Judgments

Decision Information

Canada (Auditor General) v. Canada (Minister of Energy, Mines and Resources)

Collection	Judgments
Date	1987-01-22
Report citation	[1987] 1 F.C. 406
File numbers	A-1-86
Subjects	Constitutional Law Energy

Decision Content

A-1-86

Minister of Energy, Mines and Resources, Minis ter of Finance, Deputy Minister of Energy, Mines and Resources and Deputy Minister of Finance (Appellants) (Defendants- Respondents)

Auditor General of Canada (Respondent) (Plain- tiff- Applicant)

INDEXED AS: CANADA (AUDITOR GENERAL) v. CANADA (M/N- IS'TER OF ENERGY, MINES AND RESOURCES)

Court of Appeal, Pratte, Heald and Hugessen JJ.-Ottawa, October 6, 7, 8, 1986 and January 22, 1987.

Constitutional law - Financial administration - Auditor General - Acquisition by Petro-Canada of Petrofina Canada Inc. - Parliament authorizing expenditure for acquisition Appeal from Trial Division judgment Auditor General entitled to access to Cabinet documents and Petro-Canada records regarding share valuation - Access sought outside scope of Auditor General's responsibilities under s. 13 Auditor General

Act Under s. 13 responsibilities limited to audits of Canadian government departments and federal Crown corpo rations - S. 13 right of access to be considered in light of s. 14 which allows access to Crown corporations' audits reports - Parliament, in specifically addressing right to access in s. 14, restricting any general power inferred from s. 13 - S. 7(2)(d) imposing duty to verify whether ministers, in imple menting will of Parliament as expressed in Appropriation Acts, acted with due regard to economy and efficiency - S. 7(2)(d) responsibility not extending to determining whether government acted with due regard to economy and efficiency - Auditor General's role not to criticize legislation - Appeal allowed - Auditor General Act, S.C. 1976-77, c. 34, ss. 5, 6, 7, 8, 13, 14 - Financial Administration Act, R.S.C. 1970, c. F-10, ss. 2, 19, 54, 57, 58, 60, 61(1), 64, 77 - Appropriation Act, No. 4, 1980-81, S.C. 1980-81-82-83, c. 51, Schedule, Vote 5c - Petro-Canada Act, S.C. 1974-75-76, c. 61, ss. 17, 18, 26(1) - Canada Evidence Act, R.S.C. 1970, c. E-10, s. 36.3 (as added by S.C. 1980-81-82-83, c. Ill, s. 4) - Federal Court Act, R.S.C. 1970 (2nd Supp.), c. 10, s. 28(6) - Canadi- an Bill of Rights, R.S.C. 1970, Appendix III, s. 2.

Energy - Acquisition by Petro-Canada, Crown corpora tion, of Petrofina Canada Inc. at $120 share - Expenditure of up to 1.7 billion dollars authorized by Parliament - Auditor General requesting access to Cabinet documents and Petro-

Canada records pertaining to valuation of shares before and after acquisition — Appeal from decision granting access allowed — Auditor General Act, S.C. 1976-77, c. 34, ss. 5, 6, 7, 8, 13, 14 — Petro-Canada Act, S.C. 1974-75-76, c. 61, ss. 17, 18, 26(1).

In February 1981, it was announced that Petro-Canada, a Crown corporation, had reached an agreement to purchase Petrofina Canada Inc. at a price of $120 per share. Parliament, by Vote 5c of the Appropriation Act No. 4, 1980-81, granted authority to spend up to 1.7 billion dollars to enable Petro- Canada to acquire the shares and assets of Petrofina. This was done by the imposition of a special charge on all Canadian petroleum consumption. The proceeds of that charge were to be paid into a special non-budgetary account known as the Canadian Ownership Account.

Requests were made by the Auditor General to the auditor of Petro-Canada, to officers of Petro-Canada and to the Governor in Council to obtain information as to the valuation of the shares of Petrofina before and after its acquisition by Petro- Canada. Those requests were denied. Access to Cabinet docu ments was also refused on the ground that the documents sought constituted confidences of the Queen's Privy Council of Canada. The Trial Division held ([1985] 1 F.C. 719) that the Auditor General had the right to access to all the documents claimed.

The ultimate question is whether the respondent is entitled to the production of those documents. Fundamental to the deter mination of that issue is the determination of the nature and extent of the responsibilities of the Auditor General.

Held (Hugessen J. dissenting), the appeal should be allowed.

Per Heald J.: Subsection 13(1) of the Auditor General Act cannot be relied upon to support the respondent's claim for access since the access sought falls outside the scope of the Auditor General's responsibilities under the said subsection.

(1) Cabinet documents

Under subsection 13(1), the Auditor General is entitled to access to information that relates to the fulfilment of his responsibilities and he is also entitled to require from members of the public service of Canada such information as he deems necessary for that purpose. Subsection 13(2) empowers the Auditor General to station his staff in "any department". Under subsection 13(3), employees of the Auditor General who are examining the accounts of "a department or of a Crown corporation" are required to take an oath of secrecy. Taking into context the scheme of section 13 in isolation, it would appear at first glance, that the "responsibilities" contemplated by Parliament in subsection (1) are to be limited to audits of departments of the Government of Canada and of federal Crown corporations. Were it otherwise, Parliament in enacting subsections (2) and (3), would have given to the Auditor

General similar enabling and assisting powers in respect of Cabinet Ministers and the Privy Council.

This view is strengthened by section 5 of the Auditor General Act which refers to the "auditor of the accounts of Canada". Pursuant to subsection 54(1)(a) of the Financial Administra tion Act, the Receiver General is required to keep accounts showing the "expenditures made under each appropriation". The Auditor General's responsibility therefore commences after the appropriations have been passed by Parliament. It cannot include decisions reached by the Governor in Council which led to the parliamentary appropriation.

The Auditor General's responsibilities are related to the implementation of legislative enactments passed by Parliament and cannot be extended to permit him to challenge the wisdom of those enactments. In this case, the effect of the Trial Division judgment would be to allow the Auditor General to audit the political process prior to the enactment of the Act which contains the Parliamentary spending authority for the Petrofina acquisition. The authority conferred upon the Audi tor General pursuant to subsection 13(1) cannot be interpreted in such an all-embracing fashion.

(2) Petro-Canada records

The right of access to Petro-Canada's records which might appear, inferentially, to flow from section 13 must be con sidered in the light of section 14. Section 14 allows the Auditor General access to the audit reports of the Crown corporations' auditors. It allows him to seek further information from the Crown corporation's officers; and, in the event of their refusal, he can ask the Governor in Council for an order compelling the granting of access to the records and the disclosure of further information.

The fact that Parliament has specifically addressed the ques tion of the Auditor General's right to access to information in respect of federal Crown corporations in section 14 serves to restrict accordingly any general power which could be inferred from section 13, in the absence of section 14. On this basis, the Auditor General is not entitled to the unencumbered access to the records of Petro-Canada which the declaration of the Trial Division gives him.

The respondent submits that subsection 13(l) allows him to determine what information relates to the fulfilment of his duties. The relevant sections of the Act do not provide such wide powers. When the Auditor General is examining the accounts of a Crown corporation, he is not auditing the accounts of Canada. Subsection 14(1) makes this clear since it refers to the accounts of Canada in contradistinction to the accounts of a Crown corporation.

Per Pratte J.: Paragraph 7(2)(d) of the Auditor General Act imposes on the Auditor General the duty of verifying and reporting whether the various ministers, in implementing the will of Parliament as expressed in the Appropriation Acts, have acted with due regard to economy and efficiency. However, for the respondent to succeed on the basis of that provision, the responsibility under paragraph 7(2)(d) would have to extend further so as to include the duty of determining whether the

authorization to spend contained in the Appropriation Act itself was given with due regard to economy and efficiency. The respondent would then be empowered to determine whether the government that caused Parliament to adopt the Appropriation Act had taken those elements into account.

Such an interpretation cannot stand since it would have the effect of changing the nature of the Auditor General's duties. The role of the Auditor General is neither to criticize the legislation adopted by Parliament nor to pass judgment on the wisdom of government decisions that result in the adoption of such legislation. If Parliament had intended to modify the nature of the functions of the Auditor General in such a radical way, it would have expressed itself much more clearly.

Per Huggessen J. (dissenting): The question whether the responsibility of the Auditor General extends to inquiring whether due regard to economy has been demonstrated and value for money achieved should be answered in the affirmative.

Even a narrow view of the Auditor General's function must include the duty of determining whether money has been spent for the purpose for which it was appropriated by Parliament. The language of Vote 5c cannot be overlooked. In authorizing an investment in Petro-Canada, Parliament did so in order to increase Canadian public ownership of the oil and gas industry in Canada through the share purchase acquisition of Petrofina by Petro-Canada. It follows that an inquiry into whether the money was spent for the purposes for which it was voted may properly look beyond the investment in Petro-Canada to the share purchase and property acquisition by Petro-Canada in Petrofina.

The proposition that the decision to purchase Petrofina was purely political and subject therefore to political accountability only is without merit. It is the Auditor General's duty to tell, and Parliament's right to know, the economic cost of the political decision. If the implementation of the decision to increase Canadian ownership in the oil and gas industry involved buying shares and assets at a premium over their market value, then the Auditor General has a duty to say what that premium was so as to permit others to make the political judgment as to whether it was worth paying.

The question whether the Auditor General has a right to require to see the documents relating to the valuation of the Petrofina shares was also to be answered in the affirmative. Subsection 13(1) is intended to override both statutes and common law rules to the contrary. It makes it clear that only a specific override can prevail. It extends access to all informa tion relating to the fulfilment of the Auditor General's respon sibilities. The right to receive information from public servants and the right to access to other sources of information are two distinct rights, separated in English by the conjunctive phrase "and he is also entitled to" and in French by a semi-colon. Thus the first portion of subsection 13(1) clearly extends to informa-

tion in the possession of persons other than civil servants, who are exclusively the subject of the second portion.

The primacy decreed under subsection 13(1) must have some scope for practical application. If the only remedy available to the Auditor General to enforce the subsection 13(1) right is through the exercise of his power as commissioner under sub section 13(4), then the latter power must itself enjoy the primacy which would include primacy over section 36.3 of the Canada Evidence Act. The subsidiary argument, that in the event of denial of access the Auditor General's only remedy is to make an unfavourable report to Parliament under paragraph 7(1)(6), could not be accepted. A legal right entails a legal remedy. A declaration of the kind sought in the present pro ceedings is appropriate as a remedy.

Finally, although the Auditor General is the one who in the first instance must decide what is properly within the scope of his inquiry, any dispute as to his judgment on the point must be determined by a court of law.

CASE JUDICIALLY CONSIDERED

REFERRED TO:

British Columbia Development Corporation et al. v.

Friedmann, Ombudsman et al., [1984] 2 S.C.R. 447.

COUNSEL:

W. I. C. Binnie, Q.C. and Graham R. Garton for appellants (defendants-respondents). Gordon F. Henderson, Q.C., Emilio S. Bina- vince and Martin W. Mason for respondent (plaintiff-applicant).

SOLICITORS:

Deputy Attorney General of Canada for appellants (defendants-respondents).

Gowling & Henderson, Ottawa, for respon dent (plaintiff-applicant).

The following are the reasons for judgment rendered in English by

PRATTE J.: I have had the privilege of reading the reasons for judgment prepared by my brother Hugessen J. as well as those of my brother Heald J. Like Mr. Justice Heald, I cannot share the opinion of our brother on the nature of the Auditor General's responsibilities.

The ultimate question to be answered in this case is whether the respondent is entitled to the production of certain documents relating to the evaluation of the shares of Petrofina Canada Inc.

Leaving aside the problem arising from the alleged confidential nature of those documents, the respondent's entitlement to the production of those documents must flow from sections 13 and 14 of the Auditor General Act [S.C. 1976-77, c. 34]. Clearly, the powers conferred by those two sec tions can only be exercised by him in the fulfil ment of his responsibilities under the Act. What ever be the extent of those powers, therefore, they cannot be used to obtain documents, be they confi dential or not, for a purpose other than the fulfil ment of the Auditor General's responsibilities as they are defined in the Act. The first and essential question to be resolved in this case is, therefore, that on which I disagree with my brother Hugess- en J., namely, what is the nature and the extent of the respondent's responsibilities under the Auditor General Act?

The respondent is the "auditor of the accounts of Canada". He is not the auditor of the accounts of Crown corporations like Petro-Canada. What ever be his rights under sections 13 and 14, he may only exercise them in fulfilling his responsibility as auditor of the accounts of Canada. This observa tion is not superfluous since the documents sought by the respondent relate to the evaluation of the shares of Petrofina Canada Inc. prior to their acquisition by Petro-Canada. Those documents would clearly be relevant in an audit of the accounts of Petro-Canada; they are not so clearly related to an audit of the accounts of Canada.

A second preliminary observation. Counsel for the respondent laid much stress, during argument, on the legislative history of the Auditor General Act which, according to him, shows that the responsibilities of the Auditor General have been constantly increased and that, for that reason, the law now in force should be interpreted in a way consistent with this desire of Parliament to enlarge those responsibilities. I do not see any merit in that argument. The gradual enlargement of the respon sibilities of the Auditor General cannot be denied. That evolution, however, does not help in deter mining the precise limits of those responsibilities as they are now defined by the statute. In my view, all that need to be said of that legislative history for our purposes is that the powers that the respondent is asserting in this case certainly exceed

the limits of his responsibilities as they were defined before the coming into force of the Audi tor General Act in 1977. The Auditor General's responsibilities with respect to government expen ditures were then limited to verifying and report ing, first, whether they were accurately reflected in the public accounts and, second, whether they had been authorized by Parliament. Clearly, the docu ments to which the respondent seeks access in this case do not relate to the fulfilment of those respon sibilities. The question, therefore, is whether the Auditor General Act of 1977 has increased the responsibilities of the Auditor General so as to justify the demands that he makes in this case.

The Auditor General Act of 1977 has modified the responsibilities of the Auditor General with respect to expenditures in only one way. In addi tion to the duties that he formerly had of reporting to the House whether the public accounts accu rately reflected those expenditures and whether all those expenditures had been authorized by Parlia ment, paragraph 7(2)(d) of the new Act imposed on the Auditor General the duty of reporting whether "money has been expended without due regard to economy or efficiency".

All government expenditures must be authorized by Parliament. Paragraph 7(2)(d), therefore, must refer to money that has been expended pursuant to the authorization of Parliament. It is on that basis that the meaning of paragraph 7(2)(d) must be determined.

When Parliament appropriates a sum of money for a given purpose, it thereby authorizes the Minister of the department concerned to spend that sum for the purpose specified. In most cases, however, Appropriation Acts leave many things to the discretion of the Minister who must decide the manner in which he will spend the money for the specified purpose. For instance, the Minister who is authorized to spend X dollars to build an office building must determine the location of the build ing, choose the architect, the contractor, etc. When Parliament authorizes an expenditure of that kind, it certainly expects the Minister con cerned to make those decisions relating to the manner in which the money will be spent with "due regard to economy and efficiency". I have, therefore, no difficulty in concluding that the new

responsibility bestowed on the Auditor General merely imposes on him the duty of verifying and reporting whether the various ministers, in imple menting the will of Parliament as expressed in the Appropriation Acts, acted with due regard to economy and efficiency. Thus, that new responsi bility is merely an extension of the responsibility that the Auditor General already had of verifying that the government had complied with the wishes of Parliament by making no expenditures except those authorized by Appropriation Acts.

If the new responsibility of the Auditor General does not extend further than that, it would certain ly not justify the demands made by the respondent. In this case, Parliament had authorized the Minis ter of Energy, Mines and Resources to spend up to 1.7 billion dollars to acquire shares of Petro- Canada so as to enable that Crown corporation to purchase Petrofina Canada Inc. The Minister was given very little discretion by that legislation: he could neither fix the conditions at which Petrofina Canada Inc. would be acquired nor refuse to approve the terms of that acquisition. As all the documents of which the production is sought by the respondent in these proceedings relate to the evaluation of Petrofina Canada Inc., they do not relate in any way to the fulfilment of the Auditor General's new responsibility of verifying that the money appropriated by Parliament had been spent by the Minister of Energy, Mines and Resources, with due regard to economy and efficiency. If the Minister had no discretion in the matter, he could not have regard to economy and efficiency.

In order for the respondent to succeed, there fore, the new responsibility of the Auditor General under paragraph 7(2)(d) must extend further than I have said so as to include, not only the duty to determine whether a Minister, in spending money pursuant to an Appropriation Act, complied with the implied wish of Parliament that the authorized expenditures be made in a manner consistent with economy and efficiency, but also the duty of deter mining whether the authorization to spend con tained in the Appropriation Act itself was given with due regard to economy and efficiency. Then, the respondent would have the power, that he asserts here, of determining whether the govern ment that caused Parliament to adopt the Appro-

priation Act here in question had due regard to economy and efficiency. I cannot give such a wide interpretation to paragraph 7(2)(d) of the Auditor General Act which would, in my opinion, have the effect of not merely enlarging the responsibilities of the Auditor General but of changing their very nature. The role of the Auditor General, as I understand it, is neither to criticize the legislation adopted by Parliament nor pass judgment on the wisdom of government decisions that resulted in the adoption of such legislation. If Parliament had intended to modify the nature of the functions of the Auditor General in such a radical way, it would, in my opinion, have expressed itself much more clearly.

For these reasons, I am therefore of opinion that the documents of which the respondent seeks the production in this case do not relate in any manner to the fulfilment of his responsibilities.

I would allow the appeal, set aside the judgment of the Trial Division and dismiss the action of the respondent, with costs both in this Court and in the Trial Division.

* * *

The following are the reasons for judgment rendered in English by

HEALD J.: I have read the reasons for judgment herein prepared by my brother Hugessen J. Since I am in substantial disagreement with the result which he proposes and with his reasons for so concluding, it is necessary to express my own views as to the proper conclusions to be reached on this appeal.

Initially, I should say that I agree with Hugess- en J. that the issues in this case were not fully stated in the Trial Division [[1985] 1 F.C. 719].' I also think my brother Hugessen's characterization of the central issue is more accurate,—i.e.,—to determine the nature and extent of the respon

d I also agree with his observations about the practice adopt ed, in the Trial Division, in this case, of issuing two sets of reasons for judgment. I concur with him that such a method of proceeding is not to be recommended since it fails to "contrib- ute to the proper and orderly dispatch of judicial business".

sibilities of the Auditor General and, in making that determination, to decide whether his duty to make examinations and inquiries and to report to the House of Commons includes the responsibility to track the use of public funds past the first recipient and on to the ultimate beneficiary in order to decide whether the Canadian people have had value for their money. Out of this general issue, there arise two subsequent issues which were also discussed by Hugessen J. The first subsequent issue is—Does the responsibility of the Auditor General require him to inquire into whether due regard for economy has been demonstrated and value for money achieved in the Petrofina acquisi tion? And, if the answer to the first subsequent issue is in the affirmative, then a second subse quent issue arises—Does the Auditor General have the right to demand to see the Cabinet documents and the records of Petro-Canada relating to the Petrofina acquisition and, in the event of refusal of access, to enforce that right through the Courts?

My disagreement with my brother relates to the determination of those issues.

More specifically, I do not think a proper inter pretation of subsection 13 (1) of the Auditor Gen eral Act, leads to the conclusion that, pursuant to the authority of that subsection, the Auditor Gen eral has the right, on the facts of this case, to access to all Cabinet documents dealing with the Petrofina acquisition. Likewise, I have the view that subsection 13(1) does not entitle the Auditor General to access to the records of Petro-Canada. Subsection 13(1) requires careful analysis. It reads:

13. (1) Except as provided by any other Act of Parliament that expressly refers to this subsection, the Auditor General is entitled to free access at all convenient times to information that relates to the fulfilment of his responsibilities and he is also entitled to require and receive from members of the public service of Canada such information, reports and explanations as he deems necessary for that purpose. [Emphasis added.]

I agree with my brother Hugessen that the changes in language from the former provision (subsection 57(1) of the Financial Administration Act [R.S.C. 1970, c. F-10]) make it clear that

subsection 13(1) is intended to override both stat ute and common law rules to the contrary and that the override must be specific. Nevertheless, this paramountcy is restricted to information relating to the fulfilment of the responsibilities of the Audi tor General. Accordingly, if the Cabinet confi dences in issue or the right of access to the records of Petro-Canada do not relate to "the fulfilment of his responsibilities", the paramount language at the commencement of the subsection does not assist the respondent.

THE PARAMETERS OF THE RESPONSIBILITIES OF THE AUDITOR GENERAL

(a) With respect to Cabinet documents

The opening portion of subsection 13(1) which restricts the Auditor General's access to informa tion relating to the "fulfilment of his responsibili ties" is separated from the remainder of the sub section by the word "and". Thus, the broad discretion conferred upon the Auditor General in the second portion of the subsection refers only to the "public service" and not to Ministers of the Crown, the Queen's Privy Council or the employees of Petro-Canada. 2 It is also significant that in subsection 13(2), the Auditor General is empowered to station members of his staff in "any department" for the effective discharge of his duties. Furthermore, in subsection 13(3), employees of the Auditor General who are exam ining the accounts of "a department or of a Crown corporation" are required to take an oath of secre cy. Accordingly, taking into context the scheme of section 13 in isolation, it seems at first glance, that the "responsibilities" contemplated by Parliament in subsection (1) are to be limited to audits of

2 Sections 17 and 18 of the Petro-Canada Act [S.C. 1974- 75-76, c. 61 ] provide that the Corporation's officers, agents and employees "shall be deemed not to be employed in the public service of Canada" except only for certain specified purposes relating to superannuation and employees compensation. In so far as Ministers of the Crown are concerned, they are clearly not members of the public service of Canada since in the definition of "public officer" in section 2 of the Financial Administration Act, Ministers are separately mentioned vis-à- vis members of the public service of Canada. The definition in section 2 reads: "public officer includes a Minister and any person employed in the public service of Canada". (The empha sis is mine.)

departments of the Government of Canada and of federal Crown corporations. Were it otherwise, I would have expected Parliament in enacting sub sections (2) and (3), to give to the Auditor General similar enabling and assisting powers in respect of Cabinet Ministers and the Privy Council. 3

This view of the matter is strengthened, in my opinion, by references to other sections of the Auditor General Act as well as to sections of related statutes. Section 5 of the Auditor General Act provides:

5. The Auditor General is the auditor of the accounts of Canada, including those relating to the Consolidated Revenue Fund and as such shall make such examinations and inquiries as he considers necessary to enable him to report as required by this Act. [Emphasis added.]

The reference to reporting undoubtedly refers to the requirement contained in section 7 of the Act that the Auditor General report annually to the House of Commons as well as to the permissive authority with respect to special reports to the House of Commons conferred upon him pursuant to section 8. The expression "accounts of Canada" is not defined in the Auditor General Act. How ever, it is referred to in the Financial Administra tion Act. Section 54 of that Act provides:

54. (1) Subject to regulations of the Treasury Board, the Receiver General shall cause accounts to be kept in such manner as to show

(a) the expenditures made under each appropriation;

(b) the revenues of Canada; and

3 Subsections 13(2) and 13(3) read as follows: 13....

(2) In order to carry out his duties more effectively, the Auditor General may station in any department any person employed in his office, and the department shall provide the necessary office accommodation for any person so stationed.

(3) The Auditor General shall require every person employed in his office who is to examine the accounts of a department or of a Crown corporation pursuant to this Act to comply with any security requirements applicable to, and to take any oath of secrecy required to be taken by, persons employed in that department or Crown corporation.

(2) The Receiver General

(a) shall cause accounts to be kept to show such of the assets and direct and contingent liabilities of Canada, and

(b) shall establish such reserves with respect to the assets and liabilities,

as, in the opinion of the Minister, are required to give a true and fair view of the financial position of Canada.

(3) The accounts of Canada shall be kept in the currency of Canada.

This is consistent with section 19 of the same Act which provides:

19. Subject to the British North America Acts, 1867 to 1965, no payments shall be made out of the Consolidated Revenue Fund without the authority of Parliament.

Thus, pursuant to subsection 54(1)(a), supra, the Receiver General is required to keep accounts showing "the expenditures made under each appropriation". These accounts form a part of the "accounts of Canada". They are a part of the accounts which the Auditor General is charged with reporting on to the House of Commons. However, his responsibility commences after the appropriations have been passed by Parliament. Therefore, I agree with counsel for the appellants that the "responsibilities of the Auditor General" are "downstream" of the Appropriation Act or other authorizing statute, and that the work of the Office of the Auditor General in respect of which he must report to the Commons annually pursuant to section 7 would not include decisions reached by the Governor in Council which led to the Parlia mentary appropriation (Vote 5c of Appropriation Act No. 4, 1980-81 [S.C. 1980-81-82-83, c. 51]).

I also agree with counsel for the appellants that the Auditor General's responsibilities are related to the implementation of legislative enactments passed by Parliament and cannot be extended to permitting the Auditor General to challenge the wisdom of those enactments. In this case, the effect of the Trial Division judgment would be to allow the Auditor General to audit the political process prior to March 31, 1981, the date of enactment of Appropriation Act No. 4, which Act contains the parliamentary spending authority for

the Petrofina acquisition. I am unable to interpret the authority conferred upon the Auditor General pursuant to subsection 13 (1) in such an all- embracing fashion.

(b) With respect to the records of Petro-Canada

I said earlier that my appreciation of subsection (1) of section 13 when read in context with subsec tions (2) and (3) of that section led me to conclude that the "responsibilities" envisaged by Parliament in subsection (1) may be restricted to audits of federal government departments and of federal Crown corporations. Since Petro-Canada is a fed eral Crown corporation and since the respondent takes the position that he has the right of access to the records of Petro-Canada in the course of his audit of the accounts of Canada, it is necessary to examine more closely the situation with respect to Petro-Canada. In particular, it is necessary to consider the provisions of section 14 of the Auditor General Act. That section reads:

14. (1) Notwithstanding subsections (2) and (3), in order to fulfil his responsibilities as the auditor of the accounts of Canada, the Auditor General may rely on the report of the duly appointed auditor of a Crown corporation or of any subsidiary of a Crown corporation.

(2) The Auditor General may request a Crown corporation to obtain and furnish to him such information and explanations from its present or former directors, officers, employees, agents and auditors or those of any of its subsidiaries as are, in his opinion, necessary to enable him to fulfil his responsibilities as the auditor of the accounts of Canada.

(3) If, in the opinion of the Auditor General, a Crown corporation, in response to a request made under subsection (2), fails to provide any or sufficient information or explana tions, he may so advise the Governor in Council, who may thereupon direct the officers of the corporation to furnish the Auditor General with such information and explanations and to give him access to those records, documents, books, accounts and vouchers of the corporation or any of its subsidiaries access to which is, in the opinion of the Auditor General, necessary for him to fulfil his responsibilities as the auditor of the accounts of Canada.

Subsection 14(1) empowers the Auditor General, in the fulfilment of his responsibilities to audit the accounts of Canada, to have access to and rely upon the reports of duly appointed auditors of

Crown corporations. 4 Subsection 14(2) entitles the Auditor General to obtain information and expla nations from the directors, officers, employees, agents and auditors of a Crown corporation. Sub section 14(3) permits the Auditor General, in cases where he believes that a Crown corporation has failed to provide sufficient information, to ask the Governor in Council to direct the Crown cor poration's officers to furnish the Auditor General with such further explanations and information as he considers necessary and to give him such fur ther access to the Corporation's records as he considers necessary. 5

In my view, section 14, supra, must be read in context with section 13 and when this is done, I think it clear that any entitlement to access to the records of a Crown corporation such as Petro- Canada which might appear, inferentially, to flow from the provisions of section 13, must be con sidered in the light of the provisions of section 14. Section 14 addresses with particularity the rights of the Auditor General with respect to the records of a Crown corporation. Section 14 allows the Auditor General access to the audit reports of the Crown corporation's auditors; it allows him to ask for further information and particulars from the Crown corporation and its auditors; and, in the event of their refusal, he can go to the Governor in Council for an order compelling access to the records and compelling further information and explanations.

° Subsection 26(1) of the Petro-Canada Act provides:

26. (1) ... the accounts of the Corporation shall be audit ed each year by an auditor appointed by the Governor in Council.

In fact the firm of Peat Marwick Mitchell was the auditor of Petro-Canada at all relevant times.

5 Pursuant to subsection 14(2) the Auditor General did demand from Petro-Canada information relating to its acquisi tion of Petrofina. Petro-Canada referred the Auditor General to its auditors. Subsequently the Auditor General applied to the Governor in Council pursuant to subsection 14(3) for an Order in Council compelling Petro-Canada to furnish the Auditor General with the information requested. By Order in Council dated June 26, 1984, the Governor in Council refused to direct the officers of Petro-Canada to provide the desired information.

In my view, the fact that Parliament has specifi cally addressed the question of the Auditor Gener al's right to access and to information in respect of federal Crown corporations in section 14 serves to restrict accordingly any general power which could be inferred from section 13, in the absence of section 14. On this basis, it is my view that the Auditor General is not entitled to the unencum- bered access to the records of Petro-Canada which the declaration of the Trial Division gives him. I have this opinion because the access sought by the respondent falls outside the purview of his respon sibilities and thus subsection 13(1) cannot be relied on to support his claim for access.

It is said, however, on behalf of the respondent that subsection 13 (1) allows the respondent "to determine what information relates to the fulfil ment of his responsibilities" (respondent's memo randum, paragraph 33). It was further submitted (respondent's memorandum, paragraph 35): "con- sidering Sections 5, 6, and 7, the Respondent has, under Section 13, the entitlement to free access to information and to require and to receive any information, reports and explanations which the Respondent deems necessary to enable him to fulfil his responsibilities under the Auditor Gener al Act". This is a sweeping proposition. It would give the Auditor General carte blanche. He would be the sole arbiter of where his "responsibilities" commenced and terminated. In my view, the rele vant sections of the Act cannot reasonably be interpreted to provide such wide powers for the reasons given earlier herein. Furthermore, section 5 gives the Auditor General wide powers with the use of the words "as he considers necessary" but only when he is auditing the accounts of Canada. When he is examining the accounts of a Crown corporation, he is not auditing the accounts of Canada. Subsection 14(1) makes this clear in my view since it refers to the accounts of Canada in contradistinction to the accounts of a Crown cor poration. If it could be said that the accounts of Canada include the accounts of Crown corpora tions, then the enabling provisions of section 14

would be redundant since the Auditor General has all the powers necessary for the discharge of his responsibility pursuant to section 5 in so far as the accounts of Canada are concerned. 6 Likewise, sub section 13(1) gives him wide powers by employing the words "as he deems necessary" but only for purposes relating to "the fulfilment of his responsibilities".

In addition to rendering redundant the enabling provisions of section 14 of the Act, the interpreta tion of subsection 13(1) advocated by the respon dent would render nugatory the provisions of sub section (3) of section 14. As noted earlier herein, the Governor in Council refused, pursuant to sub section 14(3) to direct Petro-Canada to deliver the information sought by the Auditor General with respect to Petro-Canada's acquisition of Petrofina. By demanding the same information directly from the appellants as directors of Petro-Canada pursu ant to subsection 13(1), the respondent seeks to effectively reverse the decision of the Governor in Council, a result which he could not achieve by recourse to the courts since, pursuant to subsection 28(6) of the Federal Court Act [R.S.C. 1970 (2nd Supp.), c. 10], this Court has no jurisdiction to review any decision or order of the Governor in Council. In my view such an interpretation of the words used in subsection 13(1) would be quite improper since the consequence thereof would be to achieve a result by indirect means which was impermissible through direct action.

Since I have concluded, for the reasons expressed supra, that the access sought by the respondent and given to him in the declaration of the Trial Division goes far beyond his entitlement pursuant to subsection 13(1) because that access lies outside the parameters of his assigned respon sibilities, it is unnecessary to deal with the issues of

6 If any further support were needed for this view of the matter, I think the provisions of section 77 of the Financial Administration Act which set out in detail the way in which the accounts of a federal Crown corporation are to be audited, and reported upon, to the responsible Minister, are clear evidence that Parliament intended the accounts of Crown corporations to be separate from the accounts of Canada.

Crown privilege and the constitutional conventions of Cabinet confidentiality which were canvassed extensively by both counsel, in their memoranda, and at the hearing of the appeal.

THE REMEDIES AVAILABLE TO THE AUDITOR GENERAL

Before concluding, I would like to express some views as to the remedies which are open to the Auditor General in the discharge of his respon sibilities. In my view the Auditor General has a hierarchy of remedies available to him under the Auditor General Act. The first remedy which is, in my view, a primary remedy, is founded in para graph 7(1)(b) of the Auditor General Act. Subsec tion 7(1) reads:

7. (1) The Auditor General shall report annually to the House of Commons

(a) on the work of his office; and

(b) on whether, in carrying on the work of his office, he received all the information and explanations he required.

The next remedy is nourished by the provisions of subsection 13(4) of the Auditor General Act. That subsection reads:

13....

(4) The Auditor General may examine any person on oath on any matter pertaining to any account subject to audit by him and for the purposes of any such examination the Auditor General may exercise all the powers of a commissioner under Part 1 of the Inquiries Act.

The third remedy is the remedy provided pursuant to subsection 13(1) which, as noted supra, is the most comprehensive remedy because of the para- mountcy clause expressed at the outset of the subsection.

I conclude that the subsection 13(4) remedy is a less powerful one than the remedy under subsec tion 13(1) because of the absence of the para- mountcy clause in subsection 13(4). This conclu sion is reinforced, in my view, when the application of section 36.3 of the Canada Evidence Act [R.S.C. 1970, c. E-10 (as added by S.C. 1980-81-

82-83, c. 111, s. 4)] 7 to each of the subsections is analyzed. Because of the absence of a paramount- cy clause in subsection 13(4), I think that a certifi cate filed pursuant to subsection 36.3(1) would effectively preclude any action under subsection 13(4) by the Auditor General in the areas encom passed by the subsection 36.3(1) certificate.

That section reads as follows:

36.3 (1) Where a Minister of the Crown or the Clerk of the Privy Council objects to the disclosure of information before a court, person or body with jurisdiction to compel the production of information by certifying in writing that the information constitutes a confidence of the Queen's Privy Council for Canada, disclosure of the information shall be refused without examination or hearing of the information by the court, person or body.

(2) For the purpose of subsection (1), "a confidence of the Queen's Privy Council for Canada" includes, without restricting the generality thereof, information contained in

(a) a memorandum the purpose of which is to present proposals or recommendations to Council;

(b) a discussion paper the purpose of which is to present background explanations, analyses of problems or policy options to Council for consideration by Council in making decisions;

(d) a record used for or reflecting communications or discussions between Ministers of the Crown on matters relating to the making of government decisions or the formulation of government policy;

(e) a record the purpose of which is to brief Ministers of the Crown in relation to matters that are brought before, or are proposed to be brought before, Council or that are the subject of communications or discussions referred to in paragraph (d); and

(f) draft legislation.

(3) For the purposes of subsection (2), "Council" means the Queen's Privy Council for Canada, committees of the Queen's Privy Council for Canada, Cabinet and committees of Cabinet.

(4) Subsection (1) does not apply in respect of

(a) a confidence of the Queen's Privy Council for Canada that has been in existence for more than twenty years; or

(b) a discussion paper described in paragraph (2)(b)

(i) if the decisions to which the discussion paper relates have been made public, or

(ii) where the decisions have not been made public, if four years have passed since the decisions were made.

However, it seems to me that a more serious problem could arise were the Auditor General to seek enforcement of a subsection 13(1) remedy in the face of a subsection 36.3(1) certificate. Assum ing, for the sake of argument, that the Auditor's view that he is the sole arbiter of the parameters of his responsibilities is the correct one, then the interesting question arises as to how he would be able to enforce his subsection 13(1) rights through the courts. Assuming, for example, that he were to make an application to the Court for access to Cabinet documents, and, assuming that a minister of the Crown or the Clerk of the Privy Council were to file a certificate pursuant to subsection 36.3(1), the provisions of that subsection, if appli cable, would require the Court to refuse disclosure of the information "without examination ... of the information by the court". In my view, this situa tion demonstrates clearly the difficulties involved in providing an effective and realistic remedy for the rights asserted by the respondent pursuant to subsection 13(1). While this problem is not before the Court in this appeal, I think it relevant to consider the lack of a viable remedy when testing the validity of the respondent's submissions con cerning the sweep of his authority. Put another way, if the Court was required to deal with an application by the Auditor General to enforce his right to access under subsection 13(1), and, in response, thereto, a certificate pursuant to subsec tion 36.3(1) were filed, the Court might well be in the difficult position of attempting to determine whether the Auditor General was acting within his responsibilities without being able to examine the information in question because of the strictures contained in subsection 36.3(1). The Court would be in this position because, if the Auditor General was acting within his responsibilities, pursuant to subsection 13(1), section 36.3 of the Canada Evi dence Act would have no application. If, however, the Auditor General was acting outside the scope of his responsibilities, subsection 13(1) would not apply so as to oust the application of section 36.3. Accordingly, the threshold question for the Court would be whether or not the Auditor General was acting within his responsibilities. In order to deter mine the answer to this threshold question, the Court might conceivably need to have access to the information in question. By having that access, the Court would be in violation of subsection 36.3(1) in advance of being able to determine whether or not the Auditor General was to be bound by its provisions. If, after seeing the material, the Court

concluded that the Auditor General was acting within the scope of his responsibilities in seeking access, then the provisions of subsection 36.3(1) would not apply because of the paramountcy provisions of subsection 13(1) of the Auditor Gen eral Act. If, conversely, the Court decided that the Auditor General was acting outside the scope of his responsibilities, the paramountcy provisions of subsection 13 (1) would not apply, and subsection 36.3(1) would operate to prevent the Court's access to the material in question. In such circum stances, the Court would have been placed in the embarrassing and difficult position of having breached subsection 36.3(1) in order to discharge its duties with respect to the subsection 13(1) application of the Auditor General.

In my view, such a repugnant and inconsistent consequence demonstrates forcibly that Parlia ment could never have intended that the parame ters of subsection 13(1) would include confidences of the Privy Council, Ministers and the Cabinet.

CONCLUSION

For all of the above reasons, I have concluded that the respondent is not entitled to any of the relief given to him by the Trial Division. I would therefore allow the appeal with costs, set aside the judgment of the Trial Division and substitute therefor a judgment dismissing the respondent's action and application with costs.

* * *

The following are the reasons for judgment rendered in English by

HUGESSEN J. (dissenting): The issue in these proceedings was stated by the Associate Chief Justice, presiding in the Trial Division, in the following terms:

The issue in this case, in the briefest possible terms, is whether the right of access to information, given to the Auditor General of Canada in section 13 of the Auditor General Act, S.C. 1976-77, c. 34, takes precedence over or must defer to the convention of confidence of the Queen's Privy Council for

Canada. [Reasons for judgment, November 1, 1985, Case, pp. 3174-3175. 8 1*

As I see it, there is another issue underlying the question stated by the Trial Judge that requires to be answered first. It is to know the nature and extent of the responsibilities of the Auditor Gener al. More particularly, it is to know whether the Auditor General's duty to make examinations and inquiries and to report to the House of Commons includes the responsibility to follow the use which has been made of public funds beyond their immediate or first recipient through to their ulti mate beneficiary in order to determine whether the Canadian people have had value for their money.

The matter arises in this way. In February 1981, Petro-Canada, a Crown corporation, announced that it had reached an agreement with Petrofina

8 The case reveals that there were two sets of reasons for judgment issued. The first, from which the above extract is taken, is dated November 1, 1985, and appears to have been delivered from the Bench on that day. As far as I can deter mine, there then followed a further hearing, on November 12, 1985, whose purpose was to "discuss" the reasons for judgment, following which the Judge indicated certain corrections and amendments. Both parties then moved for judgment in accord ance with their respective understanding of the Judge's reasons and these motions were heard on December 4, 1985. Finally, on December 6, 1985, the Judge issued amended reasons for judgment which differ substantially from the original reasons; in particular, they contain a number of new findings of fact. Judgment itself was entered on December 6, 1985.

This method of proceeding is not to be recommended. Having had the matter under advisement for more than seven months, the Judge, if he was not ready to give his reasons in final form on November 1, would have done better to have waited until he was ready. The issue of what can only be described as draft reasons subject to amplification and correc tion in the light of invited comments from the parties to the litigation does not, in my view, contribute to the proper and orderly dispatch of judicial business.

* Editor's Note: The amended reasons for judgment are published at [1985] 1 F.C. 719. The above extract appears at p. 724 thereof.

S.A. to purchase Petrofina Canada Inc., at a price of $120 per share.'

Petro-Canada was incorporated by Act of Par liament (S.C. 1974-75-76, c. 61). Its entire share capital is held by the Minister of Energy, Mines and Resources in trust for the Crown and is non transferable. The Corporation is, for all purposes, an agent of Her Majesty and may only exercise its powers as such. The Auditor General is not the auditor of Petro-Canada and the latter's books are, in accordance with section 26 of the Act, audited by an auditor appointed by the Governor in Coun cil. Petro-Canada's capital budget is subject to the approval of the Governor in Council.

The Petrofina acquisition was a massive finan cial undertaking. The cost at the agreed price of $120 per share was approximately 1.7 billion dol lars. On the eve of the takeover announcement, the Governor in Council had approved Petro-Canada's supplementary capital budget permitting share purchase investments to an amount of 1.5 billion dollars.

Some time after the takeover had been announced and the details of the acquisition made public, Parliament was asked to approve the neces sary funding to enable Petro-Canada to pay the bill. This was done by the imposition of a special charge on all Canadian petroleum consumption; the proceeds of that charge were to be paid into a special non-budgetary account known as the Canadian Ownership Account (C.O.A.). While the actual taxing statute creating the charge did not come until some time later, the wording of Vote 5c of the Appropriation Act No. 4, 1980-81 (S.C. 1980-81-82-83, c. 51), tells us all we need to know for the purposes of this case:

9 As is so often the case in corporate takeovers, the actual details of the transaction were vastly more complicated, involv ing both share purchase and transfer of assets and the interposi tion of subsidiary companies. While these complications may well be a source of legitimate concern to anyone inquiring into whether the Canadian people obtained value for money in the takeover, they have no direct bearing on the issues in this case.

ENERGY, MINES AND RESOURCES A—DEPARTMENT

ENERGY PROGRAM

5c Energy—Operating expenditures including payments, in the current and subsequent fiscal years, in accordance with such terms and conditions as may be prescribed by the Governor in Council on the recommendation of the Minis ter and the Minister of Finance, of such amounts as are from time to time required for investment in shares, debentures, bonds or other evidences of indebtedness of Petro-Canada in order to increase Canadian public owner ship of the oil and gas industry in Canada through the share purchase of and property acquisition from Petrofina Canada Inc., by Petro-Canada, (not to exceed 1.7 billion dollars which includes the interim financing costs) for which purpose there shall be established in the Accounts of Canada a non-budgetary trust account to be known as the Canadian Ownership Account:

a) to which shall be credited all amounts received as a consequence of a Canadian Ownership special charge for the purpose of increasing the Canadian Public Ownership of the oil and gas industry in Canada; and

b) to which shall be charged any investment made hereunder for the share purchase of and property acquisition from Petrofina Canada Inc.

and to further provide that no investment shall be made pursuant hereto in excess of the amount of the balance to the credit of the account, and to provide a further amount

of . . .. .... . ... 5,382,000

The reading of this text makes it clear that what had been authorized is an investment in Petro- Canada in order to allow the latter to acquire the shares and assets of Petrofina. In other words, Petro-Canada is the chosen vehicle for achieving the canadianisation policy evidenced by the

Petrofina takeover.

The Auditor General conceives it to be within his field of responsibility

... to ascertain whether due regard to economy has been demonstrated and value for money achieved in the $1.7 billion acquisition of Petrofina Canada Inc. 10

Pursuant to subsection 14(1) of the Auditor General Act," the Auditor General has requested

1 ° Paragraph 9.197, Report of the Auditor General for the year ended March 31, 1983. Case, p. 121.

11 14. (1) Notwithstanding subsections (2) and (3), in order to fulfil his responsibilities as the auditor of the accounts of Canada, the Auditor General may rely on the report of the duly appointed auditor of a Crown corporation or of any subsidiary of a Crown corporation.

information from the auditor of Petro-Canada. The reply indicated that the latter's mandate does not extend to a value-for-money audit and that accordingly the information was not available. (Letter from Peat Marwick, August 4, 1983. Case, pages 861 to 867.)

A request to Petro-Canada, pursuant to subsec tion 14(2) of the Auditor General Act,'Z for pre- and post-acquisition evaluation of the shares and assets acquired from Petrofina was met by a refusal.

A request pursuant to subsection 14(3) of the Auditor General Act" was then made to the Gov ernor in Council, asking that the latter direct Petro-Canada to furnish the required information. That request also was denied.

Finally, a written request was addressed to each of the defendants for the following information:

• Copies of any analysis and/or evaluation reports pertaining to the acquisition of Petrofina Canada Inc.

• Copies of any presentations, documents, memoranda you considered in forming your recommendations relating to the acquisition of Petrofina Canada Inc. using funds from the Canadian Ownership Account.

" - 14....

' 3 14. ...

• Copies of any evaluations of the Petrofina Canada Inc. acquisition and of the assets acquired which were undertaken subsequent to the acquisition. [Case, page 128.]

Access was refused on the grounds that the docu ments in question constituted confidences of the Queen's Privy Council for Canada.

The present proceedings followed. After some technical amendments which need not concern us here, they take the form of an action for a declara tion that the Auditor General has the right to free access to:

(i) All analysis and/or evaluation reports pertaining to the acquisition of Petrofina Canada Inc. prepared for, or received by or considered by, the Defendants in the exercise of their respective individual or joint statutory responsibilities;

(ii) All presentations, documents or memoranda relating to the use of funds from the accounts of Canada (in particular from the Canadian Ownership Account) for the acquisition of Petrofina Canada Inc. that were prepared for, or received for or considered by, the Defendants in the exercise of their respective joint or individual statutory responsibilities with respect to the acquisition of Petrofina Canada Inc.;

(iii) All evaluations of the Petrofina Canada Inc. acquisition and/or the assets acquired that were undertaken subsequent to the acquisition, prepared for, or received by, or considered by, the Defendants in the exercise of their respective individual or joint statutory responsibilities;

(iv) To provide the Plaintiff with information, and reports and explanation contained in the documents set out in (a)(i). [Case, pages 24-25.]

There would appear to be no doubt that the documents in question exist and can and will be made available if so ordered. A certificate of the Clerk of the Privy Council purportedly issued in accordance with section 36.3 of the Canada Evi dence Act (R.S.C. 1970, c. E-10, as amended by S.C. 1980-81-82-83, c. 111, s. 4) states that com pliance with the order sought

... would require the Respondents to this application to pro duce to the Auditor General the documents listed in Schedule "A" hereto. I have personally examined and have carefully considered each of those documents, and the information set out therein are confidences of the Ministry of the Right Hon ourable Pierre Trudeau, being memoranda to Cabinet, memo randa to Cabinet Committee, Cabinet agenda, Cabinet Com mittee agenda, Cabinet minutes, Cabinet Committee minutes, records of Cabinet decisions, records of Cabinet Committee decisions, draft legislation, correspondence between ministers of

the Crown, records of discussion between ministers of the Crown, or briefing notes for ministers of the Crown with respect to matters under consideration by the Cabinet. [Case, page 72.]

The only question therefore is whether the Audi tor General has the right to demand to see the documents and to enforce that right, in the event of refusal, through the courts. The most conve nient starting point for an examination of that question is to look at the role played by the Auditor General in the complex interplay of rela tionships which forms the structure of the modern- day government of Canada.

Although of fairly recent creation when com pared with many more traditional posts, the Audi tor General is a high officer of State. In form he is appointed by the Governor in Council for a non renewable term of ten years. He is paid a salary equal to that of the Chief Justice of the Federal Court and is removable only upon joint address of both Houses of Parliament. In substance and in fact, he is regarded as the principal watchdog over government spending and his annual reports, with their doleful litanies of moneys wasted and resources dissipated, are eagerly read and widely distributed.

The role of the Auditor General has evolved substantially over time and, as with many of our institutions of Government, has tended to run beyond (although not, of course, against) the strictly legal framework in which it is set. That framework has itself been fairly recently revised in the Auditor General Act which came into force

August 1, 1977. ' 4 It is the interpretation of that statute which lies at the heart of the present litigation. It is important, however, that the Court, when addressing that interpretative task, have in mind not only the statute itself but also the evolu- tive history of the Auditor General's office.

That history can be conveniently summarized as a progression from a financial audit to a compre hensive audit; from an attestation of proper book keeping practices to an examination of whether value has been had for money spent. 15 It can be seen most clearly from a comparison of the statu tory framework before and after the adoption of the 1977 statute. That statute was itself, however, a catch-up exercise and an attempt to capture in legal terms the role of the Auditor General as it then existed. Since that role has continued to evolve and since, as will be seen, nothing in the language of the 1977 statute requires it to be given a narrow reading, care must be taken to avoid freezing the function as though it had not con tinued to develop.

14 The statute itself was the result of a conflict between the sixth Auditor General, Maxwell Henderson, and the Govern ment of the day over the right of the Auditor General to investigate and report on "non-productive" payments—in other words, value for money. In due course, an independent commit tee of professionals (the Wilson Committee) was set up. Its report in March 1975 strongly favoured the concept of a comprehensive audit; the 1977 Act was in large measure the translation of that report into law by Parliament. See Report of the Independent Review Committee on the Office of the Audi tor General of Canada. Ottawa, March 1975. Information Canada Catalogue No. FA7-I975; see also Sinclair, Sonja. "Value-for-money auditing: after ninety-nine years of contro versy, an idea whose time has come". Optimum, 10, 1 (1979) at pp. 39-46; and Hartle, Douglas G., "The Role of the Auditor General of Canada" Canadian Tax Journal, 23, 3 (May-June 1975) at pp. 193-204.

15 The "three elements" of the modern comprehensive audit are well described in Standards for Audit Of Governmental Organizations, Programs, Activities, And Functions, United States General Accounting Office, 1981 Revision (U.S. Gov ernment Printing Office stock no. 020-000-00205-1), at p. 3:

I. Financial and compliance—determines (a) whether the financial statements of an audited entity present fairly the

(Continued on next page)

Prior to 1977, the statutory basis for the Audi tor General's authority lay in Part VII of the Financial Administration Act (R.S.C. 1970, c. F-10). The essentially financial nature of the audit which he was charged with performing appears clearly from sections 58 and 60:

58. The Auditor General shall examine in such manner as he may deem necessary the accounts relating to the Consolidated Revenue Fund and to public property and shall ascertain whether in his opinion

(a) the accounts have been faithfully and properly kept;

(b) all public money has been fully accounted for, and the rules and procedures applied are sufficient to secure an effective check on the assessment, collection and proper allocation of the revenue;

(e) money has been expended for the purposes for which it was appropriated by Parliament, and the expenditures have been made as authorized; and

(d) essential records are maintained and the rules and proce dures applied are sufficient to safeguard and control public property.

60. The Auditor General shall examine and certify in accord ance with the outcome of his examinations the several state ments required by section 55 to be included in the Public Accounts, and any other statement that the Minister may present for audit certificate.

The words used are wholly compatible with the traditional auditing function of examining books of account and certifying financial statements.

There was, however, another side to the Auditor General's duties. He was charged with making an annual report to the House of Commons. While that duty may once have been viewed as something

(Continued from previous page)

financial position and the results of financial operations in accordance with generally accepted accounting principles and (b) whether the entity has complied with laws and regulations that may have a material effect upon the finan cial statements.

2. Economy and efficiency—determines (a) whether the entity is managing and utilizing its resources (such as personnel, property, space) economically and efficiently, (b) the causes of inefficiencies or uneconomical practices, and (c) whether the entity has complied with laws and regulations concerning matters of economy and efficiency.

3. Program results—determines (a) whether the desired results or benefits established by the legislature or other authorizing body are being achieved and (b) whether the agency has considered alternatives that might yield desired results at a lower cost.

of a formality, rather like the auditor's report to shareholders in a private sector corporation, it led directly to the growth and dramatic change in the Auditor General's role. Subsection 61(1) of the Financial Administration Act shows at once both the limitations and the potential for growth of the reporting function:

61. (1) The Auditor General shall report annually to the House of Commons the results of his examinations and shall call attention to every case in which he has observed that

(a) any officer or employee has wilfully or negligently omit ted to collect or receive any money belonging to Canada,

(b) any public money was not duly accounted for and paid into the Consolidated Revenue Fund,

(d) an expenditure was not authorized or was not properly vouched or certified,

(e) there has been a deficiency or loss through the fraud,

default or mistake of any person, or

(/) a special warrant authorized the payment of any money,

and to any other case that the Auditor General considers should be brought to the notice of the House of Commons.

While paragraphs (a) to (f) inclusive seem to point to a purely financial audit (albeit an extend ed one, since paragraph (c) mandated an inquiry into the "purpose" for which money had been or should have been spent), the final words of the subsection were viewed by auditors general as allowing a far ranging inquiry into the economy, efficiency and effectiveness of government opera tions; in a word, a comprehensive audit.

As indicated, the 1977 statute clearly reflects this development in the role of the Auditor Gener al. The financial auditing and attesting function is, of course, retained. Section 6 reproduces the sub stance of the former section 60:

6. The Auditor General shall examine the several financial statements required by section 55 of the Financial Administra tion Act to be included in the Public Accounts, and any other statement that the Minister of Finance may present for audit and shall express his opinion as to whether they present fairly information in accordance with stated accounting policies of the federal government and on a basis consistent with that of the preceding year together with any reservations he may have.

This section is, however, preceded by a general statement of the duties and functions of the Audi tor General in a new section 5:

While a part of this text draws on the opening words of the former section 58, it differs in a most important respect by linking the Auditor General's examinations (to which are added inquiries) not to the accounts being audited but to the report which he is to make to the House of Commons. The scope of that report is also greatly expanded from what was found in the former subsection 61(1). The key text is in subsections 7(1) and 7(2):

7. (I) The Auditor General shall report annually to the House of Commons

(a) on the work of his office; and

(b) on whether, in carrying on the work of his office, he received all the information and explanations he required.

(2) Each report of the Auditor General under subsection (1) shall call attention to anything that he considers to be of significance and of a nature that should be brought to the attention of the House of Commons, including any cases in which he has observed that

(a) accounts have not been faithfully and properly main tained or public money has not been fully accounted for or paid, where so required by law, into the Consolidated Reve nue Fund;

(b) essential records have not been maintained or the rules and procedures applied have been insufficient to safeguard and control public property, to secure an effective check on the assessment, collection and proper allocation of the reve nue and to ensure that expenditures have been made only as authorized;

(d) money has been expended without due regard to economy or efficiency; or

(e) satisfactory procedures have not been established to measure and report the effectiveness of programs, where such procedures could appropriately and reasonably be implemented.

Three significant points emerge from a reading of this text:

I. The paragraphs of the former section 58 relating to the Auditor General's examination of accounts and the former subsection 61(1) relating to his report to the House have been consolidated; examination and report now cover the same ground.

2. The non -limitative nature of the enumerated paragraphs of former subsection 61(1) has been retained and reinforced; the Auditor General is to call attention to anything he considers significant, including the listed items.

3. Paragraphs (d) and (e) give specific authority to inquire into matters of economy, efficiency and effectiveness, the classic vocabulary of comprehen sive auditing or value for money.

In the light of this analysis, I turn to the ques tion of whether the responsibility of the Auditor General does indeed extend, as he asserts, into inquiring whether due regard to economy has been demonstrated and value for money achieved in the Petrofina acquisition. In my view, the answer is an unequivocal "yes".

In the first place, I would note that even a narrow view of the Auditor General's function must include the duty of determining if money has been spent for the purposes for which it was appropriated by Parliament (see Auditor General Act, paragraph 7(2)(c)). If, of course, the purpose of Vote 5c was only to authorize an investment of 1.7 billion dollars in shares, debentures, bonds or other evidences of indebtedness of Petro-Canada, then the Auditor General's inquiry could not go beyond a determination that such investment was in fact made. This, however, would require one to ignore most of the language of Vote 5c. I cannot regard as mere superfluous window dressing the fact that Parliament, in authorizing an investment in Petro-Canada, did so

... in order to increase Canadian public ownership of the oil and gas industry in Canada through the share purchase of and property acquisition from Petrofina Canada Inc., by Petro- Canada .... [Emphasis added.]

It would seem to me to follow that an inquiry into whether the money was spent for the purposes for which it was voted may properly look beyond the investment in Petro-Canada to the share purchase and property acquisition by Petro-Canada in Petrofina.

But there is more. Vote 5c is an authority to spend amounts required for investment in Petro- Canada to increase Canadian ownership of the oil

and gas industry through the Petrofina acquisition, such amounts

... not to exceed 1.7 billion dollars which includes the interim financing costs ....

The mention of financing costs is significant. There are no financing costs attached to the investment by the Government of Canada in Petro-Canada. There were very significant financ ing costs to Petro-Canada in connection with its share and asset purchase from Petrofina. Thus it follows, as a simple matter of statutory interpreta tion, that the amounts "required for investment in ... Petro-Canada" are the amounts required by Petro-Canada for the share purchase and property acquisition including financing costs. That being so, an audit of the spending made pursuant to the authority of Vote 5c must properly inquire into what amounts were so required for that purpose.

That inquiry, in a comprehensive audit of the type mandated by Parliament, clearly extends to determining whether value for money was obtained, not only when the Canadian people invested 1.7 billion dollars in Petro-Canada but also when Petro-Canada turned those same dollars around and used them to purchase the shares and assets of Petrofina.

It is no answer to the Auditor General's claim to say that the decision to purchase Petrofina was purely political, with political motives and justifi cation, and subject therefore to political accounta bility only. It may well be that the decision was political but it is surely the Auditor General's job to tell, and Parliament's right to know, the eco nomic cost of the political decision. The Auditor General neither has nor claims the right to ques tion the wisdom of the decision to increase Canadi- an ownership in the oil and gas industry through the purchase of shares and assets from Petrofina. If, however, the implementation of that decision involved buying shares and assets at a premium over their market value, then the Auditor General can and should say what that premium was so as to permit others to make the political judgment as to whether it was worth paying.

I turn next to the question of the Auditor Gener al's right to require to see the documents bearing on the valuation of the Petrofina shares and assets both before and after their acquisition by Petro- Canada. Here again the answer depends upon a reading of the Auditor General Act in its historical perspective.

The development of the statutory provisions relating to the Auditor General's duty to examine and report has been paralleled in those sections dealing with his right of access to information. In Part VII of the Financial Administration Act, the relevant texts were subsections 57(1),(2) and (3) and section 64.

57. (1) Notwithstanding any Act, the Auditor General is entitled to free access at all convenient times to all files, documents and other records relating to the accounts of every department, and he is also entitled to require and receive from members of the public service of Canada such information, reports and explanations as he may deem necessary for the proper performance of his duties.

(2) The Auditor General may station in any department any person employed in his office to enable him more effectively to carry out his duties, and the department shall provide the necessary office accommodation for any officer so stationed.

(3) The Auditor General shall require every person employed in his office who is to examine the accounts of a department pursuant to this Act to comply with any security requirements applicable to, and to take any oath of secrecy required to be taken by persons employed in that department.

64. The Auditor General may examine any person on oath on any matter pertaining to any account subject to audit by him and for the purposes of any such examination the Auditor General may exercise all the powers of a commissioner under Part I of the Inquiries Act.

As can be readily seen, the emphasis in these texts is upon access to the accounts which are the subject matter of the Auditor General's examina tion. The same texts reappear in the 1977 statute but consolidated into one section under the head ing "ACCESS TO IN FORMATION" and with impor tant changes, notably in subsection (1).

ACCESS TO INFORMATION

13. (1) Except as provided by any other Act of Parliament that expressly refers to this subsection, the Auditor General is entitled to free access at all convenient times to information

that relates to the fulfilment of his responsibilities and he is also entitled to require and receive from members of the public service of Canada such information, reports and explanations as he deems necessary for that purpose.

A comparison of the former subsection 57(1) with the new subsection 13(1) reveals the following:

1. The primacy provision has gone from a "not- withstanding" to an "except as provided". The former text arguably would not prevail against any non-statutory rule of law; there can be no doubt that the new text is intended to override both statute and common law rules to the contrary.

2. The old primacy provision left open the possi bility of its being overridden by implication by some subsequent statutory text. The new provision, inspired it would seem by section 2 of the Canadi- an Bill of Rights (R.S.C. 1970, Appendix III), makes it manifest that only a specific override can prevail.

3. The former text limited the entitlement to access to the accounts of departments; the new text extends it to all information relating to the fulfil ment of the Auditor General's responsibilities.

4`. The right to require and receive information from public servants has been made subject to the same condition as the right to access to other sources of information. In each case the test is whether the information sought relates to the ful filment of the Auditor General's responsibilities. Since they are clearly two distinct rights, separat ed in the English text by the conjunctive phrase

"and he is also entitled to" and in the French text by a semi-colon, it may be safely asserted that the first extends to information in the possession of persons other than civil servants ("members of the public service of Canada"), who are exclusively the subject of the second.

Unless subsection 13(1) is meaningless verbiage, the primacy it decrees must have some scope for practical application. If the only "remedy" avail able to the Auditor General to enforce the right created by subsection 13 (1) is through the exercise of his power as commissioner under subsection 13(4), then the latter power must itself enjoy the primacy which would, of course, include primacy over section 36.3 of the Canada Evidence Act.

Thus if, as appellants urged, subsection 13(4) is the only means that the Auditor General has of enforcing his right of access to information, the argument becomes no more than a procedural quibble: surely it can make no difference at bottom whether the Trial Division is called upon to enforce a subpoena issued by the Auditor General pursuant to his powers under subsection 13(4) or, as has in fact happened, to declare that the right to access exists.

For my part, however, I can see no basis in principle upon which the Auditor General's right of access under subsection 13(1) should be limited by the procedural remedy of subsection 13(4). The scope of the first so vastly exceeds that of the second that any such limitation would, in truth, amount to a denial of the right itself.

By the same token, 1 am unable to accept the appellants' subsidiary argument that, in the event of denial of access, the Auditor General's only remedy is to make an unfavourable report to Par liament under paragraph 7(1)(b). The statute speaks in terms of entitlement, a legal term pecu liarly apt to describe a legal right for which there must be a legal remedy. A declaration of the kind sought here is singularly appropriate as a remedy. If I had any doubt on the matter (and I have not),

I would apply to the Auditor General Act the same sort of broad and purposive interpretation as was given by the Supreme Court to the Ombudsman Act (R.S.B.C. 1979, c. 306) in British Columbia Development Corporation et al. v. Friedmann, Ombudsman et a1.,[1984] 2 S.C.R. 447.

Only a few further comments are required.

In their written memoranda and during the argument of the appeal, the parties dealt exhaus tively and at length with the questions of Crown privilege and the constitutional convention of Cabinet confidentiality. It is perhaps desirable therefore that I should deal briefly with them, if only for the purpose of indicating that I do not think that the present appeal requires us to make any definitive pronouncement on either subject.

With respect to the doctrine of Crown, or offi cial privilege, I would note, first of all, that it is simply a rule of evidence and does not constitute a constitutional limitation upon legislative powers. Indeed, both Parliament and provincial legisla tures have passed legislation dealing with the sub ject in recent years. Accordingly, while there may be some question as to whether the recent amend ments to the Canada Evidence Act (of which section 36.3 is one) constitute a complete codifica tion of the subject or whether there remains some residue of the common law still in effect, there can be no question that, as far as the federal Crown and its agencies are concerned, the Parliament of Canada can make such rules as it chooses with respect to Crown privilege. In my view, there is simply no room for doubt that the words of subsec tion 13(1) of the Auditor General Act are strong enough to override any privilege, whether based in statute or in common law. Accordingly, it does not seem to me to be necessary for us to add to the already abundant jurisprudence which has strug gled with defining the limits of the privilege.

The convention of confidentiality, whereby the members of one administration are prohibited from seeing (and a fortiori from disclosing) the

confidences of a previous administration of a dif ferent political stripe, is another matter. The Trial Judge found that such convention exists. I am not entirely sure that he was right. 16 But I do not think that it is necessary to express a definitive opinion on the point. The convention, if it exists, is no more than that. Convention, by definition, must give way before an express text of law. While I would agree that it is a sound principle of statutory interpretation not to find that a well established convention has been abrogated by an ambiguous text, I can find nothing in the words of subsection 13(1) of the Auditor General Act which is in the least ambiguous in this regard. Indeed, by the very nature of his functions, the Auditor General is inquiring into events after they have taken place, sometimes many years later. It is quite simply unthinkable that his inquiries could be frustrated by a change of government.

There is one point remaining. In paragraph 2 of his formal order, the Trial Judge granted a decla ration of the Auditor General's right to free access to the information contained in certain specified categories of documents; these categories corre spond reasonably to what had originally been claimed by the Auditor General by letter to the appellants and by his subsequent proceedings in the Trial Division.

Paragraph 1 of the Trial Judge's formal order is, however, another matter. It reads as follows [at page 752]:

I. IT IS HEREBY DECLARED THAT the plaintiff is entitled pursuant to subsection 13(1) of the Auditor General Act to have access to information, including information contained in documents that are confidences of the Queen's Privy Council, that relates to matters of public expenditure and that comes within the scope of the Auditor General's responsibilities as set out in the Auditor General Act, as the plaintiff deems neces sary for the purpose of carrying out these responsibilities including the audit of the financial statements required by section 55 of the Financial Administration Act, R.S.C. 1970, c.

6 One recalls the famous "Munsinger" case, when Prime Minister Pearson appears to have had ready access to some confidential papers of the previous Diefenbaker administration. See, in particular, pp. 51-54 of Report of the Commission of Inquiry Into Matters Relating to One Gerda Munsinger. Ottawa, September 1966. Queen's Printer Catalogue No. Z1-1966/2.

F-I0, and to permit the Plaintiff to report to Parliament, including whether any money has been expended without due regard to economy or efficiency. [Case, p. 3267.]

In my view, this declaration is far in excess of what was asked for and should not, in any event, be granted. It, in effect, gives the Auditor General carte blanche, with the authority of a binding declaration from the Court, to have access to all and every document as he alone deems necessary. While it is, of course, true that, in the first instance, it will always be the Auditor General who must decide what is or is not necessary for him to carry out his functions under the law, it is equally true that, in any case where his judgment on the point is questioned, the matter will have to be determined by a court of law. That is precisely what has happened in the present case and if, in some future case, some problem arises as to what is properly within the Auditor General's scope of inquiry, it will have to be resolved in the same way. I would therefore strike out paragraph 1 of the Trial Judge's order. Subject only to this, I would dismiss the appeal with costs.

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