A-485-75
Rothmans of Pall Mall Canada Limited and
Imperial Tobacco Limited (Appellants)
v.
Minister of National Revenue and Deputy Minis
ter of National Revenue for Customs and Excise;
Benson & Hedges (Canada) Limited, and The
Macdonald Tobacco Inc. (Respondents)
[No. 1]
Court of Appeal, Pratte, Urie and Le Dain JJ.—
Ottawa, March 1, 2 and April 12, 1976.
Jurisdiction—Customs and excise—Extraordinary reme-
dies—Whether appellants aggrieved parties—Duty on ciga-
rettes—Whether cigarettes measuring less than four inches
when filter not included and over four inches when filter
included to be treated as two cigarettes—Excise Act, R.S.C.
1970, c. E-12, ss. 6, (as am. R.S.C. 1970 (1st Supp.) c. 15, s.
3), 202—Customs Tariff R.S.C. 1970, c. C-41, s. 21(1)(d).
Revenue Canada reviewed the question as to whether the
filter should be included in measuring cigarette length, having
regard to the definitions of "cigarette" and "manufactured
tobacco" in section 6 of the Excise Act. The conclusion was
that a unit in which the portion containing tobacco was less
than four inches would be considered as one cigarette, notwith
standing that its total length, including filter, would exceed
four inches. Appellants sought relief against this conclusion,
while respondents objected to the Court's jurisdiction. The
Trial Judge dismissed the motion, holding that the Court
lacked jurisdiction. It was decided that appellants had not
established that they were aggrieved parties, and that the
Minister's interpretation was not a decision. Appellants
appealed.
Held, dismissing the appeal, the Trial Judge was correct.
Appellants have no genuine grievance entitling them to chal
lenge the interpretation. It did not adversely affect their legal
rights, impose any additional legal obligation on them or
prejudicially affect them directly. Nor do they derive any rights
from what may have been their own assumption as to the
application of section 6. In so far as the interpretation of the
section is to be considered a "change" in policy by the Depart
ment, there is no supporting authority for a general duty, when
considering such a change to be applied in individual cases, to
notify anyone who may be interested, and offer an opportunity
to be heard. Appellants had made no previous representations
as to how section 6 should be applied to cigarettes such as
respondent companies were introducing. There had been no
undertaking to appellants with respect to the question, nor did
such practice as there was with respect to industry representa
tion give any reasonable expectation that representations of the
kind made by respondent companies involving a matter of a
competitive nature were such as would come from the industry
as a whole, or be promptly communicated to it. In any event,
appellant companies learned of the proposed policy change soon
after its adoption and had opportunity to make representations.
While the Courts have increasingly taken a broader view of
locus standi requirements, nowhere has it been suggested that
persons in the position of appellants in relation to the official
action complained of would be persons considered aggrieved
(even for purposes of certiorari and prohibition, where the
locus standi requirement may not be quite as strict). A person
should not have the right to interfere with an official action
affecting an existing competitor solely to prevent the competi
tor from obtaining some advantage, particularly where the
complainer is free to seize the same advantage. The public
interest in competition is an important factor in the exercise of
discretion as to whether to recognize standing in a competitive
relationship.
The case is not one that raises any questions of the limits of
statutory authority. The most it raises is a question of adminis
trative interpretation of the governing statute. The action is not
subject to certiorari, prohibition, mandamus or injunction.
There was no determination of any rights, no duty to act
judicially, nor any enforceable public duty at all (but rather,
one owing to the Crown). Nor was there interference with
appellants' rights such as would entitle them to an injunction
against public authorities.
Regina v. Liverpool Corporation [1972] 2 Q.B. 299, dis
tinguished. The King v. Richmond Confirming Authority
[1921] 1 K.B. 248 and Regina v. Commissioners of Cus
toms and Excise [1970] 1 W.L.R. 450, considered. Thor-
son v. Attorney General of Canada [1975] 1 S.C.R. 138
and McNeil v. Nova Scotia Board of Censors (1975) 5
N.R. 43, discussed. Landreville v. The Queen [1973] F.C.
1223, applied.
APPEAL.
COUNSEL:
R. T. Hughes for appellants.
W. B. Williston, Q.C., and R. W. Cosman for
respondent The Macdonald Tobacco Inc.
G. W. Ainslie, Q.C., and W. Lefebvre for
respondents the Minister of National Revenue
and the Deputy Minister of National Revenue
for Customs and Excise.
J. B. Claxton, Q.C., for respondent Benson &
Hedges (Canada) Ltd.
SOLICITORS:
Donald F. Sim, Q.C., Toronto, for appellants.
Faskin & Calvin, Toronto, for respondent
The Macdonald Tobacco Inc.
Deputy Attorney General of Canada for
respondents the Minister of National Revenue
and the Deputy Minister of National Revenue
for Customs and Excise.
Lafleur & Brown, Montreal, for respondent
Benson & Hedges (Canada) Ltd.
The following are the reasons for judgment
rendered in English by
LE DAIN J.: This is an appeal from a judgment
of the Trial Division' dismissing an application for
relief in the nature of prohibition, mandamus,
injunction and certiorari on the ground, among
others, that the applicants lack status or locus
standi.
The application is directed against action taken
by the Minister of National Revenue and the
Deputy Minister of National Revenue for Customs
and Excise in respect of the interpretation and
application of the definition of "cigarette" in sec
tion 6 of the Excise Act, R.S.C. 1970, c. E-12, for
purposes of the imposition, levying and collection
of excise duty under the said Act. The Deputy
Minister is impleaded because of his authority
under the Act to exercise the powers of the Minis
ter. The respondent companies, upon whose
representations such action was taken, were, at
their request, added as parties by order of the
Court.
Section 202 of the Excise Act provides:
202. There shall be imposed, levied and collected on tobacco
and cigars manufactured in Canada and on Canadian raw leaf
tobacco the duties of excise set out in the schedule, by means of
stamps to be affixed to the packages in which tobacco, cigars
and Canadian raw leaf tobacco are entered for consumption
under departmental regulations.
"Manufactured tobacco" is defined in section 6
of the Act as follows:
"manufactured tobacco" means every article made by a tobac
co manufacturer from raw leaf tobacco by any process
whatever, except cigars; and includes cigarettes and snuff;
The definition of "cigarette" in section 6, as
replaced by R.S.C. 1970 (1st Supp.), c. 15, s. 3, is
as follows:
"cigarette" means every description of cigarette and any roll or
tubular construction intended for smoking that is not a cigar;
and where any cigarette exceeds four inches in length, each
' [1976] 1 F.C. 314.
three inches or fraction thereof shall be deemed to be a
separate cigarette;
The Schedule to the Act, as amended, provides
that excise duties are to be imposed, levied and
collected on cigarettes at the rate of five dollars
per thousand, where the weight is not more than
three pounds per thousand, and at the rate of six
dollars per thousand, where the weight is more
than three pounds per thousand.
The definition of "cigarette" in the Excise Act
has a bearing on the duties collected under the
Customs Tariff; R.S.C. 1970, c. C-41, as indicated
by section 21(1) of the latter Act, which reads in
part as follows:
21. (1) There shall be levied, collected and paid as customs
duty on all goods hereinafter enumerated in this section when
imported into Canada or taken out of warehouse for consump
tion therein, in addition to the duties otherwise established, an
amount equal to the amount that would have been imposed,
levied and collected thereon under the Excise Act as excise
duties if
(d) in the case of cigars, cigarettes and tobacco enumerated
in tariff items 14305-1, 14315-1, 14400-1, 14450-1 and
14500-1, the goods were "tobacco, cigars and cigarettes
manufactured in Canada" within the meaning of the Excise
Act.
The issue of statutory construction raised in
these proceedings is whether the filter tip portion
of a cigarette should be included in determining its
length for purposes of the definition in section 6 of
the Excise Act. The Department of National
Revenue, Customs and Excise, has adopted the
position that it should not be included. The appel
lants contend that it should, and that the position
adopted by the Department gives the respondent
companies a competitive advantage which causes
the appellants prejudice. The appellants seek by
these proceedings to require the Minister to
include the filter tip portion of a cigarette in
determining its length for purposes of the defini
tion in section 6. The issues on this appeal are
whether the appellants have the required status or
locus standi to bring these proceedings, and
whether, in any event, the specific forms of relief
sought would be appropriate to challenge the
action of the Minister.
The affidavit evidence and cross-examination
thereon disclose the following background to the
appellants' contention. The appellant and respond-
ent companies are competitors in the manufacture
and sale of tobacco products. Together they share
about 99 per cent of the Canadian market, with
their estimated individual shares running approxi
mately as follows: Rothmans-27 per cent;
Imperial (or its parent, Imasco)-38 per cent;
Macdonald-20 per cent; and Benson & Hedges
14 per cent. Prior to 1975 there were no cigarettes
on the Canadian market having an overall length
of more than four inches. Sometime early in 1975
the respondent companies, acting separately,
decided to introduce cigarettes with a tobacco
portion of less than four inches but an overall
length, including the filter tip, of more than four
inches. Macdonald proposed to introduce a ciga
rette called "More" and Benson & Hedges a
cigarette called "Plus". Before doing so they
sought clarification from the Department of Na
tional Revenue, Customs and Excise, as to how the
definition in section 6 of the Excise Act would be
applied to such cigarettes, and, specifically, wheth
er the filter tip would be included in determining
the length of the cigarettes for purposes of that
definition. The practical question, for purposes of
excise duty, is whether a cigarette of this length
and composition is to be deemed to be one ciga
rette or two.
Both Macdonald and Benson & Hedges
approached the Department separately, without
notice to each other or the other members of the
industry. Nor did the Department notify anyone
else in the industry that this question was beiig
raised. The question appears to have been fi st
raised with departmental officials by Macdon«ld
in May 1975. A memorandum dated June 3, 1975
was sent by W. M. Horner, Chief Excise Duty,
Department of National Revenue, to Regional
Directors, Excise, but without notification to the
industry, in the following terms:
There is evidence that a market is developing in other countries
for long cigarettes (over 4 inches).
The manufacturer of cigarettes in Canada in excess of 4 inches
would require consideration of length as well as weight when
assessing duty.
The definition of a cigarette in the Excise Act stipulates that
where a cigarette exceeds 4 inches in length, each 3 inches or
fraction thereof shall be deemed to be a separate cigarette.
The weight of the cigarettes is determined as the weight of the
tobacco paper and tip. The length of the cigarette should be
determined by including these same materials.
Would you kindly adjust your tobacco audit program to make
provisions for reviewing the length of cigarette products
produced.
There were discussions by representatives of
Macdonald and Benson & Hedges with depart
mental officials in the course of June 1975, and
the Department agreed to consider its interpreta
tion of the definition of "cigarette" in section 6 of
the Excise Act. Some time around the end of June
or the beginning of July, officials in the Depart
ment agreed to adopt the view urged by Mac-
donald and Benson & Hedges, and these compa
nies were so advised. It was conceded on
cross-examination by Howard Perrigo, Assistant
Deputy Minister—Excise of the Department of
National Revenue, Customs and Excise, that this
represented a "change" of administrative policy or
interpretation. Some time in late June or early
July the appellant companies learned of the pro
posed change of policy through their own inquiries
and made strong representations against it, but
departmental officials indicated that they would
adhere to their position. On the strength of the
assurances received from departmental officials as
to the manner in which the definition of "ciga-
rette" would be applied to "Plus" cigarettes,
Benson & Hedges imported these cigarettes for a
short period from an affiliated company in the
United States and began manufacture of them in
Canada in July, 1975. Since being introduced into
Canada "Plus" and "More" cigarettes have been
treated for purposes of excise duty as being ciga
rettes under four inches in length.
The appellants applied in July, 1975, by origi
nating notice of motion for writs of prohibition,
mandamus, injunction and certiorari, to have the
effect of requiring the Minister of National Reve
nue and the Deputy Minister of National Revenue
for Customs and Excise to include the filter tip
portion in determining the length of cigarettes for
purposes of calculating the number of cigarettes
upon which duties are to be imposed, levied and
collected under the Excise Act. On the hearing of
the motion the respondents made what the Trial
Judge described as "a preliminary objection to the
Court's jurisdiction to grant the relief asked for."
After hearing argument on this issue and reserving
judgment, he dismissed the motion on the ground
that the applicants lacked status or locus standi
for any of the relief claimed, and on the further
grounds that, apart from the question of status, the
powers and duties of the respondent officials and
the nature of the action taken by them were not
such as to give rise to the specific forms of relief
sought. The applicants appealed from this
judgment.
The complaint of the appellants is that the
change in departmental policy was adopted with
out first giving them an opportunity to be heard
and that it had the effect of conferring a competi
tive advantage on the respondent companies by
permitting them to market a longer cigarette for
the same amount of excise duty as is paid by the
appellants. The appellants do not contend, nor is
there any evidence to suggest, that they themselves
have had any interest in marketing a cigarette with
a tobacco portion of less than four inches but an
overall length, including the filter tip, of more than
four inches. They do not seek the interpretation
which they contend to be the correct one in order
to permit them to do anything in particular that
they are not able to do now, but rather to prevent
the respondent companies from doing something
which is thought to give the latter a commercial
advantage.
I am in agreement with the learned Trial Judge
that such an interest is not sufficient to give the
appellants the required status or locus standi to
obtain any of the relief sought in their application.
The appellants do not have a genuine grievance
entitling them to challenge by legal proceedings
the interpretation which the respondent officials
have given to the definition of "cigarette" in sec
tion 6 of the Excise Act for purposes of their
administrative application of the Act. Such inter
pretation does not adversely affect the legal rights
of the appellants nor impose any additional legal
obligation upon them. Nor can it really be said to
affect their interests prejudicially in any direct
sense. If it permits the respondent companies to do
something which the appellants are not doing, it is
because the appellants choose not to do it.
The appellants do not derive any rights, proce
dural or otherwise, from what may have been their
own assumption as to how section 6 of the Excise
Act would be applied to a cigarette in which the
tobacco portion is less than four inches long but
the overall length, including the filter tip, is more
than four inches. Before May or June, 1975, offi
cials of the Department had not been called on to
consider this question so there was no basis in their
action for such an assumption. In so far as the
interpretation is to be considered a "change" of
administrative policy it can only be considered as
such in relation to the internal memorandum cir
culated by Homer at the beginning of June. When
the question was raised by the respondent compa
nies in May and June the departmental officials
were under no duty to advise the appellant compa
nies and offer them an opportunity to make
representations. I know of no authority which sup
ports a general duty, when considering a change of
administrative policy to be applied in individual
cases, to notify and offer anyone who may be
interested an opportunity to make representations.
The circumstances of the present case are distin
guishable, for example, from those in Regina v.
Liverpool Corporation [1972] 2 Q.B. 299, in
which the Court of Appeal granted an application
for prohibition to prevent the Corporation from
giving effect to a change of policy respecting the
number of taxicab licences to be issued before
hearing representations from taxicab owners and
other interested persons. When the corporation
had originally considered a change in the existing
policy it had invited representations from the
owners and following such representations the cor
poration had given an undertaking to the owners
that there would be no increase in the number of
licences issued before certain legislation to regu
late private cars for hire had been adopted and put
into force. Contrary to this undertaking, which the
corporation had been advised was not binding on
it, and without notice to the owners and a further
opportunity to them to make representations, the
corporation adopted resolutions providing for an
increase in the number of licences. On learning of
this the owners asked for an opportunity to make
representations and were in effect denied an ade
quate opportunity. The Court held that the Corpo
ration had dealt unfairly with the owners. Lord
Denning M.R. held that, given the nature of the
power to grant taxi licences, there was a duty to
act fairly by giving persons interested an opportu
nity to make representations before adopting a
change of policy with respect to the issue of
licences. The Court as a whole held that the
corporation was bound by the undertaking that it
had given, at least to the extent that it should not
be permitted to set it aside before hearing all those
who were interested. In my opinion the decision in
this case cannot be taken as authority for the
proposition that whenever an administrative au
thority, regardless of the nature of its function,
contemplates a change in the policy to be applied
in individual cases, it has a duty to notify persons
who may conceivably be interested and offer them
an opportunity to make representations. The con
clusion that the corporation had not acted fairly in
the Liverpool Taxi case must be viewed in the
light of the particular circumstances of that case:
the general nature of the power to grant licences;
the early assurances given to the taxi owners that
they would be heard before there was any change
of policy, and the fact that they were heard in the
first instance; and, finally and most importantly,
the undertaking given by the corporation to the
owners that there would be no increase in the
number of licences before certain legislation had
come into force, which carried with it the neces
sary implication that there would be no departure
from this undertaking without a further opportu
nity to the owners to make representations. The
importance to be attached to these circumstances,
in considering the general significance of this case,
is reflected, I think in .the judgments of the other
members of the Court, which, as I read them,
rested essentially on the undertaking that the Cor
poration had given. Roskill L.J. said [at page 311]:
"It has been said that the council and its relevant
committee and sub-committee were never under
any duty to hear any representations from the
applicants. That may or may not be correct. In the
light of what has happened, I do not think it
necessary to express any opinion upon that ques
tion." Sir Gordon Willmer said [at page 313]: "It
seems to me that in these very special circum
stances, having regard to the history of how this
matter had been dealt with in the past, and having
regard especially to the giving of the undertaking,
the applicants are justified in regarding themselves
as `aggrieved' by what I can only describe as
unfair treatment on the part of the Liverpool
Corporation."
The circumstances in the present case are quite
different and afford no basis for a conclusion that
the respondent officials acted unfairly toward the
appellants. There had been no previous representa-
tions by the appellants as to how the definition in
section 6 in the Excise Act should be applied to
cigarettes of the kind introduced by the respondent
companies. There had been no undertaking to the
appellants with respect to this question. Nor did
such practice as there was with respect to industry
representation give any reasonable expectation
that representations of the kind made by the
respondent companies, involving a matter of a
competitive nature, were such as would come from
the industry as a whole or be promptly com
municated to the industry as a whole. In any event,
the appellant companies learned of the proposed
policy soon after it was adopted and had an oppor
tunity to make representations.
It is unnecessary to review the many cases that
were cited to us as purporting to show that the
courts are increasingly disposed to take a broad
view of the requirement of locus standi. The
expression that is given to the requirement of locus
standi may vary somewhat from one recourse to
another, and it may be that the requirement is not
as strict with respect to certiorari and prohibition,
where in certain circumstances a stranger may be
recognized as having standing, as it is with respect
to other recourses. Cf. de Smith, Judicial Review
of Administrative Action, 3rd ed., 366-369. But in
none of the cases on certiorari and prohibition,
however broad a view is taken of the requirement
of locus standi, do I find anything to suggest that
persons in the position of the appellants in relation
to the official action complained of would be con
sidered to be persons aggrieved for purposes of
these remedies. It may be conceded that in certain
contexts a competitive interest may be regarded as
conferring status to challenge administrative
action, as for example, on certiorari to quash the
grant of a licence allegedly in excess of jurisdic
tion: The King v. Richmond Confirming Authority
[1921] 1 K.B. 248. A person should not, however,
in my view, have the right to interfere with or
meddle in official action affecting an existing com
petitor for the sole purpose of preventing that
competitor from obtaining some advantage, par
ticularly where the action complained of is some
thing that the person complaining is free to take
advantage of himself. That kind of interest appears
to have been clearly rejected in the case of Regina
v. Commissioners of Customs and Excise [1970] 1
W.L.R. 450 (albeit one of mandamus), where
Lord Parker C.J. said [at page 456]: "Secondly, as
it seems to me, in any event the interest, or the
motive, which is moving this application is what I
would term an ulterior motive, a motive of putting
people out of business and nothing more." The
public interest in competition must be borne in
mind in exercising the judicial discretion as to
whether to recognize standing in a competitive
relationship.
The decisions of the Supreme Court of Canada
in Thorson v. Attorney General of Canada [1975]
1 S.C.R. 138, and McNeil v. Nova Scotia Board
of Censors (1975) 5 N.R. 43, were urged upon us
as indicating a relaxation of the requirement of
locus standi. A careful reading of these decisions
shows, in my respectful opinion, that the principal
consideration governing them is the importance in
a federal state of opportunity to challenge the
constitutional validity of statutes. No such con
sideration is applicable here. It was suggested that
there is a comparable consideration of public
policy in broad access to challenge the validity of
administrative action, and this view finds some
support in the recognition of a judicial discretion
to permit a stranger to bring certiorari or prohibi
tion in certain cases. The present case is not one
that raises any question of the limits of statutory
authority. The most that is raised is a question of
administrative interpretation that the authorities
are obliged to make in their application of the
governing statute. Indeed, the action in this case is
not of the kind that is subject to challenge by
certiorari or prohibition. There is no decision here
determining rights or obligations in an individual
case, much less a determination of those of the
appellants. See Landreville v. The Queen [1973]
F.C. 1223. There is no duty to act judicially or
fairly in a procedural sense. In so far as man-
damus is concerned, there is no public duty of any
kind that the appellants have a right to enforce.
The duty of the respondent officials under section
202 of the Excise Act is one owing to the Crown
rather than the appellants. Cf. The Queen v. Lord
Commissioners of the Treasury (1871-72) 7
L.R.Q.B. 387. In so far as injunction is concerned,
apart from the question of whether it may lie in
certain cases against servants of the Crown, there
is no interference with the rights of the appellants
such as would entitle them to bring it against
public authorities. Cowan v. C.B.C. [1966] 2 O.R.
309.
For all of the above reasons the appeal should be
dismissed with costs.
* * *
PRATTE J.: I concur.
* * *
URIE J.: I concur.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.