[1995] 2 F.C. 544
T-2531-94
TNT Canada Inc. (Applicant)
v.
Director of Investigation and Research appointed under the Competition Act and John A. Olah (Respondents)
Indexed as: TNT Canada Inc. v. Canada (Director of Investigation and Research) (T.D.)
Trial Division, Teitelbaum J.—Toronto, January 24 and February 21, 1995; Ottawa, March 16, 1995.
Competition — Application to set aside ex parte orders requiring individuals to appear for examination on matters relevant to Competition Act, s. 10 inquiry — Orders made after applicants charged with indictable offences under Act — Under s. 11, once Director of Investigation and Research causing inquiry to be made may apply ex parte for order requiring individual to attend for examination — Inquiry prerequisite to s. 11 examination — Inquiry ends when purpose attained i.e. when sufficient facts determined for Director to refer matter to Attorney General and charges laid — Not continuing until conviction obtained.
Practice — Judgments and orders — Reversal or variation — Application to set aside F.C. Judge’s ex parte orders requiring individuals to appear for examination on matters relevant to Competition Act, s. 10 inquiry — R. 330 permitting Court to vary, annul any ex parte order — Only F.C. Judge can vary, annul orders herein — Teitelbaum J. having jurisdiction to hear applications as Judge who issued orders and as Judge of Court issuing orders.
Practice — Parties — Standing — Application to set aside ex parte orders requiring individuals to appear for examination on matters relevant to Competition Act, s. 10 inquiry — Applicants not subject to s. 11 examinations — Charged with indictable offences under Act — Admitted that purpose of examinations to obtain information for criminal prosecution — When individual or corporation charged, and persons to be examined in “parallel proceeding”, individual or corporation can be irreparably harmed or seriously affected by examinations — Such individual or corporation having standing to bring R. 330 application to review ex parte orders.
Judges and courts — Application to set aside ex parte orders requiring individuals to appear for examination on matters relevant to Competition Act, s. 10 inquiry — Judicial review unavailable as neither decision to issue orders nor decision to apply therefor decision of federal board, commission or tribunal — Only F.C. Judge can vary orders — Teitelbaum J. having jurisdiction as Judge who issued orders, Judge of Court issuing orders.
These were applications to set aside or vary ex parte orders made by Teitelbaum J. requiring certain individuals to attend for examination on matters relevant to an inquiry under Competition Act, section 10 into the sale and supply of pool car freight forwarding and related services. A formal inquiry pursuant to section 8 (now section 10) into the applicants’ activities was commenced in 1987, based on allegations that the applicants had entered into an agreement not to undercut each other’s prices. Paragraph 45(1)(c) renders it an indictable offence to conspire to prevent or lessen competition unduly in the transportation or supply of a product. In 1989 the Director of Investigation and Research recommended to the Attorney General that charges be laid against the applicants under section 45. In September 1990 and July 1992 charges were laid against the applicants under paragraph 45(1)(c). After a preliminary inquiry, the applicants were committed to stand trial. The ex parte application was made and granted thereafter. Under Federal Court Rule 330 the Court may rescind any ex parte order.
The Director argued that the applicants did not have standing because they were not directly affected by the decision to seek ex parte orders which, he submitted, could only affect the persons ordered to be examined under oath. The applicants, who are the accused in the criminal proceedings, submitted that they could be adversely affected by the outcome of the examinations of the persons for whom the ex parte orders issued because the matters as to which the witnesses would be examined went directly to the Crown’s case at the criminal trial.
The issues were whether the Court could entertain the motions to set aside the ex parte orders under Rule 330 or the inherent jurisdiction of the Court; whether the applicants, who were not subject to the section 11 examinations, had standing to bring an application pursuant to Rule 330; whether there was an ongoing “inquiry” commenced pursuant to Competition Act, section 10 when the ex parte orders were issued; and, whether an inquiry commenced pursuant to section 10 continues after criminal charges have been brought by the Attorney General.
Held, the applications should be allowed.
Only a Judge of the Federal Court can vary or annul the ex parte orders. Teitelbaum J. had the jurisdiction to hear the applications both as the Judge who issued the orders under review, and as a Judge of the Court that issued the orders. The applicants could not proceed by way of judicial review in that the decision to issue the orders was not made by a federal board, commission or other tribunal, as required by Federal Court Act, subsection 18.1, but by a judge having superior court jurisdiction. Furthermore, neither the Director’s application for the issuance of the ex parte orders nor the “decision” to make the application were “a decision” subject to judicial review as a “decision issued by a federal board, commission or other tribunal”. The latter was an administrative act.
The applicants had standing to bring the application for review. It was admitted by the Director that the purpose of these section 11 examinations was to obtain information concerning the pending criminal charges, indictable offences which can have serious effects. When an individual or corporation is charged and persons are to be examined in a “parallel proceeding” to obtain information concerning those charges, that individual or corporation can be irreparably harmed, or at least could be seriously affected by, the examinations. Such an individual or corporation would have standing to bring a Rule 330 application for a review of ex parte orders issued by that Court. The persons to be examined are being called upon to give answers under oath about possible crimes committed by the applicants. The applicants have a direct interest in the section 11 examination and may be directly affected thereby.
When the ex parte orders were issued the Court did not have jurisdiction to make them as there was no ongoing inquiry pursuant to section 10. Under section 10, the Director is to cause an inquiry to be made whenever he believes, on reasonable grounds, that an offence under Part VI or VII has been or is about to be committed. The reason to “cause an inquiry to be made” is to determine whether an offence under section 45 has taken place. Once the Director causes an inquiry to be made, pursuant to section 11, he may make an ex parte application, affirming that an inquiry is being made under section 10, for an order requiring a person to attend for examination under oath regarding information that he may have that would be relevant to the inquiry. There must be an inquiry as a prerequisite to a section 11 examination.
An inquiry ends when the purpose of the inquiry has been attained i.e. when the Director has determined sufficient relevant facts to refer the matter to the Attorney General and the Attorney General brings charges against the individuals or corporations who were the subject of the section 10 inquiry pursuant to subsection 45(1). Here the “inquiry” ended when the Attorney General brought charges against the applicants. It does not continue until a conviction is obtained. The Director may continue the inquiry after referring the matter to the Attorney General in order to get additional evidence, but once criminal charges are brought, control of the proceedings, including, if necessary, further prosecutorial work is the responsibility of the Attorney General and it is the Attorney General who has carriage of the proceedings before the criminal court. Once criminal charges are brought, the Director’s role continues in his capacity as an enforcement official. This does not include the power to hold hearings under section 11 nor to obtain warrants under section 15.
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].
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), 11 (as am. idem, s. 24), 12 (as am. idem), 13 (as am. idem), 15 (as am. idem) 45 (as am. idem, s. 30).
Criminal Code, R.S.C., 1985, c. C-46.
Federal Court Act, R.S.C., 1985, c. F-7, s. 18.1 (as enacted by S.C. 1990, c. 8, s. 5).
Federal Court Rules, C.R.C., c. 663, RR. 324, 330 (as am. by SOR/79-58, s. 1).
CASES JUDICIALLY CONSIDERED
APPLIED:
R. v. R.J.S., [1995] S.C.J. No. 10 (QL); Wilson v. R., [1983] 2 S.C.R. 594; (1983), 4 D.L.R. (4th) 577; [1984] 1 W.W.R. 481; 26 Man. R. (2d) 194; 9 C.C.C. (3d) 97; 37 C.R. (3d) 97; 51 N.R. 321.
REFERRED TO:
May and Baker (Canada) Ltd. v. The Oak, [1979] 1 F.C. 401 (1978), 89 D.L.R. (3d) 692; 22 N.R. 214 (C.A.).
APPLICATIONS to set aside ex parte orders requiring certain individuals to attend for examination on matters relevant to a Competition Act, section 10 inquiry made after the applicants had been charged with indictable offences under section 45. Applications allowed.
COUNSEL:
John B. Laskin for applicant TNT Canada Inc.
Robyn M. Bell for applicant Consolidated Fastfrate Transport Inc.
Donald S. Affleck, Q.C. for applicants Cottrell Transport Inc., Larry Wilson and David Trudeau.
John M. Hovland and Claire Kennedy for applicant Northern Pool Express (Trans Western Express).
Michael R. Dambrot, Q.C. for respondents.
SOLICITORS:
Tory Tory DesLauriers & Binnington, Toronto, for applicant TNT Canada Inc.
Davies, Ward & Beck, Toronto, for applicant Consolidated Fastfrate Transport Inc.
Kelley Affleck Greene, Toronto, for applicants Cottrell Transport Inc., Larry Wilson and David Trudeau.
Osler, Hoskin & Harcourt, Toronto, for applicant Northern Pool Express (Trans Western Express).
Deputy Attorney General of Canada for respondents.
The following are the reasons for order rendered in English by
Teitelbaum J.: These reasons shall apply to the case of TNT Canada Inc. v. Director of Investigation and Research Appointed under the Competition Act and John A. Olah, T-2531-94, to the case of Consolidated Fastfrate Transport Inc. v. Director of Investigation and Research Appointed under the Competition Act and John A. Olah, T-2581-94, to the case of Cottrell Transport Inc., Larry J. Wilson and David L. Trudeau v. Director of Investigation and Research Appointed under the Competition Act and John A. Olah, T-2600-94 and Northern Pool Express Ltd. doing business as Trans Western Express v. Director of Investigation and Research Appointed under the Competition Act and John A. Olah, T-2608-94.
On the 22nd of September 1994, pursuant to a Rule 324 [Federal Court Rules, C.R.C., c. 663] ex parte application, I issued six orders for the attendance and examination of Peter Dockalek, Robert Stanley, Danny Swail, Bryan Swail, Hank Russelle and Donald Clarke to attend before John A. Olah on October 3, 1994 “to be examined on oath or affirmation on any matters relevant to the above noted Inquiry.”
The “above noted Inquiry” refers to an inquiry under section 10 of the Competition Act [R.S.C., 1985, c. C-34 (as am. by R.S.C., 1985 (2nd Supp.), c. 19, ss. 19, 23)] (Act), into the sale and supply of pool car freight forwarding and related services.
The orders were issued by me on the 22nd of September 1994 as I was satisfied, from the evidence that was placed before me, that the requirements of paragraph 11(1)(a) [as am. idem, s. 24] and subsection 13(1) [as am. idem] of the Competition Act had been satisfied and that an inquiry had been commenced in 1987 pursuant to section 10 of the Act.
As a result of my issuing the above orders for attendance and examination, the present applicants, TNT Canada Inc. (TNT), Consolidated Fastfrate Transport Inc. (Consolidated), Cottrell Transport Inc., Larry J. Wilson and David L. Trudeau (Cottrell) and Northern Pool Express Ltd. (Trans Western) filed originating notices of motion for the purpose of obtaining an order:
(a) declaring s.s. 11(1)(a) of the Competition Act to be of no force or effect insofar as they purport to authorize the respondent the Director of Investigation and Research appointed under the Competition Act (the “Director”) to apply for orders requiring the attendance of persons to be examined before a presiding officer after charges have been laid against the person whose conduct is to be the subject of the examinations and after a preliminary inquiry has been held in respect of the charges and a committal for trial has been ordered;
(b) declaring that the Director was without jurisdiction or authority to bring the application brought ex parte on September 19, 1994 for orders under s.s. 11(1)(a) and 13(1) of the Competition Act appointing a presiding officer and requiring the attendance of six persons to be examined before the presiding officer;
(c) restraining the respondent John A. Olah (Olah), who was appointed as a presiding officer by the ex parte orders issued by the Honourable Mr. Justice Teitelbaum on September 22, 1994 on the application of a representative of the Director (the “orders”), from proceeding with or conducting any examinations pursuant to the orders;
(d) declaring that the conduct of examinations pursuant to the orders would infringe TNT’s rights under s. 11(d) of the Canadian Charter of Rights and Freedoms (the “Charter”); and
(e) setting aside the orders;
or such other order as may seem just.
The application is based on the following grounds, as stated in the TNT notice of motion:
(a) that the conduct of examinations pursuant to ss. 11(1)(a) and 13(1) of the Competition Act after charges have been laid against the person whose conduct is to be the subject of the examinations and after a preliminary inquiry has been held in respect of the charges and a committal for trial has been ordered would be inconsistent with ss. 7 and 11(d) of the Charter;
(b) that there was at the time the orders were applied for no inquiry being made under s. 10 of the Competition Act in respect or which an application for the orders could have been brought;
(c) that the application for the orders was not made for a purpose authorized by the Competition Act, and constituted an abuse of process;
(d) that, in his ex parte application for the orders and in his information on oath, the applicant for the orders failed to disclose material facts relevant to the exercise of the discretion of the Court whether to grant the orders;
(e) that, if all relevant facts had been disclosed, there would have been no basis for the granting of the orders;
(f) that the conduct of the examinations applied for by the Director would, having regard to the fact that the application for the orders was made:
— some four years after charges of conspiracy under s. 45 of the Competition Act were laid against TNT and four other corporations based on the conclusions of the inquiry in respect of which the application was ostensibly brought;
— some four months after the corporations (together with five individuals charged subsequently) were committed for trial on these charges at the conclusion of the preliminary inquiry;
— some three months after the arraignment on these charges; and
— some three and one-half months before the trial of TNT and the corporations is scheduled to begin; infringe TNT’s rights guaranteed by s. 11(d ) of the Charter; and
(g) such other grounds as counsel may advise;
When the ex parte Rule 324 application was placed before me on or about September 22, 1994, an affidavit of David M. Gilkes entitled “Information to obtain Orders for the Attendance and Examination of Certain Persons” dated September 19, 1994 accompanied the ex parte application (see Tab 5 of Application Record). David M. Gilkes is an authorized representative of the Director of Investigation & Research under the Act.
I do not intend to repeat in this decision what Mr. Gilkes gives as background information as the document contains 40 paragraphs and speaks for itself.
The “information document” speaks of “the inquiry” information that he (Gilkes) was able to obtain concerning the applicants, information concerning the Pool Car Freight Forwarding Industry and information concerning an “agreement” involving the applicants.
Mr. Gilkes also states, in the information document, that the persons to be examined, under oath, “have or are likely to have information relevant to this inquiry.” “This inquiry” being the one hereinabove stated as having commenced in 1987 and as being pursuant to section 10 of the Act involving the sale and supply of pool car freight forwarding and related services.
It was as a result of the information given by Mr. Gilkes that I issued the ex parte orders. Mr. Gilkes informed me, as it relates to “the inquiry,” in paragraphs 2 to 7 of his information document, the following:
2. On April 7, 1987, the Director of Investigation and Research (the “Director”), caused an inquiry to be made, pursuant to section 8 (now section 10), of the Act, into the activities of Clarke Transport Canada Inc., Consolidated Fastfrate Transport Inc., Cottrell Transport Inc., SSF Distribution Inc.—Distribution SSF Inc., TNT Canada Inc. doing business as TNT Railfast, Northern Pool Express Ltd. doing business as Trans Western Express, and Westway Forwarding Limited, based on reasonable grounds that an offence contrary to section 45(1)(c) of the Competition Act has been committed by the pool car freight forwarding companies.
3. It was alleged that the companies named in paragraph 2 entered into an agreement in which they would not undercut each other’s prices. This was facilitated through the exchange of rate information at regularly scheduled meetings.
4. On May 1, 1987 Mr. Justice Rosenberg of the Supreme Court of Ontario, as it was then known, issued warrants to search and seize pursuant to section 13 (now section 15) of the Act. Searches were conducted between May 5 and May 15, 1987, inclusive, and a total of 51,175 documents were seized from 14 premises.
5. On September 24, 1990, charges were laid under section 45(1)(c) of the Competition Act against Clarke Transport Canada Inc., Consolidated Fastfrate Transport Inc., Cottrell Transport Inc., Northern Pool Express Ltd. d/b/a Trans Western Express, and TNT Canada Inc. d/b/a TNT Railfast. A copy of the Information is attached hereto as Exhibit “A”.
6. On July 16, 1992, charges under section 45(1)(c) of the Act were laid against Larry Wilson, David Trudeau, Graham Muirhead, Al Lajoie, Donald Freeman and /Ed Pequeneza, in relation to the same matter. Mr. Pequeneza was diagnosed with terminal cancer and charges were withdrawn on May 31, 1993 (he passed away in October 1993). A copy of the Information is attached hereto as Exhibit “B”.
7. The preliminary hearing for the ten accused commenced on February 7, 1994. On May 25, 1994 Mr. Justice Pickett of the Ontario Court (Provincial Division) committed all of the accused to stand trial. The accused were to be arraigned on June 24, 1994 and the trial against the corporate accused is scheduled to start on January 9, 1995.
It is important to note that the ex parte request made to me on or about September 22, 1994 was made after criminal charges had been filed against the applicants, after a preliminary inquiry had been held and after the applicants had been committed to trial. The trial on the criminal charges against the corporate applicants is scheduled to proceed in March 1995.
The issues to be determined can be gleaned from the grounds listed by the applicants in their application.
1) Can the Director conduct examinations pursuant to section 10, paragraph 11(1)(a) and subsection 13(1) of the Act after criminal charges have been proceeded with against the person(s) whose conduct is to be the subject of the examination and after a preliminary inquiry has been held in respect of the charges and a committal for trial has been ordered? This would be, according to the applicants, inconsistent with section 7 and paragraph 11(d) of the Charter [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]].
2) Was there an ongoing “inquiry” commenced pursuant to section 10 of the Act at the time when the ex parte orders were issued; and
3) Was there a failure on the part of the Director’s representative, Mr. Gilkes, to disclose relevant and material facts when the Director applied for the ex parte orders?
In addition, there are a number of procedural issues to be determined. The applicants set out the issues as follows:
Substantive Issues
1. When the ex parte orders under s. 11(1)(a) of the Competition Act were applied for and granted, was the inquiry under s. 10 of the Act to which reference is made in paragraph 2 of the information of David M. Gilkes (Application Record, p. 20) being made, or was the inquiry concluded?
2. If the inquiry was being made, so that the ex parte orders could have been applied for and granted, was there a proper basis for granting the orders, having regard to the factors relevant to the exercise of the Court’s discretion to grant the orders, the non-disclosure in the ex parte application for the orders and the evidence now before the Court?
3. If the inquiry was being made, so that the ex parte orders could have been applied for and granted, did the application for the orders, in the circumstances of this case, constitute an abuse of process?
4. If the inquiry was being made, so that the ex parte orders could have been applied for and granted, and the orders were otherwise properly granted, does the operation of s. 11(1)(a) of the Competition Act and the granting of the orders, in the circumstances of this case, infringe s. 7 or s. 11(d) of the Canadian Charter of Rights and Freedoms?
Procedural Issues
1. Does the Court have jurisdiction to entertain the motions to set aside the ex parte orders under Rule 330 or the inherent jurisdiction of the Court?
2. If so, do the applicants have standing to bring the motions?
3. Does the Court have jurisdiction to entertain the applications for judicial review under ss. 18 and 18.1 of the Federal Court Act?
4. If so, do the applicants have standing to bring the applications?
5. If so, and the applicants have made out a case for granting all or part of the relief sought in the applications, should the Court decline to grant relief in the exercise of its discretion?
If I am satisfied that, at the time of the issuance of my ex parte orders, there was no ongoing inquiry pursuant to section 10 of the Act, then, it is admitted, no ex parte order can issue pursuant to section 11 of the Act. In such a case, I would not be obligated to decide any of the other substantive issues raised by the present application. In fact, counsel for all applicants and counsel for the respondent Director asked me not to decide any of the other substantive issues should I conclude that there was no ongoing inquiry.
I believe it necessary to first decide the procedural issue of whether the Court has jurisdiction to entertain the motions to set aside the ex parte orders under Rule 330 [as am. by SOR/79-58, s. 1] or the inherent jurisdiction of the Court.
I am satisfied that the Court has the necessary jurisdiction to hear the present application to set aside or vary the ex parte orders I issued on September 22, 1994.
Federal Court Rule 330 states:
RULE 330. The Court may rescind
(a) any order that was made ex parte, or
(b) any order that was made in the absence of a party who had failed to appear through accident or mistake or by reason of insufficient notice of the application;
but no such rescission will affect the validity or character of anything done or not done before the rescinding order was made except to the extent that the Court, in its discretion, by rescission order expressly provides.
Clearly, the orders which issued on September 22, 1994 at the request of the Director of Investigation and Research were ex parte orders. Thus, if I conclude after reviewing all of the evidence that I should not have granted the ex parte orders, I am satisfied I can vary or annul the issued orders. I am satisfied that only I, or another judge of the Federal Court can vary or annul the ex parte orders I issued. No judge of any other court would have the jurisdiction to vary or annul my ex parte order. Counsel for the Director made the suggestion that I leave the matter of whether to vary or annul the order to the judge hearing the criminal matter.
In the case at bar, I am satisfied that if I conclude that at the time I issued the ex parte orders there was no ongoing inquiry into the activity of the applicants by the Director pursuant to section 10 of the Act or there was material non-disclosure or misleading evidence, I have, pursuant to Rule 330 the jurisdiction to vary or annul the ex parte orders that I issued.
In the case of Wilson v. R., [1983] 2 S.C.R. 594, it was held, per Laskin C.J., Estey J. and McIntyre J. [headnote, at pages 594-595]:
In the absence of the right of appeal from an authorization, and given the inapplicability of certiorari, any application for review of an authorization must be made to the court that made it. As it is not always practical or possible to apply for review to the same judge who made the order, another judge of the same court can review an ex parte order if: 1) he has the power to discharge the order, 2) he acts with the consent of, or in the event of the unavailability of, the judge who made the order, and 3) he hears the motion de facto as to both the facts and the law involved.
On page 607, Mr. Justice McIntyre states:
Since no right of appeal is given from the granting of an authorization and since prerogative relief by certiorari would not appear to be applicable (there being no question of jurisdiction), any application for review of an authorization must, in my opinion, be made to the court that made it. There is authority for adopting this procedure. An authorization is granted on the basis of an ex parte application. In civil matters, there is a body of jurisprudence which deals with the review of ex parte orders. There is a widely recognized rule that an ex parte order may be reviewed by the judge who made it. In Dickie v. Woodworth (1883), 8 S.C.R. 192, Ritchie C.J. said, at p. 195:
The judge having in the first instance made an ex parte order, it was quite competent for him to rescind that order, on its being shown to him that it ought not to have been granted, and when rescinded it was as if it had never been granted ….
This view is reflected in the words of Mathers C.J.K.B. in the case of Stewart v. Braun, [1924] 3 D.L.R. 941 (Man. K.B.), at p. 945:
But it frequently happens that Judges and judicial officers are called upon to make orders ex parte, where only one side is represented and where the order granted is not the result of a deliberate judicial decision after a hearing and argument. An application to rescind or vary an ex parte order is neither an appeal nor an application in the nature of an appeal and therefore the Judge or officer by whom such an order has been made, has since the Judicature Act, as he had before, the right to rescind or vary it ….
Also, see May and Baker (Canada) Ltd. v. The Oak, [1979] 1 F.C. 401(C.A.).
I am also satisfied that the applicants could not proceed by way of judicial review in that my decision to issue the orders on September 22, 1994 is not a decision issued by “a federal board, commission or other tribunal” as that is understood in subsection 18.1 of the Federal Court Act [R.S.C., 1985, c. F-7 (as enacted by S.C. 1990, c. 8, s. 5)].
My decision to issue the ex parte orders was a decision of a judge having superior court jurisdiction. Thus, the applicants are not permitted to ask for a review of the ex parte orders issued by me by way of an application for judicial review.
Furthermore, neither the application made by the Director for the issuance of the ex parte orders nor the “decision” to make the application are what can be defined as “a decision” subject to judicial review as “a decision issued by a federal board, commission or other tribunal” as that is understood in subsection 18.1 of the Federal Court Act. The “decision” to ask for the issuance of the ex parte orders can only be considered as an administrative act and not a decision as contemplated in section 18.1 of the Federal Court Act.
The next procedural issue to be determined is, do the applicants who are not subject to the section 11 examinations have standing to bring an application pursuant to Rule 330 of the Federal Court Rules?
The position of the applicants, who it must be recalled are the accused in the criminal proceedings, is that they could be directly affected by the outcome of the examinations of the persons for which the ex parte orders issued.
Counsel for the applicants submits “There is plainly an effect that enables the accused (the present applicants) to come before the Court, and seek to set aside these orders.” He submits that the applicants may be adversely affected by the issuance of the ex parte orders and thus have an interest in bringing the present application for review pursuant to Rule 330. Counsel submits that there are a number of reasons clearly indicating how the applicants are adversely affected. He lists the reasons as follows:
1) the applicants are accused “they are facing very serious criminal charges”;
2) “the criminal trial is imminent.” In fact the criminal trial for the present applicants is scheduled to commence in March 1995;
3) the matters as to which these witnesses (those ordered to be examined pursuant to the ex parte orders) would be examined go directly to the case that the Crown wishes to demonstrate at the trial (the criminal trial);
4) the Crown seeks to use these examinations for the purpose of securing the conviction of these applicants of a serious criminal offence;
5) the Competition Act, itself, specifically recognizes that the applicants are affected, adversely affected, by the taking of evidence under section 11.
Here counsel pointed to subsections 12(3) [as am. by R.S.C., 1985 (2nd Supp.), c. 19, s. 24] and 12(4) [as am. idem] of the Act.
12. …
(3) A presiding officer shall permit a person who is being examined pursuant to an order under paragraph 11(1)(a) and any person whose conduct is being inquired into to be represented by counsel.
(4) Any person whose conduct is being inquired into at an examination pursuant to an order under paragraph 11(1)(a) and that person’s counsel are entitled to attend the examination unless the Director or the authorized representative of the Director, or the person being examined or his employer, establishes to the satisfaction of the presiding officer that the presence of the person whose conduct is being inquired into would
(a) be prejudicial to the effective conduct of the examination or the inquiry; or
(b) result in the disclosure of confidential commercial information that relates to the business of the person being examined or his employer.
Counsel for the Director is of the view that the applicants should not be granted standing as the applicants are not directly affected by the decision of the Director to ask for the issuance of the ex parte orders. He submits that the ex parte orders can only affect the persons ordered to be examined under oath.
Counsel for the Director admitted to the Court that the purpose of the section 11 of the Act examinations is to obtain information concerning the criminal charges presently pending before the Ontario General Court against the applicants. The criminal charges pending are indictable offences which can have most serious effects.
I am satisfied that when an individual or corporation is charged and persons are to be examined in a “parallel proceeding” to obtain information concerning those charges that individual(s) or corporation(s) can be irreparably harmed or at least, could be seriously affected by the examinations. Thus, such an individual or corporation would have standing to bring a Rule 330 application to the Court for a review of the ex parte orders issued by that Court.
Although the persons to be examined are not, at the present time, accused of any crime, they are being called upon to give answers under oath about a possible crime or crimes committed by the applicants.
I believe the statement of the Chief Justice of Canada in the case of R. v. R.J.S., [1995] S.C.J. No. 10 (QL), File 23581, unreported, February 2, 1995, at pages 4 and 5 of his reasons are indicative as to how the present applicants may be affected by the Director using the section 11 examinations as a means to indirectly gather incriminating evidence against the applicants.
As an example of a situation where a judicial exemption from compellability would, in my view, be warranted, the following hypothetical case can be considered. Suppose that the members of a trade association in a particular industry met and agreed upon a scheme to fix the prices of the goods they produced, an indictable offence under s. 45(1)(c) of the Competition Act, R.S.C., 1985, c. C-34. Suppose further that the Director of Investigation and Research obtained documents clearly indicating the persons involved and the nature of their involvement—for example, an agreement to fix prices signed by the parties. If the Director commenced an inquiry and obtained subpoenas compelling the signatories to testify, it would, in my view, be open to the signatories to apply to the court for an exemption from compulsion to testify. In such a case, where the facts revealed that the Director had already concluded that an offence had been committed and had identified the parties to the offence, the court would be justified in concluding that forcing the suspects to testify would violate their s. 7 rights. In these circumstances, I believe the court would have the discretion to declare the subpoenas to be of no force and effect, thereby excusing the suspects from testifying.
Furthermore, upon a plain reading of subsections 12(3) and (4) of the Act, it is apparent Parliament was of the view that “[a]ny person whose conduct is being inquired into” may be present at the section 11 examination.
Surely, one can thus conclude that the applicants have a direct interest in the section 11 examination and may be directly affected by the said examinations.
I am satisfied that the present applicants have standing to bring the Rule 330 application for review and that I have the jurisdiction as both the Judge who issued the orders to be reviewed and as a judge of the Court that issued the orders to review same.
At the start, I would state that as reviewing Judge of a number of ex parte orders pursuant to a Rule 330 application, I, in the circumstances of this case, should not discuss the issue of the constitutional validity of sections 10 and 11 of the Act.
In the circumstances of the case at bar, I am satisfied that I should restrict myself to determining whether or not there is an ongoing inquiry pursuant to section 10 of the Act and if the answer is yes, was there sufficient disclosure by the Director (or his representative) of all material facts so as to enable me to decide whether or not to issue the ex parte orders of September 22, 1994.
All parties to these proceedings agree that in order for the Director to ask for a section 11 examination, there must be an ongoing inquiry.
Sections 10 and 11 of the Act state:
10. (1) The Director shall
(a) on application made under section 9,
(b) whenever he believes on reasonable grounds that
(i) a person has contravened or failed to comply with an order made pursuant to section 32, 33 or 34, or Part VIII,
(ii) grounds exist for the making of an order under Part VIII, or
(iii) an offence under Part VI or VII has been or is about to be committed, or
(c) whenever he is directed by the Minister to inquire whether any of the circumstances described in subparagraphs (b)(i) to (iii) exists,
cause an inquiry to be made into all such matters as he considers necessary to inquire into with the view of determining the facts.
(2) The Director shall, on the written request of any person whose conduct is being inquired into under this Act or any person who applies for an inquiry under section 9, inform that person or cause that person to be informed as to the progress of the inquiry.
(3) All inquiries under this section shall be conducted in private.
11. (1) Where, on the ex parte application of the Director or the authorized representative of the Director, a judge of a superior or county 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 Director or the authorized representative of the Director on any matter 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 Director or the authorized representative of the Director within a time and at a place specified in the order; or
(c) make and deliver to the Director or the authorized representative of the Director, 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.
(2) Where the person against whom an order is sought under paragraph (1)(b) in relation to an inquiry is a corporation and the judge to whom the application is made under subsection (1) is satisfied by information on oath or solemn affirmation that an affiliate of the corporation, whether the affiliate is located in Canada or outside Canada, has records that are relevant to the inquiry, the judge may order the corporation to produce the records.
(3) No person shall be excused from complying with an order under subsection (1) or (2) on the ground that the testimony, record or other thing or return required of the person may tend to criminate the person or subject him to any proceeding or penalty, but no testimony given by an individual pursuant to an order made under paragraph (1)(a), or return made by an individual pursuant to an order made under paragraph (1)(c), shall be used or received against that individual in any criminal proceedings thereafter instituted against him, other than a prosecution under section 132 or 136 of the Criminal Code.
(4) An order made under this section has effect anywhere in Canada.
Therefore, pursuant to section 10, the Director is to cause an inquiry to be made whenever he believes, on reasonable grounds, that an offence under Part VI or VII has been or is about to be committed. The reason to “cause an inquiry to be made” is with a “view of determining the facts” to determine, in the case at bar, if an offence in relation to competition, as per subsection 45(1) [as am. by idem, s. 30], has taken place.
45. (1) Every one who conspires, combines, agrees or arranges with another person
(a) to limit unduly the facilities for transporting, producing, manufacturing, supplying, storing or dealing in any product,
(b) to prevent, limit or lessen, unduly, the manufacture or production of a product or to enhance unreasonably the price thereof,
(c) to prevent or lessen, unduly, competition in the production, manufacture, purchase, barter, sale, storage, rental, transportation or supply of a product, or in the price of insurance on persons or property, or
(d) to otherwise restrain or injure competition unduly,
is guilty of an indictable offence and liable to imprisonment for a term not exceeding five years or to a fine not exceeding ten million dollars or to both.
I wish to emphasize that my interpretation of section 10 of the Act in the circumstances of this case is that the Director had to have caused an inquiry to determine the facts to see if a conspiracy existed among a group of persons or corporations as stated in subsection 45(1) of the Act.
Once the Director causes an inquiry to be made, pursuant to section 11, he may make an ex parte application to a judge of a superior court, or county court or Federal Court affirming that an inquiry is being made under section 10 to order a person or persons to attend to be examined under oath regarding information that that person or persons may have that would be relevant to the inquiry.
In the case at bar, this would mean relevant to the criminal offence of conspiracy to lessen competition against the present applicants.
Clearly, there must be an inquiry. In the case at bar, and as I have stated, it is admitted that if there is an ongoing inquiry it is the inquiry commenced by the Director which led to the referral to the Attorney General. This referral caused the Attorney General to bring criminal charges against the applicants.
Therefore, it is of the utmost importance to determine if, when I issued my ex parte orders on September 22, 1994 pursuant to section 11 of the Act, there was an ongoing inquiry. It is admitted that no new inquiry was caused to be made against the applicants pursuant to section 10 of the Act. The only inquiry that the Director caused to be made against the applicants is the one commenced on April 7, 1987.
All parties agree that had the Director caused a new inquiry to commence against the same applicants, there would be no doubt as to the validity of the ex parte orders issued by me provided the examinations related to the “new inquiry.”
We now know how an “inquiry” commences. The issue is to determine how, if ever, an “inquiry” ends.
In a nutshell, the applicants say that an inquiry ends as against certain individuals or corporations the moment criminal charges are filed against the said individuals or corporations. The Director submits that the inquiry only ends when the Director so determines as there is nothing in the Act that states when an “inquiry” ends. The Director also submits that an inquiry would end upon a conviction.
I am satisfied that an “inquiry” does not end when the Director refers the “matter” to the Attorney General.
I am satisfied that an inquiry ends when the purpose of the inquiry has been attained. That is, when the Director is of the view that he has determined the relevant facts, sufficient for him to refer the matter to the Attorney General and the Attorney General brings charges against those certain individuals or corporations pursuant to subsection 45(1) of the Act. In the circumstances of the case at bar, what brings the “inquiry” to an end is the Attorney General bringing the charges against the applicants.
With the utmost respect for the Director’s counsel, I cannot conclude that an inquiry only ends when the Director so decides or in the circumstances of the present case, when a conviction is obtained.
It is not the purpose nor the objective of the Act nor is it the purpose or the objective of the Director to obtain “a conviction.” One of the main purposes and objectives of the Director is to gather all of the necessary information to determine whether there exist sufficient facts to recommend to the Attorney General to bring criminal charges. This is part of the Director’s law enforcement function.
It must, of course, be clearly understood that I am only speaking of a section 10 inquiry.
Having said this, I believe it necessary to better understand how I have come to the above conclusions to start with giving a resumé of the relevant facts.
On April 17, 1987, the Director commenced a formal inquiry pursuant to section 8 [R.S.C. 1970, c. C-23] (now section 10) of the Act into the activities of the applicants. The “inquiry” was based on allegations that the applicants had entered into an agreement not to undercut each other’s prices, contrary to paragraph 32(1)(c), now paragraph 45(1)(c), of the Act. Paragraph 45(1)(c) renders it an indictable offence punishable by up to five years imprisonment and a fine of up to $10 million dollars to conspire to prevent or lessen competition unduly in the transportation or supply of a product. Following the commencement of the inquiry, searches were conducted in May 1987 pursuant to warrants issued under section 13 (now section 15) of the Act. More than 51,000 documents were seized.
In November 1989, the Director, as a result of the “1987 inquiry” recommended to the Attorney General of Canada that charges be laid under section 45 of the Act against the applicants. There is no evidence before me of anything done by the Director to continue the inquiry after the matter was remitted to the Attorney General for consideration of prosecution. The Director agrees (paragraph 3, page 2 of his memorandum of argument) that after the matter was remitted to the Attorney General and until the ex parte application to me, “the Director did not use any formal powers (by which is meant statutory powers requiring judicial sanction) in the course of this inquiry.”
From the evidence before me, or as a result of a total lack of evidence before me, I am satisfied that the Director took no steps pursuant to the Act to continue the inquiry after he submitted what evidence he had gathered to the Attorney General and this is particularly so from the time the Attorney General laid charges against the applicants. If any investigation did in fact take place, it was under the direction of the Attorney General.
On September 24, 1990, charges were laid under paragraph 45(1)(c) of the Act against Clarke Transport, Consolidated, Cottrell, TNT and Trans Western. On July 16, 1992, charges were laid against Wilson, Trudeau, Lajoie, Pequeneza, Freeman and Muirhead. The charges were withdrawn as against Pequeneza. The information alleged that the accused (the present applicants) had committed the offence between February 1976 and May 1987.
The preliminary inquiry under the Criminal Code [R.S.C., 1985, c. C-46] in respect of the charges against the applicants and accused individuals began on February 7, 1994 in the Ontario Court (Provincial Division).
On May 25, 1994, at the conclusion of the preliminary inquiry, all accused (the applicants) were ordered to stand trial.
Some four months after the accused (the applicants) were sent to trial, on September 19, 1994, Gilkes brought an ex parte application to the Federal Court on behalf of the Director for orders under paragraph 11(1)(a) and subsection 13(1) of the Act appointing a presiding officer and requiring that six individuals, Robert Stanley, Danny Swail, Bryan Swail, Hank Russelle, Peter Dockalek and Donald Clarke appear before the presiding officer in Toronto on October 3, 1994 to be examined under oath or affirmation.
I granted, as has been previously said, the said orders requested on September 22, 1994.
The present applicants and the accused individuals were notified of the ex parte orders made on September 22, 1994 and of the examinations to be held on October 3, 1994 by letters from Gilkes to their counsel dated September 27, 1994. Notice was provided on the basis that each of the accused corporations and individuals to whose counsel a letter was sent is “the subject to the extent permitted by subsection 12(4) of the Act.”
The counsel who would have carriage of the examinations are the counsel who are prosecuting the criminal charges on behalf of the Attorney General. Counsel for the Attorney General confirmed that the Crown had no intention of seeking to introduce transcripts of the evidence taken from the examinations at the criminal trial of the applicants but that this did not preclude either the Crown or the defence (the applicants) seeking to use the transcripts to refresh the memory of the witnesses or to impeach their testimony if called at trial.
Following the presentation of the present applications before me, the section 11 examinations have been adjourned sine die.
Therefore, as stated, the issue is to determine whether an inquiry into the acts of certain individuals or corporations commenced by the Director pursuant to section 10 of the Act continues after criminal charges have been brought by the Attorney General, the said criminal charges being brought by the Attorney General upon the recommendation to do so by the Director.
As I have hereinabove stated, I am satisfied that the inquiry ends when the purpose of the inquiry has been attained and that is when the Attorney General brings criminal charges against those persons or corporations the activities of which were the subject of the section 10 inquiry. I cannot and do not accept the principle that the Act allows the Director to carry on an inquiry into the activities of individuals and corporations who have been the subject of an inquiry and who have been charged under the Competition Act by the Attorney General as a result of the findings made by the Director pursuant to an inquiry. This, of course, does not mean that further prosecutorial work in preparation for the trial may not be required with the assistance of the Director but, if required, it would be under the jurisdiction of the Attorney General pursuant to his prosecutorial responsibilities. As I have previously stated, nothing in the Act prevents the Director from continuing his inquiry after referring the matter to the Attorney General in order to enable the Director to get additional evidence but once criminal charges are brought, control of the proceedings, including, if necessary, further prosecutorial work is the responsibility of the Attorney General and it is the Attorney General who has carriage of the proceedings before the criminal court.
So long as no charges are brought by the Attorney General against individuals or corporations as a result of facts gathered pursuant to a section 10 inquiry, the Director, pursuant to the Act can continue with an inquiry to gather facts by holding section 11 examinations or of making section 15 [as am. idem, s. 24] searches and seizures. In order to hold a section 11 examination or to obtain a section 15 warrant, the Director must be involved in an ongoing inquiry. An ongoing inquiry for what purpose? To gather evidence to submit to the Attorney General so that a decision may be made by the Attorney General as to whether or not to lay criminal charges, as in this case, pursuant to paragraph 45(1)(c) of the Act. This does not, before charges are laid, preclude the Attorney General from referring the matter back to the Director for further investigation.
I am satisfied that once the Director has submitted sufficient evidence to the Attorney General such that criminal charges are brought, the Director’s role continues in his capacity as an enforcement official. However, this does not include the power to hold hearings under section 11 of the Act nor to obtain warrants under section 15 of the Act once criminal charges have been brought.
Thus, I am satisfied that when I issued the ex parte orders on September 22, 1994, I did not have jurisdiction to make such orders as no inquiry, pursuant to section 10 of the Act, was ongoing.
As stated, I was asked not to decide any of the alternative issues should I conclude that there was no ongoing inquiry. I do not intend to decide any of the other issues other than to say that I am satisfied there was no material non-disclosure of relevant facts by the Director’s representative when he asked for the ex parte orders.
The applications of the applicants are allowed with costs. In that only one application was argued as a representative application, there shall only be one set of costs for the argument portion.