate decision -- "Matter" in s. 18.1 (anyone affected by matter may apply for judicial review) encompassing any matter in regard to which remedy might be available under ss. 18, 18.1(3) -- Letter herein "decision, order, act or proceeding" reviewable by Court -- In sending letter, Manager "federal board, commission or other tribunal" within Federal Court Act, s. 2(1) as at least purporting to exercise jurisdiction or powers conferred by or under Act of Parliament i.e. Tobacco Act -- Declaratory relief appropriate -- Real, live dispute with respect to interpretation of s. 29 -- Applicant justified in seeking remedy from Court without subjecting itself to criminal prosecution.
Health and Welfare -- Applicant selling cigarettes in multi-packs (two packs) of cigarettes at slightly reduced price -- Manager of Tobacco Enforcement Unit, Health Canada sending letter threatening prosecution as breach of Tobacco Act, s. 29 prohibition against offering cash rebates -- Sale of multi-packs not tantamount to promoting tobacco products, practice prohibited by ss. 19, 29(a) -- Not constituting cash rebate as not within same category as examples in s. 29(a) -- Parliament clearly decided not to include pricing strategies in prohibited conduct.
This was an application for judicial review of a "direction" issued by the respondent Manager of the Tobacco Enforcement Unit of Health Canada. The applicant operates as Quickie Convenience Stores in Ontario and Quebec. At the material time it offered for sale a single pack of cigarettes for $4.31 plus tax and a multi-pack (two packs) for $7.99 plus tax. Therefore the price per pack if bought in a multi-pack was $4. This pricing strategy was adopted in response to the highly competitive cigarette sales environment, which resulted from the introduction of self-serve gasoline stations and independent convenience stores. The multi-pack offer was not in any pre-packaged container, wrapping or special package. On March 19, 2000, the Tobacco Enforcement Unit sent a form letter to establishments selling tobacco products stating that it was Health Canada's view that selling multiple packs of cigarettes for a per unit price inferior to that charged on the sale of single packs of cigarettes if sold individually, constituted a "cash rebate" which contravened Tobacco Act, section 29. The letter also advised that after May 1, 2000 Health Canada would be sending warning letters to retailers who, in their view, continued to violate section 29, and that any subsequent impugned conduct might lead to prosecution. On May 30, 2000 the applicant received a warning letter identical in content to the form letter, but signed by the Manager of the Tobacco Enforcement Unit, and addressed to the applicant personally. Under threat of prosecution the applicant stopped offering the multi-pack prices and sought judicial review of the letter which it characterized as a direction ordering it to cease and desist from some of its marketing and pricing strategies. The applicant sought declaratory relief.
The issues were: (1) whether the Court had jurisdiction to hear this matter; and (2) whether selling multiple packs at a price inferior to that charged on the sale of single packs of cigarettes constituted a "cash rebate" for the purposes of section 29.
Held, the application should be allowed.
Under Federal Court Act, paragraph 18(1)(a) the Trial Division has jurisdiction to grant declaratory relief against any "federal board, commission or other tribunal". Section 18 must be read in conjunction with paragraph 18.1(3)(b), which sets out the powers of the Trial Division on an application for judicial review of "a decision, order, act or proceeding" of a federal board, commission or other tribunal. Not only are decisions and orders of a federal board subject to judicial review, but also all acts or proceedings thereof. It has been held that judicial review under section 18 must be given a broad and liberal interpretation, as a result of which a wide range of administrative actions will fall within the Court's judicial review mandate. It is also clear that judicial review is no longer restricted to decisions or orders that a decision maker was expressly charged to make under the enabling legislation. Rather, judicial review will extend to decisions or orders that determine a party's rights, even if the decision at issue is not the ultimate decision. The word "matter" in section 18.1 (anyone affected by the matter may apply for judicial review) is not restricted to "decisions or orders", but encompasses any matter in regard to which a remedy might be available under section 18 or subsection 18.1(3). The direction was coercive in that its purpose was to threaten the applicant to immediately stop selling multi-packs or face criminal prosecution. The May 30 letter was a "decision, order, act or proceeding" and was reviewable by the Court. In sending the letter, the Manager was a "federal board, commission or other tribunal" within the meaning of Federal Court Act, subsection 2(1) (person exercising or purporting to exercise jurisdiction or powers conferred by or under an Act of Parliament). The Manager was, at the very least, purporting to exercise jurisdiction or powers conferred under the Tobacco Act. That no provision of the Tobacco Act specifically conferred authority on the Manager to send the letter at issue to the applicant did not signify the he was not a "federal board, commission or other tribunal".
Declaratory relief was an appropriate remedy. There was a real and live dispute between the parties with respect to the interpretation of section 29. The applicant was justified, on the facts, in seeking a remedy from this Court without having to submit itself to a criminal prosecution. The respondents could have laid a charge against the applicant and hence sought an interpretation of section 29 from the court of summary conviction. Instead they sent coercive letters in the hope that compliance would result, without the necessity of having to lay a charge. In these circumstances, this Court was a proper forum. The application was not premature.
That tobacco is generally sold in cartons or in individual packs was irrelevant to the interpretation of paragraph 29(a). The sale of multi-packs at a reduced price per pack did not constitute a cash rebate. It was a reflection of the applicant's internal pricing strategy and economic decision as a result of which less profit on a per-pack basis was generated on the sale of multi-packs. The applicant's strategy was not tantamount to promoting tobacco products, which practice is prohibited by section 19 and paragraph 29(a). The non-exhaustive list of examples in paragraph 29(a) is a clear indication of what Parliament had in mind when it prohibited the giving of any consideration for the purchase of tobacco products. The sale of two packs of cigarettes at a slightly lower price than that of individual packs was not within the same category as the examples given by Parliament. Thus the applicant's selling strategy did not constitute either a cash rebate or a consideration of the type which Parliament had in mind when it enacted paragraph 29(a). Parliament clearly decided not to address the pricing of cigarettes and, as a result, did not include pricing strategies in the conduct which it sought to prohibit.
statutes and regulations judicially
considered
Federal Court Act, R.S.C., 1985, c. F-7, s. 2(1) "federal board, commission or other tribunal" (as am. by S.C. 1990, c. 8, s. 1), 18 (as am. idem, s. 4), 18.1 (as enacted idem, s. 5).
Tobacco Act, S.C. 1997, c. 13, ss. 2 "tobacco product", 4, 10, 18, 19, 29, 33 (as am. by S.C. 1998, c. 38, s. 3).
Tobacco Products Control Act, R.S.C., 1985 (4th Supp.), c. 14, s. 7(2).
Tobacco Products Information Regulations, SOR/2000-272, s. 1 "carton", "unit".
cases judicially considered
applied:
Gestion Complexe Cousineau (1989) Inc. v. Canada (Minister of Public Works and Government Services), [1995] 2 F.C. 694; (1995), 125 D.L.R. (4th) 559; 184 N.R. 260 (C.A.); Morneault v. Canada (Attorney General), [2001] 1 F.C. 30; (2000), 189 D.L.R. (4th) 96; 32 Admin. L.R. (3d) 292; 256 N.R. 85 (C.A.); Moumdjian v. Canada (Security Intelligence Review Committee), [1999] 4 F.C. 624; (1999), 177 D.L.R. (4th) 192; 246 N.R. 287 (C.A.); Markevich v. Canada, [1999] 3 F.C. 28; (1999), 172 D.L.R. (4th) 164; [1999] 2 C.T.C. 104; 99 DTC 5136; 162 F.T.R. 209 (T.D.); Dyson v. Attorney-General, [1911] 1 K.B. 410 (C.A.); Operation Dismantle Inc. et al. v. The Queen et al., [1985] 1 S.C.R. 441; (1985), 18 D.L.R. (4th) 481; 12 Admin. L.R. 16; 13 C.R.R. 287; 59 N.R. 1; R. c. Rothmans, Benson & Hedges Inc., Montréal 500-27-000567-919, Morand J., judgment dated 3/5/96 (C.Q.).
authors cited
Brown, Donald J. M. and John M. Evans. Judicial Review of Administrative Action in Canada, loose-leaf ed. Toronto: Canvasback, 1998.
APPLICATION for judicial review of a "direction" issued by the Manager of the Tobacco Enforcement Unit of Health Canada in the form of a letter warning the applicant that the continued sale of multi-packs of cigarettes at a slightly reduced price contravened Tobacco Act, paragraph 29(a) prohibition against cash rebates and might lead to prosecution. Application allowed.
appearances:
Stephen Victor, Q.C. and Jane M. Bachynski for applicant.
Jeff R. Anderson for respondents.
solicitors of record:
Kimmel, Victor, Ages, Ottawa, and Borden Ladner Gervais LLP, Ottawa, for applicant.
Deputy Attorney General of Canada for respondents.
The following are the reasons for order rendered in English by
[1]Nadon J.: This is an application for judicial review of a "direction",1 issued by the respondent, John T. Zawilinski, acting in his capacity of Manager, Tobacco Enforcement Unit, Ontario Region, Health Protection Branch, Health Canada, received by the applicant on May 30, 2000. The direction reads as follows:
The purpose of this letter is to inform you of Health Canada's position on cash rebates offered on the purchase of multiple packs of cigarettes or other tobacco products, in order to assist you in complying with section 29 of the Tobacco Act.
The purpose of the Tobacco Act is to protect the health of Canadians, particularly youth, from the harmful effects of tobacco use. Given that promoting tobacco products is one of the main ways of influencing consumer attitudes, restricting promotion is an essential part of the Act. The Act restricts the promotion of tobacco products, including sales promotion such as cash rebate, while allowing tobacco manufacturers and retailers sufficient leeway to exercise their freedom of commercial expression.
Health Canada has observed that some retailers offer cash rebates on the purchase of multiple units of tobacco products. For example, a retailer offers one pack of cigarettes for $4, but 3 packs for $10. Health Canada is of the view that this practice contravenes section 29 of the Tobacco Act.
Paragraph 29(a) states that no manufacturer or retailer shall:
offer or provide any consideration, direct or indirect, for the purchase of a tobacco product, including a gift to a purchaser or a third party, bonus, premium, cash rebate or right to participate in a game, lottery or contest.
Therefore, retailers must make sure they do not offer a cash rebate on the purchase of more than one unit of tobacco product. The selling price of multiple packs of cigarettes must be the same as if the packs were sold individually, that is to say the sum of the selling price of each of the packs (e.g., $4 per pack, thus $12 for 3 packs).
Please note that the "unit" to be used in determining the base price is the intact, finished, packaged product. Thus, an unopened carton of cigarettes is one unit of tobacco product; a pack of cigarettes is also one unit of tobacco product.
Retailers are completely free to set the selling price of their tobacco products. Accordingly, the price of a carton or pack of cigarettes is at the retailer's discretion. The above-mentioned section 29 restriction applies only to cash rebates for multiple-unit sales.
Please note that as of May 1, 2000, Health Canada will be issuing warning letters to retailers who contravene this provision. Any subsequent offence may lead to prosecution.
Any retailer who contravenes section 29, is guilty of an offence and liable on summary conviction, for a first offence to a fine not exceeding $3,000 and for a subsequent offence, to a fine not exceeding $50,000. Please take the necessary steps to avoid contravening this Act.
[2]It should be noted that the applicant initially filed its application before the Ontario Superior Court of Justice. However, following discussion and correspondence with the respondents, the applicant abandoned those proceedings and on October 11, 2000, filed the present application. Leading up to the applicant abandoning its application in the Ontario Court, was a letter dated August 4, 2000, sent by the respondents to the applicant, which reads in part as follows:
As I indicated in our telephone conversation on August 2, in our view, the Ontario Court has no jurisdiction to deal with this Application. The applicant is seeking relief against a person exercising powers under an Act of Parliament. By virtue of s. 18 of the Federal Court Act, the Federal Court of Canada has exclusive jurisdiction to issue the relief your client is seeking. We would therefore be grateful if could abandon the Application in the Ontario Court.
[3]On August 5, 2000, Blais J., with the consent of the respondents, allowed the applicant's motion for an extension of time to commence and file the present proceedings.
[4]The applicant, Larny Holdings Ltd., operates as Quickie Convenience Stores in Ontario and Quebec (Quickie) and in the course of its business sells cigarettes. At the material time, Quickie offered for sale to its customers a single pack of cigarettes for $4.31 plus tax and offered for sale a carton of cigarettes (eight packs) for $28.49 plus tax. Quickie also offered two packs (multi-pack) of cigarettes for $7.99 plus tax.
[5]Therefore, the price per cigarette pack, if bought individually, was $4.31. If a customer bought a multi-pack, the price per pack was $4, and if the customer purchased a carton, the price per pack was $3.56. Offering two packs of cigarettes at a per pack price slightly under the per pack price if sold individually, was a pricing strategy that Quickie had used for approximately 10 years. Quickie's pricing strategy was adopted in response to the highly competitive cigarette sales environment, which resulted from the introduction of self-serve gasoline stations and independent convenience stores in the Ontario market. The multi-pack offer was not offered in any pre-packaged container, wrapping or special package. The applicant simply advertised that it would sell two packs at a per pack price slightly inferior to that of an individual pack of cigarettes.
[6]The respondents, the Minister of Health and John T. Zawilinski, who are responsible for the administration and enforcement of the Tobacco Act, S.C. 1997, c. 13 (the TA), are of the view that selling the multiple-pack at a price inferior to the per pack price, if sold individually, violates the TA.
[7]As a result of receiving two somewhat coercive letters from the respondents, advising it that selling the multi-packs at a reduced price was illegal, the applicant ceased the sale thereof.
[8]On March 19, 2000, the Tobacco Enforcement Unit, Health Canada, delivered by way of a letter, a notice to establishments selling tobacco products, which included the applicant. The letter stated that it was Health Canada's view that selling multiple packs of cigarettes for a per unit price inferior to that charged on the sale of single packs of cigarettes if sold individually, constituted a "cash rebate" and as such contravened section 29 of the TA. I note, in passing, that selling a carton of eight packs of cigarettes, at a much greater reduced price per pack, is not, according to the respondents, illegal.
[9]The letter also advised the applicant and the other retailers that after May 1, 2000, Health Canada would be sending warning letters to retailers who, in their view, continued to violate section 29 of the TA, and that any subsequent impugned conduct might lead to prosecution. The letter further stated that any retailer who contravened section 29 of the TA was guilty of an offence and liable on summary conviction, for a first offence, to a fine not exceeding $3,000, and for a subsequent offence, to a fine not exceeding $50,000. The letter concluded by advising retailers to "please take the necessary steps to avoid contravening the Act". This form letter was not signed nor addressed to anyone in particular.
[10]On May 30, 2000, the applicant received a warning letter signed by Mr. John Zawilinski which, inter alia, outlined Health Canada's position with respect to the meaning of section 29 of the TA. The content of this letter was identical to that of the form letter sent earlier by the respondents, save for two minor changes. Firstly, the letter was addressed to the applicant personally. Secondly, the letter was signed by Mr. Zawilinski.
[11]On May 30, 2000, under threat of prosecution, the applicant stopped offering the multi-pack prices. Thus, the second letter had its intended effect--at least on the applicant--i.e. convincing retailers to stop selling multi-packs for a per-pack price inferior to the price of one pack sold individually, without having to lay a charge. As a result, the applicant's tobacco sales revenue has declined by 1%. Hence, the applicant has lost approximately $6,500 per week. In addition, the applicant has seen a decline in customer traffic of approximately 2,100 customers per week across its 38 locations.
[12]The applicant argues that the act of sending out coercive letters threatening prosecution and fines upon conviction of up to $50,000, interfered with its internal pricing strategies. Moreover, the applicant argues that the letter is, in effect, a direction from Health Canada ordering the applicant to cease and desist from some of its marketing and pricing strategies. Thus, the applicant seeks judicial review of the letter which it characterizes as a direction. The applicant asks this Court for the following relief:
1. A declaration that the direction issued by Mr. Zawilinski to the applicant is invalid and/or unlawful;
2. An order quashing or setting aside the direction;
3. An interim permanent order and/or injunction prohi-biting and restraining Mr. Zawilinski and Health Canada generally from restricting the pricing and sale by the applicant of multi-packs of cigarettes at a lesser or reduced per-pack price when compared to the applicant's per-pack price if sold on a single pack basis.
[13]As appears from the above, the applicant seeks, inter alia, a declaration that selling multiple packs at a price inferior to that charged on the sale of single packs of cigarettes sold individually, does not constitute a "cash rebate" for the purposes of section 29 of the TA.
[14]Before addressing the merits of the application, I must address a number of jurisdictional issues raised by the respondents. The first issue arises from the respondents' submission that Mr. Zawilinski has made no decision capable of being reviewed and that, in any event, he cannot be considered as a "federal board, commission or other tribunal" [as am. by S.C. 1990, c. 8, s. 1] as that expression is defined in subsection 2(1) of the Federal Court Act, R.S.C., 1985, c. F-7 (the Act). In the respondents' submission, since no legal consequences flow from Mr. Zawilinski's decision/letter, it cannot be viewed as a reviewable "decision or order" under section 18.1 [as enacted idem, s. 5] of the Act. The respondents' submission on this issue appears at paragraphs 6 to 9 of their memorandum of fact of law, which read as follows:
| 6. Section 2 of the Federal Court Act, in defining "Federal Board, Commission or Other Tribunal" does not contemplate every act or omission of a Minister or servant of the Crown, as being a decision of a Federal Board, Commission or other Tribunal. The decision must be made pursuant to or under authority of an Act of Parliament or there must, at the very least, be a threat of future use of such authority. That is, there must be concrete legal consequences flowing from the action/decision of the board. No such consequences flow directly from the Respondent's opinion in this case [Authorities omitted.] |
| 7. In addition, an activity involving the provision of a non-binding opinion as to how provisions of a statute are perceived to apply do not fall within the types of decision of a federal board, commission or other tribunal which can be open to review. [Authorities omitted.] |
| 8. A recommendation to charge or the laying of an information [sic] be the subject of a judicial review any more than a Minister's recommendation to the Governor in Council concerning certain proposed legislative amendments [sic] be open to review. [Authorities omitted.] |
| 9. The Respondents have no direct power to enforce the impugned opinion. They cannot levy any sanction, revoke a license, or otherwise directly affect the Applicant in respect of what it might perceive to be a violation of s. 29 of the Act. The most that can be done, as discussed below, is the laying of an information to initiate a charge against the applicant. Thereafter, the prosecutor and ultimately the Court will have the final say as to whether or not there has been a contravention and the appropriate penalty to be imposed thereon. |
[15]For the reasons that follow, I am of the view that the respondents' position is incorrect. I begin with the remarks of Décary J.A. in Gestion Complexe Cousineau (1989) Inc. v. Canada (Minister of Public Works and Government Services), [1995] 2 F.C. 694 (C.A.), where at pages 700 to 705, he states in unequivocal terms that judicial review under section 18 [as am. idem, s. 4] of the Act is intended to be broad in scope and "readily available" to applicants:
The phrase "powers conferred by or under an Act of Parliament" found in the definition of a "federal board, commission or other tribunal" is particularly broad and is not subject to the limitation suggested by the Minister. . . .
It should be borne in mind that what is at issue here is determining whether a litigant has access to this Court's power of review in connection with a legislative provision--paragraph 18(1)(a) of the Federal Court Act--by which Parliament sought to make the federal government subject to the Court's superintending and reforming power. As I see it, there is no reason to try and distort the usual meaning of the words or strive to divest them of all practical meaning by resort to fine distinctions suited to constitutional analysis, which would have a sterilizing effect contrary to the intent of Parliament.
When it amended paragraph 18(1)(a) of the Federal Court Act in 1990 to henceforward permit judicial review of decisions made in the exercise of a royal prerogative, Parliament unquestionably made a considerable concession to the judicial power and inflicted a significant setback on the Crown as the executive power, if one may characterize making the government still further subject to the judiciary as a setback. What appears from this important amendment is that Parliament did not simply make the "federal government" in the tradition sense subject to the judiciary, but intended that henceforth very little would be beyond the scope of judicial review. That being so, I must say I have some difficulty giving to s. 18(1)(a) an interpretation which places Ministers beyond the scope of such review when they exercise the most everyday administrative powers of the Crown, though these are also codified by legislation and regulation.
With respect, that would be to take an outmoded view of supervision of the operations of government. The "legality" of such acts done by the government, which is the very subject of judicial review, does not depend solely on whether such acts comply with the stated requirements of legislation and regulations. . . .
. . .
This liberal approach to the wording of paragraph 18(1)(a) is not new to this Court. It is readily understanding, if one only considers the litigant's viewpoint and takes account of the tendency shown by Parliament itself to make government increasingly accountable for its actions. . . .
. . .
In recent years, Parliament has made a considerable effort to adapt the jurisdiction of this Court to present-day conditions and to eliminate jurisdictional problems which had significantly tarnished this Court's image. As between an interpretation tending to make judicial review more readily available and providing a firm and uniform basis for the Court's jurisdiction and an interpretation which limits access to judicial review, carves up the Court's jurisdiction by uncertain and unworkable criteria and inevitably would lead to an avalanche of preliminary litigation, the choice is clear. [Footnotes omitted; emphasis added.]
[16]Under paragraph 18(1)(a) of the Act, the Trial Division of this Court has jurisdiction to, inter alia, grant declaratory relief against any "federal board, commission or other tribunal". Section 18 of the Act must be read in conjunction with paragraph 18.1(3)(b), which confers on the Trial Division the following powers:
18.1 (1) . . .
(3) On an application for judicial review, the Trial Division may
. . .
(b) declare invalid or unlawful, or quash, set aside or set aside and refer back for determination in accordance with such directions as it considers to be appropriate, prohibit or restrain, a decision, order, act or proceeding of a federal board, commission or other tribunal.
[17]On a reading of the above paragraph, it is clear that not only are decisions and orders of a federal board subject to judicial review, but also all acts or proceedings thereof. The meaning of the words "decision, order, act or proceeding" of a federal board, was examined by the Federal Court of Appeal in Morneault v. Canada (Attorney General), [2001] 1 F.C. 30 (C.A.). At issue in that case, inter alia, was whether findings of individual misconduct against named individuals made by the Commission of Inquiry into the Deployment of Canadian Forces to Somalia in 1992, constituted reviewable decisions under paragraph 18.1(4)(d) of the Act. In addressing that issue, Stone J.A., for the Court of Appeal, opined as follows at paragraphs 40-43:
The issue, in my view, resolves itself into one of statutory construction. It is not clear, however, that similarities in procedure by itself affords a reliable basis for concluding that the findings in issue are "decisions" reviewable under paragraph 18.1(4)(d). This Court has been called upon on many occasions to construe the phrase "decision or order . . . required by law to be made on a judicial or quasi-judicial basis, made by or in the course of proceedings before a federal board, commission or other tribunal" in section 28 of this Act as it read prior to the 1990 amendments. As has been pointed out in D. J. M. Brown and J. M. Evans, Judicial Review of Administrative Action in Canada, loose-leaf ed. (Toronto: Canvasback Publishing, 1998), at paragraph 2:4420, note 376, "initially the Court restricted the term to `final' decisions or orders, and to those that the tribunal was expressly charged by its enabling legislation to make" but, subsequently, the scope of section 28 was "broadened to include a decision that was fully determinative of the substantive rights of the party, even though it may not be the ultimate decision of the tribunal". Indeed, a recommendation to a Minister of the Crown by an investigative tribunal which by reasonable expectation would lead to a deportation, has been considered reviewable. . . .
I must, however, acknowledge the force of the argument the other way, that the review of findings like those in issue is available on the ground afforded by paragraph 18.1(4)(d) despite their nature as non-binding opinions, because of the serious harm that might be caused to reputation by findings that lack support in the record. . . .
If a ground for granting relief is not available under that paragraph, I have the view that the findings are yet reviewable under the section. Judicial review under section 18.1 is not limited to a "decision or order". This is clear from subsection 18.1(1) which enables the Attorney General of Canada and "anyone directly affected by the matter" to seek judicial review. It is plain from the section as a whole that, while a decision or order is a "matter" that may be reviewed, a "matter" other than a decision or order may also be reviewed. This Court's decision in Krause v. Canada, [1999] 2 F.C. 476 (C.A.) illustrates the point. It there held that an application for judicial review pursuant to section 18.1 for a remedy by way of mandamus, prohibition and declaration provided for in section 18 [as am. by S.C. 1990, c. 8, s. 4] of the Act were "matters" over which the Court had jurisdiction and that the Court could grant appropriate relief pursuant to paragraphs 18.1(3)(a) 18.1(3)(b). . . . I am satisfied that the respondent is directly affected by the findings and that they are amenable to review under section 18.1. The findings are exceptionally important to the respondent because of the impact on his reputation. The Court must be in a position to determine whether, as alleged, the findings are not supported by the evidence.
To be reviewable under section 18.1 a "matter" must yet emanate from "a federal board, commission or other tribunal". Such was the case in Krause, supra. The phrase "a federal board, commission or other tribunal" is defined in subsection 2(1) of the Act to mean "any body or any person having, exercising or purporting to exercise jurisdiction or power conferred by or under an Act of Parliament. In my view, the Commission falls within the scope of the definition, for it derived its mandate from the March 20, 1995 Order in Council as subsequently amended and its detailed investigatory powers and power to make findings of misconduct from the Inquiries Act. [Authorities omitted; emphasis added.]
[18]Mr. Justice Stone's remarks in Morneault, supra, like those of Décary J.A. in Gestion Complexe, supra, are to the effect that judicial review under section 18 of the Act must be given a broad and liberal interpretation, as a result of which a wide range of administrative actions will fall within the Court's judicial review mandate. It is also clear that judicial review is no longer restricted to decisions or orders that a decision maker was expressly charged to make under the enabling legislation. Rather, judicial review will extend to decisions or orders that determine a party's rights, even if the decision at issue is not the ultimate decision. It also follows from the Court of Appeal's decision in Morneault, supra, that the word "matter" found in section 18.1 of the Act is not restricted to "decisions or orders", but encompasses any matter in regard to which a remedy might be available under section 18 or subsection 18.1(3).
[19]In Moumdjian v. Canada (Security Intelligence Review Committee), [1999] 4 F.C. 624 (C.A.), Robertson J.A. concluded [at paragraph 22] that a decision in the form of a recommendation or advice to a Minister or to the Governor in Council, and which was intended to be acted upon, must necessarily be reviewable "if only because the consequences which flow from a flawed decision or a flawed process are invariably of fundamental significance to those who are adversely affected by it". He then concluded [at paragraph 23], following a careful review of the relevant jurisprudence, that the expression "decision or order" had no fixed or precise meaning, but that its meaning depended upon the statutory context in which the advisory decision was made, "having regard to the effect which such decision has on the rights and liberties of those seeking judicial review".
[20]I will refer to one last case on this issue. In Markevich v. Canada, [1999] 3 F.C. 28 (T.D.), Evans J. (as he then was), at paragraphs 9 to 13, makes the following remarks:
The respondent made a preliminary objection to the Court's jurisdiction to entertain this proceeding. The argument was that only a "decision or order" may be the subject of an application for judicial review under section 18.1 of the Federal Court Act. The letter written on behalf of the Minister, which is identified in the applicant's originating notice of motion as the subject of the application for judicial review, was simply informative in nature and did not purport to determine or otherwise affect any legal rights or duties of the applicant. It was not a "decision or order", and was therefore unreviewable by this Court. Indeed, on very similar facts to those at bar, this was the conclusion reached by Teitelbaum J. in Fuchs v. R., [1997] 2 C.T.C. 246 (F.C.T.D.).
With all respect, I do not share this rather limited view of the scope of the subject-matter of this Court's judicial review jurisdiction. The words "decision or order" are found in subsection 18.1(2) of the Federal Court Act, which provides that an application for judicial review of a "decision or order" must be made within 30 days after the time that the decision or order was first communicated by the decision maker. In my opinion, this subsection simply provides a limitation period within which an application for judicial review of a decision or order must normally be made. It does not say that only decisions or orders may be the subject of an application for judicial review, nor does it say that administrative action other than decisions or orders are subject to the 30-days limitation period: Krause v. Canada, [1999] 2 F.C. 476 (C.A.).
It seems to me that the permitted subject-matter of an application for judicial review is contained in subjection 18.1(3), which provides that on an application for judicial review the Trial Division may order a federal agency to do any act or thing that it has unlawfully failed or refused to do, or declare invalid or set aside and refer back, prohibit or restrain "a decision, order, act or proceeding of a federal board, commission or other tribunal" [emphasis added]. The words "act or proceeding" are clearly broad in scope and may include a diverse range of administrative action that does not amount to a "decision or order", such as subordinate legislation, reports or recommendations made pursuant to statutory powers, policy statements, guidelines and operating manuals, or any of the myriad forms that administrative action may take in the delivery by a statutory agency of a public program: see Krause v. Canada, supra.
However, in order to qualify as an "act or proceeding" that is subject to judicial review, the administrative action impugned must be an "act or proceeding" of a "federal board, commission or other tribunal", that is a body or person "having, exercising or purporting to exercise jurisdiction or powers conferred by or under an Act of Parliament" (subsection 2(1) [as am. by S.C. 1990, c. 8, s. 1] of the Federal Court Act). While the letter written on the Minister's behalf to the applicant that is the subject-matter of this application for judicial review was not an act or proceeding by a federal body in the exercise of any statutory power, the Minister, of course, is a person having statutory powers under the Income Tax Act.
Even though not taken in the exercise of a statutory power, administrative action by a person having statutory powers may be reviewable as an "act or proceeding" under paragraph 18.1(3)(b) if it affects the rights or interests of individuals. The letter in question here contained no decision made pursuant to a statutory power, nor did it explicitly purport adversely to affect any right or interest of the applicant. However, it is a reasonable inference from both the letter, and the applicant's communications with Ms. Kara, the writer of the letter, that it signified that Revenue Canada had made a decision to try to collect the unpaid tax and intended to take measures to attempt to recover the previously "written off" tax debt. And, as is apparent from the requirements to pay that was subsequently issued, this was indeed the case. [Boldface added.]
[21]The facts in Markevich, supra, were that the applicant owed back taxes which were subsequently "written off" by Revenue Canada because there appeared to be no realistic chance of collecting the debt in the foreseeable future. As a result, his 1993 statement of account with Revenue Canada showed a nil balance. However, in 1998, a Ms. Kara of the Richmond, B.C. office of Revenue Canada, sent the applicant a letter advising him that he owed over $770,000 in back taxes. Ms. Kara, writing on behalf of the Minister, stated in her letter that Revenue Canada had decided to try to collect the unpaid taxes and intended to take measures to recover the previously "written off" debt.
[22]Evans J. concluded that notwithstanding the fact that the letter contained "no decision made pursuant to a statutory power, nor did it explicitly purport adversely to affect any right or interest of the applicant", the letter still constituted an act capable of review by this Court.
[23]With the above jurisprudence in mind, I now turn to the specifics of the case before me. I agree wholeheartedly with the applicant that the respondents' direction cannot be characterized in the way that the respondents suggest, i.e. as an opinion or warning letter: (i) not issued pursuant to any specific legislative authority, but rather as a courtesy to inform the applicant of the respondents' position as to the effect of section 29 of the TA; (ii) from which no legal consequences flow to the applicant; (iii) a "non-binding opinion" with respect to the interpretation of section 29 of the TA; and (iv) a "recommendation" to charge the applicant with an offence under the TA.
[24]The direction sent by the respondents is, in my view, coercive, in that the purpose thereof is to threaten the applicant to immediately stop selling the multi-packs, failing which a charge would be laid and criminal prosecution might be commenced. I have no doubt that what the respondents hoped for was what in fact happened, i.e. that the applicant would stop selling multi-packs so as to avoid criminal prosecution. As I have already indicated, the applicant's decision to stop selling multi-packs has resulted in financial loss.
[25]I am therefore of the view that the letter sent by Mr. Zawilinski is a "decision, order, act or proceeding" and is reviewable by this Court. I also have no hesitation in concluding that in sending the direction, Mr. Zawilinski was a "federal board, commission or other tribunal" within the meaning of subsection 2(1) of the Act, which defines that expression in the following terms:
2. (1) . . .
"federal board, commission or other tribunal" means any body or any person or persons having, exercising or purporting to exercise jurisdiction or powers conferred by or under an Act of Parliament or by or under an order made pursuant to a prerogative of the Crown, other than any such body constituted or established by or under a law of a province or any such person or persons appointed under or in accordance with a law of a province or under section 96 of the Constitution Act, 1867;
[26]In their Judicial Review of Administrative Action in Canada (Toronto: Canvasback Publishing, 1998, loose-leaf edition), the learned authors Donald J. M. Brown, Q.C. and the Honourable John M. Evans make, at paragraph 2:4310, the following remarks concerning the meaning of the words "federal board, commission or other tribunal" found at subsection 2(1) of the Act:
In the result, the source of a tribunal's authority, and not the nature of either the power exercised or the body exercising it, is the primary determinant of whether it falls within the definition. The test is simply whether the body is empowered by or under federal legislation or by an order made pursuant to a prerogative power of the federal Crown.
Footnote 251, which also appears under paragraph 2:4310, is also relevant:
Note that, because "federal board" is defined to include a body or person "having, exercising or purporting to exercise jurisdiction or powers conferred by or under" federal legislation, it may not be necessary to establish that the administrative action being reviewed was made in the exercise of a statutory power.
[27]I agree entirely with the view of these authors. How can it be said in the present matter that Mr. Zawilinski was not a person "having, exercising or purporting to exercise jurisdiction or powers conferred by or under" an Act of Parliament? If Mr. Zawilinski was not, at the very least, purporting to exercise jurisdiction under the TA, what, one may ask, was he doing?
[28]While it may be true that no provision of the TA specifically conferred authority on Mr. Zawilinski to send the letter at issue to the applicant, this does not, in my view, signify that Mr. Zawilinski was not a "federal board, commission or other tribunal". In my view, Mr. Zawilinski was, at the very least, purporting to exercise jurisdiction or powers conferred by or under the TA.
[29]The respondents raise two other jurisdictional issues. Firstly, they submit that the Federal Court, Trial Division, is not the proper forum to determine the meaning of section 29 of the TA, the proper forum being the provincial court, with summary conviction jurisdiction. They also argue that the application brought by the applicant is premature, in that there is no lis between the parties, and that until such time as the applicant is charged with an offence under the TA, the application is premature. The respondents assert that the applicant can only obtain a judicial declaration regarding the meaning of section 29 of the TA from the court which has jurisdiction in regard to the summary conviction process. Since no charge has been laid against the applicant, that process has yet to be commenced.
[30]If the applicant followed the respondents' logic, it would have put itself to the risk and expense of criminal prosecution in order to obtain a declaration concerning the meaning of section 29 of the TA, and more particularly, whether the sale of multi-packs constitutes a "cash rebate" under the section. In other words, the applicant would have to engage in conduct that allegedly breached the statute, wait for a charge, suffer the prejudice that would result from the charge, and then expend substantial sums of money in defending the charge. That, surely, cannot be the solution to the applicant's difficulties. As Farwell L.J. stated at pages 420-421 in Dyson v. Attorney-General, [1911] 1 K.B. 410 (C.A.):
Now the action asks for no declaration in respect of any penalty; the complaint is that the Legislature has entrusted to a Government department (the Commissioners of Inland Revenue) the performance of the duty of making certain specific inquiries in a specific manner from landowners and of requiring answers to be sent to themselves, and has imposed a 50£ penalty for disobedience. The plaintiff alleges that the Commissioners have exceeded their powers by making inquiries not authorized to be made, by not giving proper time to answer, and by requiring answers to be sent to a person not authorized to receive them and to whom it is injurious to the plaintiff's interest to send them. . . . it would be a blot on our system of law and procedure if there is no way by which a decision on the true limit of the power of inquisition vested in the Commissioners can be obtained by any member of the public aggrieved, without putting himself in the invidious position of being sued for a penalty. I am, however, of opinion that the Attorney-General's contention is not well founded.
[31]Farwell L.J. then went on to state, at page 424, that "the Courts are the only defence of the liberty of the subject against departmental aggression". The words of Farwell L.J. appear to be quite apposite in the present matter, since the respondents' submission is that Mr. Zawilinski acted without statutory authority in sending out the directive which is at issue in these proceedings.
[32]In my view, declaratory relief is the appropriate remedy in the present case. In Operation Dismantle Inc. et al. v. The Queen et al., [1985] 1 S.C.R. 441, Dickson J. (as he then was) held that in order to obtain declaratory relief, a person need only show that a legal interest or right was "in jeopardy or grave uncertainty". Mr. Justice Dickson's reasoning is as follows (page 457):
None of this is to deny the preventative role of the declaratory judgment. As Madame Justice Wilson points out in her judgment, Borchard, Declaratory Judgments (2nd ed. 1941), at p. 27, states that:
. . . no "injury" or "wrong" need have been actually committed or threatened in order to enable the plaintiff to invoke the judicial process; he need merely show that some legal interest or right of his has been placed in jeopardy or grave uncertainty . . . .
Nonetheless, the preventative function of the declaratory judgment must be based on more than mere hypothetical consequences; there must be a cognizable threat to a legal interest before the courts will entertain the use of its process as a preventive measure. As this Court stated in Solosky v. The Queen, [1980] 1 S.C.R. 821, a declaration could issue to affect future rights, but not where the dispute in issue was merely speculative.
[33]The case before me is surely not a case where the dispute between the parties is merely speculative. There is, in my view, a real and live dispute between the parties with respect to the interpretation of section 29 of the TA. The applicant is certainly justified, on the facts of the case, to seek a remedy from this Court without having to submit itself to a criminal prosecution.
[34]The upshot of the matter is that the respondents were at liberty to lay a charge against the applicant and, hence, seek an interpretation of section 29 of the TA from the court of summary conviction. However, the respondents did not charge the applicant, but proceeded to send coercive letters in the hope that compliance would result, without the necessity of having to lay a charge. In these circumstances, I am satisfied that this Court is a proper forum. I am also satisfied that this application for judicial review is not premature.
[35]I now turn to the merits of the application. The only issue for determination is whether selling multi-packs of cigarettes at a slightly lower price per pack than if the packs were sold separately, constitutes an unlawful cash rebate under paragraph 29(a) of the TA. For the reasons that follow, my answer to that question is no.
[36]The relevant sections of the TA are as follows:
2. . . .
"tobacco product" means a product composed in whole or in part of tobacco, including tobacco leaves and any extract of tobacco leaves. It includes cigarette papers, tubes and filters but does not include any food, drug or device that contains nicotine to which the Food and Drugs Act applies.
. . .
4. The purpose of this Act is to provide a legislative response to a national public health problem of substantial and pressing concern and, in particular,
(a) to protect the health of Canadians in light of conclusive evidence implicating tobacco use to the incidence of numerous debilitating and fatal diseases;
(b) to protect young persons and others from inducements to use tobacco products and the consequent dependence on them;
(c) to protect the health of young persons by restricting access to tobacco products; and
(d) to enhance public awareness of the health hazards of using tobacco products.
. . .
18. (1) In this Part, "promotion" means a representation about a product or service by any means, whether directly or indirectly, including any communication of information about a product or service and its price and distribution, that is likely to influence and shape attitudes, beliefs and behaviours about the product or service.
. . .
29. No manufacturer or retailer shall
(a) offer or provide any consideration, direct or indirect, for the purchase of a tobacco product, including a gift to a purchaser or a third party, bonus, premium, cash rebate or right to participate in a game, lottery or contest; [Emphasis added.]
[37]As is obvious from section 4 of the TA, the purpose of the TA is to protect the health of Canadians, and more particularly, to protect young persons from inducement to use tobacco products and to restrict their access to these products. That is why section 19 of the TA prohibits the promotion of tobacco products, except as authorized by the TA or the Regulations made thereunder. Section 29, the marginal note of which is "Sales promotions", falls under Part IV of the TA, entitled "Promotion".
[38]The applicants argue that the sale of multi-packs does not offend the intent, purpose, primary focus or overriding objective of the TA, nor does it result in the harm for which that legislation was enacted to prevent. Rather, according to the applicant, the sale of multi-packs simply reflects its internal pricing strategy and economic decision to generate less profit, on a per pack basis, on the sale of multiple packs of cigarettes, in response to the pricing strategies pursued by its competitors in the highly competitive environment and business of retail cigarette sales. The applicant further argues that its selling strategy does not constitute a means to promote the sale of cigarettes by influencing or shaping attitudes, beliefs and behaviours about cigarettes, as contemplated and prohibited by sections 18 and 29 of the TA.
[39]In arguing that the sale of multi-packs offends section 29, the respondents submit that the meaning of section 29 can be informed by the use of the word "unit" and by the apparent meaning that they have ascribed to that word. In the direction sent to the applicant, the respondents took the view that a "unit" was either an unopened carton of cigarettes or a single pack of cigarettes. Thus, in the respondents' view, retailers were free to set the selling price of their tobacco products, i.e. of the "unit". Since multi-packs are not "units", they cannot be sold, according to the respondents, at a price which is inferior to the selling price of one individual pack. The respondents' position appears at paragraphs 52 to 54 of their memorandum of fact and law, which read as follows:
52. In response to paragraphs 57-61, while there is no definition of the term "unit" in the Act, the interpretation put forward by the Respondents' [sic] in the impugned letters is an [sic] accord with scheme. The use of the word unit was simply illustrative.
53. Currently the reality, which is confirmed by the Applicant's own evidence and which is sufficiently notorious in any event that this Honourable Court could take judicial notice of the fact, is that cigarettes are sold either in a single package or in a carton of 8 packages.
54. Prices may be set for the carton or the package as a matter of convenience and because of the nature in which they are produced. Once, however, a carton is broken down, it becomes a compilation of 8 separate packages. There is no evidence on record that cigarette packages come in smaller cartons or mini-cartons. Consequently, the applicant is offering an incentive for a purchaser to buy more than one package of cigarettes. That is, more than one unit.
[40]Unfortunately for the respondents, I see no merit in this submission. The term "unit" is nowhere defined in the TA, nor in the Regulations made thereunder.2 The definition of "tobacco product" found in section 2 of the TA does not include, nor refer to the term "unit". The fact that tobacco is generally sold in cartons or in individual packs is, in my view, of no relevance whatsoever in regard to the interpretation of paragraph 29(a) of the TA.
[41]The only question, as I have already stated, is whether the sale of multi-packs constitutes a cash rebate under paragraph 29(a). In R. c. Rothmans, Benson & Hedges Inc. (3 May 1996), Montréal 500-27-000567-919 (C.Q.), the defendant was charged as follows:
[translation] At Montréal, in the district of Montréal, on or about the 20th of November 1990, being a distributor, illegally offered a cash rebate in exchange for the purchase of a tobacco product, namely: an offer of a cash rebate of $1.00 for each of 800 cartons of Mark Ten cigarettes, 8 packages x 25 cigarettes, King size, sold to SUE SHANG WHOLESALE REGD., thereby committing an infraction foreseen by Sections 7(2) and 18(1)(i)(a)(i) of the Tobacco Products Control Act, S.C. 1988, c. 20.
[42]The issue before the Court was whether the method by which the defendant promoted the sale of its "Mark Ten" cigarettes constituted a "cash rebate" within the meaning of the Tobacco Products Control Act [R.S.C., 1985 (4th Supp.), c. 14], the predecessor Act to the TA. Subsection 7(2) of that Act provided as follows:
7. . . .
(2) No person shall offer any gift or cash rebate . . . to the purchaser of a tobacco product in consideration of the purchase thereof or to any person in consideration of the furnishing of evidence of such a purchase.
[43]After a careful review of the dictionary meanings of the words "rebate" and "remise" and the relevant case law, Mr. Justice Morand of the Court of Quebec concluded as follows at pages 5-6:
[translation] It appears from all of these definitions that the words "rebate" and "remise" refer to a reduction of price of a manufactured product at the moment of the purchase of this product or following its purchase. The Court can also take direction from the text of the Act where these words are written. In Section 7(2), the Legislator has indicated that it is prohibited to offer a gift or a cash rebate. It could have added "a rebate, a reduction in price", which it did not do. For the Court, the fact of selling a product at a determined price cannot constitute a cash rebate.
In this case, the accused had sold to a wholesaler a quantity of cigarettes at a determined price. As the Legislator did not prohibit the sale of cigarettes nor legislate as to the manner to set prices, the accused benefited from all its rights to sell its products at a reasonable price fixed according to its choice. The fact of selling a brand of cigarettes at a price different than that of another brand is not prohibited by the Legislator. What is prohibited, is to give a gift or to give a cash rebate in exchange for the purchase of cigarettes. In this case, there is no evidence that the wholesaler had received a gift or was offered a cash rebate following its purchase. It only paid the price set by the accused without any other reward.
By way of example, every week we receive at home a "Publi-Sac" containing flyers from the principal grocery retailers. We find coupons therein, which, when presented at the moment of purchase of a product, shall be deducted from the total amount of the bill. This is a cash rebate offered by the manufacturer in exchange for a purchase.
In the present case, there has not been a cash rebate; there has been a sale at a slightly lesser price on one brand of cigarettes, which is not prohibited by the Legislator. [Emphasis added.]
[44]I agree entirely with Mr. Justice Morand's reasoning and in particular, that the promotional scheme before him did not constitute a cash rebate so as to render the defendant guilty of an infraction under subsection 7(2) of the Tobacco Products Control Act.
[45]In my view, the sale of multi-packs by the applicant, at a reduced per-pack price, does not constitute a "cash rebate" under paragraph 29(a) of the TA. I agree with the submission put forward by the applicant that the sale of multi-packs is a reflection of its internal pricing strategy and economic decision as a result of which less profit, on a per-pack basis, is generated on the sale of multi-packs. The applicant's strategy, in my view, is not tantamount to promoting tobacco products, which practice is prohibited by section 18 and paragraph 29(a) of the TA.
[46]On my reading of paragraph 29(a) of the TA, I fail to understand the respondents' submission that the sale of multi-packs constitutes a cash rebate or a consideration for the purchase of tobacco products. The non-exhaustive list of examples given by Parliament in paragraph 29(a) of the TA is, in my view, a clear indication of what Parliament had in mind when it prohibited the giving of any consideration for the purchase of tobacco products. The list includes "a gift to a purchaser or a third party, bonus, premium, cash rebate or right to participate in a game, lottery or contest". I cannot agree that the sale of two packs of cigarettes at a price which is slightly inferior to that of two packs sold individually, falls within the same category as the examples given by Parliament. Thus, the applicant's selling strategy does not constitute either a cash rebate or a consideration of the type which Parliament had in mind when it enacted paragraph 29(a) of the TA.
[47]It goes without saying that I have difficulty seeing how the sale of a multi-pack of cigarettes can constitute a cash rebate, if the sale of a carton does not. In both cases, the customer pays a per-pack price which is inferior to the per-pack price of cigarettes sold individually. Parliament clearly decided, in my view, not to address the pricing of cigarettes and, as a result, did not include pricing strategies, of the type used herein by the applicant, in the conduct which it sought to prohibit. Had it done so, the TA, and more particularly, paragraph 29(a) would have been worded differently.
[48]In my view, the applicant, in selling multi-packs of cigarettes, did not offer or provide any consideration, direct or indirect, to its clients for the purchase of tobacco products. As a result, the applicant is entitled to the following declaration:
[49]The sale by the applicant of multi-packs of cigarettes for a per pack-price less than the price charged on the sale of single packs of cigarettes sold individually, does not constitute, under paragraph 29(a) of the TA, a "cash rebate" offered to customers.
[50]The applicant shall be entitled to its costs.
1 I am using the word "direction" because that is the word which the applicant has used in its notice of application filed on October 11, 2000, to characterize the letter which is at issue in these proceedings. However, the respondents contest the use of the word "direction" for the letter which they sent to the applicant.
2 This is not entirely correct, since the Tobacco Products Information Regulations, SOR/2000-272, made pursuant to s. 33 [as am. by S.C. 1998, c. 38, s. 3] of the TA, define the word "unit" [s. 1] as follows: "(a) a cigarette; (b) a cigar; (c) a tobacco stick; (d) a kretek; (e) a bidi". The Regulations also define the word "carton" in the following terms: "a package intended to be sold to consumers and that contains two or more packages of a tobacco product, other than a tube, a filter or cigarette paper".
I should also note that s. 10 of the TA prohibits the sale of cigarettes in a package containing less that 20 cigarettes.